Podcast Series: Turning Up Clean Energy in Asia

Episode 1: A Brief History of Clean Energy in Asia

All eyes are on Asia as it attempts to complete a clean energy transition away from fossil fuels. National governments will have to work with the private sector to achieve their ambitious climate goals. That’s where the Climate Solutions Partnership (CSP) comes into play.

With financial support from HSBC, WRI researchers are innovating and implementing data-backed solutions to steer more private finance toward the scaling up of renewable energy across Asia. Hear from three experts at the forefront of the nexus between capital and clean energy to see how the Asian countries where the CSP operates in – China, India, Indonesia and Vietnam – are leading the way toward a decarbonized future, as well as the challenges they face in completing that journey.

Transcript for Intro Episode

0:05 – 6:54 Clorinda Wibowo (WRI Indonesia)

You are listening to WRI’s Big Ideas Into Action podcast. And we want to welcome you to the first episode of Turning Up Clean Energy in Asia. Throughout this series, we’ll cover how research projects led by World Resources Institute – or WRI for short -- accelerate the clean energy transition in China, India, Indonesia, and Vietnam.

My name is Clorinda Wibowo, Senior Manager of Energy and Sustainable Business, here at WRI Indonesia. I’ll be your host for this episode. Thanks for tuning in!

The Climate Solutions Partnership – here-on out referred to as the CSP -- is a collaboration between WRI, the World Wildlife Fund (or WWF), and HSBC....HSBC also funds the CSP.

WRI-led CSP projects aim to break down barriers to private finance investing in renewable energy, build up capacity to decarbonize supply chains, and bring together stakeholders who can reimagine the private sector’s role in transforming the energy sector, while implementing research-based solutions.

Before we begin, we must acknowledge the historical context of global energy. The United States and European countries kicked off the Industrial Revolution around 1850 and through the first 100 years, they were responsible for a vast majority of GHG emissions, according to WRI’s own Climate Watch.

Then, they offshored much of their manufacturing needs to other countries around the world, shifting the climate burden to those countries which were looking to provide for their own growing populations...all while helping meet the demands of increasing consumption in Western countries in an increasingly unregulated world.

We will focus on the four CSP countries – China, India, Indonesia, and Vietnam. According to data from the World Bank, the four CSP countries are among the largest manufacturing countries in the world – producing things for locals with newfound wealth who are looking to increase their quality of life and producing critical parts for global brands that moved their supply chains to Asia.

Such rapid economic development led to an equally rapid increase in demand for energy, and thus GHG emissions. Since 1990, the percentage of global GHG emissions in the four CSP countries has more than doubled, based on data collected and analyzed by WRI, accounting for more than a third of the world’s GHG emissions in that time-span.

While this pales in comparison to historical emissions produced by the like of the U.S. and other European countries, the region – like the rest of the world – sits at a crossroads. The continual influx of cash to the region could fund more fossil fuel infrastructure or spur on the clean energy transition.

Take China, which makes up 53% of global coal use according to the International Energy Agency, which accounts for 70% of its total emissions! And yet, China plans to build a mind-boggling 3,100 GW of renewable energy by 2030.

According to a recent report from Climate Analytics, China and India are engaged in “a spree of coal-fired power plant construction,” but Asia is also the only region broadly on track to triple renewables by 2030 --- the agreed upon goal set by countries at COP28 in 2023. In fact, the report asserts that tripling renewable energy is “possibly the most powerful action the world can take in the transition away from fossil fuels in this critical decade.”

One other point sticks out from the report. The transition will cost money. A lot of it. From this year, 2024, all the way through 2030, annual spending on renewable energy expansion needs to double from the current $1 trillion mark. How and where will this money materialize?

That’s where the CSP comes in!

In each episode, you’ll learn about the details of projects that are poised to scale the private sector’s role in accelerating the clean energy transition. You’ll hear from the WRI researchers behind each project, as well as some of our partners and outside experts. Most of all, we hope that you’ll understand the role that each country can play in bringing these data-backed solutions to commercial viability.

Thank you to HSBC for funding the CSP and our colleagues at WWF, for their partnership in research and implementation of the projects. Speaking of those projects, it’s time to look at the big picture of how Asia became a manufacturing powerhouse...and what that means for the clean energy transition on the continent.

Joining us to talk about the history of energy in Asia is Justin Wu (HSBC), the Asia-Pacific Co-head of Climate Change for HSBC......and Beni Suryadi (ASEAN Centre for Energy) Suryadi, the Acting Manager of Sustainable and Renewable Energy for the ASEAN Centre for Energy.

We're also thrilled to be joined by Deepak Krishnan (WRI India), WRI India’s Deputy Director of the Energy Program. Welcome to all the speakers to the podcast!

Asia is home to rapidly growing manufacturing industries. How have these industries been operating in line with sustainable principles...or how have they not? I’ll send this over to Deepak as I know that WRI India is working on industrial decarbonization projects. Over to you, Deepak.

6:55 - 9:25 Deepak Krishnan (WRI India)

Thank you Inda for the question, and great to be on this panel discussion. So, Asia is a growing region and many types of industries are setting up base [there]; folks who are already there are expanding their operations. But what we are seeing on the ground in India and as well as some limited experience in the Southeast Asian region is that corporates are particularly serious about these issues and they are doing what they can in the region that they’re operating in to ensure that sustainability remains a top agenda item and that they deliver on the commitment, which is more important than making those commitments.

Speaking particularly from a clean energy perspective, again, a little bit of numbers over here. The Bloomberg New Energy Finance (BNEF) which brings out these corporate power purchasing agreement volumes, showed that from FY22-23, corporate PPA volumes in Asia-Pacific grew from 7.7 GW to 9.7 GW. And the forecast is that the Asia region is going to continue to grow; already, we have seen growth in Asia and Europe, you know, superseding growth in America, which has been leader in the last few years of this track record that Bloomberg has been building. What we also have been seeing is that it’s not just large companies who are, you know, taking up commitments and trying to deliver on them. Even the smaller, medium, and small-scale enterprises (SMEs) -- who typically form part of the supply chain of large corporates – are also taking part in this journey, though they definitely need more help, moving forward.

At the same time, one should also bear in mind that there is a larger question about greenwashing and whether targets that been set are delivered upon. So in this context, one should keep in mind that corporates are trying. Not everything, in terms of policy and the geopolitics doesn’t always happen to be in their favor – given this context, I feel that sustainability is a big part of Asian companies' journey, and a lot of them are taking steps to deliver on it.

9:26 – 9:45 Clorinda (WRI Indonesia)

Thank you, awesome, Deepak. Now I'm going to turn to Pak [“Pak” is a prefix used as a sign of respect in Indonesia] Beni. Who are the primary actors that shape the current energy policy in Asia and how much does the state or the government decide things, compared to the private sector, Pak Beni?

9:46 – 12:18 Beni Suryadi (ASEAN Centre for Energy)

So thank you, Clorinda! Thank you for having me in the discussion.

As we know that in many Asian countries and the Southeast Asia countries, the states retain significant control over the and energy sector through the state-owned energy and regulatory framework. Countries like Indonesia or Vietnam have a strong governmental oversight and intervention in the energy policy and infrastructure development.

We do acknowledge that the private sector's role is growing, especially in the countries that are liberalizing their energy markets. In Asia, in general, we've seen it's in Japan and South Korea but particularly in the Southeast Asia, we see how the private sector is playing a significant role in countries such as Singapore or the Philippines. We also have seen the increased private investment in renewable energy and technology innovation.

However, even in this context, the states often retain a significant regulatory and policy-making roles. And furthermore, as we’re talking about increasing private investment countries like Thailand, Malaysia, and the Philippines are seeing growing private sector involvement in renewable energy projects -- of course supported by the government policy aimed at the market liberalization, commonly known through the public private partnership, where we acknowledge that these partnerships are crucial in developing energy infrastructure, with the private companies bringing in capital and expertise.

While the state remains the primary actor in shaping energy policy in many countries in the region, there is a noticeable trend toward increasing private sector involvement, again particularly in the renewable energy sectors and technological innovation. The balance of the powers vary across the region, with some countries maintaining strong government control, but the others are also embracing a more market-driven approach.

12:19 – 12:57 Clorinda (WRI Indonesia)

Thank you, thank you Park Beni. While you've also already talked about how the public and private sectors are the key or important actors in this landscape, I would like to ask to Justin (Wu): From your perspective as a financier, how closely are the economic and the decarbonization goals linked in a country context? Like how can the private sector decarbonize, without the pursuit of net-zero targets becoming a liability for companies?

12:58 – 15:50 Justin Wu (HSBC)

Yeah, and thank you, thank you for the question, and for having me on the podcast, [it’s] really a pleasure to be here with everyone.

You know, the decarbonization goals of a country, particularly in Asia, is very much linked to its economic trajectory. There is no sort of decarbonization unless, you know, the whole economy essentially is mobilized and transformed in some way. It doesn't happen separately in isolation. It's not a side project. It is the economic plan of your country if you have a decarbonization pathway. And of course, the key is to make sure that a decarbonization or net-zero pathway also creates economic growth and opportunity, and the private sector is able to continue to thrive in this sort of environment. I think that's what public policy needs to sort of, you know, make sure that is sort of aligned and enables that to happen.

I think in Asia this is particularly an important issue. Of course there's a very diverse set of countries in Asia, but the state tends to play an important role in economic development, or has played and continues to play an important role in economic development in all of these countries. Therefore, it will have an important role to play in its decarbonization goals as well.

So take a few examples right? If you see China, for example, as a country that has probably been the most successful in the world in terms of scaling up renewable energy, both in terms of deploying wind, and solar, and electric vehicles, but also building a manufacturing industry and supply chain around it. You know, this has been a topic of quite a bit of discussion in the media, but clearly favorable government policies over the past decade has enabled that to happen, and I think that's been the case for many other countries as well. And then if you look at Southeast Asia, right? Many of the energy companies are state-owned companies; very much tied to the national economic development of that country, very much tied to energy security and many other, you know, socioeconomic context issues. These companies seem to play a important role in hitting net-zero targets and finding a way to provide -- can you provide affordable but clean energy in these countries? So, that is definitely something that the, you know, public sector or the government needs to play a role in them.

