The Rise of Nascent Clean Energy Technologies in Decarbonizing Economies: Early-Stage Infrastructure and Investment Trends

The global energy transition is accelerating, driven by the urgent need to decarbonize economies and meet net-zero targets. At the heart of this transformation lies the adoption of nascent clean energy technologies—such as green hydrogen, battery energy storage systems (BESS), and carbon capture—whose early-stage infrastructure development is critical to scaling their impact. Decarbonizing economies, particularly in Southeast Asia and Latin America, are emerging as pivotal battlegrounds for this transition, where policy frameworks, investment trends, and regional collaboration are shaping the future of energy systems.

Investment Trends and Policy Frameworks: A Global Perspective

According to a report by BloombergNEF, global investment in the energy transition reached $2.1 trillion in 2024, a 11% increase from the previous year, underscoring the growing financial commitment to decarbonizing economies Global Clean Energy Investment Jumps 17%, Hits $1.8 Trillion in 2023^[1]. This momentum is supported by policy frameworks that emphasize regulatory stability and credible investment pipelines. For instance, the U.S. Department of Energy (DOE) has allocated over $97 billion through the Bipartisan Infrastructure Law and the Inflation Reduction Act to advance clean energy infrastructure, including investments in hydrogen, carbon management, and grid modernization Clean Energy Infrastructure Funding for Projects and Programs^[2].

However, the success of these initiatives hinges on addressing the "implementation gap" between ambitious targets and actual deployment. A McKinsey analysis highlights that while global investment in clean energy technologies must increase from USD 1.8 trillion in 2023 to USD 4.5 trillion annually by the early 2030s, only 10% of abatement potential comes from fully mature technologies, with the rest requiring significant innovation and capital What Would It Take to Scale Critical Climate Technologies?^[3]. This gap is particularly pronounced in emerging markets, where early-stage infrastructure projects face challenges such as high upfront costs, regulatory uncertainty, and limited access to financing Scaling Up of Innovative Clean Energy Technologies Needed to Achieve Net-Zero Emissions Targets Globally^[4].

Southeast Asia: Bridging Ambition and Reality

Southeast Asia, a region with rising energy demand and a coal-dependent energy mix, is grappling with the dual challenge of decarbonization and affordability. Indonesia, for example, aims to generate 23% of its electricity from renewables by 2025 but has only achieved 11% as of 2022 due to insufficient investment and regulatory barriers Clean Energy and Decarbonization in Southeast Asia: Overview^[5]. To address this, the country has launched the Comprehensive Investment and Policy Plan (CIPP) under the Just Energy Transition Partnership (JETP), which includes $20 billion in international support for renewable energy and emerging technologies like small modular nuclear reactors (SMRs) and carbon capture, utilization, and storage (CCUS) Energy Technologies and Decarbonization in Southeast Asia^[6].

Despite these efforts, Southeast Asia faces a $367 billion funding gap over the next five years to meet its decarbonization goals Clean Energy and Decarbonization in Southeast Asia: Overview^[5]. A case in point is Indonesia's exploration of SMRs, which requires technical expertise and capital that remain scarce. Similarly, carbon capture projects in the region, such as BP's Tangguh CCUS initiative, face high costs—estimated at $60 to $120 per ton of CO2 stored—and a lack of mature regulatory frameworks CCS in Southeast Asia | McKinsey^[7].

Latin America: Leveraging Renewable Potential and Infrastructure Repurposing

Latin America, with 65% of its energy derived from renewables in 2022, is a leader in renewable energy adoption. Countries like Chile and Brazil are leveraging their abundant solar and wind resources to develop green hydrogen and BESS projects. Chile, for instance, has released a national green hydrogen strategy and aims to become a major exporter by 2030, targeting European and Chinese markets The Rise of Green Hydrogen in Latin America^[8]. Meanwhile, Brazil's Petrobras is exploring hydrogen for industrial applications, while Uruguay has launched a Green Hydrogen Sector Fund to support smaller-scale projects The Rise of Green Hydrogen in Latin America^[8].

A key innovation in Latin America is the repurposing of existing fossil fuel infrastructure for hydrogen production. For example, repurposing natural gas pipelines in Argentina and Chile could reduce costs by up to 75% compared to building new infrastructure from scratch Transforming Infrastructure for a Sustainable Hydrogen Future in Latin America^[9]. However, challenges persist, including the need for 140% growth in wind and solar capacity to meet hydrogen production demands and the lack of binding regulatory frameworks for stand-alone BESS projects The State of Battery Storage (BESS) in Latin America^[10].

Overcoming Barriers: Policy, Finance, and Collaboration

The scalability of nascent clean energy technologies in decarbonizing economies depends on three pillars: policy innovation, financial mechanisms, and regional collaboration.

1. Policy Innovation: Governments must adopt demand-side policies to stimulate hydrogen usage and grid modernization. For example, Chile's energy storage bill, which allows stand-alone BESS projects to be profitable, is a model for other regions The State of Battery Storage (BESS) in Latin America^[10]. Similarly, cross-border electricity integration in ASEAN could reduce system costs by 11.9% through shared infrastructure Accelerating ASEAN’s Energy Transition in the Power Sector^[11].

2. Financial Mechanisms: Early-stage projects require innovative financing tools such as Project Preparation Facilities and Development Impact Bonds. The African Development Bank's DREAM programme in Ethiopia, which provided $8 million for renewable energy feasibility studies, demonstrates how such tools can de-risk investments Global Clean Energy Investment Jumps 17%, Hits $1.8 Trillion in 2023^[1].

3. Regional Collaboration: Cross-border partnerships are essential to address implementation gaps. The Indo-Pacific Economic Framework (IPEF) and Japan-U.S.-Mekong Power Partnership (JUMPP) are examples of initiatives that could accelerate clean energy deployment in Southeast Asia Clean Energy and Decarbonization in Southeast Asia: Overview^[5].

Future Outlook: A $4.5 Trillion Imperative

The path to decarbonization is clear but demanding. By 2030, global investment in clean energy technologies must reach $4.5 trillion annually to meet net-zero targets What Would It Take to Scale Critical Climate Technologies?^[3]. For Southeast Asia and Latin America, this means scaling green hydrogen production, expanding BESS capacity, and repurposing carbon capture infrastructure.

As stated by the International Energy Agency (IEA), the success of these efforts will depend on aligning ambitious goals with robust delivery capabilities Decarbonisation Pathways for Southeast Asia^[12]. With the right policy frameworks, financial incentives, and regional cooperation, decarbonizing economies can transform nascent technologies into the backbone of a sustainable energy future.