Climate change: what happened to Asia-Pacific’s green recovery from coronavirus?


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Over 100 commercial jets stand idly on the tarmac of Singapore’s Changi Airport, grounded by the Covid-19 pandemic that has debilitated the airline industry.
Passenger volume at what was the world’s seventh busiest airport has plummeted to a mere 1.5 per cent of happier and noisier times before the pandemic.
This sight is repeated at aviation hubs across the world, with some 31 per cent of the world’s 26,000 commercial planes still inactive according to aviation data company Cirium, even as air travel creeps up with the establishment of travel bubbles between countries with low virus transmission rates.
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But there has been a silver lining. Coupled with working from home, an arrangement that remains the default mode of white-collar labour in many countries, carbon-dioxide emissions have fallen to an unprecedented low.
A study published in the prestigious Nature Communications journal in October found the amount of carbon dioxide emitted worldwide in the first half of this year was 8.8 per cent less than in the same period last year – a decrease of 1,551 million tonnes. This was a larger drop than during the financial crisis of 2008, the oil crisis of 1979 or even World War II.
The world has been given a glimpse of what a low-carbon and resource-constrained future could look like – one that of all regions, the Asia-Pacific desperately needs, being home to five of the 10 countries most impacted by the effects of climate change in 2018. The countries are Japan, the Philippines, Sri Lanka, India and Fiji, according to environmental think tank Germanwatch.
It has been a wake-up call and an opportunity for the region, and this has hastened the switch to cleaner energy sources for some countries. But prioritising a green recovery in the short term will be a struggle for most, say experts.
In Singapore, where piped and liquefied natural gas still produces the lion’s share of its electricity, the government last month announced a S$49 million (US$36 million) Low-Carbon Energy Research Funding Initiative at the Singapore International Energy Week 2020, in a bid to accelerate its transition towards a cleaner and more sustainable future.
This followed a statement by the republic’s Deputy Prime Minister Heng Swee Keat, who stressed that environmental sustainability was an integral part of a resilient economy, and that this would be an opportunity for the green sector to develop into a growth industry in its own right.
That same month, both Japan and South Korea also set 2050 as their target to be carbon neutral.
Such open commitment was crucial, said Armida Alisjahbana, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific (Escap), especially from the world’s largest economies and biggest polluters. “They take the lead, and our hope is that the rest of the region quickly catches up.”
Analysis by Escap found that as of the end of October, Asia-Pacific countries had introduced 111 new policies and measures that countered the pandemic’s impact while also focusing on mitigating climate change.
Despite this, specific plans – such as decommissioning fossil fuel-based power plants, placing environmental conditions on the aviation sector or increasing renewable energy targets as part of their recovery strategies – were still missing, said Margareth Sembiring, an associate research fellow at the S. Rajaratnam School of International Studies in Singapore.
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On the contrary, a revision to the 2009 Coal and Mineral Mining Law passed by the Indonesian government in May has, for instance, given coal companies even more power and fewer obligations, such as automatic permit extensions of up to 20 years.
The development was described as “a complete disaster” at a July webinar on the subject organised by the Institute of Southeast Asian Studies. “It goes back to political power, the priorities of the leadership and the economic reality on the ground,” explained Philip Andrews-Speed, senior principal fellow at the National University of Singapore’s Energy Studies Institute, who was in attendance.
While China launched a green economic recovery plan and pledged to be carbon neutral by 2060, it has also accelerated its approvals for coal energy projects this year, driven by a glut of local government infrastructure projects.
Sembiring, in her report on the potential for a green recovery in Southeast Asia, said that in a region of developing nations, the integration of the green agenda in development plans had been challenging and partial because of the imperative to grow the economy, secure energy, food, and other needs. Not to mention the high costs often associated with the acquisition of technology and expertise needed to transition to a low-carbon economy.
One issue has been that the technology needed for a green transition was in the hands of the private sector, said Venkatachalam Anbumozhi, senior energy economist at the Economic Research Institute for Asean (the Association of Southeast Asian Nations) and East Asia.
“They have the technology, human resources and money. But capital is flowing into high-carbon investments such as the construction of coal power plants instead of renewable energy plants,” he said. “Why? Because there is more certainty in the technology, the budget is high and the returns are almost guaranteed. Investments in green activities are still considered risky.”
It stems from a lower rate of return on investments (ROI) and a lack of understanding of the long-term benefits of green projects, leading to a “viability gap”.
Investors expect an ROI of between 12 and 15 per cent for each project but the value can be just between 7 and 8 per cent for a renewable energy project. This is where governments need to act as a bridge by providing incentives or a carbon tax, for instance, Anbumozhi said. And when it comes to knowledge gaps, he suggested governments consider demonstration projects to showcase the potential for revenue.
But there are some encouraging trends. The pandemic had broken the link between upgrading sustainable energy and the oil price, said Professor Euston Quah, head of economics at Singapore’s Nanyang Technological University.
For several decades, it was conventional wisdom that the lower the oil price, the lower the interest in sustainable energy. This April produced one of the lowest oil prices adjusted for inflation since 1946.
“Such a low price level should have led to decreased use of renewable energy, even given Covid-19, but nothing of that sort has happened – at least not yet. Maybe consumer preferences have changed,” he said.
It was also increasingly difficult for companies to get funding for fossil fuel projects from banks, Andrews-Speed said.
Three major Japanese banks this year announced they would no longer accept loan applications for new coal power projects. CIMB announced in September that it was developing a coal policy, which would be made available by the end of this year or early next year.
“That’s important. But we must also think: are we really going green or do we just not invest and worry about electricity tomorrow?” he said.
Quah, however, said countries should be allowed to go green at a pace desired by their citizens, and at a price they could afford.
“There is no doubt that in the case of climate change, we will need both mitigation as in carbon pricing and various regulations and other methods to reduce global warming,” he said. “But this will take time and it will require significant cooperation among countries.”
This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
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