Cleantech Group’s Managing Director for APAC, Summer Bae, gathered perspectives from investors across the region to assess how geopolitical instability is reshaping the cleantech investment landscape. This quarter’s questions:
Does geopolitical instability increase or decrease the attractiveness of long-duration climate bets?
Is cross-border cleantech investing becoming structurally harder due to national security concerns?
Across both questions, a common pattern emerges: geopolitical instability is not reversing the energy transition, but making it more complex, localized, and system-dependent. Capital is becoming more selective, favoring technologies and business models that align with national priorities, strengthen resilience, and can operate within fragmented global systems. For investors and corporates, the challenge is no longer just identifying the right technologies—but navigating the structures, partnerships, and markets that enable them to scale.
Does geopolitical instability increase or decrease the attractiveness of long-duration climate bets?
Andrew Wong, Director, TRIREC
Geopolitical instability generally makes long-duration climate bets less attractive in the short term, but more compelling in the right strategic categories. It raises financing costs, supply-chain risk, policy uncertainty, and execution risk, yet it also strengthens demand for solutions tied to energy security, domestic industrial capacity, grid resilience, and critical infrastructure.
Long-duration climate investments already require patience, technical execution, and supportive policy. When the geopolitical environment becomes unstable, those projects face additional friction: tariffs can raise equipment costs, export controls can disrupt supply chains, and shifting industrial policy can weaken visibility on demand. For investors, that usually means higher discount rates and a lower appetite for capital-intensive bets with long payback periods.
This is especially true for climate businesses that depend on global manufacturing footprints or cross-border commercialization. If a company needs stable access to batteries, power electronics, semiconductors, or specialized materials from multiple jurisdictions, geopolitical risk can materially degrade the investment case.
At the same time, instability can improve the attractiveness of climate solutions that solve resilience and sovereignty problems. Governments and corporates are increasingly treating energy systems as strategic assets, not just decarbonization tools. That supports demand for renewables, storage, distributed energy, grid modernization, industrial electrification, and localized supply chains.
In practice, geopolitical risk often shifts capital toward climate businesses that are more “country-resilient” and less dependent on fragile global logistics. In that sense, instability can create a stronger, more durable market for climate infrastructure.
The bottom line is geopolitical instability does not eliminate the case for long-duration climate bets. It changes the ranking. The most attractive opportunities are those that align decarbonization with energy security, industrial policy, and supply-chain resilience.
Summer’s take:
Geopolitical instability does not necessarily reduce the attractiveness of long-duration climate bets, but it does reshape where conviction lies.
As Andrew highlights, a more volatile environment raises financing costs, disrupts supply chains, and introduces policy uncertainty. These factors can make capital-intensive, long-payback projects harder to execute—particularly those reliant on complex, cross-border value chains.
At the same time, instability is reinforcing the importance of climate solutions tied to energy security, industrial resilience, and domestic capacity. Across APAC, there is less evidence of a pullback from long-term climate investment and more of a shift in focus.
Two dynamics are becoming more visible. First, climate investments are increasingly evaluated not only on cost and carbon impact, but also on their role in ensuring system reliability and national resilience. Second, global optimization is giving way to more regionalized models, where localized supply chains and deployment pathways carry greater weight.
This is driving a more selective allocation of capital—away from areas with higher execution complexity and cross-border dependencies, and toward grid infrastructure, storage, and industrial electrification, where demand is both immediate and policy-supported. The result is likely a more uneven investment cycle, with capital concentrating in segments that are harder to defer.
In that context, geopolitical instability is less a deterrent than a filtering mechanism. The most compelling long-duration climate bets are those that align decarbonization with energy security and industrial policy, and that can be executed within increasingly fragmented global systems.
Louis Murayama, Partner, Antares Ventures
I have lived and done business in Southeast Asia for the better part of a decade. I knew the region ran on fossil fuels. What I did not fully appreciate until the Strait of Hormuz closed was how narrowly sourced those imports are.
Thailand’s net oil imports consume 4.7% of GDP, the highest ratio in Asia, and 60% of that depends on crude from the Middle East. When Hormuz shut, Bangkok immediately brokered a passage deal with Tehran and banned fuel exports. The rest of the region is similarly exposed. The Philippines sources 95% of its crude from the Gulf and declared an energy emergency in late March. Vietnam sits at 88%, Malaysia at 70%. Indonesia is lower at 20%, but a highly leveraged budget has left it just as exposed to the price shock.
