From Data to Direction: What 480 Donor-funded Projects Reveal About Southeast Asia’s Clean Energy Transition

Rising energy demand, rapid urbanisation, growing populations, and shifting geopolitical dynamics are placing immense pressure on Southeast Asia’s energy systems. The need for secure, affordable, and sustainable energy has never been more urgent. The International Energy Agency (IEA), a central force in shaping global energy policy — has responded by establishing its first Regional Cooperation Centre outside of Paris, choosing Singapore as its base. 

In this edition of SIPET Connect, Maximilian Heil, Project Coordinator CASE at GIZ, speaks with Sue-Ern Tan, the Head of the IEA Regional Cooperation Centre, about the Centre’s strategic priorities, the evolving nature of energy security, and how Southeast Asia can shape a secure, affordable, and sustainable clean energy future through regional collaboration.  

In this conversation, Sue-Ern Tan offers a front-row view of how multilateral institutions are rethinking their role—working more directly with countries, gathering region-specific data, and enabling cross-border solutions like power trade and clean energy financing. IEA’s move to establish a regional hub in Singapore signals a shift from its global advisory role to one that also builds local and regional partnerships. With energy transitions gaining urgency and complexity, Southeast Asia needs not just capital and technology, but coordination and capacity. This new Centre aims to deliver exactly that—embedding support where it’s most needed, and making sure the region’s voice is heard in shaping the global energy agenda. 

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SIPET Connect: To begin, could you briefly introduce yourself and your role at the IEA? 

Sue-Ern Tan: I’m the Head of the IEA’s recently-opened Regional Cooperation Centre in Singapore. This is the IEA’s first office outside of its headquarters in Paris, and it serves as a platform to deepen our collaboration across Southeast Asia. While we have a broad global mandate, our initial focus here is clearly on ASEAN — supporting countries in the region to navigate the challenges and opportunities of the clean energy transition. 

SIPET Connect:  The IEA has long played a key role in global energy governance. How has its focus evolved in recent years, particularly in light of energy security concerns and the global emphasis on the clean energy transition? 

Sue-Ern Tan: The IEA was established over 50 years ago to coordinate collective responses to oil supply disruptions among member countries. That mission remains relevant — we activated those emergency response mechanisms most recently after Russia’s invasion of the Ukraine and the subsequent energy crisis in 2022. But the world has changed dramatically over the course of the IEA’s history. 

Today, the IEA works across all fuels and technologies, supporting governments and industry to build sustainable, affordable, and secure energy systems. For example, at the Global Summit on the Future of Energy Security, which we co-hosted with the UK Government in April, two major themes emerged: first, that energy security is no longer just about oil and gas but includes critical minerals, supply chains, and electricity system reliability; and second, that multilateral cooperation is more essential than ever.  

SIPET Connect: Why was Southeast Asia chosen for the IEA’s first regional office — and why Singapore specifically? 

Sue-Ern Tan: Southeast Asia is a fast-growing region and a major driver of global energy trends. In fact, the region is expected to account for around a quarter of future global demand growth, second only to India. What’s more, eight out of the ten ASEAN member states have committed to net-zero targets. So, the region is both strategically important and full of potential. 

Having this regional presence allows us to work much more closely and responsively with countries on the ground and Singapore is very well-located to access the rest of the region. 

SIPET Connect: What are the key objectives and priority areas for the Regional Cooperation Centre in Singapore? 

Sue-Ern Tan: We focus on three core thematic areas: 

First, we assist efforts to accelerate renewable power and cross-border power trade — particularly through support for the ASEAN Power Grid and guidance on how to integrate variable renewables.  Second, we work on the scaling up of clean energy technologies — including hydrogen, ammonia, CCS, nuclear, and innovations related to AI and data centre demand.  And finally, we provide analytical support for efforts to unlock finance for clean energy—notably through work like our Cost of Capital Observatory, which identifies region-specific barriers to investment. 

And then, underpinning all of this, we work in the areas of capacity-building and development partnerships.  We engage with partners in the region on capacity building and training, especially for Southeast Asian policymakers and regulators across many different topics; and we also work through partnerships and the convening of events, to help align efforts across institutions and stakeholders in the region. 

SIPET Connect: How does your work in the Regional Cooperation Centre complement the efforts of the IEA’s work more globally? 

Sue-Ern Tan: It’s very much a joint effort. The Regional Cooperation Centre is small—just five people—but we’re fully integrated into the broader IEA network. We collaborate closely with the analytical teams in headquarters, whether on global energy modelling, data, or market and policy insights. 