And at the same time, I think for private companies, clearly they need to be mobilized to see a business case in doing so, and only in that way can they actually, you know, scale a lot of these technologies, make them commercially viable, and then we can sort of, you know, see the levels of investment that we need to see to achieve the net-zero goals that we've set out to achieve.

15:52 – 16:28 Clorinda (WRI Indonesia)

So Deepak, if we compare that with your perspective as more as the neutral and nonprofit organization in India, as one of the driving countries with a lot of private sectors that now are already submitting to SBTi and so on. And you mentioned that a lot of companies are already doing the sustainability measures. Do you think that these private sectors are actually decarbonizing and also gaining the economic benefit out of it?

16:29 – 19:22 Deepak Krishnan (WRI India)

Yes, so one of the driving forces for adopting decarbonization measures, particularly renewable energy, is cost. So in India, we have a system where there is something called a cross-subsidy mechanism, wherein commercial and industrial consumers are charged a higher tariff than the average rate. So let's say if the average rate is four, the commercial guys and industrial guys are charged at 6 or 7 or sometimes even 9 and ten rupees per unit of electricity. And this cross-subsidizes a lot of poorer residential segments and agricultural consumers. So, there is a system which has been in place and every year, given the fuel price variations costs that utilities incur, companies are always finding that their tariff is only growing higher and higher, whereas if they get into contracts with the renewable energy companies, for instance, whether it is a wind farm or an on-site solar project on their roof, what they are seeing is that there may be some initial investment that they have to make, if they go with one particular model, but then they are locked into a particular price and they start to see the savings from, you know, day one.

There are other models wherein, you know, companies called RESCO – that is Renewable Energy Services Companies – come and set these panels on your roof, supply electricity like another utility and your power purchase costs are effectively different. This also applies if companies are looking at energy efficiency interventions, since we, you know, clean solutions, we want to look at both energy efficiency and renewables. Even in energy efficiency, we are finding these models come in where, you know, there is a service company that comes in, makes the investments, enters into an agreement with you to, you know, offset your savings against the bill and they earn their revenue. So that is a significant driver for companies.

Apart from that, there are also regulatory mandates if you are a corporate who is procuring, say, thermal electricity from, you know, through private contracts, then some share of renewable purchase obligation has to be met. At the same time, new rules like CBAM [Carbon Border Adjustment Mechanism] are slowly seeping in, though they are so concentrated on specific sectors and also their applicability is, you know, not sure of when it will actually kickstart in full. So, such regulatory measures or the company's own desire to be seen as a, you know, an organization that adheres to, you know, the fight against climate change and wants to be seen as the leader. So, these are some of the drivers, but without the savings that renewable energy offers, I'm not sure that the momentum would have picked up so much. So definitely people who have implemented [these solutions] are seeing savings.

19:23 – 19:50 Clorinda (WRI Indonesia)

You mentioned a lot of very interesting examples from India, regarding the, I would say it as, cost incentives that incentivizes these companies to transition and gain the economic benefit out of it. But I'm curious, Pak Beni, do you see these trends as cost incentives already applies in many Asian countries right now? Or do you see it as still a challenge for many Asian countries?

19:51 – 21:11 Beni Suryadi (ASEAN Centre for Energy)

Indeed, it is still a challenge for many in the Southeast Asian countries. Cost is always, I mean any time they have a kind of discussion with private sectors, cost [and] the investment always comes on top. It’s not over simplified that the monies doesn't exist, but there's a lot of barriers we highlighted that hampers the opportunities. The cost falls into four aspects in the issue of the ease of doing the business.

Many private [companies] or manufacturing factories consistently cite the political and economic stability as the foundation for investment they made. And then also the effectiveness of the process, such as import-export is also very critical. And then also in the issue of the availability of low-cost production and effective logistic system, as well as access to export markets.

But then, this is just a sum up that shows the cost of investment are, indeed, critical barriers for accelerating the clean energy transition.

21:40 – 21:28 Clorinda (WRI Indonesia)

Thank you, Pak Beni. I'm interested about Justin’s perspective for these questions. Do you think that cost is still a challenge for most of these Asian countries? Or do you think there are other challenges like Pak Beni mentioned, as well?

21:29 – 24:24 Justin Wu (HSBC)

Yeah, I think it's a very good question right? So, I think from the first principles, you know, with any company pursuing a sustainable solution or, you know, a decarbonization solution, I think it’s quite important to, well, set goals and have ambitions and then also try to align it with your overall business strategy, right. So, you don't want to view it as sort of a separate side show. You want it as your sort of main business strategy, and clearly you also wanted to have a strong business case for doing so. Often, the example that Deepak, you know, and you mentioned in India about procuring clean energy actually as a cost-saving measure, right? Who wouldn't want to secure affordable, clean energy for a long period time at a low price? I mean, I think a strong business case to do that will of course, you know, always be favorable to a company.

But having said that, I think in, you know for instance, in Southeast Asia, but also in some other places, often this is not...you know, there are various distortions, let's say in the market or in the system that maybe caused this not to align your incentives, right? So, for instance, we can say clean energy is very cheap, very affordable, but you know, for various reasons, let's say the cost of capital or cost of the financing in these countries is higher than in other places, and clean energy clearly is different from fossil fuels in that you have to have a lot more upfront capital investment, right? And you don’t have zero operating costs or low operating cost, but you have a lot of upfront costs, so cost of capital is a big...is a big issue in these emerging countries and this gets talked about a lot in various international forums.

But also, I think it’s one of the issues we address in the in the CSP (Climate Solutions Partnership) as well. But clearly this is one thing that is holding [the transition] back. Others, such as whether, you know, you have the right incentives in place for renewable energy to kind of achieve its potential; whether they [companies] have access to the grid and, you know, companies are allowed to procure it at a good price, whether there's subsidies for fossil fuels that also distort the market.

So, I think a lot of these things will ultimately distort the fundamentals of if it were purely competitive between let's say decarbonization sources and other things, you know, some of these issues might distort it. And secondly, I think, you know, clean energy is well-known, I think it's a scalable solution. There are others emerging technologies that we may need to deploy for decarbonization that are higher cost and more risky, right, and less sort of well-tried for instance, and that may need a bit of a kick or a boost from the beginning. And that, again, is either -- we need policy to help that, we need philanthropic, you know, funding or sort of development funds; something to kind of, you know, kickstart that as well, right? So, I think depending on the solution, there are, you know, certain applications, certain solutions that we must apply, and of course we have to sort of have a level playing field for everything as well as they scale. 

24:25 – 25:01 Clorinda (WRI Indonesia) 

I sense, optimism about the challenge that we are currently facing, in terms of the cost and the technologies, and maybe the leadership or the willingness from each country.

So with that in mind, what will be your thoughts, and this is for all the panelists actually, what are your thoughts on how these Asian countries – China, India, Indonesia, and Vietnam – can achieve their clean energy goals in the future? What potential solutions do you see for progressing forward? Maybe I'll start from Deepak.

25:02 – 26:44 Deepak Krishnan (WRI India)

Sure, thanks in India. So, the potential is varied because one, there is the technological front where right now a lot of solutions are focused on solar PV, then on thermal side to a limited extent. Solar-thermal has come in, biogas is there. But, you know we are also talking about newer forms of energy or sectors like green hydrogen, offshore wind is picking up. So those are also opportunities which both governments and the private sector would try to tap going forward. So that is one.

Second, of course, is the market innovations and mechanisms. For example, speaking from the Indian context, yes, we do have, again, differing solutions across different states focused on rooftop solar, direct, open-access contracting with the renewable energy generators, but a larger green tariff market or a virtual power purchase agreement market, the likes of which we are seeing in Europe or the US, those are yet to take off here. So that would be one other.

And third, I believe that you know large corporates will figure a way out. You know, they have strong financial backing and clean energy suppliers actually will queue up to provide solutions to them. But it is the smaller MSMEs [Micro-, Small-, and Medium-sized Enterprises] which definitely still need capacity, you know and support to, you know, participate in this clean energy transition. So, I feel tackling these challenges and, you know, helping companies, along with of course other consumers, is what is going to help these markets grow.

26:45 – 26:47 Clorinda (WRI Indonesia)

Thank you Deepak. And maybe Pak Beni?

26:48 – 30:14 Beni Suryadi (ASEAN Centre for Energy)

So maybe I just talk about the two countries the Southeast Asia region and start with of Vietnam. I mean, we have seen how Vietnam is making history as the fastest country in the Southeast Asia region in bringing renewable energy, particularly in solar and wind, into their energy system. So, a lot of the policy framework incentive to be put in place, we translated into the success of Vietnam in skyrocketing their renewable energy mix. But there we also need to recognize the challenge that currently Vietnam is experiencing where they need to do more on the grid enhancement integration. Upgrading the national grids has become very crucial now to support the higher levels of renewable energy. Updating the national grid has become necessary to cope with the aspiration, the ambition for Vietnam to bring clean energy more into the system. Investing in the grid infrastructure, to reduce transmission loss and improved reliability, will ensure a stable and efficient energy supply. And of course all of it needs high investment, so this is where the public-private partnership and international cooperating becomes also very crucial, because for starting a partnership between the public and private as we discuss earlier, will drive this progress.

And the same case is happening in Indonesia, in how public and private partnership will play significant roles in so-called awakening the sleeping giant of Indonesia, as we know, that has a tremendous potential in the clean energy. They have hydro, geothermal, solar, wind, which, referring to many data that we have, is still a tiny portion of it that’s being utilized. While at the same time, we also recognize that over half of the country is still relying heavily on the fossil fuels and over half of the coal-fire power plants in Indonesia is less than 10 years [old].

