A recent report found that relatively few companies in the Asia-Pacific region have adopted net-zero carbon emission strategies to date. Nevertheless, there are grounds for cautious optimism as pacesetters in the region announce ambitious targets and experiment with innovative decarbonization strategies.
State of play
The report, published in April by the Carbon Disclosure Project (CDP), found that by the end of 2021 just 8% of companies in the Asia-Pacific region had signed on to plans to reach net-zero carbon emissions. Furthermore, less than one-third of responding companies had adopted science-based targets.
The CDP, a non-profit organization that maintains a global environmental disclosure system, analyzed data from 3879 companies across 21 markets, which together account for around 14% of global market capitalization.
The report warned that the gap in corporate efforts to control emissions had to be closed if the targets of the 2015 Paris Agreement are to be met.
The urgent need for action was recently underlined by the Intergovernmental Panel on Climate Change’s “Sixth Assessment Report”, published in August 2021. Among other warnings, it noted that 3 billion people around the globe are highly vulnerable to the effects of climate change.
A substantial proportion of the most at-risk populations are in the Asia Pacific. Indeed, the CDP predicts that exposure to climate-related hazards could erode between 5.5% and 26% of its collective GDP by 2050.
Ongoing carbon emissions are also a concern. In 2020, the Asia Pacific was responsible for 52% of global energy-related CO2 emissions and had a decarbonization rate of 0.9% – significantly below the world average of 2.5%. A global average of 12.9% is needed to limit the Earth’s temperature increase over pre-industrialization levels to 1.5°C.
Regional trailblazers
While the situation is worrying, the CDP report outlined a few reasons for cautious optimism.
More and more companies in the region are signing up to climate targets, with firms competing to display climate leadership; for example, 2021 saw a 29% increase in corporate disclosures relative to the previous year, according to the CDP report.
At the same time, there is growing awareness of the commercial opportunities associated with net-zero actions.
In the middle of last year Grab and Gojek – Southeast Asia's biggest super apps that specialize in ride-hailing and delivery – pledged to achieve net-zero carbon emissions.
While Singapore-based Grab did not provide a timeframe for its transition, the company expressed that it was aiming for "a net-zero-carbon future", which it will achieve in part by adopting electric vehicles and partaking in reforestation programs.
Indonesia’s Gojek – which has since merged with e-commerce firm Tokopedia to form a holding company, GoTo – committed to net-zero by 2030. This will involve shifting its entire fleet to electric vehicles and producing zero waste. Gojek is setting an ambitious standard in the industry: Uber, for its part, aims to reach net-zero by 2040.
Other tech start-ups are contributing to the movement towards net-zero emissions by nudging consumers towards green alternatives. Carro, also based in Singapore, is one of the region’s largest online car marketplaces, and last year it launched low-interest car loans which only apply to hybrid and electric cars.
Another area where the region is making strides is green or sustainability-related bonds, with banks in the Asia Pacific increasingly participating in environmentally friendly lending and net-zero portfolios. At the end of 2021, for instance, Malaysia’s CIMB Group, which operates throughout ASEAN, committed to mobilizing RM30bn ($7 billion) in sustainable finance through to 2024 and achieving net-zero carbon emissions by 2050.
On a similar note, 2021 saw Nippon Life Insurance – one of Japan’s largest private institutional investors – announce a goal to achieve net-zero emissions for companies in its stock and bond portfolios by 2050.
Energy transition
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The Asia Pacific region, and China in particular, is also at the forefront of many sustainable energy developments.
After a decade of building solar and wind power plants, China now has some 570 GW of installed renewable energy capacity and is the world’s largest producer of wind turbines and solar panels.
Other countries are also expanding their footprints in the space. Thailand, for example, has for some years been trialing innovative approaches to expand its renewable energy segment. Australian blockchain firm Powerledger has been working with Thai Digital Energy Development to foster the country’s energy trading infrastructure, enabling the trading of renewable energy certificates and carbon credits. In April this year, the firm announced a further expansion of the project.
As these and many other examples show, innovative efforts to achieve carbon neutrality are gathering pace among companies in the Asia Pacific. With a growing number of firms committing to science-based, net-zero carbon emissions targets, the region’s business community could yet rise to the urgent challenge of slowing or halting the damaging effects of climate change.
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Therefore, the IPCC and companies involved with the environment such as the Carbon Disclosure Project (CDP) should instead tell peoples of the world the plain truth, namely that the notion of net-zero emissions is an illusion. It will never be achieved by 2050 or 2100 or ever. The reason is fossil fuels will continue to drive the global economy well into the future.
And while energy transition will continue to move forward slowly, a total global energy transition is also an illusion. Even a partial transition can’t succeed without huge contributions of natural gas, nuclear energy and even coal (yes coal) because of the intermittent nature of renewables.
A better approach by the IPCC and like-minded organizations is to admit as a first step what is obvious to everyone in the world, namely fossil fuels are here to stay probably for the next 100 years or until an alternative as versatile and practicable as oil is discovered or developed. The second step is to encourage the world to invest heavily in carbon-catching technology. As renewables increase their share in global electricity generation, coal and natural gas use will be reduced in a corresponding way. It is a sort of global energy diversification. This is, in my opinion, the right approach to dealing with climate change problems rather threatening the world all the time with existential threats and problems that may or may not happen.
A proof of the futility of the current IPCC policies is the hasty policy of the EU abetted by the IEA to accelerate energy transition at the expense of fossil fuels thus precipitating the destructive energy crisis that has been enveloping the EU since January 2021. This has led to a coal renaissance which has retarded energy transition by at least five years.
China, the world’s largest economy based on purchasing power parity (PPP) is indeed raising its coal production while Germany, the EU’s largest economy is reviving its coal-powered electricity plants and even giving new life to some of its nuclear plants which were destined for closure. This only goes to show that economics and energy security always take precedence over environmental concerns.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London