For instance, the IEA’s upcoming Global Hydrogen Report will feature an ASEAN-specific deep dive. Our role is to gather the most accurate and regionally relevant data, ensuring that Southeast Asia’s developments are reflected in global discourse. We lead regional projects and analysis while also feeding those regional insights back into the IEA’s global work. We are also building on the already excellent work happening at the IEA to deliver more efficiently and effectively in this region.   

SIPET Connect: Where do you see the biggest opportunities for accelerating the clean energy transition in Southeast Asia? 

Sue-Ern Tan: A connected regional power grid is absolutely essential for Southeast Asia, where electricity demand is growing faster than anywhere else. Interconnections will allow countries to move electrons more efficiently, match supply to demand centres, balance variable renewables, and unlock cross-border trade. 

Financing poses a significant barrier, particularly for interconnections, which is why IEA is preparing a report focused on how to mobilise investment in this area. Political will is also crucial, especially at the bilateral level, to align technical and regulatory frameworks across borders. 

We recognise the need to address a range of topics to help countries achieve their energy transition goals. Energy efficiency is the primary fuel and we have a large work programme in Southeast Asia focusing on accelerating efficiency across buildings, appliances, transport, and industry. The region’s key role as a manufacturing hub with excellent technological and natural resource potential is also a key opportunity to encourage the development of a variety of energy supply chains and technologies from solar and wind to hydrogen and batteries.  

Finally, we at the IEA understand the critical importance of data. It underpins effective policy making and we have seen how eager countries in this region are to enhance their capacity on data and energy statistics in order to help shape and measure their transition goals.   

SIPET Connect: Collaboration is key in scaling up the energy transition. Who are the IEA’s key partners in the region, and what are some upcoming areas of focus? 

Sue-Ern Tan: We work closely with regional bodies like the ASEAN Centre for Energy (ACE) and the ASEAN Secretariat and all of their member states, as well as multilateral organisations including UN ESCAP, ADB, World Bank, and UNOPS-ETP. Our engagement extends to various regional governments and local contacts, including embassies and development partners. There are a number of active philanthropies, think tanks, NGOs, academic institutions and others which are both local and regional doing really interesting and important work as well. The new regional centre is looking to build new and continue long-established trusting and collaborative relationships. Our goal is to complement, and not to duplicate, existing initiatives.  

For example, we collaborate with UNESCAP on capacity development for regulators, and with the project CASE on the Regional Energy Transition Dialogue. We’re always asking: Where can the IEA add the most value? 

We also work based on demand from countries. For example, we collaborate with Southeast Asian countries to understand their energy goals, what it is they need to achieve those goals and where the IEA is best equipped to support. 

SIPET Connect: What are the biggest challenges in achieving a just energy transition in Southeast Asia? 

Sue-Ern Tan: From an equity standpoint, one ongoing challenge is energy access—not just whether electricity reaches people, but whether it’s reliable, clean, and affordable. Clean cooking is another area that deserves more attention in this region, particularly for women and rural communities. 

Fossil fuels will remain part of the mix for some time. The question is: how do we manage the energy transition responsibly? How do we support affected communities, improve methane management, and ensure fairness in job transitions? 

The IEA recently helped launch a Global Commission on People-Centered Clean Energy Transitions, which encourages countries to embed social equity, access, and participation into their transition strategies. We’re working to bring those principles into this region’s policy frameworks. 

SIPET Connect: How can platforms like SIPET and regional partnerships contribute to addressing barriers to transition? 

Sue-Ern Tan: Platforms like SIPET are vital for promoting transparency and open access to data and research, supporting knowledge transfer and capacity building, and bridging the gap between analysis and action by helping stakeholders move from policy aspiration to implementation. 

Ultimately, no single actor can drive the energy transition alone. Practical, inclusive, and collaborative efforts are key to make the energy transition real on the ground. We must build on the existing work of partners and make sure we are providing the most impact for countries in this region. 

SIPET Connect: Finally, what message would you like to share with SIPET’s community of energy transition professionals? 

Sue-Ern Tan: Keep going. The scale of both the opportunity and the challenge in Southeast Asia is immense. Success here is not optional; it’s essential for the global energy transition. 

But let’s also remember: a successful energy transition isn’t just about hitting emissions targets. It must also make energy more secure, more affordable, and more reliable. If we keep those pillars in mind, we’ll be better equipped to build transitions that truly work—for governments, people, and businesses. 

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About Sue-Ern Tan 

Sue-Ern Tan is the Head of the International Energy Agency’s Regional Cooperation Centre in Singapore. She brings extensive experience in international policy and development, and leads the IEA’s regional engagement in Southeast Asia. She leads a team focusing on accelerating renewable energy, scaling clean technologies, and unlocking regional collaboration to drive a just and secure energy transition. 