So, there is a massive effort for the waking Indonesia to transition away from the fossil fuels to the clean energy direction, which required a detailed, strategic assessment to ensure and minimize the risk of the stranded assets, jobs losses, and economic impact.

But what the other potential solution is also beyond the border of the country itself, right? So, in the Southeast Asia region, we are embracing the regional integration through the Asian power grids. With help, we escalated the process of the energy transition in the region, the spirit under the Asian power grid so that we can optimize resources and match with the demand, this will help the countries, Vietnam, Indonesia and the countries in the Asian region to progressingly achieve the clean energy goals in the future.

30:15 – 31:00 Clorinda (WRI Indonesia)

I noticed two different angles between Deepak and Pak Beni, here. Deepak is talking more about the different interventions, like how we can grow the market and also helping the smaller SMEs.

And Pak Beni raised a really great point regarding the supply side of the energy itself; upgrading the grid and also how, in the future, solutions Asian power grid is one of the growing and emerging topic – not emerging, it's been years -- but it's continuously growing topic, in the region. And Justin, yeah if you may add about the how these countries can achieve their clean energy goals in the future and what are the potential solutions moving forward?

31:01- 33:07 Justin Wu (HSBC)

Yeah, I think Deepak and Pak Beni covered, quite well, I think some of the main points. I think all four countries are quite different. If you look at China, it pretty much will, you know, probably be the only country that will either hit or overachieve its, you know, clean energy goals which it set itself. Actually, I think it's the only one that will achieve this, you know, the so-called “three times renewable energy by 2030,” right, which was set out at the COP28 agreement.

India obviously, Deepak has mentioned, also has actually done a tremendous job at scaling renewable energy. And we see, obviously, developments in Vietnam and Indonesia as well, though I think slower in these two countries due to some of the reasons that we mentioned earlier around deployment, cost of capital and policies and, you know, still a lot of subsidies for fossil fuels in these countries.

I think one other question, maybe I'll just touch on briefly is, while clean energy is scaling in these countries, all four are still heavily reliant on fossil fuels, primarily coal, right? And each actually have quite a bit of it. Actually, all four are still building coal-fired power plants, right, even though some have set end dates for when that would happen, but all four are still building them. So, there is this sort of big question out there that, you know, even as we are scaling up renewable energy, all four are still heavily reliant on fossil fuels. And I think, to kind of get around that, right, so you know, not only to hit your clean energy targets, but how do you take a holistic approach to decarbonize your energy system that requires I think, you know, quite a bit of planning and sort of long-term thinking about the energy system...maybe some tough choices and big decisions to be made, right, about how you transform the way that you supply sort of electricity and power in all these countries. And there are a lot of technological solutions out there to allow that to happen, but to actually deploy them at scale and to get it to the level that we need to see, you know, that's still very much a work in progress.

33:08 – 33:33 Clorinda (WRI Indonesia)

Thank you Justin. I think we already reached the end of the podcast, so if each speaker, Justin, Deepak, and Beni, if you may help us finish this sentence. “These countries will reach their clean energy goals if the private sectors...” then you may continue. Maybe I’ll start with Justin, first.

33:34 – 34:22 Justin Wu (HSBC)

Well, I think what we’ve established in our conversation is that this is clearly a public-private partnership, right? There’s definitely a role for the private sector and I can finish that sentence for you, but I think the public sector needs to create this enabling environment and allow a, you know, level playing field, right? Whether it's with you know the type of support you offer to different types of energy, creating the infrastructure that you need, the grid infrastructure, and the other things around it.

But if I were to just answer your question about the private sector, you know, one thing I would push is to raise ambition, right? I think, set your goals but also raise your ambition and try to always work towards it. I think that's how we need to sort of think about climate; that we may not have all the right targets today, but we need to raise our ambition so we eventually get to where we need to get to.

34:23 – 35:36 Beni Suryadi (ASEAN Centre for Energy)

Thank you. The Asian countries will read their clean energy goals faster if the private sector is fully part of the process. So, I see that there are many countries in the Southeast Asia region where there's a regulated market where most of the private sector is on the receiving side, that's going to be without really being fully involved in the market itself. I understand there is a lot of concern that if it's being liberalized, then the private sector might make the costs higher and then because energy is a very crucial power, a right of the people, then it may cause trouble. But I do also believe that the private sector has a lot of innovation to bring to the table. So, if they're given a role to really be part of the energy system in the countries, then they will help the countries to achieve their clean energy goals faster than what the government only can do.

35:37 – 36:47 Deepak Krishnan (WRI India)

Yeah, so I think a lot of points have been covered both by Justin and Pak Beni, but definitely the innovation part is crucial because the initial investments that the private sector can bring in, you know, facilitate innovations that can actually help reduce cost of technologies, which can help other segments of the society. So, definitely the innovation factor is crucial. But at the same time, participating in the public decision-making process and sharing these learnings that they have gained through the innovations. And again, this is something we see a lot of companies do once they have successfully implemented something or scaled something up. They generally try to build coalitions, share their learnings, and encourage others to adopt [them]. So, I think that participatory approach is also very crucial because, you know, if these learnings are stuck only within one particular company's walls, then it couldn't benefit anyone. So, I think the innovation and participation are the two key aspects from the private sector to help countries scale their clean energy.

36:48 – 38:11 Clorinda (WRI Indonesia)

Very much agree Deepak. Thank you so much.

As you heard, the four countries in Asia where CSP Energy operates are a barometer for the clean energy transition. Next time, we’ll take you behind the scenes of WRI India’s work to bring stakeholders together at the nexus of health and energy.

That does it for this edition of Turning Up Clean Energy in Asia. A podcast series produced and edited by Daniel Baker with funding from the Climate Solutions Partnership. The CSP is a 5-year partnership between WRI, WWF, and financed by HSBC with a focus on nature-based solutions and accelerating the clean energy transition in Asia.

You can learn more about this work and hear future episodes in the series on our website: wri.org/initiatives/climate-solutions-partnership

Thank you to our guests – Beni Suryadi, Justin Wu, and Deepak Kirshnan – who made this episode possible. For my colleagues at WRI, my name is Clorinda Wibowo. Don’t forget to leave us a 5-star rating on whatever podcast platform you listened to this episode on. Every review counts. Thanks for listening!

Episode 2: Decarbonizing Healthcare in India

Delivering healthcare is a 24/7 job. But what happens when the electricity supply —  necessary for so many critical procedures and equipment, medications and operating facilities —  is unreliable? HSBC India partnered with WRI India to finance solar power and battery energy storage solutions for rural healthcare facilities across three Indian states; Jharkhand, Maharashtra, and Assam.

Creating a consistent electrification plan has improved service for more than 400,000 patients across India. Ensuring reliable, renewable energy means that health facilities can focus on what they do best: Serving their patients safely. Shivani Shah, Senior Communications Manager, talks about the successes and challenges of scaling solar-based healthcare to thousands of facilities across the country, with multiple WRI and non-WRI experts. Guests for the episode include:

• Rajni Gupta, Program Manager, Catholic Health Association of India (CHAI)
• Romit Sen, Senior Vice President, Corporate Sustainability, HSBC India
• Lanvin Concessao, Program Manager, WRI India Energy Program
• Rishikesh Mishra, Senior Program Associate, WRI India Energy Program

Transcript for Episode 2

Shivani Shah (0:05 – 1:46)

Hello everyone, this episode of turning up clean energy in Asia will sound a bit different. That's because it's not exactly about proving a high return on investment. It's about highlighting how positive changes in one of the critical global systems, the energy system, helps make the world better for people, nature, and climate. My name is Shivani Shah, your host for today's episode. I can't wait to share how WRI India partnered with HSBC and development partners in the health sector to build renewable energy and storage solutions for rural health facilities in the three states of Jharkhand, Maharashtra, and Assam.

This CSP project brings together multiple stakeholders who steer private philanthropic finance towards building a better world that runs on renewable energy.

Powering healthcare care is extremely precarious in rural India. Several thousand health sub-centres and public health centres, which are often the first point of contact for communities seeking basic healthcare, do not have reliable electricity services. In today's post COVID-19 world, where telemedicine access is just as important as regular life-saving healthcare services, electricity is everything. To help us understand the connection between energy and healthcare, we are joined by Lanvin Concessao, Program Manager at WRI India and Dr. Rajni Gupta, Program Manager at CHAI. Dr. Rajni, what are some of the challenges to delivering healthcare care in rural regions?

Dr. Rajni Gupta, CHAI (1:48 – 4:05)

Thank you Shivani, for having me on this platform. First of all, the CHAI, that is Catholic Health Association of India, is an 80-year old nonprofit organization. It is predominantly managed by Catholic Sisters and 80% of the member institutions are located in remote and unreached areas. We provide the low-cost to free health services to marginalized tribal populations and to the low-income groups. We have a membership of over 3,500 healthcare institutions and social services centers. Out of these, around 2,000 healthcare centers are located in these remote areas and 600 are located in the secondary and tertiary hospitals in the small towns.

And apart from this, CHAI network has care and support centers also, for the people living with HIV, children, youth with disabilities, and also for the palliative support. So, we have the major challenges, the availability of a qualified doctor in the hard-to-reach areas or tribal belt. So, the telemedicine services by the CHAI has come as a boon for us. We are getting a qualified doctor; was a major challenge, and especially the specialist doctors. So, this has helped us in a big way.

The next significant challenge that we have faced is the power cut, or voltage fluctuation, or erratic supply of electricity. So, they are dependent on the diesel generators or the dirty fuels degrading the environment through carbon emissions. So, these are the major challenge which we face in the healthcare in the rural areas.

We have a few hospitals like Bharat Mata Health Centre in Jharkhand which they used to conduct deliveries in candlelight due to absence of electricity. Even in Garchurali, which is in Maharashtra at the tribal belt, again that is Assisi Sheva Satar, they cater to almost 150 patients daily, but they face nearly seven hours of power cuts. So, these are the challenges which was, after integrating green energy solutions, able to provide the essential services round the clock and they are able to...to upgrade their health services.

