Is Asia up to the global warming challenge?

Green shoots across the region

While China remains the critical constituent in the governance of climate issues, across the Asia Pacific there are encouraging “green shoots” posting the beginnings of a transition away from fossil fuel dependence and carbon intensive economy. If the Indian Government’s commitments are implemented, for example, that country’s clean energy pathway will be characterised by an investment of 2% of GDP in “green growth” over the next five years, new building standards and mandatory fuel efficiency standards, and significant investment in wind and nuclear energy. Already the fourth wind energy nation, India is seriously investing in solar and wants 2000 MW installed annually by 2017. India is also looking to introduce market focussed solutions and plans to create a domestic market for environmental credits later this year (Pew Centre, 2008).

South Korea is not waiting for international agreements on climate change to move vigorously on energy efficiency and energy diversification with an annual 2% of GDP investment in cleantech. This level of investment makes possible its 2009 commitment to achieve a mandatory 4% emissions cut on 2005 levels which by 2020 adds up to reducing its total greenhouse gas emissions by 30%. A mandated emissions trading scheme covering the majority of South Korea’s carbon pollution is likely to start from 2012 with 600 of the nation’s biggest emitters ( 4 May 2010).

The ASEAN nations have a range of programs already in place contributing to greenhouse gas mitigation and climate change adaptation – all of them aligned with the robust economic goals set by each member state. Such plans extend from the Philippines building on a strong renewables base in which geothermal and hydro already account for more than a third of the country’s power, to the Thais securing 20% of their energy from renewables by 2025. Energy starved but geothermal and biomass rich Indonesia has a 2025 goal of 17% of its national primary energy mix coming from non-fossil fuels along with an overall emissions reduction target of 26% by 2020.

Neighbouring oil and gas dependent Malaysia seems least ambitious in the energy diversification field with plans to double hydropower to 17% of generation by 2020 while taking tentative steps into solar. It boasts a range of tax incentives for energy efficiency and conservation technologies (see Llewellyn and Santovetti, 2010 and UNFCC web site for National Reports).

Not all things renewable deliver net environmental benefits. Much controversy has attended the promotion of biofuels derived from palm oil plantations established in Indonesia and Malaysia at the cost of vast tracts of destroyed rainforest and loss of biodiversity. Negative consumer reaction in western countries to the environmental implications of palm oil products raises the possibility of discriminatory market intervention through eco-labelling or even regulatory impost. As an issue it is litmus to a much bigger question of whether environmental goals and performance should be embedded in World Trade Organisation protocols.

Does trade exposure mean vulnerability on environment?

Asia’s current exposure to the contingent risk of eventual trade limitations on carbon results from UNFCC rules that accrue embedded carbon emissions of an internationally traded good or service to the producing country. The parties to the UNFCC have assiduously avoided linking trade and climate change because of the complexities, not least of which include the difficulties of measuring and verifying embedded carbon and managing a consumption-based international emissions trading system. By parking the fairness concept, parties to UNFCC have decided there are simpler more expedient paths to take.

But the difficulty of implementing a consumption- based emissions abatement system does not deny that consumers in developed countries have effectively ‘leaked’ or outsourced their carbon footprint to developing countries. Net exports were the source of 24% of China’s GHG emissions in 2004; carbon pollution which amounted to as much as Japan emitted and twice that of the UK and which was generated for the benefit of consumers in Australia, America and Europe (Wang and Watson, 2009 p 88).

The Asian economic miracle has been built on international trade and an export to GDP ratio more than twice that of western countries. One third of China’s GDP and one fifth of India’s derives from exports. The trade exposure of the ‘tiger economies’ of the ASEAN and of dynamic South Korea is even more acute at between 50% and 100% of GDP (Llewellyn and Santovetti p14). For commodities exporters like Australia which provide the raw feedstock for much of the region’s energy and manufacturing, their economies enjoy the same contingent risk potentially arising from a linkage of climate change strategy with trade rules constraining the trade of carbon intense products.

If trade were to be linked with carbon in any practical sense, there would need to be much more sophisticated and transparent accounting and governance frameworks, necessitating higher levels of trust and disclosure between countries – in short a governance regime internationally that does not yet exist and is unlikely to happen with serious rapid environmental feedback from the climate system.

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