About the IEA 

The International Energy Agency (IEA) is an autonomous intergovernmental organisation that works to shape a secure and sustainable energy future for all. Founded in 1974, the IEA provides authoritative analysis, policy recommendations, and capacity-building support to its members and partners around the world. The IEA's new Regional Cooperation Centre in Singapore supports Southeast Asia and beyond in advancing energy security, clean energy innovation, and regional integration. 

Reframing the Energy Transition: What Southeast Asia Is Learning from Transition Finance 

As Southeast Asia strives to decarbonize its economies while maintaining economic growth and prioritizing energy security, transition finance has emerged as an essential tool. Transition finance is designed to enable high-emitting sectors to embark on credible pathways toward net zero. It meets companies where they are, not where they should already be. 

SIPET Connect’s Transition Finance Series, which we have run over the past six months, has featured interviews with six leading experts working across finance, policy, and clean energy. The interviews shed light on what this financial instrument means in practice. Drawing from their insights, this article examines how Southeast Asia is defining transition finance, why it is rising in importance, what challenges remain, and what it will take to make transition finance truly impactful. 

What Is Transition Finance—and How Is It Different from Green or Climate Finance? 

As global pressure to decarbonize economies increases, the financial sector is starting to differentiate between various approaches to climate-aligned capital. While green finance focuses on funding clearly defined low-carbon activities, and climate finance often supports mitigation or adaptation in vulnerable regions, transition finance specifically targets carbon-intensive sectors and helps them move toward net zero through credible, science-based plans.  

Melissa Brown, Director at Daobridge Capital, explained that “Transition Finance was born out of necessity—to fill the gap left by green finance for economies that need incremental steps, not leaps.” Unlike green finance, which is typically project-based and emphasizes low-emission investments, transition finance focuses on companies and sectors that remain carbon-intensive but are committed to time-bound decarbonization strategies. 

Jason Lee, Head of Sustainability at CIMB Thai Bank, described transition finance as a dual-pronged approach: managing emissions within financial portfolios while supporting real-economy clients through their transition. “It’s about helping companies move from where they are to where they need to be,” he said. 

Instruments such as sustainability-linked loans (SLLs) and transition bonds are gaining traction in the region. These allow flexibility in the use of proceeds, provided that borrowers commit to measurable emissions or energy efficiency improvements. These loans (SLLs) are typically governed by standards like the GHG Protocol and the ISSB’s IFRS S2.1 

Why Transition Finance Is Gaining Ground 

The interviews revealed a shared understanding that transition finance plays a vital role in the global decarbonization effort. In Southeast Asia, where fossil fuels continue to dominate energy supply and industrial activities, achieving a successful transition requires more than just green finance. 

“We can’t ignore large, high-emitting companies if we want a real energy transition,” said Sarinee Achavanuntakul, Managing Director of Climate Finance Network Thailand (CFNT) “We need to create financial tools tailored for established players in sectors like energy, transport, and heavy industry—not just for startups and new green ventures.” Transition finance enables these firms to retire carbon-intensive assets, invest in cleaner technologies, and realign with national decarbonization goals. 

This approach recognizes that most companies in heavy industry cannot “go green” overnight. “It’s not just about financing projects but fostering partnerships where both parties are committed to meaningful environmental outcomes,” said Jason Lee. Anouj Mehta, Director of ADB’s Thailand Resident Mission added, “Transition finance offers a powerful way to integrate commercial and development finance at scale.” 

Ultimately, the appeal of transition finance lies in its pragmatism. It accepts that change takes time but demands accountability along the way. By offering a flexible yet disciplined framework, it allows Southeast Asia to pursue decarbonization without sidelining the economic realities of its most critical sectors. 

Challenges and Lessons Learned 

A key challenge is credibility. Putra Adhiguna, Managing Director at Energy Shift Institute, cautioned, “We see a lot of transition plans that don’t align with emissions realities or lack transparency.” He emphasized the need for robust, independently verified plans with clear trajectories, milestones, and capital strategies. 

Tailored solutions are also essential. What works in Thailand may not work in Indonesia or Vietnam. Financial products must reflect each country’s energy mix, policies, and industrial structure. 

While blended finance can help de-risk investments, it isn’t a universal fix. Melissa Brown observed, “Concessional capital can help mitigate project risks, but providers need assurance that execution risks can be properly managed and priced.” 

Deni Gumilang, Sustainable Energy Finance Lead at GIZ Indonesia, emphasized the role of public finance in attracting private capital: “We are trying to integrate applicable structures that can attract private investment… mechanisms by which public finance can de-risk private investment are essential.” He noted that while blended approaches are gaining ground, policy coherence and regulatory clarity remain key barriers to scale. 

