The East Asia and Pacific region is a major driver of global growth in demand for climate smart technologies, according to the recently-released “Creating Markets for Climate Business” report from the International Finance Corporation (IFC). Trillions of dollars of investment is expected to be poured into transport infrastructure, particularly in major markets such as Vietnam and Indonesia.

The report also points to China’s leading role in grid-tied renewables, Japan as the second-largest investor globally in rooftop solar, and expected increases in green infrastructure in the region. Generally, in East Asia, the total regional investment opportunity is over $3 trillion through to 2025 just in green buildings alone. And the Pacific Islands are becoming attractive markets for off-grid solar and mini-grid systems.

The report identifies seven industry sectors that can make a crucial difference in catalyzing private investment: renewable energy, off-grid solar and energy storage, agribusiness, green buildings, urban transportation, water, and urban waste management. Already, more than $1 trillion in investments are flowing into climate-related projects in these areas. But trillions more could be triggered by creating the right business conditions in emerging markets, the report found.

It said that developing countries can meet climate targets promised in the landmark Paris Agreement by catalyzing trillions of dollars in private investments through a combination of smart policy reforms and innovative business models.

“The private sector holds the key to fighting climate change,” said Mr. Philippe Le Houérou, CEO of IFC. “The private sector has the innovation, the financing, and the tools. We can help unlock more private sector investment, but this also requires government reforms as well as innovative business models, which together will create new markets and attract the necessary investment. This can fulfill the promise of Paris.”

In Vietnam, Prime Minister Nguyen Xuan Phuc has recently pledged $1 billion to the Mekong Delta to fund projects aimed at tackling climate change amid warnings that the country’s rice basket is disappearing. The funding will come from the State budget, the World Bank, and other sources.

The Asian Development Bank (ADB) recently approved $170 million in loans to help Vietnam upgrade urban infrastructure and address climate change, benefitting about 116,000 households in Hue, Vinh Yen, and Ha Giang cities.

Addressing climate change is a strategic priority for the IFC. Since 2005, it has invested $18.3 billion of its own funds in long-term financing for climate-smart projects and mobilized an additional $11 billion from other investors. This latest report is a follow-up to the Climate Investment Opportunities report issued last year, which found that the Paris Agreement could create $23 trillion in investment opportunities for 21 emerging-market countries.