Want a bird’s eye view of key commitments across the region that are encouraging and driving change?
In our country chapters, we look at initiatives to encourage the transition to a net zero economy - across emissions reduction targets, carbon markets, financing, transport, housing and buildings, and agriculture.
Here is a brief snapshot. More detail and examples are in the country chapters.
Energy transition
The International Energy Association (IEA) calls the climate challenge 'essentially an energy challenge’. Scaling clean energy investment is key to transitioning to net zero.
Southeast Asia is expected to have the second-highest energy demand growth until 2050 under IEA estimates (only India ranks higher).
Vietnam and Indonesia entered the Just Energy Transitions Partnerships in 2022, receiving global support to transition away from coal power.
In Indonesia, international help (including from World Bank initiatives like the Sustainable Landscape Management Program) is needed to reach the upper end of targeted emissions cuts of 32 to 43% by 2030. Almost half of emissions come from deforestation and fires.
For the Philippines, hydro and geothermal power feature heavily. The nation is focused on the job opportunities the transition will bring: around 189,000 in 2021 in direct jobs alone.
Singapore has put clean hydrogen at the heart of its decarbonisation strategy and has entered transition-related partnerships with Australia, the UK and France.
Japan and the Republic of Korea are similarly densely populated with geography ill-suited to the solar and onshore wind that dominate elsewhere. Like Singapore, their energy mix will feature clean hydrogen (set to account for nearly 40% of global hydrogen imports combined by 2050). Offshore wind and nuclear will also meet the challenge of decarbonising fossil-heavy industrials. The nations will attract more than US$175b in combined energy investments by 2050 under IEA estimates.
Carbon markets
Carbon markets will play a crucial role in mobilising funds and incentivising decarbonisation activities. Progress and initiatives across the region vary but all of the covered countries have a scheme in place or planned. For Singapore, ambitions extend to becoming a global hub for carbon credit trading.
Singapore, Indonesia, the Republic of Korea and Japan have carbon markets and levies / taxes in various stages – see the summary from the Asia Securities Industry & Financial Markets Association (ASIFMA) below.
The Philippines has no explicit carbon pricing mechanisms, but one is on the cards under a suite of new low-carbon legislation that is pending.
Vietnam is planning to pilot a voluntary emissions trading scheme from 2026, initially covering steel, cement and thermal power. Implementation is expected from 2028. A national crediting mechanism is due in 2026.
Financing
Finance is the unavoidable metric and driver common to every country. To increase investor confidence and certainty, sustainable finance taxonomies that are widely understood and applied are essential. We outline positive moves across the region, most notably via the ASEAN Taxonomy Board’s recently released Taxonomy for Sustainable Finance.
Singapore has committed US$10m in new funds to invest in low-carbon technology, advancing its position as a hub for green innovation and clean technologies.
Indonesia needs US$1t in renewable energy and transmission investment by 2060 but supportive policies are needed.
The Philippines has a sustainable finance taxonomy and government stimulus for green investment has grown – including allowing foreign ownership of a renewable energy project.
The Republic of Korea’s K-Taxonomy boosts investor confidence in green activities.
Japan is encouraging green, transition and innovation finance as it stimulates the economy to attract private investment.
Mobilizing the private sector is also instrumental to achieve progress towards our collective climate ambition.” - US Secretary of the Treasury Janet L. Yellen, Statement on the World Bank Development Committee, October 2023
'We need the scale, resources and ingenuity of the private sector.' - World Bank president Ajay Banga
The World Bank provided almost US$40b in climate finance in the 2023 fiscal year – a record high, amounting to 41% of its financing. In the five years to 2023, it has cut 230m tonnes of carbon emissions annually. One of its arms, the IFC has mobilised US$162b in private sector investments from US$5.6b of shareholder capital.
But it wants to move faster and take more risks – and it wants the private sector to look beyond 'algorithms and expertise' to join it.
In October 2023 the World Bank revealed its new playbook, based on a poverty-free 'livable planet' vision. The World Bank’s new president Ajay Banga – who started in June 2023 – toured countries worldwide including in East Asia in his first six months in the role. Five of its eight global challenges are directly linked to net zero efforts: Adaptation and Mitigation; Energy Access; Food and Nutrition Security; Water Security and Access; and Protecting Biodiversity and Nature.