Regulatory uncertainty adds complexity. Frameworks for taxonomies, carbon pricing, and disclosure remain in development. Several of the interviewees called on governments to move faster to match investor expectations. 

Sarinee highlighted political realities: “You cannot depoliticize transition finance. In regions where fossil fuels are tied to state revenues or elite interests, credible plans must navigate entrenched systems.”  

Capacity and data deficiencies continue to pose challenges. Many companies lack the internal expertise to develop credible transition plans or monitor financed emissions. Lishia Erza, CEO of Candra Naya Lestari, stressed the importance of involving micro, small, and medium-sized enterprises (MSMEs) and local communities: “Finance must shift away from top-down models and support those most affected by climate impacts.” 

Where Do We Go from Here? 

The path forward for transition finance in Southeast Asia is clear yet challenging. 

First, the region must transition from one-off pilot projects to scalable, institutional financial strategies. This involves defining what “credible transition” means at the country level, aligning it with Nationally Determined Contributions (NDCs), and creating taxonomies that reflect regional realities. As Anouj Mehta noted, “DFIs are essential in creating viable financing structures that balance risk and return… [they] could try and mobilize concessional finance, provide risk guarantees, and technical assistance to make these projects bankable.” This kind of support is crucial for de-risking first-mover projects and building national transition finance frameworks that can attract both domestic and international capital.  

Second, financial institutions should invest in internal capacity—not only in risk analysis but also in helping clients navigate transition pathways. This is particularly crucial for MSMEs and mid-sized firms, many of which lack the technical expertise to develop and implement transition plans. “Offering guidance on taxonomies or bond principles builds trust and long-term value,” said Jason Lee. 

Third, alignment of policy and regulatory frameworks will be vital. Enabling frameworks for carbon pricing and mandatory disclosure must keep pace with market innovation. Melissa Brown highlighted that global narratives are evolving, and Southeast Asia must “break away from the one-size-fits-all playbook” to create market-appropriate solutions. 

Lishia Erza added that supporting a just and inclusive transition requires more than just financial flows. “We need hands-on technical assistance and community-level engagement to make these plans real,” she stated. “Otherwise, transition finance risks reinforcing existing inequalities rather than alleviating them.” 

Finally, Southeast Asia requires more regional platforms for peer learning and innovation. As Putra Adhiguna observed, the transition “requires as much cooperation and trust-building as it does capital.” Regional coalitions and open-data tools, like the Southeast Asia Information Platform for the Energy Transition (SIPET), can enhance transparency and coordination.  

Conclusion 

Transition finance offers Southeast Asia a pragmatic pathway to decarbonize from within, rather than around, its economies. The insights from these six interviews suggest that the region is ready to lead—not by replicating models from the Global North, but by designing its own future, anchored in credibility, inclusion, innovation, and peer-to-peer learning. 

Explore the Interviews: 

Putra Adhiguna, Energy Shift Institute – November 2024 

Jason Lee, CIMB Thai – December 2024 

Melissa Brown, Daobridge Capital – January 2025 

Sarinee Achavanuntakul, Climate Finance Network Thailand (CFNT) - February 2025

Anouj Mehta, ADB – March 2025  

Lishia Erza, Candra Naya Lestari and Deni Gumilang, GIZ Indonesia – June 2025 

As Southeast Asian countries accelerate efforts to meet their corporate and national climate targets, Indonesia faces one of the region's most complex challenges: how to finance its transition from fossil fuels—particularly coal—while creating a cleaner, more inclusive energy economy. Transition finance focuses on moving investment from brown (carbon-intensive) infrastructure into green infrastructure, but they should also aim to achieve a transition-phased, equitable shift of the energy sector that creates jobs and development benefits.  

For this edition of SIPET Connect, Peter du Pont, Senior Advisor on the GIZ CASE project, speaks with a leader who is actively shaping the transition finance landscape in Indonesia. Lishia Erza, Chief Executive Officer of Candra Naya Lestari, brings a dual perspective as both a sustainable finance expert and an entrepreneur. She draws on her experience with impact investing, local incubation networks, and public-private platforms to empower communities and small businesses. Deni Gumilang, Sustainable Energy Finance Lead at GIZ, has spent more than a decade advancing climate and energy finance in Indonesia, advising ministries, co-developing policy tools, and supporting the design and development of relevant mechanisms like the derisking facilities for RE that align public and private finance. 

Together, Lishia and Deni offer grounded insights into what transition finance looks like in the Indonesian context—how it’s being applied, what gaps remain, and what it will take to ensure that the country’s energy shift is both just and achievable. 

