ASEAN and climate change

Meeting 11

I Made Krisna Gupta

2024-05-13

Today

How ASEAN overcome climate change, its current position, its projections
still taking from Sonobe et al. (2024)¹, specifically chapters from the part one.

climate change leads to rising sea level, prolonged drought, floods, and storms.
Global externalities: global impacts and global solutions.
humanitarian crises, fast population displacement through migration, intensified reliance on imports for vital commodities, and even fuel conflicts.
All countries must collaborate.

Home of Four of the top 10 nations globally affected by climate change: Myanmar, the Philippines, Thailand, and Vietnam.
Home of 50 coastal cities projected to affected heavily by the rise of sea level.
Indonesia emerged as the country with the highest GHG emissions in the ASEAN region in 2021, recording 2.05 billion tons.

VietNam 507.34 million tons, Thailand 452.12 million tons.

Deforestation is one of the leading causes of emissions in the agriculture
- notably for large-scale commercial farming and palm oil plantations,
Between 2007 and 2018, deforestation generated around $48 billion (5.7% of gross domestic product, GDP)
however, air pollution and fire damage offset over half of this.
Urban congestion from personal vehicles costs about 0.5% of GDP, while air pollution shortens the average Indonesian citizen’s life expectancy by 1 to 4 years (Greenstone and Fan 2019).

Forests provide various ecological services beyond their local surroundings, such as air filtration, groundwater replenishment, and temperature regulation.
Forests offer economic advantages and improve community resilience at the local level, notably during natural catastrophes
High deforestation rates, however, pose serious dangers, as do predicted habitat and biodiversity losses of up to 40% by 2100.

country	targets	country	targets
BRN	20%		MMR
CAM	41.7-59.1%	PHL	2.71-72.29%
IDN	31.89-43.2%	SGP	60 $Mt CO_2e$
LAO	60%	THA	30%
MYS	45%	VNM	15.8-43.5%

The upperbound of some pledges are conditional on developed nations’ help.

Most countries pledges economy-wide sectors, eg., power generation, land use, and transportation.
Some countries has wide-range actions:
- Renewable energy: CAM, IDN, BRN, LAO,THA
- Industrial emission reduction: BRN, CAM, MMR
- Nature-based solution: BRN, CAM, IDN, LAO, MMR
Others lack detailed commitment. eg., VNM, PHL, SGP

Energy demand in ASEAN is still growing, particularly from high income growth and friendshoring. It is projected that demand will grow to 218% in 2030. Under carbon neutral scenario, this number goes down to only 166%.
Cold,hard cash. According to the International Energy Agency, Southeast Asia will need an annual investment of $190 billion to reach its climate goals by 2030, which is $120 billion more than the average annual investment reported from 2016 to 2020.

Coal is too good. Most ASEAN countries still depends on coal, especially after Russian attack on Ukraine. MYS, PHL and THA alone accounting to 70% of ASEAN coal imports. Other energies typically used to meet growing demands instead of reducing reliance on coal. Coal is extremely reliable, doesn’t need new grid capacity or storage, and cheap. In Power Development Plans of most ASEAN countries, coal is still the backbone.

The region boasts a large, still mostly untapped, renewable energy potential, with variable renewable energy and energy storage technologies potentially playing a central role in reaching net-zero emissions.
Beyond solar and wind power sources, several ASEAN countries (including Indonesia, Viet Nam, and the Philippines) have significant geothermal resources: a very reliable source of energy but often met with contentious land ownership problem.
With energy infrastructure still growing, the region has much smaller sunk cost compared to more developed economies.

The Asian Development Bank (ADB) launched the Energy Transition Mechanism (ETM) in 2021 as a market-based approach aimed to reduce GHG emissions by phasing out fossil fuel power plants and replacing them with clean energy alternatives in Asia and the Pacific.
The ETM is designed to use concessional and commercial capital to accelerate the retirement or repurposing of polluting power generation units (shorten the life of legacy coal power assets) and at the same time unlock new renewable energy investments, including support for enhanced grid capacity for renewable energy.

The JETP (Just Energy Transition Partnership) for Indonesia and Vietnam.
Indonesia is expected to receive $20 billion in public and private financing under the JETP, over the next 3–5 years. Assistance will be delivered in the form of grants, concessional loans, market-rate loans, guarantees, private investments, and technical expertise. A JETP Secretariat (reporting and analytical role) was set up by Indonesia in February 2023, to which ADB provides institutional support.
Over the same period, Viet Nam is set to receive $15.5 billion under the JETP. Related assistance will focus on finance, technology, and capacity building, as well as policy and regulation improvement to increase private investment in renewable energy. A JETP Resource Mobilization Plan is expected to be published by Viet Nam in late-2023.

Sustainable finance is another options ASEAN countries can use.
ASEAN’s sustainable debt market—including green, social, and sustainability (GSS) bonds and loans, as well as sustainability-linked bonds (SLBs) and sustainabilitylinked loans (SLLs)—retained robust volumes (at $36 billion) despite the inevitable reaction to adverse market conditions (rising inflation and interest rates).
Sustainable finance these days receive some badrep (greenwashing, unsavvy activist investors), but may be promising in ASEAN.

APG (ASEAN Power Grid) tries to bring all ASEAN countries’ energy network to connect with one another.
six bilateral interconnections have been in operations, linking Singapore and Peninsula Malaysia, Thailand and Peninsula Malaysia, and via Thailand to Cambodia, Lao PDR and Vietnam.
Six APG projects are under construction with a schedule of completion in 2017. The Sarawak-West Kalimantan interconnection was planned but is yet to finished. Sarawak is mostly hydropowered.