Green Finance Advisor of Friends of the Earth (HK)

Photo credit: Iron & Earth (CC BY-SA)

Asia is highly vulnerable to climate change. Based on the Global Climate Risk Index 2021[1], six of the ten most affected countries from 2000 to 2019 are in Asia. It is encouraging to see many Asian countries committed their long-term net zero emission targets. However, the road to net zero is full of uncertainty as it seems that most of these countries do not have detailed planning and strategies for reaching the targets. According to the latest study conducted by Siemens Energy in collaboration with management consultant Roland Berger, the Asia Pacific region only scored a 25% of readiness for energy transition.[2] Many countries in the region have younger demographic, larger population and faster growing economies. They are certainly facing more challenges and are more resisted in energy transition than the developed countries. However, with close to 80% of global coal consumption coming from Asia Pacific, the energy transition of the region is critical to the success of the earth in combating climate change.

Coal is not only the primary source of power for many countries in this part of the world but also a major source of their national income. The major challenges to enable smooth energy transition are the current rules and regulations that were initiated to favour coal and other fossil fuels. One of the primary products of these rules and regulations is the fossil fuel subsidies. According to a report from Asian Development Bank[3], government spending on fossil fuel subsidies, which covers the gap between global and domestic prices, exceeds public spending on education or health in some Asian countries. These subsidies accrue largely to the rich and reduce incentives for investment in renewables and energy efficiency. Comparatively, financial incentives for renewable energy is just a fraction of the subsidies given to fossil fuels.[4] Energy transition is therefore not only about changing the energy mix to more clean energy and less fossil fuels but also about rebalancing the power and wealth among the society. We should drive energy transition that would positively impact both the environment and the people.

Recognizing the importance of just transition of the workforce in the paradigm shift towards low carbon and climate resilient economies and society, head of states and governments signed the Solidarity and Just Transition Silesia Declaration at COP24[5]. The challenge is the execution of the just transition concept in government policies. Sadly, just transition is nothing but slow in many countries that need to diversity its energy supply. Without the acceleration in just transition, the net zero goals are far reaching. At COP26 the United States, EU and other developed countries made a joint declaration[6] to support the conditions for a just transition internationally, including the developing countries and emerging economies. The help of the signatories and other developed countries is very much needed to mobilize resources, including capital, to just transition. Hopefully, we will see some actions before COP27, not just another declaration at the conference.

[1] Global Climate Risk Index 2021 – Who Suffers Most from Extreme Weather Events? Weather-Related Loss events in 2019 and 2000-2019, Germanwatch

[2] Asia Pacific Energy Transition Readiness Index – Geared up for change, Siemens Energy and Roland Berger

[3] Fossil Fuel Subsidies in Asia: Trends, Impacts, and Reforms – Integration Report, Asian Development Bank

[4] Asia-Pacific Must Phase Out Fossil-Fuel Subsidies, BRINK News

[5] Solidarity and Just Transition Silesia Declaration, COP24

[6] Supporting the conditions for a Just Transition Internationally, COP26