The instinct from here is straightforward: we should do more climate investment, but what is emerging is less simple than it looks.
The crisis hits hardest in transport, logistics, and industrial feedstocks. Diesel, petrol, jet fuel—these are sectors that renewable energy does not yet reach well. And the grids across ASEAN cannot absorb much more as they stand. Some solar plants in Vietnam are already curtailing output by as much as 40%, and the country still suffers blackouts from intermittency. A lot needs to happen before the region can adopt renewables at a meaningful scale.
Yet the potential is real, precisely because the region is diverse. The barrier is political, not technical. Vietnamese offshore wind, Thai solar, Lao hydropower, Indonesian geothermal. Treated as a single grid, ASEAN would have a genuinely balanced renewable system. But cross-border electricity trade runs at under 0.5% of total supply (in Europe it is over 9%). These resources sit behind national borders that barely trade power with each other, and each country is left managing intermittency alone. Denmark can run on 90% renewables because it plugs into a continental grid. Instead of curtailing half its solar output, Vietnam could be selling it.
None of this is new. Regional integration has been discussed and planned for years. But what makes me hopeful this time is that everyone got hit at once. The Hormuz closure did not pick favorites among ASEAN members. That shared experience should matter. If this war teaches us one lesson, let it be that the path to energy independence runs through cooperation, not isolation. We should be talking to our neighbors, not brokering bilateral passage deals with the country that just closed the strait.
Summer’s take:
Louis highlights a central tension in Southeast Asia’s energy transition: the urgency of reducing fossil fuel dependence, set against the structural realities of how energy systems are built and operated today.
The Strait of Hormuz disruption underscores how concentrated and fragile the region’s energy supply remains. High reliance on imported crude—particularly from the Middle East—translates directly into economic vulnerability when geopolitical shocks occur. In that sense, the case for accelerating climate investment is clear.
At the same time, the constraints he outlines are significant. Transport fuels, industrial heat, and feedstocks remain difficult to electrify, while grid infrastructure across ASEAN is not yet equipped to absorb large volumes of variable renewable energy. Curtailment in markets like Vietnam reflects not a lack of supply, but limitations in transmission, flexibility, and system integration.
This points to a more structural opportunity. Southeast Asia is not short on renewable resources—it is unevenly distributed. The region’s long-term advantage lies in complementarities across markets: hydro in Laos, geothermal in Indonesia, wind in Vietnam, and solar in Thailand. Realizing that potential, however, requires moving beyond nationally bounded systems.
Cross-border power trade remains limited, despite long-standing initiatives such as the ASEAN Power Grid. Deeper regional integration could significantly improve system efficiency and resilience, allowing countries to balance intermittency collectively rather than individually.
What may be different now is the shared nature of the shock. A disruption affecting all markets simultaneously can shift incentives more quickly than gradual policy processes, creating stronger alignment between energy security and regional cooperation.
In this context, grid investment is no longer a technical upgrade—it is a strategic priority. Without stronger domestic and cross-border transmission, renewable deployment will continue to stall regardless of resource availability. Strengthening these systems will be central to scaling the transition while reducing exposure to future shocks.
Is cross-border cleantech investing becoming structurally harder due to national security concerns?
Dr. Eric Wang, Managing Partner, GRC SinoGreen
Cross-border cleantech investment in China has encountered significant structural headwinds, driven largely by evolving national security priorities. The landscape is being reshaped by a ”dual-sided regulatory squeeze”: U.S. outbound investment controls (OISP) have restricted capital flow into sensitive technologies, while the Chinese government has tightened oversight on foreign ownership in sectors critical to energy security, such as nuclear fusion and next-gen storage.
However, the environment is defined by strategic selection rather than total closure. China’s 2026 Negative List and the 2025 Action Plan for High-Standard Opening Up continue to encourage foreign investment in “high-value” cleantech areas like EV components and green hydrogen, provided they align with local industrial goals.
