Closing the Gap

Mobilizing Energy Financing Across the Asia-Pacific

June 5, 2025

Asia-Pacific region accounted for 60% of global greenhouse gas (GHG) emissions in 2023. The region will be at the forefront of shaping the global energy transition, yet it faces a significant challenge for financing the shift to clean, affordable, and inclusive energy systems.

According to UN Economic and Social Commission for Asia and the Pacific (ESCAP), Asia-Pacific countries, excluding China require an estimated $800 billion annually in energy investments to meet sustainable energy targets. However, current clean energy investments stand at just $300 billion per year, a large financing gap, particularly in critical areas like grid infrastructure and battery storage solutions.

To close these financing gaps, countries across the region are mobilizing resources from public and private sectors, while also exploring innovative models such as blended finance, green bonds, carbon markets, and community-based mechanisms.

However, financing sustainable energy remains complex—often involving diverse stakeholders, layered financing structures, and advanced risk mitigation tools. Many developing countries continue to face capacity constraints in designing, structuring, and executing effective energy finance strategies.

UNDP is working across the region to help countries address these barriers and unlock sustainable energy finance through its regional and country-level initiative. In countries like Mongolia, Pakistan, Sri Lanka, and Maldives, UNDP has been supporting governments in strengthening public financial management, integrating climate goals into national budgets, accessing international climate funds, enhancing capacity while fostering public-private collaboration to scale clean energy investment.

Financing the Shift from Coal to Clean Energy in Mongolia

A person walks down a snowy path towards a city with smoke billowing from factories. — UNDP Mongolia

Guntuya, a resident in the capital Ulaanbaatar, is among 1.6 million people who rely on heat generated from coal to survive the harsh winters. That indoor and outdoor air pollution from coal burning is linked to more than 7,000 deaths annually, with the economic toll amounting to 10% of Mongolia’s GDP.

But now a new UNDP’s pilot project ‘Solar Facility Project’ that has brought solar-powered heating and thermal storage to dozens of households in Ulaanbaatar’s ger areas, may be the first step in reducing that trajectory of pollution. The system, co-funded by the Governments of France and Mongolia, uses unique technical combination of Photovoltaic (PVs) and related equipment with a smart meter that captures the emission reduction. The system is not only well-suited to the harsh weather conditions of Mongolia but also improves air quality, reduce emissions, and enables carbon credit tracking.

A person in a warm coat stands next to solar panels in a snowy landscape under a clear blue sky. — UNDP Mongolia

“Our home is warm and clean, and there’s no black smoke anymore. The solar system eliminated the need to purchase and transport coal, saving both time and money,” says Guntuya.

Building on this success, the initiative is partnering with Chingeltei District, with a shift to market-based models for clean energy. This is a clear example of how clean energy can transform lives while supporting climate commitments.

In the policy front, UNDP is leading the development of Mongolia’s first Just Energy Transition Framework with support from the Joint SDG Fund. Designed in collaboration and consultations with national stakeholders, the framework will align with the country’s Nationally Determined Contributions (NDCs), long-term emissions strategy, and the Sustainable Development Goals (SDGs).

Driving Clean Energy Investment in Pakistan

Wind turbines stand against a sunset sky, with a power plant emitting smoke nearby. — UNDP Pakistan

In Pakistan, more than 56 million people—26 percent of the population—still lack access to electricity, particularly in remote and flood-affected areas. The transport sector, including two and three wheelers are primarily fossil fuel based, and the energy transition efforts so far have neither been inclusive nor sustainable.

Now, UNDP is driving a transformative shift to support the Government of Pakistan in realizing a climate-resilient, inclusive, and sustainable energy future. UNDP’s Energy Offer provides a strategic framework to close this gap while aligning with Pakistan’s SDGs and climate commitments. It focuses on three interconnected pillars: expanding universal access to renewable energy, promoting low-carbon transportation, and supporting a just energy transition.