When it comes to good ideas, Banga says the World Bank should 'steal shamelessly – and share seamlessly' – along with any who are moving the needle, including the private sector. In 2024 it will release usable data from its Global Emerging Markets Risk Database, which informs its own investing, to encourage risk taking & investing. New financial tools to enable US$157b in additional lending capacity over the next decade include a hybrid capital instrument and portfolio guarantee mechanism.
Banga has singled out for focus:
- Sound, transparent voluntary carbon markets: ensuring credit integrity, avoiding greenwashing via validation (showing the value of monetising & protecting natural resources)
- Spending better: one example is repurposing US$6t in fertiliser runoff, unnecessary air pollution & overfishing every year to incentivise sustainable practices
- Working with credit rating agencies: unlocking capital and pricing via a better understanding of the World Bank’s work
Banga has also established a Private Sector Investment Lab comprising 15 world leading CEOs, including from banks and asset managers. The key is making projects bankable, with an initial focus on scaling transition finance and increasing renewable energy.
Prudential plc chair Shriti Vadera is co-chair of the Lab and members include:
- Macquarie CEO Shemara Wikramanayake
- Standard Chartered Group Chief Executive Bill Winters
- Temasek CEO Dilhan Pillay Sandrasegara
- HSBC Holdings Plc CEO Noel Quinn
- Mitsubishi UFJ Financial Group CEO Hironori Kamezawa
- AXA CEO Thomas Buberl
- BlackRock CEO Larry Fink.
Transport
Among the biggest emitting sectors is transport – and all the covered countries have initiatives to electrify and / or move to cleaner fuels including biodeisel blends and green hydrogen.
Singapore has a ‘car-lite’ vision, including by phasing out internal combustion vehicles within 15 years and having ‘EV-ready towns’.
Indonesia plans to have 13 million electric motorbikes on roads by 2030 under a national strategy that is in progress, as part of wider electrification and biofuel plans to address high road transport emissions.
The Philippines will undergo a massive transport system expansion and has set targets for biodiesel blends, EVs and charging stations.
Vietnam’s young EV market is set to grow to 3.5mn by 2040 and initiatives stretch to buses, airfield vehicles, waterways, railways and ports.
The Republic of Korea is set to become a leading global supplier of eco-friendly cars, and at home wants at least half of all vehicles on roads by 2040 battery-powered or fuelled by hydrogen.
Japan has a heavy focus on hydrogen fuel-cell cars, buses and fuelling stations. Shipping and aviation are in the early stages of research and demonstration projects.
Housing and buildings
Singapore has prioritised the ‘greening’ of buildings via a scheme to boost the energy performance of existing buildings and accelerate green tech in new ones.
Indonesia has enacted new standards to boost the green performance of public housing.
The Philippines is prioritising climate-resilience in housing in response to intense natural disaster risks. A code encourages green building but is not mandatory.
Vietnam has a relatively small number of green buildings – but is showing signs of interest in enhancing policies as urbanisation grows. Cities are taking steps to become sustainable and smart.
South Korea has ‘zero energy’ targets for new buildings and incentives to remodel existing buildings.
Japan has a net zero energy target for new constructions (half by 2030) and is incentivising the development of next-generation solar cells.
Agriculture
Singapore is aiming to meet a third of nutritional needs via locally produced food by 2030 – addressing food security concerns. Urban farming is key.
Indonesia’s plans to turn its forests from a source of over 40% of country emissions (via deforestation and fires) into a net carbon sink by 2030.
The Philippines is similarly prioritising forest cover in a bid to reduce deforestation, as well as encouraging climate-resilient agricultural practices
Vietnam is embracing innovation and initiatives to modernise its agriculture sector ahead of expected growth, including making it more environmentally friendly. A high-tech focused partnership with Australia tackles challenges like food productivity and climate resilience.
The Republic of Korea is turning to sewerage infrastructure and rainwater runoff to address severe flood risks; environmental practice policies including payments encouraging organic production are updated every five years and there is a need for them to go further.
Japan aims to cut industrial food waste by 1/5 in the next 6 years, and have the sector run on zero carbon emissions by 2050.
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