Vaccinating Asean for a lower-carbon future
It is said that green shoots can be found in anything if one looks hard enough. The Covid year of 2020 flew squarely in the face of that. With over 96 million infected and 2 million fatalities, the last 12 months have been traumatic for so many families around the world.
Livelihoods have been fundamentally affected as millions face eviction, unemployment and poverty. Global gross domestic product (GDP) was estimated to have contracted over 5%, according to the World Bank, destroying more than US$7 trillion in economic output. For Asean, most economies, with the possible exception of Vietnam, experienced an economic contraction in 2020.
In light of all the bad news, it is hard to talk about green shoots. However, if there are some, one is surely the fact that global greenhouse gas emissions in 2020 declined by 2.4 billion tonnes or 7%, the largest yearly drop ever seen. This mainly reflected the drop in demand for transport, especially air travel, and subdued industrial energy consumption triggered by the global lockdown.
While that number may look impressive, the UN Environment Programme (UNEP) says global emissions must continue to drop by 7% every year until 2030 to meet the Paris Climate Accord goal of a maximum 1.5C rise in temperatures by 2050. It took a painful global lockdown for the annual goal to be touched in 2020. Barely.
This obviously will not last. Health and economic needs trump most others, and trillions of dollars in stimulus packages are being prepared to jumpstart economies in 2021, which will ramp up emissions substantially. In Asean, stimulus measures by Thailand and Malaysia are expected to exceed 20% of GDP, while Singapore is reportedly considering a $74-billion fiscal package for its next budget.
Monetary easing by central banks has reduced benchmark interest rates to record lows in the Philippines, Indonesia as well as Thailand. In China, domestic air travel numbers are already back to 2019 levels and industrial production has spearheaded fourth quarter growth to pre-pandemic levels. There is therefore reason for optimism that the recovery will be swift, but it is important that it is also green.
The reason is that the road leading to a high-carbon future does not look assuring. At least three major urban centres in Southeast Asia -- Bangkok, Ho Chi Minh City and Jakarta -- are seen as high risk from rising sea levels via global warming. The entire Mekong river delta, Vietnam's "rice basket", could be submerged in four decades.
The health and environmental risks that come with high emissions are grossly visible in most urban hubs as haze once again engulfs cities such as Bangkok, Jakarta and Hanoi.
As the fourth largest economy measured by purchasing power parity after China, the US and India, Asean has a key role to play in meeting emissions reduction targets. Indonesia, the largest emitter in Asean, had pledged to reduce emissions by 29% by 2030 with some assistance. Companies are increasingly tapping the green finance market, taking Asean financing to $7.8 billion in 2019, an almost 50% increase.
In Thailand, the developer of the ubiquitous BTS skytrain has raised over $600 million through green financing instruments to invest in transport expansion, looking to reduce emissions by 28,000 tonnes per year. But much more needs to be done. And the reaction to Covid in 2020 has shown that there is hope and appetite for change.
As the various fiscal and monetary stimuli indicate, there is a willingness for swift policy action to tackle emergencies. The enormous resources being marshalled can partly be channeled toward a greater push for renewable energy, making transport links more sustainable and shifting economic priorities toward carbon-neutral goals.
Market solutions are increasingly crucial. Action can be triggered by encouraging more emissions disclosure by companies, along the lines recommended by the Task Force on Climate-related Financial Disclosures, and tapping the green finance market.
The former governor of the Bank of England, Mark Carney, recently put his weight behind a $100-billion global carbon offset market, which is a key opportunity for industries and individuals to help support a sustainable recovery.
The tools and pathways exist. There is a need for action. As 2020 has shown, we have a tremendous ability to come together and pool our resources to solve the problems that affect us the most. Covid will hopefully, and with great cost, be resolved eventually as vaccines are rolled out. Carbon emissions leading to climate change is one of the next big challenges on the horizon.
As we grapple with the deadly embrace of a global pandemic and put our collective efforts toward changing our lives and altering our economies, it is worthwhile to also consider vaccinating ourselves against a high-carbon future.
The writer is a finance professional working in Bangkok and is a Sustainability and Climate Risk (SCR) certification holder. The views expressed are of the writer alone. He can be reached at firstname.lastname@example.org