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SIPET Connect: How do you define transition finance in the Southeast Asian and Indonesian context? 

Lishia Erza: 
For me, transition finance is really about financing the in-between—those activities and stakeholders that might not be part of a company’s direct climate plan but are still deeply impacted by the shift to low-carbon systems. There’s a lot of conversation around emissions, but we often forget the social and economic implications. 

Think about the ecosystem surrounding a coal power plant—transport providers, local small and medium enterprises (SMEs), informal workers. If a power plant shuts down, these people are impacted, yet they often don’t factor into corporate decarbonization strategies. Transition finance should be about making sure those groups aren’t left behind. Another is perhaps the transition of industries to lower emission practices. This often requires significant change management that bears financial impact that are too large to underestimate. 

So, while I don’t directly apply transition finance tools in my current supply chain finance work, I do collaborate with banks and asset managers to design new products and asset classes — for example reskilling loans for women or mechanics who need to shift from traditional to electric vehicle industries, to green agriculture practices and so on. The idea is to help them meaningfully participate in the transition, not just survive it. 

Deni Gumilang: 
Upon entering this domain around 2017, the landscape of transition finance was not as developed in Indonesia than it is at present. At that time, Indonesia remained committed to the development of 35 GW of new power capacity—much of it coal-fired. Subsequently, pressure arising from international commitments under the Paris Climate Agreement, and necessitated a strategic pivot towards renewable energy. That shift, both technically and financially, is complicated. 

GIZ has focused its efforts on assisting the government in aligning its public finance mechanisms with more private finance. Initially, the work primarily focused on the public side—supporting the Ministry of Energy, Ministry of Finance, OJK, and other agencies. But now we are trying to integrate applicable structures that can attract private investment as well. This encompasses the design of financial instruments and helping policymakers comprehend how public and private finance can collaboratively support a pragmatic, yet aspiring, transition. 

SIPET Connect: How are financial institutions in Indonesia responding to these needs, especially around support for what is called a “just transition”? 

Lishia Erza: 
We’re seeing more openness from banks and financial institutions, though it’s still early. The financial products under discussion lately aren’t tied to any specific company. For instance, when a bank considers loans for reskilling, it’s not necessarily connected to one employer laying people off—it’s more about understanding that certain sectors are transitioning and workers across those sectors need support. 

We’re seeing more openness from banks and financial institutions, though it’s still early. The financial products under discussion lately aren’t tied to any specific company. For instance, when a bank considers loans for reskilling, it’s not necessarily connected to one employer laying people off—it’s more about understanding that certain sectors are transitioning and workers across those sectors need support. 

In East Java, for example, a municipality aiming for net-zero by 2045 is working with a local bank to offer financial instruments that help their communities. These might include insurance for livelihood protection, new business loans, or support for upskilling. It’s different from the typical sustainability-linked finance, where the metrics are tied directly to a single company’s environmental, social and governance (ESG) goals. However, while the financial institutions are responding through product offerings, I have yet to see FSPs enabling the people element both on FSP and client side for increase in the uptake.  

Deni Gumilang: 

Our focus at GIZ has been to support the policy and regulatory conditions in Indonesia that enable banks and investors to engage. We participated in the design of the Indonesia Financial Services Authority’s (OJK’s) sustainable finance regulation, a pivotal framework that established the foundation for integrating sustainability objectives into financial products. 

We have also contributed to the development of public finance schemes through the Ministry of Finance—examining mechanisms by which public finance can de-risk private investment. In one example, we analyzed a portfolio of 70 power purchase agreements (PPAs), as part of the government's task to ensure fair energy, working with ADM Capital and separately with PT Sarana Multi Infrastruktur (Persero) as well as USAID, to evaluate their bankability. Such pre-investment support is critically important, given that financial institutions often demonstrate a reluctance to proceed independently without policy backing. 

SIPET Connect: What roles does your organization play in enabling these efforts? 

Lishia Erza: 
Candra Naya Lestari is part of an industrial group with subsidiaries working across precision agriculture, manufacturing, and finance. We play a dual role as intermediary and also as ecosystem players. 

First, through one of our collective movements,  we help municipalities. We’re supporting about 100 local governments in building sustainability strategies in their economies. These aren’t just documents—they’re action plans for net-zero transitions, which often include economic development, workforce shifts, and community engagement. 

Second, through our venture building arm we support a curated network of more than 100 businesses—some are inherently sustainable, others are just starting their transition journeys. We’ve helped mobilize approximately $200 million in capital, some of which goes toward empowering local incubators and accelerators. We also work with investors and financial institutions to identify risks, explore deal mechanics, and target specific sectors that need support. 

