Tackling climate change

Last month’s historic China-U.S. agreement to curb greenhouse gas emissions was a major step forward in tackling climate change. The Intergovernmental Panel on Climate Change also recently outlined climate change threats again, warning clearly that the world must act now to avoid irreversible damage.

Despite such clear warnings, many people believe economic growth and climate action are incompatible. The fact is, we can cut greenhouse gas emissions to avoid climate catastrophe and still enable strong economic growth.

This is the key message of “Better Growth, Better Climate: The New Climate Economy Report,” a recent report from the Global Commission on the Economy and Climate. Investment in infrastructure can be made in a more climate-friendly and innovative way. Such investment, even compared to ordinary types of investment, increases GDP and creates jobs when it is deployed, and over the long term due to productivity and welfare gains.

Many countries in Asia and the Pacific have put in place green growth policies. They have made strong commitments to pursue economic growth in a way that limits carbon emissions and ecological degradation. Contrary to perception, leaders of developing countries in the region know the importance of such policies and wish to be a part of global efforts for mitigating emissions.

According to the report, three sectors stand out as crucial in the fight against climate change: energy, cities, and land use and agriculture.

First, Asian Development Bank (ADB) data forecast Asia’s share of world energy consumption will increase from 34 percent in 2010 to 51 percent in 2035. This 51 percent would be in line with its share of global population. However, Asia has an opportunity to make a special contribution to global efforts for mitigation. Greater investment in cleaner forms of conventional power, such as natural gas, or in renewable energy like solar and wind power is needed to answer that demand.

Increasing the energy efficiency of buildings, transport, and industries would also curb energy demand. ADB estimates that investing just 1 percent to 4 percent of overall energy sector investment in energy efficiency measures like better insulation in buildings and efficient home appliances could meet 25 percent of developing Asia’s projected increase in primary energy consumption by 2030.

Second, more than 40 percent of the region’s population lives in cities. This will grow to around 65 percent by 2050. Asia needs to build better connected cities that use mass public transport. Cities also need to be more compact, with urban spaces incorporating homes, businesses, and leisure areas.

India offers the classic example of the city challenge. As the second largest urban system in the world after China, India is poised to have more than half a billion people living in cities by 2030. But the pace of growth in urban services and infrastructure lags far behind the population influx, resulting in serious environmental consequences. This is what GGGI in India is trying to address. By defining green growth in the city context and drawing on existing best practices, GGGI is developing a framework for policymakers to integrate the “green growth approach” in their planning to simultaneously achieve multiple developmental objectives - economic, social and environmental.

Third, demand for food in Asia is rising as populations grow and become wealthier. At the same time, almost all suitable agricultural land is already under cultivation. Therefore, Asia must improve agricultural supply chains so that better farm-to-market roads and storage facilities reduce food waste. Innovative farming such as drip-fed irrigation will cut water and energy needed to produce food.

In the Philippines, ADB is helping farmers introduce new types of salt-tolerant rice so that land lost to saltwater intrusion may once again become productive. Restoring forest areas is another effective way of sequestering carbon and conserving biodiversity. Paying farmers to retain and maintain their forests can provide rural incomes.

Despite encouraging signs in many Asian countries, much remains to be done.

Some governments are employing policy measures such as subsidizing gasoline while delaying much-needed investment in mass transit. Instead, they should phase out fossil fuel subsidies and use released resources to promote climate-friendly investment and innovation. Governments should also adopt well-designed regulations and predictable carbon pricing.

Green investment can be largely financed by Asia’s domestic investors and increasingly, by long-term institutional investors such as life insurance and pension funds. Asia should make more productive use of its own large pools of savings. Investment from outside Asia should be encouraged, too. The region needs to improve the investment climate and create more bankable projects, including through public-private partnerships. ADB and other multilateral development banks are also scaling up their green investment, and organizations like GGGI are increasingly assisting countries to develop projects that are ready for green investment.

Taking this opportunity, we would like to stress that a strong and equitable international climate agreement is essential to support ambitious domestic actions by both developing and developed countries. Developed countries should show leadership by aggressively reducing emissions and by mobilizing financial and technological support for developing countries.

In short, developing countries in Asia and the Pacific can grow and develop and still reduce the impact of climate change. But we must act now.

*Takehiko Nakao is the president of the Asian Development Bank and a member of the Global Commission of the Economy and Climate which has overseen the New Climate Economy report. Yvo de Boer is the director general of the Global Green Growth Institute, one of the research partners for the report.

by Yvo de Boer ,Takehiko Nakao