To achieve its NDC (Nationally Determined Contributions) or emissions reduction commitments and unlock the green economy potential, the SEA (South East Asia) region will need to reduce greenhouse gas emissions by 33% from business-as-usual levels in 2030. This has been revealed in Southeast Asia’s Green Economy 2023 Report: ‘Cracking The Code’, a report by Bain & Company, Temasek, GenZero and Amazon Web Services (AWS).
The report stresses on public and private sectors’ collective efforts to reach the goal that the four SEA countries – Indonesia, Singapore, Thailand, and Vietnam have committed to material emission reduction targets by 2030. “Eight out of 10 SEA countries have set carbon neutrality goals, while seven of them are either considering or have implemented carbon pricing mechanisms,” said the report.
However, the number of SEA businesses signing on to Science-Based Targets Initiative commitments have quadrupled to 109 in 2022, but green investments dipped 7% to USD 5.2 billion in 2022 compared to 2021 continuing a downward trend from previous years.
It pointed out that while the region received FDIs in green projects, the nature of foreign investment in the SEA green economy is shifting. “In 2022, foreign investment from outside of SEA had fallen by over 50% compared to 2021 and 2020. Meanwhile, intraregional investments doubled. Over half of the green investments in the region go towards Indonesia and Singapore, which have been growing over the last couple of years,” said the report. Further the report said that the RE continued to be investors’ favourite theme as the share of renewables investments remained stable at 70-75%.
“SEA governments need to focus first on proven solutions to balance rising energy demand while reducing carbon emissions. The everything, everywhere all at once mantra is not going to get the job done nor build the clarity needed to scale investment and impact,” said Dale Hardcastle, Global Head of Carbon Markets and Director of Global Sustainability Innovation Center at Bain & Company, based in Singapore.
“Regulations and investment should be focused on the deployment of proven and profitable technologies that are here today and can have impact, while we lay the track to take on hard-to-abate industries with new technologies and innovation in the longer term,”he noted.
The report cited few challenges that makes decarbonisation particularly difficult that includes high dependency on fossil fuels and reliance on international funding. The emerging middle class is driving energy demand that poses a challenge for governments and leaders in the region to fulfill the energy demands and reduce carbon emissions simultaneously.Thus, the report recommends the region to double down on its decarbonisation efforts to achieve the dual purpose of economic growth and decarbonization.
The report suggested streamlining its permit process, accelerating grid modernization efforts to reduce congestion and curtailment risks, and to increase financial incentives for renewables to accelerate the energy transition.
Frederick Teo, Chief Executive Officer of GenZero expressed hope for significant opportunities for green investments in the region.He stressed on the need of regional cooperation to unlock the full potential of an effective green economy. He also noted that the green economy in SEA could between five and six million green jobs in areas of planning, construction, operations, and maintenance of clean energy infrastructure as well as manufacturing, could be created in the decade ending 2030.