Deni Gumilang: 
At GIZ, our strength is in its capacity to construct enabling environments. We provide technical assistance to government institutions—like the Ministry of Energy and Mineral Resources, Ministry of Finance, Ministry of Planning/Bappenas, OJK, etc. We help shape regulations, create analytical modeling tools, and run feasibility studies. These things may not be often visible, but they are essential. 

More recently, through projects like the Sustainable Energy Transition Indonesia (SETI), we are  focusing on the transaction level—helping to move projects from the policy formulation to the financing stage, alongside facilitating matchmaking between donors, government, and developers. Through the PERFORM project, We are actively participating in the Energy Transition Mechanism with MoF and ADB. 

SIPET Connect: What are some of the major gaps or barriers you see in advancing transition finance? 

Lishia Erza: 

There’s a huge awareness and competency gap—especially among businesses. Many of them don’t know where to start. Do they work on EV fleets? Green their facilities? Focus on workforce issues? It’s overwhelming, especially for SMEs. Smaller businesses are still trying to navigate doing business and scaling businesses, whilst catching up with digitalisation now they’re under pressure to keep up with climate issues in business. Smaller companies have very limited resources - money, time, bandwidth, skills.  

At APINDO, the national employers’ association, I chair a committee on inclusive economy and capacity building. We’re now working on a centralized platform—a “center for sustainability and transition”—to give businesses one place to access information, financing, technology options, and policy guidance. Right now, committees from logistics, manufacturing, and transport all come to us with questions. We act as a bridge to GIZ, the International Labour Organization, development partners and technology providers, depending on the issue. 

Deni Gumilang: 
From my observation, the biggest challenge lies in policy coherence within Indonesia's regulatory framework. This framework comprises numerous layers that frequently exhibit misalignment, which often confuses investors and developers.  

Also, our current national strategy, especially in mining and downstream processing, is notably carbon-energy intensive. It might contradict the energy transition goals. Meanwhile, the development of crucial finance tools, such as tax incentives for renewable energy or carbon pricing mechanisms, remains largely questionable. 

At GIZ, we are trying to support more de-risking policies to the situation, as well as designing relevant financial tools like guarantees, mezzanine loans, project development facilities, etc to make investment more attractive. But, the effective implementation of these initiatives necessitates stronger legal backing. 

SIPET Connect: Lishia, what are you seeing in the power sector, particularly around coal phase-out or plant transition efforts? 

Lishia Erza: 
It’s being discussed, but implementation is slow. Companies interested in transitioning—like coal operators—are getting mixed signals from the government. The mechanics of transition deals are still unclear. 

We work closely with the private sector through associations, and a lot of what we hear is uncertainty. Businesses aren’t sure if they should act now or wait. Policy updates sometimes come with little warning or context. 

So at APINDO, we’re creating a platform where businesses can get clarity. We ask them: Do you need to train workers? Talk to funders? Source better tech? We connect them accordingly. The power sector narrative is heavy on the supply and distribution side, but not much on the user side; this is a lopsided conversation between demand and supply side, product and market fit principles are lost. 

SIPET Connect: What about agriculture and nature-based sectors? How do they fit into this conversation? 

Lishia Erza: 
Agriculture is one of the hardest sectors to allocate finance for an energy transition. Most farmers in Indonesia are smallholders—owning less than half a hectare. They’re understandably risk-averse, lack financial documentation, and operate in fragmented markets. 

We try to shift the mindset toward agribusiness. We help farmers think in terms of scaling, documentation, and accessing capital. But even when start-ups come with climate-smart agriculture tech, like AI irrigation or agri-PV, the models often aren’t scalable. Post-harvest is where energy use really spikes—not in the field—so PV investments don’t always make sense unless considered through an integrated economic lens – what crop should be cultivated, what prices can the farm fetch using Agri-PV, what upfront investment and operational costs should farmers consider, and so on. Close to 30% of Indonesia’s workforce work in agriculture sectors – 28% plus. Energy transition conversation should touch the agriculture sector if a third of the country’s workforce is impacted! We’re talking about 40 million people directly or indirectly involved in the transition 

SIPET Connect: And finally, what’s your take on Indonesia’s net-zero targets and the future of transition finance? 

Deni Gumilang: 
Indonesia has officially established a net-zero target for 2060 or sooner, praised the Ministry of Industry expressing an aim for 2050 for industrial sectors. Meanwhile, the progress of the Energy Transition Mechanism (ETM) is also an excellent precedent for achieving early coal plant retirement and leveraging concessional capital, even though its operationalization is still in its discussion phase. More coordination to execute JETP is also critically required among PT Sarana Multi Infrastruktur (Persero) (the Ministry of Finance’s financing vehicle), Perusahaan Listrik Negara (PLN) (the state utility), GoI, and donor entities to achieve greater impact. Concurrently, a strengthening of the legal framework to connect these different dots, particularly about integrating energy regulation and finance, is highly necessary. 