As a China-based manager, we have turned these geopolitical shifts into a distinct competitive advantage. By operating as a Qualified Foreign Limited Partnership (QFLP) manager, we manage RMB-denominated funds that serve as a sophisticated, compliant bridge for global capital. While traditional USD-denominated funds grapple with exit pressures and shifting U.S. compliance mandates, our QFLP status provides a stable domestic framework. This allows international investors to maintain exposure to high-growth sectors—such as AI, biotech, and advanced batteries—that are increasingly restricted for direct foreign equity holdings. By streamlining currency conversion and local regulatory approvals, we minimize the underlying complexity of cross-border investing, maintaining exclusive access to high-quality deal flow in China’s most strategic industries.
Summer’s take:
The “dual-sided regulatory squeeze” he describes is increasingly shaping how capital moves, particularly in sectors tied to energy security and advanced technologies. Tighter controls on both inbound and outbound investment are raising the bar for participation, but they are also creating clearer boundaries within which capital can still operate.
Local frameworks are emerging as critical enablers of access. Structures such as RMB-denominated funds and domestically aligned investment vehicles allow international capital to participate in strategic sectors while remaining compliant with evolving regulations. In this context, access is less about openness in the traditional sense and more about alignment with local policy and industrial priorities.
These pathways, however, come with trade-offs. While they offer stability and continuity, they also introduce constraints around liquidity, governance, and exit flexibility that investors must carefully navigate.
This dynamic is not unique to China. Across APAC, access to strategic sectors is increasingly shaped by local frameworks—from India’s manufacturing-linked incentives and Indonesia’s resource nationalism to Japan’s partnership-driven market entry models—requiring capital to align with national priorities rather than rely on traditional cross-border approaches.
Overall, the picture is one of recalibration rather than retreat. Cross-border investment into China’s cleantech sectors continues, but through more defined, locally anchored channels. For investors, the focus is shifting toward understanding these structures and identifying where regulatory alignment, market demand, and long-term strategic priorities intersect.
Dr. Yufan Guan, Managing Director, NIO Capital
Yes, cross-border investing is facing significant structural headwinds as cleantech becomes synonymous with critical infrastructure. We are seeing a move away from “global narratives” toward “local realities”, where national security concerns dictate the flow of capital and hardware.
However, this structural difficulty is not halting progress; it is forcing a strategic evolution in how we scale. While direct imports face higher tariffs and scrutiny, the “insatiable demand” for transition technologies is driving creative workarounds:
- Supply Chain Localization: Investors are prioritizing companies that can establish “China+1” or “Local-for-Local” manufacturing hubs.
- Third-Party Intermediaries: Utilizing “gateway” markets like Singapore to bridge capital and technology between regions.
- Collaborative Models: A shift toward Joint Ventures (JVs) and technology licensing over pure-play exports, allowing for the localized production of sensitive components like battery management systems or grid-edge Al.
While the “borderless” era of cleantech may be over, the “partnership” era is beginning. Investors who can navigate local subsidies and help portfolio companies build resilient, fragmented supply chains will find the most success in this more complex environment.
Summer’s take:
As cleantech becomes more closely tied to critical infrastructure, cross-border investment is increasingly shaped by national priorities rather than purely economic considerations.
What stands out is not a slowdown in activity, but a shift in how scaling happens. Models are moving away from globally optimized supply chains toward more localized, partnership-driven approaches. “China+1” strategies, regional manufacturing hubs, and joint ventures are becoming standard pathways to navigate regulatory complexity while maintaining market access.
This shift, however, comes with trade-offs. Operating across multiple jurisdictions, aligning with local policy frameworks, and structuring partnerships that balance control and collaboration all add layers of execution complexity. The result is a more fragmented system—one that may be more resilient, but also potentially less efficient and slower to scale.
In that context, the move from a “borderless” model to a partnership-oriented one is less a constraint than an adaptation. Capital is increasingly favoring platforms that can replicate across markets and operate within localized ecosystems, rather than single-market solutions.
This raises a broader set of questions for the market. If scaling now depends on localization, are we moving from economies of scale to economies of replication? Will fragmentation ultimately strengthen resilience, or introduce inefficiencies that slow the transition? And as partnerships become the primary route to market, how will companies balance the need for local alignment with maintaining control over technology, margins, and long-term competitive advantage?