Shivani Shah (4:06 – 4:19)

Thank you, Dr. Rajni for that. Lanvin, my question to you is what is the problem with accessing electricity in rural India? Why is it so difficult to get 24 by 7 power at health facilities?

Lanvin Concessao, WRI India (4:20 – 6:30)

Right. Yeah. Thanks, Shivani. So, you know, in India, we've had universal electrification schemes before, such as the Saubhagya scheme in 2017, which actually looked at electrifying all households in India. And so, by 2019, the government actually declared nearly universal household electrification for all willing households, which is a significant achievement. But we're yet to see the same level of progress actually in, you know, social institutions, you know, be it schools or health facilities, which are equally crucial for socioeconomic development.

So taking health facilities as an example, you know, but the rural health statistics in a report in 2022 by the Ministry of Health and Family Welfare actually mentioned that there are nearly 18,000 sub-centres and primary health centres, which actually form the base and the first point of contact for communities and in rural health systems, right. So, nearly 18,000 of these facilities lacked access to an electricity connection. Moreover, this doesn't even cover the data or access to electricity of not-for-profit or charitable institutions like CHAI, where Dr. Rajni mentioned there are 3,500 of those.

Nor does it actually cover which facilities have unreliable access to grid electricity in these areas. And the situation globally, of course, is even more stark, right? A report last year, titled Energizing Health, by WHO [World Health Organization] and various partners, estimated that nearly a billion people across the world access healthcare facilities which are either unelectrified or do not have reliable electricity. And so, you know a billion people is huge, right? If that number were a country, it would be the third largest country in the world, to put things into perspective. And really, COVID-19, the pandemic really helped bring a spotlight on this challenge of reliability, especially for critical medical services which were, you know, crucial during COVID, you know, such as oxygen production, vaccine cold chains, and ventilators. Many areas where the grid is unreliable, you know, these health facilities have to rely on expensive and polluting diesel generators, which is, you know, their main source of power backup. So yeah, the challenge is still huge. And I think there are, you know, of course, different solutions which are coming along the way for those.

Shivani Shah (6:30 – 6:40)

Thanks for that, Lanvin. So just based off what Lanvin said, Dr. Rajani, how does adopting clean energy improve delivery of health care?

Dr. Rajni Gupta, CHAI (6:41 - 8:14)

With the clean energy project, we have been able to install 238-kilowatt power of solar in 26 health facilities in three states; that is Assam, Jharkhand and Maharashtra. That helps us to improve access to reliable power for non-polluting sources and turned the reliance on the grid electricity and diesel generator. The uninterrupted supply of electricity in the health facilities have equipped them to run 24-by-7 and reduced the electricity bills. Those savings have been used for upgrading of their existing facilities.

Like we have hospitals in Karimganj, Assam. They do not have the electricity power, even they don’t have mobile and internet connectivity; network connectivity is so poor. So, adopting the greener and clean energies, we are able to utilize them to run 24 by 7 – even in the night, the visibility is so low that patient cannot locate the hospital, also. Recently we have seen the Remal Cyclone. That time, also, Assam was affected a lot because of the cyclone, but our hospitals were running fine and they were giving the services seamlessly. So, these are the things which have helped us adopt the clean energy. Mary Mother nursing home in Kokrajhar is utilizing oxygen generator and nebulization services. Saint Ursula hospital is there in Jharkhand. They have upgraded their laboratory services and providing the baby warmers. So, this is giving a greater boost to healthcare by adopting a clean energy.

Shivani Shah (8:15 – 8:22)

And how have healthcare providers, that's doctors, nurses and patients sort of benefited from this project?

Dr. Rajni Gupta, CHAI (8:23 – 9:08)

The solar project actually helped to serve more than 4 Lakh (400,000) patients in our health institutions. And during this summer, a scorching summer during this year, even when the temperature crossed 50 degrees centigrade, most of the places [where] the medical staff in our health centers were working seamlessly, without any discomfort because of the presence of solar power in those centers.

And the best example I had where the delivery was conducted in the Bharat Mata hospital in the candlelight. Now, they are doing the deliveries and they are taking the patients in the night also. So they can run 24 by 7, they have the increased number of OPD [Outpatient Department] and the staff has also increased in the hospital, which has helped them to get to the services better.

Shivani Shah (9:09 – 9:22)

So, Lanvin, how has this project addressed those electricity issues you pointed out? And why do you think solar stands out as the way to bring reliable energy or power to these facilities?

Lanvin Concessao, WRI India (9:23 – 11:20)

Solar power has been used as the primary source of power in both rural public as well as not-for-profit health facilities in India. Our partners in both these different sectors have already solarized over 3,000 rural health facilities, you know, in the past few years. And there are several commitments in India and globally to solarize many more health facilities this way and by 2030. And there's a reason why it has gained so much traction, right? Solar solutions, especially with battery backup, provide a reliable source of electricity to different critical loads in the health facilities, right, from your lights and fans, to cold chain for vaccines and medicines, maternal and childcare services, and even in many cases to water pumps, which is you know a very essential requirement.

They also help, you know, reduce the reliance on diesel generators and at the same time can also reduce the electricity bills by shifting many of these medical and non-medical applications to solar power. So, you're not just benefiting from, say a backup source which, you know, your diesel was previously targeting. But you're actually also reducing your normal electricity bills, which comes as a huge cost-saving. And another benefit is also that it's a modular source of power, which means that if there is, you know, space on your rooftop or in the facility, you can always add more solar panels and expand the power source as well in the future. It is flexible, it is, you know, it has been a reliable source of power, and it's of course sustainable.

And to, of course, understand some of these you know impacts on solar energy and health care service delivery, you know, we had the opportunity to partner with CHAI as well as HSBC India to integrate these clean energy solutions in rural and remote health facilities across Assam, Jharkhand, and Maharashtra. So here we're not only looking at integrating, you know, solar and batteries, but actually looking at the need for robust procurement standards, sustainable operations, and maintenance practices, as well as measuring the impact of our interventions on healthcare service delivery, as well as looking at decarbonizing the healthcare system.

Shivani Shah (11:21 – 11:29)

Thank you for that Lanvin, that was very useful. Dr. Rajni, what are the next steps for the project, and how do you see this expanding?

Dr. Rajni Gupta, CHAI (11:30 – 12:11)

So, I feel there is a tremendous need for sustainable energy in CHAI. When I talk about CHAI, only 7% of facilities are solarized so far, out of 3,500 member institutions we have on board. So, learning from this commissioning and maintenance of solar projects will help us to scale our work in other health institutions, especially to the other social health facilities – supporting communities like Rehabilitation Center, Addiction Centers, Palliative Care – which has a huge scope to be solarized. So, I feel that is a bigger impact we can create there  by solarizing those institutions, other than health institutions also.

Shivani Shah (12:11 – 12:12)

Lanvin?

Lanvin Concessao, WRI India (12:13 – 13:09)

This project has given us a lot of learnings, you know, starting from finding the right fit of health facilities and their energy needs, to designing better procurement processes, you know building sustainability through, you know, robust operations and maintenance and also, you know, measuring monitoring and reporting of these project outcomes. So it's very relevant for us to actually, you know, not just capture but distill these learnings and make them available for a wider audience. Not just in India, but also in other countries where they can possibly learn from this experience. I understand the context may be a bit different, but it helps to make sure that they're not reinventing the same processes or facing the same challenges that we may have faced in the earlier years of this project.

And at the same time, you know, it's important for us to also see how we can build capacity of other networks of not-for-profit hospitals or public health institutions on how they can actually approach electrification of health facilities using clean, affordable and reliable energy.  

Shivani Shah (13:10 – 14:20)

Thank you, Dr. Rajani. Thank you, Lanvin, for taking the time and sharing your insights. It was extremely useful to understand how ah the project is actually helping overcome the various challenges related to electrification in remote locations in India. And like I said, Lanvin, we are hopeful that these learnings will be useful not only across India, but across different parts of the world that continue to face similar challenges on electrification of healthcare facilities.

So we just heard from Lanvin and Dr. Rajni on this project. Let's get deeper into how this project was delivered from a technology and financial perspective. Joining us to talk about the impact of reliable energy on healthcare services are Romit Sen, Senior Vice President Corporate Sustainability at HSBC India and WRI India's Rishikesh Mishra, Senior Program Associate with the Energy Program.

I’ll start with you, Rishikesh: Can you tell me how did you design the project for different health facilities?

Rishikesh Mishra, WRI India (14:21 – 17:14)

First, that was to conduct detailed energy audits with our selected healthcare care facility partners to understand the specific energy needs of each facility. This is crucial as we recognize that one size doesn't fit all. The overall design process involved several key steps. I'll break down it into 11 steps.

And those were A) a need assessment; B) site survey and feasibility study; C) system sizing. System sizing basically means estimating solar panels that need to be installed based on energy uses and sunlight availability; D) was technical designing of the system. So technical designing means determining the required solar capacity based on energy demand and ensuring the battery systems can provide power during outages. Also importantly, choosing high-quality solar panels and inverters and batteries, with sufficient capacity, its types and lifespan; E) will be installing and commissioning; F) developing an operation maintenance plan; G) integrating the remote monitoring system or as we say RMS to the solar plant. So remote monitoring systems are basically cloud-based IoT systems for monitoring the performance of one solar plant remotely. For example, if I'm currently in my Mumbai office, I can monitor the plant status in Assam and address any issues through error codes and alarms; H) was integration with grid for optional battery charging; I) was safety components for during the overall installations; J) was also to record keep the important aspects of the whole project that we developed different kinds of format for this; and K) will be finally training facility staff, local stakeholders from the healthcare care facilities, including electricians, admins, nurses, support staff, to various capacity-building sessions on various aspects of the project, including using workshops, online meeting, mobile communication through WhatsApp group, etc...

