Chennai, May 23 (IANS): India and China are expected to drive the investment in low carbon emissions in the Asia Pacific Region (APAC), Moody's Investor's Service said in a report.

The International Energy Agency (IEA) estimates that India will spend $53 billion and $87 billion of average annual investment in 2021-25 and 2026-30, respectively, to achieve the Stated Policy Scenario (STEPS) trajectory of emissions reductions, while China will spend $239 billion and $210 billion during the same period, Moody's said.

Moody's added that bulk of the estimated investment will be allocated to clean energy and related projects.

Growing availability of green finance, underpinned by diversifying funding channels and manageable costs, will bolster power companies' energy transition and support their sizable financing requirements, the credit rating agency said in the report.

Sustainable bonds, green loans, project bonds, and green funds are common in the sustainable finance plans of APAC's power utilities.

"We expect the renewable energy sector will continue to steer growth in sustainable bond markets given the governments' decarbonisation commitments. Thermal power companies with well-defined energy transition strategies can potentially tap transition finance," Moody's said.

"Coal-fired companies in the region face rising carbon transition risk but funding risk will be lower for utilities with credible transition plans. In the medium term, coal fired power will remain critical to many power sectors in the region," the report noted.