In brief
- A new report reveals that green data centers, supported by energy efficiency regulations in Malaysia and Singapore, attracted the largest investment dollars in Southeast Asia.
- Despite this, the region is significantly behind in its green financing goals, with only 1.5% of the necessary funding to meet 2030 emission targets having been allocated.
Southeast Asia experienced a notable increase in green investments in 2023, with green data center projects contributing significantly, according to a report released Monday by Bain & Company, GenZero, Standard Chartered, and Temasek. The region attracted $6.3 billion of green investments, a 21% increase from the previous year, though funding remains insufficient.
While renewable energy remained the region’s primary green investment theme in 2023, green data centers saw the largest growth, bolstered by efficiency policies in Malaysia and Singapore.
The surge in demand for data centers, driven by new technologies like generative AI, has raised concerns about increased energy consumption. A January report from the International Energy Agency predicts that the AI industry’s energy consumption is expected to grow tenfold between 2023 and 2026.
“There is a reality gap between what many believe is happening and true progress on the ground,” said Dale Hardcastle, director of the Global Sustainability Innovation Center at Bain & Company.
But despite Southeast Asia’s “structural challenges,” immense potential exists to accelerate the energy transition and build the green economy through initiatives such as blended finance, he added.
Additionally, the report called on governments to facilitate more policy incentives and regional cooperation as well as to focus on already proven and deployable green technologies. Such efforts could unlock $300 billion of annual business by 2030, it added.