Also, to understand how critical it is to design a sufficient system for a facility, here is an example. At Jyoti Niwas Dispensary in Wani, Maharashtra, which faces extreme power availability issues, last year we installed a five-kilowatt solar plant with around 18-kilowatt hour of battery energy storage under this project. This facility is the only dispensary within 15-kilometer radius and faces significant power availability issues. For instance, last November there was like 15-20 days of power interruption due to road constructions. However, with the solar installations, 24/7 electricity was ensured, allowing uninterrupted operation of critical medical services like nebulization, which were previously unreliable due to power issues.

Shivani Shah (17:15 – 17:30)

Thank you for that, Rishikesh. I have one more question for you, given the number of challenges you've just laid out. And that is: Can you tell me what kind of challenges came by while constructing clean energy solutions, and how did you overcome these, or at least some of these?

Rishikesh Mishra, WRI India (17:31 – 19:45)

Sure. First one was logistical challenges. Those were significant, especially in remote locations where transporting equipment was difficult. Local workforce and site accessibility was also difficult. And to address these issues, working with local organizations proved beneficial for better logistics solutions. For example, in rural areas of Assam, utilizing local transport and community member support helped to overcome these challenges, ensuring timely and efficient delivery and completion of the project.

Second was, I'd say, technical complexities with the sizes of the facilities because they varied, ranging from let's say four-bedded to 150-bedded facilities. Integrating solar system with existing electrical infrastructure was managed by drawing on experience from the previous installations and following strict procurement standards. We ensured compatibility with the existing systems by conducting thorough assessments and designing custom solutions for each facility. For instance, at a health center, local electricians helped vendors integrate the new solar setup with pre-existing wiring, during installation and commissioning; avoiding any cross-connections and preventing disruption of the facility operations.

So third, or the last one I'll say, was going forward after installation commission. There are challenges on O&M, operation maintenance, which we saw during our initial part of the project. So concrete plan in place for operation maintenance will ensure thorough remote monitoring systems integration, and extensive capacity building, that allowed for real-time tracking of system performance and immediate response to any issues. The RMS also provided data on energy production, battery status, and system efficiency, enabling proactive maintenance and minimizing the downtime.

Although there were challenges with RMS integration in the early stage of the project, it has now become an integral part of our projects. So, by leveraging local partnerships, expert engineering, and IoT or RMS, we effectively overcame logistical and technical challenges, thus ensuring the success and sustainability of these DRE solar projects.

Shivani Shah (19:46 – 20:06)

Thank you, Rishikesh, for listing out a number of challenges and the detailed execution that you sort of ensured at these facilities. I have a question for you, Romit: As the CSP funder, what is HSBC India's strategy on energy transition?

Romit Sen, HSBC (20:07 – 21:22)

Shivani, as you know, as you said, the engagement with WRI is part of our Global Climate Solutions Partnership Program. But in India, the approach that we have followed is to look at energy transition from a sectoral point of view. For example, with WRI, we are engaged with energy transition in the healthcare sector. There are other initiatives that we have on energy transition focusing on sectors such as dairy, coal chain, such as productive use of energy, such as water purification treatment and wastewater treatment.

Because our philosophy here is that it's an opportune time to look at renewable energy solutions in the country. Because one, the government has a strong commitment to enhance renewable energy access. But more importantly, we see energy as a critical lever to generate development outcomes for [the] bottom of the pyramid population. And this partnership with WRI kind of demonstrates the approach of how access to clean energy can create large-scale development outcomes for our communities and people.

Shivani Shah (21:23 – 21:33)

Thank you, Romit. You mentioned you are taking a sectoral approach and I was wondering if you can talk a little bit to how does decarbonizing healthcare care fit into your larger strategy?

Romit Sen, HSBC (21:34 – 23:40)

In India also, you know, we have to look at it from the point of view of corporate social responsibility, where health care is a basic tenant of life. You need, you know, health services for overall growth, development, and well-being of an individual and on a community [level]. We are also aware that in areas...not only rural, but even in peri-urban areas and in some of towns and cities, lack of an assured supply of energy has an impact on the overall status of how services are administered and delivered to a large section of the population. That is where this engagement came through, and that is where our approach and partnership of working with WRI to look at renewable energy solutions, which will provide an assured and reliable source of clean energy for our health care facilities.

So it's a win-win, both in terms of the environmental side of it, because instead of using diesel genset and instead of relying on sources of fuels or energy that are more polluting; one, you have access to a cleaner fuel, which is more reliable and safe, and secondly, the access to energy, which we have seen, you know, data from the project has indicated the whole transformational aspect that access to clean energy has made – whether it is in terms of sheer number of patients who are availing health facilities in these hospitals, or how we've been able to better the quality of service, whether it is access to vaccination, operations, delivery, pathological tests.

So, this whole approach of looking at improving the efficiency, delivery and services of the healthcare sector through energy access, which is a critical lever, is perhaps you know a biggest win. And we are very happy that you know this approach has kind of, through the work that WRI India has done here, is being able to mainstream within the larger public policy discourse.

Shivani Shah (23:41 – 24:00)

Thank you. That was quite insightful. I do have a question based on what you just said to you and to Rishikesh.  And that is, if you could just elaborate more specifically how reliable of energy improves the delivery of health care. You can start.

Romit Sen, HSBC (24:01 – 25:19)

Yes, and I think we began this initiative in 2020. And that was the time when the COVID pandemic was ongoing. And as you realize, you know, it was a time when there was a great need. The government had started the vaccination for COVID, but we realized that in the absence of refrigeration facilities, a large part of the COVID vaccines was going to waste. And it was not able to, kind of, create an impact. More importantly, it couldn't reach to the people, you know, impact is secondary, but just that wastage meant that a large section of the population would have been deprived of the vaccines for COVID, which had ramifications on the health, well-being, survival, livelihood, everything.

And that is where this intervention, you know, the whole approach of energy access plays such an important part that access to energy was able to provide refrigeration facilities for vaccination, which at that time was, you know, critical and lifesaving. So, that's my reflection, you know, basis, the genesis. And of course, there are other examples on how, you know, vaccine storage has improved, pathological tests have improved. Other services have improved. But I'll, you know, like pass it on to Rishikesh because I'm sure he'll have much more evidence from his work on the ground. Rishikesh, over to you.

Rishikesh Mishra, WRI India (25:20 – 26:32)

Doctors and nurses have shared, during various meetings and workshops, also how the integration of reliable energy, especially solar powered plant with a battery backup, has transformed their ability to provide consistent health care services. The introduction of reliable solar energy systems have enabled these facilities to operate around-the-clock, improving outpatient care, handling more institutional deliveries, and accepting more patients.

The stable energy supply ensures the proper functioning of critical medical devices, provide comfortable environment with adequate lighting and cooling, and support continuous service such as emergency care, surgeries, use essential medical equipment like nebulizers, oxygen concentrators, and diagnostic equipment. Some facilities even have expanded their services to include a few more laboratory tests, which were previously unattainable. This transformation has significantly improved healthcare delivery in these communities, allowing healthcare centers to fulfill their missions of serving and the local population more effectively.

Shivani Shah (26:33 – 26:52)

Thank you for that Rishikesh. You've worked for quite some time on this project and I'm wondering if you could share what do you consider as some of the big wins in the past three years? And how can these successes scale health facility electrification in a near sustainable manner?

Rishikesh Mishra, WRI India (26:53 – 28:55)

One of our significant achievements has been implementing advanced technologies in remote areas. The system enables us to collect comprehensive data on energy generation, ensuring that the systems are operational and efficient. Another example is the transition from lead acid to maintenance-free VRLA gel batteries in Assam. Our project evolved from using polycrystalline solar panels of 330-watt peak in the first project, to the use of higher efficiency 550-watt peak mono-perc solar panels in the latest one. These have improved power output while requiring less space, enhancing overall project sustainability and efficiency.

Second was building capacity of a few hundreds of healthcare staffs, something that gives us the most satisfaction is the capacity building and the system training done at these facilities.

Also, while considering all this, we have seen a considerable cost-saving on energy charges by the solar plants. We have installed around 238-kilowatt peak and close to one megawatt hour of energy storage for the solar plants. These initiatives have served around more 0.4 million people and also resulted in savings exceeding more than 0.7 million in Indian currency.

And lastly, how do I see these learnings to help expand works? So, based on our experiences – working in various remote locations and numerous healthcare care facilities, in the most climate vulnerable areas – implementing these DREs solutions using advanced technologies for healthcare care facilities can significantly address critical issues of enhancing reliable 24/7 electricity for healthcare care services; including energy efficiency, not just looking at the energy supply, but also optimizing energy demand. I think all of these regions and countries should consider tailored DRE solutions for healthcare facilities, to help meet their developmental goals.

Shivani Shah (28:56 – 29:10)

Romit, I have one last question for you and that is as the project moves into the next phase, how do you see it enabling and scaling even more financing towards India's health goals as well as the country's energy transition?

Romit Sen, HSBC (29:11 – 31:57)

That's a very good question, Shivani, because I think we realize that for a country which is as large and diverse as in India, for things to happen at scale, philanthropy can help demonstrate a solution which this project has done. But to be able to scale it and make a transformational impact in this country, we need finance, both public and private sector. While we looked at energy access, our current, you know, like intervention during this year and our vision for the coming years, is to look at the whole approach of net-zero healthcare, which in addition to access, will also look at energy efficiency, will look at metering. Coming to the point of financing, so I think we all are aware that in India, and it's true for the case for developing economies, a large part of the finance is public sector. In India, 92% of the development finance is public sector finance. So the remaining 8% is, you know of course, philanthropy, CSR, private sector, multilateral, bilateral.

The WRI team has done an incredible amount of work to first build a case for energy solutions in healthcare, and then mainstreaming it in the guidelines of the National Health Mission. Because that is the major, you know, like public sector program around healthcare. And I am aware, based on my conversations with the WRI India team and, you know, officials of NHM, when WRI got them together in their annual India conclave, NHM is now looking at, you know, supporting renewable energy solutions for healthcare infrastructure under NHM.

