The world has made significant strides in the fight against climate change over the past year. In a landmark achievement, 197 countries for the first time agreed to adopt a universal, legally binding, climate-related pact in December 2015. The agreement, signed at the 21st Conference of the Parties (COP21) organised in Paris by the United Nations Climate Change Conference (UNFCCC), targets to limit global warming below 2 °Celsius above pre-industrial levels through mitigation and adaptation measures. So far, 87 countries have already ratified/ approved the agreement. With the threshold of 55 countries crossed, the Paris Agreement came into force on November 4, 2016.

Despite low contributions, the Southeast Asian countries have proactively committed to reducing GHG emissions under their respective Intended Nationally Determined Contributions (INDCs). While the higher income countries like Singapore and Indonesia have made unconditional commitments, the achievement of targets in the case of low income countries like Myanmar and Cambodia is contingent upon international support. Nonetheless, the achievement of climate change-related targets requires significant investments in sustainable assets across all infrastructure sectors.

High vulnerability to climate change

Arresting climate change is of special significance to Southeast Asian countries given their high susceptibility to climate change risk. This results from various factors including the region’s location along the Pacific ring of fire – an arc of volcanoes and fault lines encircling the Pacific basin. With an aggregate coastline of 173,252 km, these countries are particularly vulnerable to sea-based calamities like typhoons, tsunamis and storms. In addition, a large portion of the region is highly prone to flooding and droughts that are influenced by monsoon patterns.

Given this, most countries in the region rank very high on the Global Climate Risk Index (CRI) published by the Germanwatch organisation. The index analyses the quantified impacts of extreme weather events over the past 20 years and indicates the degree of vulnerability of a country to extreme weather-related events.

Four ASEAN countries – Myanmar, the Philippines, Vietnam and Thailand – are among the 10 countries most vulnerable to climate-related risks. Germanwatch estimates that between 1995 and 2014, the average annual loss due to climate-related disasters was $15.8 billion across the eight major countries in Southeast Asia. Thailand accounts for 47 per cent of these losses, followed by the Philippines, Vietnam and Indonesia with 17 per cent, 14 per cent and 11 per cent share in losses.

A key factor contributing to the high economic vulnerability is that the ASEAN economies are highly dependent on climate-sensitive sectors such as agriculture and natural resources.

For instance, a report published by the World Resources Institute (WRI) in February 2015 estimated that economies located in the Lower Mekong river basin (across Cambodia, Laos, Thailand and Vietnam) collectively risk $16 billion annually from the climate change impact on key livelihood sectors such as agriculture, fisheries and rural infrastructure. It further estimates that the region risks an additional $18 billion annually in infrastructure damage due to floods, storms and intense heat.

Tall commitments despite low contributions

Over the years, the Southeast Asian countries have been addressing the climate change issue through various environmental, economic and social activities, despite being low contributors to global emissions. With the exception of Singapore and Malaysia, the per capita greenhouse gas (GHG) emissions of ASEAN countries are lower that the global average, as per the latest data available from the World Bank. In fact, emissions from Indonesia, Vietnam and Philippines are between 1 and 2 metric tonnes per capita, against a global average of 5 metric tonnes per capita.

In the past, Indonesia, Malaysia, the Philippines and Singapore have announced voluntary mitigation targets. The focus has primarily been on building adaptive capacity through mainstreaming it in development planning. These commitments have been strengthened and expanded under the INDCs submitted by the countries to the UNFCCC. However, considerable variation remains in targets and strategies across countries.

Indonesia has set a target of reducing its GHG emissions by 29 per cent by 2030 with a clear focus on renewable energy generation. Singapore has set a high target for emission intensity reduction at 36 per cent by 2030. However, the country plans to increase its dependence on natural gas for electricity generation, given that it is a cleaner form of fossil fuel. Despite different strategies, both Indonesia and Singapore have committed to meeting their reduction targets unconditionally. In contrast, the mitigation and adaptation measures adopted by countries like Myanmar, Cambodia and Lao PDR will be dependent on financial and technical assistance received from developed countries.

Key strategy: Developing sustainable infrastructure

The INDCs of ASEAN countries indicate that one area identified to achieve the desired reductions in GHG emission is investments in sustainable infrastructure across sectors like energy, transportation, and waste management.

Clean energy development is a key focus area. Given that the electricity generation mix in Southeast Asia is steadily shifting towards coal due to its low prices and abundant indigenous supply, countries are steadily incorporating clean coal technologies into thermal power plants.