Lishia Erza: 
The good news is we’re finally having the right conversations. Five years ago, nobody was talking about a just transition. Today, banks, municipalities, and national associations are starting to engage. It’s still early—but we’re moving in the right direction, I hope we get there fast enough.  

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Editor’s Note: As Indonesia navigates the complexities of decarbonization, the idea of a just transition—one that supports not only climate goals but also social and economic equity—has taken center stage. This conversation with Lishia Erza highlights a crucial shift: transition finance is no longer just about infrastructure; it's about people, policy, and systems. From enabling financial products that support reskilling, to shaping regulations that de-risk investment, their insights reveal a growing ecosystem of solutions. The road ahead demands deeper policy coherence, greater institutional alignment, and targeted financial innovation—but the momentum is building. 

Asia stands at a pivotal moment to drive the global energy transition by leapfrogging to cleaner, low-carbon technologies. Southeast Asia, in particular, can align economic growth with climate goals through renewable energy adoption, supportive policies, and international cooperation. With targeted investments and inclusive strategies, the region can meet rising energy demand while ensuring a just, sustainable future.

A decade after the Paris Climate Agreement, Southeast Asia’s financial sector is increasingly focusing on supporting investments that contribute to decarbonization. Transition finance has emerged as a critical enabler, bridging the gap between today’s fossil-based economies and the clean energy future that governments and corporations aspire to achieve through their net-zero commitments.

In this exclusive conversation for SIPET Connect, Peter du Pont, Senior Advisor on the GIZ CASE project speaks with Anouj Mehta, Director of ADB’s Thailand Resident Mission. Mehta, who is the architect of the $2 billion ASEAN Catalytic Green Finance Facility (ACGF). shares insights on how transition finance can be scaled up effectively. With extensive experience in structuring financial solutions for green infrastructure, Mehta discusses the realities of mobilizing private capital, the role of development finance institutions (DFIs), and the innovations required to make transition finance work for Southeast Asia.

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SIPET Connect: Transition Finance is gaining traction globally, but how would you define it in the context of Southeast Asia? How does it differ from green or sustainable finance?

Anouj Mehta: Transition finance is fundamentally about mobilizing finance that can incentivize public and private sector entities to make the shift to much more resilient and environmentally sustainable practices than they currently deploy so as to lead to a much lower carbon footprint. This can be across all sectors whether in manufacturing, agribusiness, infrastructure, or services. Unlike green finance for projects that are immediately eligible and sustainable per green taxonomies, transition finance focuses on those hard-to-abate sectors, which require much more support in establishing a pathway towards the final goal of low emissions and resilience.

Southeast Asia has a complex energy landscape. Despite ambitious net-zero targets, the region remains heavily reliant on fossil fuels, particularly coal, which accounts for as much as 40% of power generation in many countries. The challenge is that many businesses, particularly in hard-to-abate industries like steel, cement, and transport, lack access to affordable financing to transition away from fossil fuels. This is where transition finance plays a crucial role. For example, it can facilitate the necessary financial mechanisms to support a range of investments, including:

1. Transition to a renewables energy mix;

2. Grid modernization to integrate intermittent renewables more effectively;

3. Energy efficiency improvements across industrial and commercial sectors;

4. Low-carbon transport systems including electrification of bus and rail networks; and

5. Risk-sharing mechanisms that encourage private investment in decarbonization projects.

This is where derisking or catalytic funds can make a difference. For instance, the ACGF aims to blend sovereign finance with funds from concessional donors so as to derisk green projects and hence attract commercial finance sources.

SIPET Connect: What role do Development Financing Institutions, or DFIs, play in structuring multi-donor transition finance mechanisms?

Anouj Mehta: DFIs are essential in creating viable financing structures that balance risk and return. Transition finance often involves investments that are not immediately commercially attractive, so DFIs could try and mobilize concessional finance, provide risk guarantees, and technical assistance to make these projects bankable.

Take ACGF, for example. We pool resources from multiple partners—ADB, the EU, Green Climate Fund, the UK, Germany’s KfW, and others—to create structured, multi-donor financing programs or projects. This approach ensures that projects in more challenging sectors, which often struggle to attract private capital, receive the bankability enhancement needed to move forward.