On the private sector finance side of it, I think this is still a work in progress. Because you know once this case is demonstrated, we would like to take it to not only philanthropies, but also commercial financing. Because the project has kind of demonstrated the models in terms of developing the right kind of RFPs or tenders for, you know, solar installations. It has also helped in customization, the point that Rishikesh also touched upon around you know the specific needs, a one-size-fits approach doesn't work. So, with the learnings, and this project has also engaged with a large amount of the service providers, you know the manufacturers and others, so, I think we will now have to work on to build a case on financing for the private sector because with the commercial angle we’ll kind of, you know, gain a little bit of dominance. That is something that I'm hoping we'll be able to pick it up from our work with WRI this year and, you know, subsequently, which of course will again then demonstrate the commercial or the business case for private financing to come and support renewable energy solutions and healthcare.

Shivani Shah (31:58 - 32:10)

Thank you, Romit. Thank you, Romit and Rishikesh for your time. And we're looking forward to how this project can create sustainable finance solutions for improving energy access in the health sector.

Rishikesh Mishra, WRI India (32:11 – 32:12)

Thanks for having me, Shivani.

Romit Sen, HSBC (32:13 – 32:14)

Thank you for having me, Shivani and Daniel.

Shivani Shah (32:15 – 33:22)

We hope that we made the connection between energy and health as clear as day.

Next time, we’ll show you how WRI helps leading corporations to decarbonize their supply chains in China.

That does it for this edition of Turning Up Clean Energy in Asia. A podcast series produced and edited by Daniel Baker with funding from the Climate Solutions Partnership. The CSP is a 5-year partnership between WRI, WWF, and financed by HSBC with a focus on nature-based solutions and accelerating the clean energy transition in Southeast Asia.

You can learn more about this work and hear the other episodes in the series on our website: WRI.org/podcasts

Thank you to our guests who made this episode possible. From my colleagues at WRI, my name is Shivani Shah. Don’t forget to leave us a 5-star rating on whatever podcast platform you listened to this episode on. Every review counts. Thanks for listening!

Episode 3: Slashing Scope 3 Emissions in China

China’s impact on global supply chains is unparalleled, so decarbonizing the businesses that set up shop in that country — from fashion sector leaders like Decathlon to food & beverage behemoths like Budweiser – is paramount to meeting international energy targets.

In this episode, you’ll hear about the different strategies the CSP team in China is using to slash Scope 3 emissions, which typically make up a majority of a corporation’s carbon footprint.

WRI China researchers laid out a sector-wide blueprint to begin their science-based decarbonization journey and partnered with major brands to model a new strategy for increasing renewable energy use up and down supply chains. Pairing the economic influence of big companies with the ambition of small businesses that make up their supply chain is a replicable recipe to reduce emissions ... rapidly.

Transcript

Justin Wu, Asia-Pacific Co-Head of Climate Change, HSBC (00:00 – 0:17)

If you look at China, it pretty much will probably be the only country that will either hit or overachieve its, you know, clean energy goals which it set itself. Actually, I think it's the only one that will achieve this, you know, the so-called “three times renewable energy by 2030,” right, which was set out at the COP28 agreement

Wenquan Zhang, WRI China (0:21 – 1:50)

That was Justin Wu, HSBC’s Co-Head of Climate Change for Asia-Pacific, talking about how China is the one country that is actually on track to meet the international goal of tripling renewable energy capacity by 2030.

What makes that even more impressive is the fact that China is the epicenter of manufacturing – birthplace to more than a quarter of the world’s stuff. That means the biggest corporations in the world are likely purchasing from small- and medium-sized enterprises – or SMEs – in China.

Fortunately for the private sector, the Climate Solutions Partnership – or CSP for short – aims to help these SMEs swap out fossil fuels for renewable energy.

My name is Wenquan Zhang your host for today’s edition of Turning Up Clean Energy in Asia. If you haven’t heard the first two episodes yet, you can find them on our website: W-R-I-dot-O-R-G-slash-podcasts...or find them on WRI's Big Ideas Into Action podcast feed on Soundcloud, Apple, or Spotify.

In this third episode of the series, we’re taking you inside the process of how our WRI China team builds up capacity for companies and their financiers to decarbonize their supply chains.

Wenquan Zhang, WRI China (1:51 – 2:50)

Another area where China leads; the production and exporting of textiles and garments. The country produces more than half of the world’s textiles...for a sector that is responsible for 6-8% of global emissions. And in May of 2024, WRI China published a paper that summarizes the fundamental approaches for fashion brand companies to undertake climate actions in China.

To talk about China’s corporate culture around decarbonizing such a critical sector, we’re joined by Mofan Zhang, WRI China Research Analyst with the Climate Program and part of the CSP team.

Okay, our first question is about Scopes 3 in the fashion sector. The team recently published a working paper titled, Fashion Brand Scope 3 Decarbonization. Why is the fashion industry important to China's decarbonization plans?

Mofan Zhang, WRI China Research Analyst (2:51 – 4:21)

Well, the fashion industry has a broad influence on social, cultural, and economic aspects. The industry not only produces clothing to meet human needs, but also provides job opportunities and foreign exchange earnings. But China is an important textile and apparel exporter in the world, contributing to one third of the world's textile exports. However, producing these fashion products consumes a significant amount of natural resources and generates substantial carbon emissions.

Fashion companies play a crucial role in the decarbonization of the fashion industry. They are connectors between suppliers, customers, and other stakeholders. WRI’s 2021 study shows the emissions breakdown of the 30 fashion companies with approved SBTs [science-based targets]. It finds that 96% of those companies' GHG emissions come from Scope 3, and 80% of Scope 3 emissions are from purchased goods and services, which means most emissions are from the supply chain.

Since many Chinese apparel and textile suppliers' companies manufacture for brands, and China is also an important consumer market for many brands, we believe this topic is important and have conducted the research.

Wenquan Zhang, WRI China (4:22 – 4:34)

So aside from the paper, the WRI team recently led a low-carbon transition training for more than 30 apparel and textile companies. What was the main benefit of the in-person training?

Mofan Zhang, WRI China Research Analyst (4:35 – 5:26)

We held a textile and apparel industry low-carbon transition training workshop in Zhejiang province on May 29th because Zhejiang is one of the major textile and apparel manufacturing hubs in China.

The main purpose of the training is to provide brands and supply chain companies [with] capacity in the low-carbon transition process. So, aside from the release of the working paper, we invited experts from local governments, utilities, industrial associations, NGOs, academics, and financial institutions to share their insights on industry development trends, product carbon footprints, green power purchasing, clean heat technologies, and green finance in this training.

Wenquan Zhang, WRI China (5:27 – 5:38)

Okay then. What types of external and regulatory pressures do companies face as far as reducing emissions within China?

Mofan Zhang, WRI China Research Analyst (5:39 – 6:28)

For most Chinese textile and apparel companies, especially those doing business globally, they may face external pressure from their customers. Because currently, many international fashion brands are taking climate actions, they have set their targets and need to work with their supply chain to achieve them.

Aside from the brand's companies' voluntary climate commitments and actions that give pressure to Chinese supply chain companies, international policies also influence the industry's future. For example, the European Commission's Green Deal and EU circular economy action plan, and particularly the EU strategy for sustainable and circular textiles.

Wenquan Zhang, WRI China (6:29 – 6:40)

So we talked about the regulatory pressures. The,  what are the first steps that a company can take if it wants to join the decarbonization journey?

Mofan Zhang, WRI China Research Analyst (6:41 – 7:02)

Well, GHG accounting and setting targets are the first steps. It can help companies identify opportunities to reduce emissions and set roadmaps for action, and also help companies to think about whether the existing business model can achieve a net-zero future.

Wenquan Zhang, WRI China (7:03 – 7:12)

Okay, thank you Mofan. So, I think my last question is, what are the potential opportunities for fashion brands in Scope 3 decarbonization in the future?

Mofan Zhang, WRI China Research Analyst (7:13 – 8:31)

Currently companies mainly take action in upstream of Scope 3 such as to improve the energy efficiency, the use of renewable energy, and sourcing green logistics, but fewer actions in the downstream, particularly related to the consumption side and the use phase. So, I believe that the circular economy business model is the new opportunity for Scope 3 decarbonization. Brands should consider innovative circular economy business models like rental, resale, repair, recycling, and the upcycling.

We know that some international brands have made some trials at a circular economy and the international market, but there are not many circular economy business models or consumer-oriented practices from those international brands in the Chinese market.

For example, we found that some international brands' Chinese websites do not have as much information about sustainability as their English websites, which cannot help Chinese consumers to get more information about sustainability and promote green consumption.

Wenquan Zhang, WRI China (8:32 – 8:40)

Thank you Mofan, for your very insightful answers on our textile industry in China and I really appreciate your time.

Mofan Zhang (8:40 – 8:41)

Thank you.

Wenquan Zhang, WRI China (8:42 – 10:10)

Since most of a company’s GHG emissions come from its supply chain, decarbonizing SMEs is paramount for large companies to meet their climate targets. In fact, the Carbon Disclosure Project found that, on average, they’re 11 times greater compared to direct activities.

Unlike the big corporations that they sell to, SMEs typically have a lot less time, knowledge, and money required to reduce their own emissions. One method for helping speed up that process; forging a strong partnership.

We will hear from Decathlon’s Sustainability Director for their North Asia Zone, Anthony Wei, who worked with our team to pool supplier demand with their vast resources to draw down their Scope 3 emissions through solar power.

Also joining us; Terry Yao, Sustainability & Agriculture Development Director of Procurement APAC for Budweiser, another company partnering with WRI to decarbonize their own supply chain.

Anthony and Terry, thanks for joining us today!

So the first round of questions is for both of you and gives listeners a sense of scope of the Scope 3 problem. How much of your company's total GHG emissions come from Scope 3 emissions? And what is the percentage of Scope 3 emissions account for the total value chain emissions, Anthony Wei?