Nighttime cityscape with illuminated buildings and streets, showcasing urban life. — UNDP Pakistan

UNDP is advancing the promotion of electric two- and three-wheelers to reduce transport sector emissions, cut urban air pollution, and improve public health outcomes. By enabling localized production, and improving charging infrastructure, and consumer awareness, the programme supports a shift to cleaner mobility systems while encouraging gender-sensitive policies and employment opportunities in e-mobility value chains.

In 2025, UNDP, in collaboration with Pakistan's Ministry of Climate Change, Ministry of Energy, and the Private Power and Infrastructure Board, hosted a consultation in Isalamabad which emphasized the importance of public-private partnerships, institutional collaboration, and streamlined regulatory frameworks to transform climate challenges into bankable projects aligned with global agreements and best practices.

Meanwhile, UNDP Pakistan's flagship report Energy Investments: Powering Business and Communities highlights the urgency of scaling up renewable energy to address the growing energy crisis.

Additionally, UNDP is exploring innovative approaches, including biomass and biogas applications for household and commercial use, climate-smart agriculture practices, development of eco-friendly villages, and gender-responsive energy programming. These efforts are designed to expand energy access, promote sustainable livelihoods, link adaptation benefits with mitigation outcomes across sectors, and ensure a just transition that leaves no one behind.

Pioneering Integrated National Financing Framework (INFF) for a Just and Clean Energy Transition in Sri Lanka

Following a request from the government, UNDP in Sri Lanka initiated the development of an Integrated National Financing Framework (INFF) for the country’s renewable energy transition, which will be a global first.

The INFF is intended to serve as a planning and delivery tool to help Sri Lanka strengthen its energy sector planning processes and identify a full range of financing resources – such as domestic public resources, aid and development cooperation, and domestic and international private finance.

Given that Sri Lanka’s strategic priorities include energy security and food security, the INFF has a key role to use renewable energy in multiple sectors, such as power, transport, agriculture, fisheries, tourism.

UNDP has initiated phase II of the project – which is the development of a financing strategy and framework for Sri Lanka. UNDP is also supporting the Government on various other financing and energy policies such as the just energy transition framework, climate finance strategy, carbon market digital registry and the SDG Taxation Framework on climate change and renewable energy.

One such complementing work on financing is the study on barriers and recommendations for equipment leasing. Equipment leasing is expected to increase access to finance Small Micro-Entrepreneurs (SMEs) which would enable them to participate in the energy transition. UNDP’s multi-faceted approach has contributed to fostering long-term environmental sustainability, positioning Sri Lanka to achieve its climate goals while promoting economic resilience.

De-risking Finance to Power a Just Energy Transition in the Maldives

Aerial view of a building with a green roof and solar panels, surrounded by palm trees. — UNDP Maldives

In partnership with the United Nations Capital Development Fund (UNCDF), UNDP is supporting the Government of Maldives in addressing one of the biggest barriers to renewable energy deployment: access to affordable finance.

In March 2025, UNDP and UNCDF launched a Joint Programme to catalyze investment in decentralized renewable energy solutions. At the heart of this initiative is a USD 700,000 guarantee facility designed to de-risk lending for financial institutions. By reducing the perceived risks of clean energy investments, the facility is expected to unlock over USD 3 million in loans for renewable energy projects across the country.

This innovative financing mechanism is a potential game-changer for the Maldives, where high upfront costs and limited access to credit have long hindered the growth of clean energy. By providing guarantees to local lenders, the facility encourages them to extend loans to renewable energy initiatives—facilitating the deployment of more than 2.2 megawatts of clean energy capacity.

UNDP’s role goes beyond financing. The programme also looks at policy reforms, institutional strengthening, and the creation of an enabling environment for private sector participation. By aligning financial incentives with national climate goals, the initiative helps ensure that clean energy investments are both viable and impactful.

Together, these country-led efforts show that closing the energy finance gap is not only possible—it’s already underway. Across Asia and the Pacific, UNDP is working hand in hand with governments, communities, and partners to close the energy finance gap and turn ambition into action.