Asia-Pacific Leans into Developing Low-Carbon Technology
The scaling up of renewable-energy and energy-efficiency solutions will be key drivers of the transition away from fossil fuels.1 We used MSCI Low Carbon Patent Scores2 to assess the future innovation potential of companies' low-carbon technologies.3 Companies in the Asia-Pacific (APAC) region may be well placed to take advantage of this climate transition.
Collectively, constituents of the MSCI AC Asia Pacific Investable Market Index (IMI) had higher average patent-quality scores related to renewable-energy and energy-efficiency technologies than their global peers in the MSCI World IMI. These gaps were particularly evident in the areas of transport, battery storage, solar power and hydrogen fuels.
Notable technology included research and development of perovskite solar cells and high-voltage electric-current lines for wind power. Automakers have also accelerated the speed and scale of their transport solutions, including electric vehicles (EVs), EV batteries, hybrid vehicles and fuel-cell cars — aiming to achieve price parity with conventional cars.4 Many have also invested in hydrogen-fuel supply chains and startups. Government subsidies and tax credits may help these companies further scale the deployment of these low-carbon solutions.5
Low-carbon patent-quality scores in the MSCI World IMI and MSCI AC Asia Pacific IMI
We analyzed the quality scores of low-carbon patents (x-axis), replicating index constituents in two portfolios. We multiplied the portfolio weight of each issuer with that issuer’s technology-specific patent-quality score. The weighted average technology-specific patent-quality score of the issuer was aggregated at the respective portfolio level. Data as of Feb.1, 2024. Source: MSCI ESG Research
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1 “Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach,” International Energy Agency (IEA), September 2023.2 For more information, see “Climate VaR Methodology Part 3: Technology Opportunities,” MSCI ESG Research, June 2020 (client access only).3 “Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach,” IEA, September 2023. Kenji Watanabe et al., “ Unpacking COP28 Renewable Energy and Energy Efficiency Commitments,” MSCI ESG Research, March 2024. 4 “Global EV outlook,” IEA, April 2024.5 “Japan, U.S. in talks to bolster hydrogen supply chain together,” Nikkei Asia, April 5, 2024.
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