Anthony Wei, Decathlon (10:11 – 10:36)

Thank you Wenquan, it's my pleasure to join this podcast. We just issued our latest annual report from Decathlon and from the report you can see the total value for Scope 3 is roughly 10.3 million tons of CO2 and it accounts for more than 99% for the total CO2 for the Decathlon group. So it's a bigger portion in our footprint.

Wenquan Zhang, WRI China (10:37 – 10:38)

Terry Yao.

Terry Yao, Budweiser (10:39 – 11:17)

Thank you very much for having me here. I'm Terry (Yao) from Budweiser APAC. For us, we disclosed our last year's carbon emission in our sustainability reporting at the beginning of this April. So, the Scope 3 is about 5.8 million metric tons. And if we look at the percentage wise, it's around 93% for the total Scope 1, 2 and 3 – similar as most other companies like us, Scope 3 is representing a majority of the percentage. If we're looking at our baseline year, which is 2017, in that year, our Scope 3 is representing about 89%, which means in the past several years, our decarbonization speed of Scope 1 and 2 is higher than in Scope 3.

Wenquan Zhang, WRI China (11:18 – 11:36)

Okay, thank you. So what is the biggest challenge for multinational corporations when it comes to reducing Scope 3 emissions? And likewise, what about the primary challenges small companies face, just like the ones in your supply chains to reduce their own emissions?

Anthony WEI, Decathlon (11:37 – 13:55)

In the Scope 3, the products sold, it's the biggest part, it accounts for around 84% of the total CO2 emission; it's the largest share in our carbon footprint. And I think two major key factors contribute to this CO2.

First, involves our design approach; to use less material and to use low-carbon materials in our product design. And another part is to decarbonize the manufacturing processes. So as a consequence, the key challenge we are facing is how to engage our supply chain, how to engage our suppliers to decarbonize their manufacturing – to use more renewable energies, and to using low-carbon manufacturing processes by investing new technology and the equipment.

I think the energy mix and the maturity of the infrastructure of different countries is quite different, which brings challenges to the multinational companies like us. Like in China, it's quite different with India, Vietnam, Bangladesh, and the European countries, the challenge is different.

However, it also brings opportunities to us with the integration of the sustainability goals into our purchase policies. It guides our purchasing strategy more in favor of the countries and the suppliers which have more resources to access and use renewable energies. For example, recently we are accelerating the renewable energy using in China. We teamed up with 14 industrial partners in Fujian province and signed the aggregated renewable energy Power Purchase Agreement (PPA) with CGNNE. But today it's still a challenge to replicate our actions in Fujian everywhere. So, the challenge ahead can't be solved by Decathlon alone. It's essential to team up with the whole ecosystem of stakeholders, in particular, with the policymakers to advance more progress in China’s energy market.

Terry Yao, Budweiser (13:56 – 16:16)

So, if you're looking at the carbon emission Scope 3 in Budweiser APAC, the packaging is representing the majority of parts. Let's say 50% of carbon emission is coming from the packaging, and around the 20-25% of the carbon emissions are coming from the raw material, including agriculture. And around 20% is coming from the cooling system – which is the consumer and our customers who want to have a cold beer in the summertime, like these days. So, this is coming from the consumer side. And slightly more than 5% is coming from the logistics.

So, looking at the suppliers, it's representing the majority of the parts of the Scope 3. So, if we, as Budweiser APAC, we are operating in China, Vietnam, South Korea and India, the four countries or four BUs (Business Units) that are less mature versus the European countries or US. So, when we discussed with our suppliers how to speed up the decarbonization journey of the Scope 3, we really needed to understand what is the majority of our supply and what is the best impression we can share with them.

So starting from that, we actually established over 10 courses of training for our suppliers, to really help them to understand what is sustainability, what is carbon. So, we started from GHG protocol, SBTi, RE-100, CDP. Another thing we're talking about is the energy mix. The four BUs [business units] we run in the business, they are all in a regulated market, especially when we're talking about the electricity. So, it's not like the free market that we can purchase the electricity in renewable resource, like batteries and small PPAs to cover everywhere.

So, even in China, we’re pushing as many as possible in our Scope 1 & 2, which means in our grid, we reached to 80% at this moment of renewable electricity. But our suppliers, they have less information, less awareness, less willingness to sign a contract through the PPA to purchase renewable electricity at this moment. So, for us we can leverage country-wide, but for our suppliers if their footprint is not rich as we have it, they may face the premium cost if we want to sign a PPA. So for me, maturity level of the supplier, including the awareness, and the premium cost through the PPA sometimes and the energy mix across the whole BUs [business units] in four countries.

Wenquan Zhang, WRI China (16:17 – 16:47)

Okay, thank you both for a very comprehensive reply to this first round of questions. So next round, we will deep dive into the Scope 3 challenges. WRI has supported Decathlon to practice aggregated renewable energy, or RE for short, procurement in Fujian last year. So how did your company decide on the aggregated RE demand approach to help suppliers? And what role did WRI play in that decision?

Anthony Wei, Decathlon (16:48 – 18:50)

In the total CO2 of Decathlon, electricity used to produce our products is the major part; it accounts for 27% of the total CO2 of Decathlon. So, driving renewable electricity is one of the key initiatives in our decarbonizing strategy. It's more the first step, because it's more the low-hanging fruit on this path. We aim to promote the use of high-quality renewable electricity, such as through the installation of the on-site solar panel, or by entering into long-term renewable energy contracts that meet specific criteria; like you have good traceability and supporting the new local renewable energy projects.

It's like what Terry said, today the market in China is not so mature; our suppliers not having a good awareness. As I introduced in my last question, currently our suppliers are facing the challenge, preliminarily related to their resources and their competence, rather than lack of intention. Because through our education, through our communication, and through the China government – you know in recent three years, the Chinese government has pushed a lot – now they have more and more intention to access, to using this kind of renewable electricity, but they lack the resources to access to it. This is why we decided to work on this aggregated RE purchase approach; to make the renewable electricity more accessible and more affordable to our supply chain, to our suppliers.

WRI is playing an important role here. As the world's most famous and influential think tank on sustainability. Your technical support brings us confidence to move on this step. And WRI, you are also helping us to activate the entire ecosystem on renewable energy, which streamlines and enhances the efficiency of the project.

Wenquan Zhang, WRI China (18:51 – 19:01)

So, what are the major benefits of this kind of aggregated RE procurement, aside from the potential cost savings for your suppliers?

Anthony Wei, Decathlon (19:02 – 20:17)

It's like accelerating our progress on this strategy. In 2021, only 3% of the electricity came from renewable electricity in China for the whole Decathlon supply chain. But in 2023, this number increased to 8%. In two years, it was increasing, but the progress is not so big. But with the aggregated RE purchase approach, we are confident to reach 42% by the end of this year. It's increasing five times (5x) compared with 2023, with this approach.

And also, China is leading this performance in all the Decathlon production countries. So, not just in China, but inside of Decathlon, we have benchmarked this method to accelerate our RE (renewable energy) strategy. This project has also opened a new door for brands like Decathlon to engage our suppliers in decarbonization. So, many other brands come to us through WRI to learn from us and even to share the willingness to work together, to drive the energy transformation for the whole value chain for brands.

Wenquan Zhang, WRI China (20:18 – 20:43)

Okay, thank you. So then for Terry, actually a few weeks ago, we saw that Budweiser China has announced that they have successfully met its sustainability goals of [at least] a 20% reduction in carbon emissions two years ahead of schedule. So, what were the biggest contributors to that decline in emissions and how much of that reduction in Scope 3?

Terry Yao, Budweiser APAC (20:44 – 23:23)

Thank you, Wenquan. Actually, it was a 25% reduction. Our goal that had been announced in the beginning of 2018 that we needed to reduce our overall Scope 1, 2, and 3 intensity at 25%, versus the baseline yield 2017, which Budweiser China has been achieved this goal by the end of last year, 2023, which means we are two years ahead of our goal.

The biggest contributor, if we're looking at the overall Scope 3, I would say is coming from packaging. In Budweiser APAC, we're having, like, several goals linked without our packages. First of all, we have our individual goals to reach circular packaging goals, to having 100% of our products to be packaged in returnable material or a majority made from recycled content to increasing this recycle content.

In packaging, we have Reduced, Reuse, Recycle. We all know that in the sustainability, we need to reduce the material weight of the packaging to help to use less of the resources of nature, to protect the Earth. So, we started with the reducing concept to try to use less material, both in aluminum or in glass, in order to reduce the carbon emission. The second R-word we are talking about is the Reuse. As a company like us, we have our returnable glass bottle. We will collect those bottles back into our manufacturing process to clean, wash, and then repackaging and sell it to our consumers again.

The third R-word that I already mentioned, the recycled material. So, increasing the recycled material can help our suppliers to use less energy to produce aluminum cans or bottles from the virgin material. The last one I am sharing is the biodegradable plastic in our whole value chain.

Another segment that we are driving is in the logistics. Logistics, for sure, is not the biggest portion, it's only like five to six percent in our overall carbon emissions, but it's really linking with our consumer and for the whole society, who can see the trucks running on the road, right. Overall speaking, by the end of last year, we had over 400 of the green trucks running on the road to deliver beer for us to our consumers.

Cooling actually is, let's say, one of the difficult challenges we are facing because the coolest refrigerators of everyone who had our beer in your apartment, is counted in our Scope 3 as well. So, how to really solve this problem? We're working with our cooler producers to push the bar of the energy efficiency of the cooler itself, to reduce the energy usage of every individual cooler to reduce the carbon emissions. Eventually, we have to fix the challenge of the let's say energy mix of the country or the region, to reduce the carbon emissions.

Wenquan Zhang, WRI China (23:24 – 23:42)

Do you have any lessons learned that can be shared with our audience in terms of your dealing with the upstream raw material suppliers, as you had just mentioned about, like aluminum suppliers, or any upstream raw materials supplier, because they are not typically SMEs?

