According to a new Asian Development Bank (ADB) report entitled ‘Asian Development Outlook 2016 Update – Meeting the Low Carbon Growth Challenge’, rising temperatures and greenhouse gases are undermining the futures of the agriculture sector and food security in Asia. This is currently evidenced by greater heat stress, shorter wet seasons and more severe droughts and disease outbreaks. The report, which was published earlier this month, discusses the current reality of climate change in Asia that includes growing greenhouse gas (GHG) emissions. It looks at countries from Central Asia (Kazakhstan), East Asia (China), South Asia (India) and South East Asia (Indonesia) – discussing the measures that will be required to limit the average temperature increase to 2°C and the social, economic and environmental impacts of climate change across Asian. Limiting the global average temperature increase to 2°C was agreed to in Paris in December last year. GHG emissions in Asia have increased from 25% of the global total in the period of 1990-1999 to 40% of the global total in 2012. Without strong action, Asia is on track to contribute approximately 50% of global GHG emissions by 2030. A sobering statement presented in the report is that climate change across Asia could cost up to 10% of GDP by 2100 if urgent actions to reduce greenhouse gas (GHG) emissions are not implemented.
it is critical to identify and strongly consider cost effective opportunities to achieve a transition to a lower carbon economy in order to mitigate the financial and environmental effects of climate change across Asia
In order to realise the goal of limiting the global average temperature increase to 2°C by 2050, Asian counties will need to invest a total of $300 billion each year in renewable power sources, carbon capture and storage, smart power grids and energy storage. The ADB estimates that the cost of transitioning to a lower carbon economy across Asia is modest – approximately 0.1% of GDP each year. By 2050 this would equate to an annual reduction in growth of 4%. This figure does not take into account the financial benefits that could be brought about by the implementation of emission reduction measures implemented between now and 2050. The ADB report points out that it is critical to identify and strongly consider cost effective opportunities to achieve a transition to a lower carbon economy in order to mitigate the financial and environmental effects of climate change across Asia. The implementation of technologies such as energy efficient air conditioners, lights and electric motors and both solar and electric cooking stoves in Asia are examples of where lower than global average abatement cost could be delivered.
The ADB report also outlines what it calls co-benefits of lower GHG emissions – i.e. improved air quality and preserving environmental resilience. Poor air quality across Asia is estimated to have contributed to 3 million premature deaths in 2010 – and this number could double by 2050 if air quality continues to worsen. The ADB estimates that implementing emissions reduction measures commensurate with the maximum 2°C global average temperature increase scenario could result in 600,000 fewer deaths per year. In addition, each $1 spent on limiting the average temperature increase to 2°C could realise more than $2 in benefits such as improved health outcomes. Implementing emission reduction measures could result in the preservation of up to 45 million hectares of forest across Asia. Environmental resilience would be preserved by increasing forested areas, controlling soil erosion and increasing biodiversity protection efforts – extremely important given Asia is home to 5 of the 10 most endangered forests in the world and the deforestation rate in Southeast Asia is higher than any other major tropical region on Earth.
According to the ‘Asian Development Outlook 2016 Update – Meeting the Low Carbon Growth Challenge’ report, Asia can realise a low carbon transition using the following approach:
- Pricing carbon and implementing emissions trading to achieve efficient mitigation – pricing carbon shines a light on the true social, economic and environmental costs of GHG emissions and provides an incentive for mitigation. Emissions trading can establish a common carbon price which in turn can provide a reliable signal to investors
- Introducing critically needed regulations to promote clean energy and energy efficiency – Governments can mandate the use of renewable energy sources, lower vehicle emissions and improved energy efficiency for consumer goods, buildings and industry. Some progress in these regulations has been made in Asia, however there are some significant gaps with respect to the coverage of these regulations and how stringent they are
- Reducing risk and facilitating finance to encourage clean energy investment – consistent government policy and support for new technologies can reduce the level of risk for individuals looking to invest in clean energy. Governments can also offer incentives such as interest subsidies, public and private partnerships plus guarantees for green bonds for private investment in new clean energy technologies
As an Australian scientist and entrepreneur who travels extensively, I see first hand the challenges and opportunities that climate change across Asia represents for Governments and industry in the region. The ADB report discusses these challenges and opportunities in detail and importantly, does so in a balanced manner. I believe balance is important because, as severe as the impacts of climate change are, the potential benefits of acting on climate change are very significant and should therefore receive similar focus. I am encouraged by the extent to which the Government and industry representatives I speak to are prioritising action on climate change and seeing the opportunities that fighting climate change presents from social, economic and environmental perspectives.
Without international cooperation, the reality is that climate change across Asia could cost up to 10% of GDP by 2100
In my last article I discussed the role that Governments, industry and investors need to play in growing the implementation of carbon pricing globally to maintain the fight against climate change. The ADB report discusses carbon pricing and trading as one component of the transition to lower carbon economies. Given the significant contribution that GHG emissions from Asia make to global GHG emissions, any success in reducing GHG emissions in Asia will have a significant global impact. Governments in Asia need to carefully consider linkages to other carbon trading schemes currently operating around the world to increase the scale of the reductions that can be achieved. They should also examine how the existing trading schemes create reliable signals that investors can participate in trading with a level of confidence. Industry in Asia needs to examine how its counterparts in other international markets price carbon and the benefits they are realising from pricing and trading. Investors in Asia should follow the lead of the increasing numbers of US and European investors looking beyond potential economic returns when considering in which companies they should invest. In playing their respective roles, Governments, industry and investors in Asia can drive action within the region as well as facilitate international participation in emissions reductions as part of the global fight against climate change. Without international cooperation, the reality is that climate change across Asia could cost up to 10% of GDP by 2100.