Good examples are emerging from the ACGF work which involves blending and derisking such as the Davao Public Transport Modernization Project in the Philippines which is the first project in the country to deploy electric bus fleets at scale, almost 1100 e buses, will service nearly 800,000 passengers daily, and targets a 60% reduction in the city’s urban transport GHG emissions– this could serve as a replicable pilot for the country and the region; other projects with great replication potential include the SDG Indonesia One green finance facility and Thailand focused GSS Bonds + program

SIPET Connect: What are the biggest bottlenecks preventing transition finance from scaling up in Southeast Asia?

Anouj Mehta: The availability of transition capital through locally available finance facilities that can be flexible and affordable is perhaps the biggest challenge. Traditional financing sources have yet to adapt to this need, with either being very commercial and focused on risk-return paradigms that do not allow untested transition innovation or very complicated public finance processes that might be slow in deployment and reach. Three other key challenges are:  

1. Low level of deployment of innovative transition finance instruments such as transition bonds or incentive-linked financing products

2. Lack of clarity especially at SMEs and SOEs on transition pathways and targets that need to be developed

3. There is often regulatory uncertainty, as the policy frameworks for transition finance are still evolving. Governments need to provide clear guidelines and incentives to de-risk investments.

All of this is why collaboration between DFIs, policymakers, and the private sector is critical. Countries that have taken a proactive approach—such as Thailand, which recently issued sustainability-linked bonds—are showing how transition finance can work when financial incentives align with decarbonization goals.

SIPET Connect: How do financial instruments like bonds contribute to transition finance?

Anouj Mehta: Bonds—particularly sustainability-linked bonds (SLBs)—are powerful tools to drive transition finance. Unlike traditional green bonds, which are tied to specific projects, Sustainability-Linked Bonds (SLBs) incentivize companies to meet sustainability targets by linking interest rates to performance. If a company fails to meet its targets, it pays a penalty through higher interest rates.

A case in point is Uruguay’s sustainability-linked bond model, which some of our ADB teams are adapting for under development projects and programs. This model ensures that borrowing costs remain competitive while encouraging long-term sustainability commitments. Similar structures could be applied across Southeast Asia to finance large-scale transitions in energy, industry, and transport.

SIPET Connect: What advice would you give to organizations looking to harness transition finance effectively?

Anouj Mehta: I feel, the change should start first with innovation in the technical approaches needed for your transition programs – whether energy mix or manufacturing process or logistics etc - and then look at what’s needed financially to make these approaches into bankable propositions. Identify the financing gaps and look at what governments and DFIs can offer to mitigate these gaps.

To make transition finance work, companies and governments need to do a few things.

1. Leverage blended finance models, using a mix of grants, concessional funding, and commercial capital to lower overall risk;

2. Demonstrate clear financial returns, so that investors can see a path to profitability, whether through carbon credits, efficiency gains, or regulatory incentives; and

3.  Finally, engage with policymakers early, since policy incentives, such as tax breaks or feed-in tariffs for renewable energy, can make or break a project’s financial viability.

SIPET Connect: Looking ahead, how do you see DFIs shaping transition finance in the next five years?

Anouj Mehta: Development Financing Institutions (DFIs) nationally and regionally, need to act quickly, innovate new financing products and instruments, and help build local capacities. If we’re serious about meeting net-zero targets, we cannot afford to move at the current pace. Some key areas for all development agencies to focus on include:

1. Accelerating approval processes for financing decisions;

2. Expanding risk-sharing mechanisms, such as Guarantee structures and first-loss capital must become standard for high-impact transition projects;

3. Scaling new financial instruments—we need more innovation in structured finance, such as sustainability-linked bonds, transition bonds, and hybrid debt models.

DFIs such as ours can help and I would urge more projects to look at the support available from catalytic funds and facilities such as the ACGF or the ADB’s recently launched Nature Solutions Finance Hub etc. The ACGF is leading the way – it has already impacted almost 50 green projects, catalyzed $ 7 bn of projects and innovating new concepts – whether over 15 thematic bonds already issued, green finance national facilities and more. This is the level of momentum we need to maintain.

Transition finance is not about replacing green finance; it is about complementing it—ensuring that industries and economies that are still carbon-intensive have viable pathways to sustainability. If structured correctly, transition finance can bridge the gap between climate ambition and real-world investment, making net-zero commitments more than just promises on paper.

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Editor’s Note: Transition finance is emerging as a critical tool to bridge Southeast Asia’s green ambitions with financial realities, ensuring that industries can decarbonize without disrupting economic growth. This interview highlights the key challenges—risk perception, slow capital deployment, and policy gaps—while also showcasing practical solutions like blended finance, sustainability-linked bonds, and risk-sharing mechanisms. As the region accelerates its net-zero transition, the insights here reinforce that success will depend on speed, scale, and smarter financial structures that mobilize both public and private capital effectively.