SE Asia needs to fill emission reduction gap of 2.6-3.2 bil mt from 2030 targets: experts

Southeast Asian countries collectively still face a gap of 2.6-3.2 billion mt in emission reductions compared to their 2030 targets, a report by U.S. consultancy Bain & Company and Singapore's state-owned investment company Temasek said June 7.

The emissions gap was estimated based on the latest Nationally Determined Contributions, or NDCs, committed by individual Southeast Asian countries, and projections according to planned policies. To close the emissions gap, the report showed that more climate financing of $1 trillion-$3 trillion will be required on top of the current accumulated level below $20 billion.

Three problems are hindering the regional decarbonization progress and the respective capital flows -- insufficient incentives to push decarbonization, bias that remains toward new technologies, and unclear system costs for renewable power, Dale Hardcastle, director of global sustainability and innovation center with Bain and Company, said on June 7 while presenting the report at Singapore's Ecosperity Week 2022.

Carbon needs to have a meaningful price so as to create the incentive that drives emitters to decarbonize, Hardcastle explained, adding that "no silver bullet exists" and new technologies still face significant challenges when compared to proven, lower-risk levers.

Furthermore, better clarity is needed for the overall cost incurred by a renewable-dominant power system, including costs of power generation, grid upgrades and intermittency management, he emphasized.

The report highlighted three key areas for investments with "tangible return and climate impact" -- energy, nature, and agriculture. Specifically, the report pointed out five priority levers that "drive 60% of Southeast Asia's carbon abatement potential," including forest conservation, renewables (solar and wind), electric mobility, sustainable farming, as well as green building materials and products.

The report said forest conservation in particular has become a growing investable space in Indonesia and Malaysia, while the electric mobility sector looks poised to take off in Indonesia, Thailand, and Vietnam, driven by strong automotive manufacturing expertise in these markets.

The report showed the among the 10 Southeast Asian countries, eight have made net zero or carbon neutrality commitments, including Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Singapore, Thailand and Vietnam. Myanmar and Philippines have not set exact timelines for achieving net zero.