Oxford Business Group has stated the importance of emerging markets in driving clean fuel transition in shipping. The question is: what do emerging markets need so as to benefit and drive this change?
Taking Indonesia as an example, the country has more than 17,000 islands on which it can strategically build green fuel bunkering centres for ammonia and hydrogen. In fact, the P4G-Getting to Zero Coalition Partnership report estimated that the development of scalable zero-emission fuel infrastructure in the country could generate a total investment of between $3.2bn and $4.5bn by 2030.
With both climatic and economic incentives to leverage its position to accelerate the energy transition, what does Indonesia (and other emerging markets) need to benefit from this revolution?
An Open Market
For many developing countries with plenty of sun, wind, and land, this is a great opportunity to transport to developed countries where there is a higher for displacing traditional fossil fuels.
However, globalisation is essential for innovation to happen at scale. Markets need to stay open so that new technologies can be delivered through global supply chains. Open markets can also facilitate the production of technologies such as hydrogen and green ammonia on a greater scale.
Technical & Financial Assistance
It’s not so much the lack of capital that’s hampering investments in emerging markets, but more so the regulatory hurdles, or other non-financial market failures. These factors dull the interest to create bankable projects, resulting in the increased cost of capital that further hinders growth.
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Protecting the Displaced
To move forward, we must not forget the ones left behind. In this context, it’s important to help countries and communities whose livelihoods are affected by this transition.
For example, decarbonisation will affect coal greatly and this means an action plan to protect those affected is needed. According to the World Economic Forum, a deep look into the environmental, social, and economic implications for the communities around are necessary.
There’s a need to create green economic diversification in the region; including green employment opportunities and looking at retraining and reskilling requirements for affected workers, while stimulating the local economy and entrepreneurship.