Terry Yao, Budweiser APAC (23:42 – 25:02)

I think aluminum is a quite good case I can share here, especially when we have a new CSRD (Corporate Sustainability Reporting Directive), the requirement from the European [Union]. So, if we're looking at the aluminum industry in China, actually China becoming the biggest export country to the globe. So, let's say 50% of the can sheet manufacturing in China has been exported outside of China. So, naturally, even if we’re pushing as many as possible used beverage can, back into a new can, the maximum of the recycled content can reach only 50%. But good things happened since the CSRD requirements, a lot of can sheet suppliers in China they have to move their manufacturing from the east coast of the China to the west or middle of the China, which has the rich resource of the hydropower. Electricity in the aluminum industry is one of the biggest drivers to halving carbon emissions.

From our side, we discussed with our suppliers to engage them to having a better awareness and understanding of their carbon; trainings, workshops to let them know why a company like us needs to push this agenda. So, we’re working with our peers to publish the white book of the UBC (Used Beverage Can) can be a new can. Technical-wise, it's okay. And the food-and-safety-wise, it's okay. So, this is something we did to raising the recycled content in the aluminum industry, also to reduce the carbon emission there.

Wenquan Zhang, WRI China (25:03 – 25:55)

Great, thank you for a very interesting insight on this topic. And so our third round of questions will be based on Scope 3 videos that WRI made last year. So, we spoke with Decathlon’s China CEO, Marc Zielinski, as well as Budweiser’s APAC’s VP of Sustainability and Procurement, Jan Clysner. You can see that video on WRI’s CSP website as well as our China website. In that video, Marc highlighted the importance of every partner in Decathlon’s supply chain, while Budweiser introduced several best practices for corporate sustainability in China.

So the question for Anthony is, how to manage suppliers and maintain a good partnership when there are more sustainability-relevant KPIs that could disturb your suppliers?

Anthony Wei, Decathlon (25:56 – 27:48)

Thank you, Wenquan. Here I would like to first replace the word “disturb” to engage, or motivate, or lead, because I believe sustainability is the new norm in the purchasing practice. It's already the new norm for Decathlon, and it will be the new norm for the global [market], let’s say.

The partnership we build with our suppliers is based on the shared vision and the shared value to be the driving force and become a light for a sustainable future. It's one of the key pillars in Decathlon’s strategy. So, it's also the key input for our partners to co-build our common project between Decathlon and our partners.

And not only by giving targets. We are also supporting our partners, our suppliers, to reach the related sustainability KPIs. For example, in 2020, when we started the work, the decarbonization work, we started to work with our priority suppliers to guide them to set their CO2 trajectory along with SBTi guidelines. Our priority suppliers are the suppliers who account for 90% of our total emissions.

We also provide a CO2 management platform with our own cost for our suppliers, freely to use to manage their CO2. And we also implement energy efficiency projects in our higher energy-consuming factories to help them to reduce their energy consumption, to helping them to improve their energy management maturity.

And we also integrate decarbonization in our purchase policy. In purchase, we’re always considering the total value, the total value which is not just on the price, on the quality, on the lead time, but also with sustainability.

Wenquan Zhang, WRI China (27:49 – 28:13)

Thank you, Anthony. And the question for Terry is, how Budweiser internalized the extra cost when achieving the climate goals like RE100 in China? And perhaps and most importantly, how can these best practices introduced in the videos be duplicated throughout your value chain? In other words, how does this approach scale maybe across the country?

Terry Yao, Budweiser APAC (28:14 – 31:10)

Thanks Wenquan. As Budweiser APAC, when we're looking at the sustainability itself, we're always talking about how sustainability should be economically friendly as well, because eventually we cannot subsidize every project without calculating the ROI, which is not a way of...sustainable way to do the sustainability.

So for us, at least, especially talking about the renewable electricity at this moment, we're sitting at 80% in China. But for sure, in some of the provinces, we have to pay premium pricing to having this green energy. In some of the provinces we can save money, especially out in the middle of China, the hydropower is quite rich as a resource. So we're looking at the whole China when we sign the PPA. Can we make even, to resist the regular electricity? In another hand, we are maximizing the onsite solar projects in our rooftops to increasing the renewable electricity in our daily operation. We already have more than 16 breweries with the onsite solar.

How to duplicate the best practice? When we're talking about sustainability, we always start talking about the energy efficiency. So we will discuss with our suppliers that we can help them to reduce the energy usage because this is really linking with their costs.

So, I have a small story I can share with you that when we discussed with a very traditional Chinese supplier, talking about sustainability, the owner of the company literally knew nothing about what is sustainability. So he was thinking we were asking them to invest a lot to reduce their energy or to install a lot of fancy equipment to increase the renewable energy. But the first thing we did with them is we tried to help them to find out the leakage of the heat. Normally in the beginning, there’s always a technical person in a manufacturer to hear the sounds, the voice of the piping. If there are leakages, you will hear the sound of the leakage. But as is the limitation of the human ears, we cannot hear very small sounds.

So we have the equipment cost us like, 500,000 Chinese yuan. We bring this machine to the manufacturer, bring these technical gentlemen going through the whole of their operation side. We found in like 12 small points of the leakage with our new machines. With those 12 leakage points, we can help the owner of the manufacturer save around like 80,000 Chinese Yuan per year, which brings them a very good, let's say ROI, because they just needed to stop this leak.

So these kinds of things we are discussing with our suppliers, becoming a starting point to join the sustainable journey, rather than tell them, ‘Hey, you guys have to do an investment to replace all your machines,’ without calculation of ROI. So this is something we are doing here.

The last question we're talking about is cross-country wise and the same logic. We always start with the project, which can be kind of a very baby step, to put the people on the journey earlier, on day one, rather than giving them a very high or aggressive goal. So you have to achieve the goal by the end of the year, but without the technical or financial support. So this is how we started.

Wenquan Zhang, WRI China (31:11 – 31:43)

Thank you Terry. And thank you both for a very good and a comprehensive insight-sharing in terms of this Scope 3 topic. And finally, we have a round of questions for both of you.

So what kind of advice would you give other textile or sportswear, or food and beverage brands who also want to decarbonize their supply chain? So what kind of advice you will have maybe for your competitors? Anthony Wei.

Anthony Wei, Decathlon (31:43 – 33:10)

In sustainability we don't have competitors, we only have cooperation because sustainability is the common goal for all of us. I think decarbonization is like team sports, like football. As a brand, you play the role like a manager or coach of the team. And it's important that you share and align the same target for the match with all the team.

So, and through this step, you are also selecting your team because only the team member that’s aligned with this target can play with you in the same match. So it's very important to filter in this step. And then share and align the tactics together. Always share the full picture to all the players; building trust with all the team.

Good communication with a good feedback loop. Supporting each other and always encourage and cheer for the team when we are playing the match.

And I think another point is the planet, the climate doesn’t wait for us. We need to push a lot on the speed to accelerate the decarbonization. But at the same time, most of the suppliers, the maturity level, the awareness is not so high. So, at the same time, we need to also balance the speed to be patient...to be patient and to  be very supportive to your supply chain.

Terry Yao, Budweiser APAC (33:11 – 35:18)

I totally agree that there are no competitors in sustainability. So in Budweiser APAC, we have seven steps to decarbonizing our overall Scope 3. The first step we are doing is to have the maturity assessment across our suppliers. For sure, most of the suppliers in APAC, they are in the early stage. Second step we do is the capability-building. We established over 10 trainings with our suppliers to let them know: What is sustainability, what is carbon, what is SBTi?

The third step we are doing is something we did in Budweiser APAC is kind of unique. You may not be able to copy from us to others, but I'm more than happy to share what we did. So, I had a small team to really help the supplier to calculate their carbon baseline with our methodology and the boundary to understanding their Scope 1, 2, and start their Scope 3 because without the baseline, they have no next step to decarbonization, right. So, the first step we have is a workshop, gathering the supplies together to share their practice accounting them and also to help them to build a decarbonization roadmap in the workshop. So, after this workshop, we are collecting decarbonization roadmap. It's our fourth and fifth step.

And after that, we will look at our suppliers' maturity level. If they are ready to be included in a contract, then we are including this decarbonization cost in our contract. Since I'm sitting in the procurement department, my peers will help me to implement those initiatives in their contracts.

The last step we are doing is the tracking and monitoring, because without this tracking and monitoring of the initiatives or the decarbonization roadmap will become a DPT in your laptop. Then it will be sitting there forever, nothing will happen in the future. So, these are the seven steps we are taking in Budweiser APAC to decarbonize the whole value chain.

A suggestion I think for me, always saying every step, baby steps count as well, so start and go ahead. Don't think too much, just go for sustainability. The goal will come to you eventually, as long as you start today.

Wenquan Zhang, WRI China (35:19 – 35:38)

Great. I really agree with what both of you have just mentioned. And thank you again, and really appreciate both of your time. And I really hope that WRI can continue working with companies like Decathlon and Budweiser in the future on sustainability.

Terry Yao, Budweiser APAC (35:39 – 35:40)

Thanks for having me here.

Anthony Wei, Decathlon (35:40 – 35:41)

Thank you.

Wenquan Zhang, WRI China (35:42 – 37:04)

The sooner companies reduce Scope 3 emissions, the sooner China -- and the world – will reach its climate goals.

That does it for this edition of Turning Up Clean Energy in Asia. A podcast series produced and edited by Daniel Baker with funding from the Climate Solutions Partnership. The CSP is a 5-year partnership between WRI, WWF, and financed by HSBC with a focus on nature-based solutions and accelerating the clean energy transition in Asia.

Next episode, we’ll share specific examples for how WRI is breaking down barriers for the private sector to increase their investments in the clean energy transition across Indonesia.

You can learn more about this work and hear the other episodes in the series on our website: wri.org/podcasts — or wherever you listen to podcasts; be it on Apple, Spotify, Soundcloud, or YouTube.

Thank you to our guests who made this episode possible. For my colleagues at WRI, my name is Wenquan Zhang. Don’t forget to leave us a 5-star rating on whatever podcast platform you listened to this episode on. Every review counts. Thanks for listening!