Several companies in the energy and utilities sectors that we met showed good awareness of energy transition issues. Many of them acknowledged that this is now an essential part of investor interests, with a focus on the arising opportunities in the low carbon future. We feel particularly positive that CLP and PTT have both set out clear business plans to harness the opportunities.
CLP, a utility company based in Hong Kong with operations in India and China, launched its Climate Vision 2050 back in 2007, which set out its mid-term renewable energy capacity targets and helped CLP become one of the first Asian companies establishing a 2050 reduction target. In recent years, the company has been targeting key markets, such as India, for renewable energy growth, and has worked with strategic investors to strengthen its competitive position. Although India’s national energy policy played a significant role in enabling such opportunities, we commend CLP’s early vision back in 2007.
CLP is also actively engaging in policy dialogues with regulators to confirm the timeline of switching its coal-fired units to lower-carbon technologies. In September 2019, the company published their position on Hong Kong’s “Long-term Decarbonization Strategy”, encouraging the government to take a balanced view considering environmental sustainability in its future energy policy and to be clear on the timeline starting the transition away from coal to natural gas.
PTT, the largest integrated oil & gas company in Thailand, is another company we see viewing the energy transition as an opportunity. We met PTT as it was working on an update of its green revenue target, and the company shared with us its positive outlook on the green product markets, where it is currently scaling up. The revenue target is coordinated between its large number of subsidiaries and informs their research and development targets and budgetary decisions. In our opinion, this is an example of best practice rarely seen in Asia. While we will continue to encourage stretching mid and long-term reduction targets by the group, we feel that management has adequate knowledge on energy transition, with a good climate change governance framework.
Chinese natural gas suppliers are another group of businesses enjoying energy transition as a driver for new business growth. Kunlun Energy and Hong Kong and China Gas are both focusing on downstream distribution and are clearly benefiting from the incentives created by China’s energy policy, which drives gasification for heat supply at major cities.