The US and Singapore announced important climate partnerships during US vice-president Kamala Harris’ recent visit to Singapore. The US will work closely with Singapore to tackle climate change by leveraging the financial sector, collaborating to promote green building standards in Asean and incorporating climate and environmental sustainability into a longstanding programme between both countries.
In Malaysia, Bank Negara Malaysia assistant governor Adnan Zaylani Mohamad Zahid said at the launch of the World Bank’s Islamic Trade Finance Report in Kuala Lumpur on Aug 23 that supply chain pressure by trade partners that require sustainability preconditions to trade could put US$65.3 billion (RM273.8 billion) worth of annual export revenue at stake if Malaysia did not transition towards a low-carbon and climate-resilient economy by 2025. He argued that sustainability was no longer a nice-to-have but was imperative for long-term business survival.
These encouraging developments barely make the headlines as the nation goes through unending political turmoil.
Climate crisis overshadowed
Indeed, Asean celebrated its 54th anniversary on Aug 8 but there is much to spoil the party. There is an alarming existential threat overshadowed by the raging Covid-19 pandemic that shows no sign of slowing down while the legitimacy of Myanmar military power continues to test Asean’s effectiveness.
The sixth report of the most scientifically informed assessment on climate change just published in early August by the Intergovernmental Panel on Climate Change (IPCC) Working Group I of the United Nations (UN) casts a damning outlook for the planet.
Scientists now confirm human actions unequivocally caused the fastest global warming in the atmosphere, ocean and land within the span of 2,000 years and each of the last four decades has been successively warmer than any decade that has preceded it since 1850.
The borderless impact of climate change is already affecting all inhabited regions across the world. This year, July was the earth’s hottest month on record, with extreme weather anomalies wreaking havoc in Canada, China, Germany, Turkey and Greece.
Produced by 234 authors from 66 countries and further approved by 195 member governments, the IPCC report warns that we may be approaching the point of no return if drastic changes are not made.
Drastic measures needed for goal of 1.5 degrees Celsius
Reducing greenhouse gases is the only pathway to reversing this course towards catastrophe. This means a drastic and complete overhaul of the energy landscape and ditching fossil fuels.
The bad news is the world’s actions have fallen short of global commitments. In fact, since the UN Framework Convention on Climate Change was signed, global carbon dioxide emissions have increased 60%, while Asean’s carbon dioxide emissions per capita are projected to rise 140% between 2015 and 2040.
The International Energy Agency warns that the pathway to carbon neutrality by 2050 is narrow. To achieve the Paris agreement goals to limit global warming to 1.5oC and net-zero by 2050, there are more than 400 drastic milestones that will need to be reached in 30 years.
Green agenda in Asean
All Asean member states are party to the Paris Climate Agreement and have committed to a shared goal of carbon reduction and neutrality by at least 2050.
The good news is the green agenda is gaining momentum in various policy discussions in Asean. The Asean Economic Community pillar that drives the region’s economic ambition is embracing more actively this agenda, which had long been nestled under the Asean Socio-Cultural Community Pillar.
Particularly in 2021, rising awareness and interest has been observed across the region. The public sector and policy stakeholders began to highlight green measures, reducing carbon footprints, and more aggressive climate actions.
The Asian Development Bank rolled out the Asean Catalytic Green Finance Facility in 2019 to encourage private participation in green infrastructure projects and reduce the perceived high risk of such ventures through co-financing with public financing.
Asean is also currently finalising a framework on the circular economy as one of the Priority Economic Deliverables of Asean chair, Brunei; and the Asean Taxonomy Board is developing a multi-tiered Asean Taxonomy for Sustainable Finance that will serve as the overarching guide for all member states.
In the private sector, large corporations are the early movers in exploring environmental, social and governance practices, investment, reporting and disclosure standards as foreign investment demands have driven the shift to adopt the green agenda.
Last chance for reset
The Covid-19 pandemic is considered a last-chance window for a fundamental reset of our economic growth model. As governments utilise fiscal policy tools for recovery, there is a window of opportunity for the green agenda to be incorporated in the areas of stimulus spending, national budget, taxation, investment and green jobs.
CARI had submitted a list of 21 Actions for a Greener Asean to the current Asean chair Brunei highlighting short-, medium- and long-term measures to be taken based on four CARI policy papers that found minimal climate mitigation measures in 2020.
Short-term measures such as providing financial assistance for green businesses and allocations for green infrastructure; upskilling for the renewable energy sector; allocation for sustainable and climate-resilient infrastructure; and including green measures in government bailout or lending have been proposed.
Other longer-term policy options such as studying and phasing-in of carbon and environmental taxes; reform of fossil fuel subsidy schemes; working towards a common minimum corporate-income-tax standard for the region to increase fiscal space needed for the climate agenda; and studying the possibility of an Asean carbon market such as the EU-Emissions Trading System are among the policy directions that Asean should take.
Developed countries must walk the talk
Crucially, in getting Asean to take heed of the green agenda, the developed countries must walk the talk.
The collective commitment to jointly mobilise US$100 billion a year by 2020 pledged by developed countries to address the needs of developing countries has fallen short, and even the UN has urged the developed countries to make good on their promise in a recent meeting.
It is not hard to see why countries such as fossil fuel-reliant China, Russia, India, Turkey and Saudi Arabia failed to agree on the wording of key climate change related to phasing out coal and the 1.5-degree goal commitments at a recent G20 meeting in July.
UN Secretary General António Guterres called on the G7 and G20’s leadership to deliver the commitments, as countries are “way off track”. All eyes are now on the UN general assembly in September to see whether the UN can achieve substantial climate progress before the 26th UN Climate Change Conference of the Parties (COP26) to be held from Oct 31 to Nov 12.
Asean’s developmental gaps and political economy are sentiments that need sensitive consideration in transitioning to a low-carbon economy. Some may even view the politics of climate change with a lens of scepticism.
We can count, however, on the openness of experts and policymakers in Asean who have generally shown a consensus that a greener Asean is a goal that must be pursued alongside economic recovery but not at the expense of economic stability. The question is then how to translate that openness into concrete actions.
Asean must not waste the opportunity presented by the pandemic to achieve just that as governments inject fiscal spending to stimulate economic growth. This is the time to mobilise a whole-of-community effort to ensure that this richly endowed region does not lose its shine.
Jukhee Hong is executive director, CARI Asean Research and Advocacy (formerly known as CIMB ASEAN Research Institute)