Renewable energy capacity addition is being aggressively followed.  For instance, under Indonesia’s INDC, the country has committed to increasing the share of renewable energy in power generation to at least 23 per cent by 2025. Similarly, Thailand, under its Alternative Energy Development Plan 2015, aims to increase its installed renewable capacity from 7.5 GW in 2014 to 19.6 GW in 2036.

Significant investments are also planned by countries to improve the efficiency of electricity consumption. Thailand provides a good example of a country that has implemented a comprehensive approach to improving energy efficiency through an Integrated Energy Blueprint, which includes a target to reduce end-use energy intensity by 30 per cent in 2036 compared to 2010 through fossil fuel subsidy removal and accelerated energy efficiency actions across a broad range of sectors. Singapore also plans to reduce its energy intensity by almost by almost 30 per cent by 2030, while Malaysia has set a target to reduce energy intensity by 10 per cent.

Development of efficient and effective transportation system provides another key area for reducing climate risk, given the sector’s high contribution to air pollution. Singapore has taken the lead in implementing sustainable transportation infrastructure. Among other things, the country is setting up 700 km of cycling paths and 360 km of rail network in the country to put 80 per cent of households within a 10-minute walk of a train station. The government is also offering a 40 per cent rebate on purchases of green vehicles. Sustainable transport programmes have also been launched in Indonesia, Vietnam and Malaysia, focusing primarily on developing public transport systems to serve growing urban populations.

The Asian Development Bank (ADB) has lent significant amount for undertaking sustainable transport projects in the Asia-Pacific region. Going forward too, it will be key focus area for ADB. Highting the future plans, Nana Soetantri, Transport Specialist, Sustainable Development and Climate Change Department, ADB, highlights that ADB’s aim is to continue assisting Asia-Pacific countries scale up sustainable transport, especially in line with their commitments to the Paris climate agreement and the recently adopted sustainable development goals.

Municipal solid waste management in a scientific manner is another key component of sustainable infrastructure development. At present, most ASEAN countries lack adequate infrastructure to provide efficient and effective waste collection, transportation and treatment services to all its residents. Governments, both at the federal and local levels, have been extending monetary support to improve waste management practices; however, these efforts have so far remained largely inadequate.

Cities like Bangkok, Hanoi, Ho Chi Minh City, Jakarta and Singapore are participating in the C40 Cities Climate Leadership Group, while Bangkok, Da Nang, Mandalay and Semarang are participating in the 100 resilient cities programme. At the regional level, 18 cities in Indonesia, the Philippines, Thailand and Vietnam are part of the Asian Cities Climate Change Resilience Network.

Issues and the way forward

Southeast Asia needs trillions of dollars in investments to build new infrastructure assets over the next two decades to keep pace with the demands of its population and economic growth. It is thus the optimal time for governments and policymakers to ensure that these new investments are adequately climate proofed.

As countries pursue investments in sustainable infrastructure, limited funding sources remains one of the biggest challenge. While investments in sustainable infrastructure projects are cost effective after factoring in the climate risk, their implementation costs remain prohibitively high for low-income countries.

The introduction of new financial instruments such as green bonds as well as resourceful use of development capital from bilateral and multilateral sources can help bridge the funding gap. According to Thiam Hee Ng, Senior Economist, Economic Research and Regional Cooperation Department, Asian Development Bank, “The rise in green bond issuances has been supported by growing interest in investing according to environmental, social and governance  criteria. The growing popularity of green bonds can provide a boost to renewable energy financing”. New and innovative funding models, other than provision of grants, can be identified for using public financing for climate change efforts. Further, the limited funds with the public sector can be utilised to mitigate risks for the private sector, effectively promoting investments.

Fiscal and financial engineering is also needed to capture the potential of new technologies. The induction of new technology in infrastructure development remains a major challenge at present, both due to lack of access and lack of funds. Southeast Asian countries must also increase investments in research and development to develop climate-friendly technologies best suited to indigenous conditions.

On a positive note, ASEAN is developing a collaborative regional approach on climate change. Some of the activities planned and under way are the development of an ASEAN Climate Change Initiative, promotion of shared knowledge on adaptation, regional strategies on capacity building and development of climate scenarios.

The proposal to establish an Indonesia-based ASEAN coordinating centre to tackle trans-border pollution has also been approved by the ASEAN members. Further, issues related to water resource management, flood discharge and water resource pollution are also being addressed at the regional level.

Conclusion

Economies around the globe have stepped up their efforts to mitigate climate change and Southeast Asian countries are following suit. Sustainable infrastructure development forms a key element of the climate change agenda of these countries, presenting significant investment opportunities across the energy and transportation sectors. However, achieving these targets will require significant policy support from the national and local governments, although there remains a need to increase the sense of urgency and to explore sources of financial and technological support.