The Association of Southeast Asian Nations (Asean) is setting course for a carbon-neutral future which could attract a substantial $3.7-6.7 trillion in green investment and unlock between 49 and 66 million additional jobs for the region, according to the block Secretariat.
Asean economic ministers endorsed a “visionary strategy” on August 19 for carbon neutrality designed to complement Asean member states’ national initiatives in meeting their respective nationally determined contributions under the United Nations Paris Climate Agreement 2015.
This strategy, commissioned by the Asean member states and with the support from the Australia for Asean Futures initiative, frames the need for Asean to pursue carbon neutrality with utmost urgency, and in doing so unlock the huge value potential of a green transformation of the region, the Asean Secretariat said.
Asean is highly vulnerable to climate change, with five of the world’s 20 most at-risk countries located in the region. Unchecked climate change could drive down regional GDP by 11% by 2100, and lead to the displacement of 87 million people in high-risk flood areas in Indonesia, Malaysia, Myanmar, Thailand, and Vietnam.
Addressing the region’s carbon burden will not only help mitigate these critical risks but also offer a path to unlock significant socioeconomic opportunities, the Secretariat added.
Citing analysis conducted by Boston Consulting Group, the Secretariat said efforts towards a carbon-neutral future could unleash between $3.0 trillion and $5.3 trillion GDP value-add by 2050.
The economic benefits of carbon neutrality would accrue to all Asean member states. Vietnam, Cambodia, Laos, and Myanmar are projected to enjoy the greatest uplift, ranging from 9% to 12% of GDP by the end of the century.
Middle-income countries such as Indonesia, Malaysia, the Philippines, and Thailand would see an increase of 4% to 7%. High-income countries Singapore and Brunei would enjoy a more modest uplift of 1% to 2%.
Asean needs to bridge a 2.6-gigaton carbon dioxide gap to achieve its carbon-neutrality goals but several conditions in the region are encouraging, the Asean Secretariat wrote.
Asean has one of the lowest CO2 emissions per capita globally, at just 3.9 tons of CO2 (tCO2) per capita, below the global average of 4.8, almost half of China’s (7.1) and less than a quarter that of the U.S. (14).
“Asean’s growing profile as an attractive financial location is creating an appealing investment environment, with total investment into Asean projected to grow at a compound annual growth rate of 12% between 2023 and 2030. This will double total capital from $962 billion in 2023 to more than$2.1 trillion by 2030,” it pointed out.
In addition, hydropower-rich member states can contribute significant volumes of zero-carbon energy, some have strong raw material bases for the production of green-technology nickel batteries, while others have robust foundations in the automotive industry that could power up electric vehicle (EV) manufacturing opportunities.
Eight-pronged strategy
The Asean strategy for carbon neutrality aims to leverage these synergies, with a commitment to develop green industries, enhance Asean interoperability, embed globally credible standards, and unlock green capabilities.
“The strategy will reduce emissions across energy, industrial processes, and agriculture sectors, among others,” the Secretariat noted.
The eight targeted strategies have been identified by the Asean member states are to accelerate green value chain integration, promote regional circular economy supply chains, connect green infrastructure and markets, enhance interoperable carbon markets, foster credible and common standards, attract and deploy green capital, promote green talent development and mobility, and share green best practices.
The strategy now moves to adoption by the Asean Economic Community Council (AECC) and is to be acknowledged by Asean leaders at the 23rd Asean Summit in September 2023 in Indonesia.
It will then be introduced to the relevant Asean stakeholders from September 2023 onwards, as the region continues to work together in unlocking the value of a carbon-neutral future.
“Asean has reached an inflection point, where decarbonization is paramount for the region’s continued economic growth,” Asean Secretary General Kao Kim Hourn said in the August 19 statement.
“The Asean strategy for carbon neutrality will provide the springboard to propel forward our green transition while unlocking huge economic potential for Asean’s citizens,” he added.