Keeping global temperature increase below 2 degrees Celsius will require developing Asia to spend an additional $300 billion per year on clean energy infrastructure through 2050, the Asian Development Bank said in its latest report.
The finding is a substantial sum, the ADB’s deputy chief economist Juzhong Zhuang said in a statement. “The ADB estimates that the region can generate more than $2 in gains for each $1 of cost it bears to reach the Paris goal, if the right steps are taken,” stressed Zhuang.
The lender suggests that sharply scaling up new investments in renewable power, smart grids, energy efficiency measures, and carbon capture and storage technologies are all essential to the low-carbon transition in the region. Resources freed up by eliminating costly fossil fuel subsidies can be redirected to clean energy investments.
The bank believes leveraging the private sector by reducing investment risk and providing financial incentives, especially for pilot projects, is one of the ways Asia can meet its Paris agreement pledges.
As the world’s fastest growing source of carbon emissions, developing Asia accounted for about 25 percent of global greenhouse gas emissions in 1990-1999, with that figure actually hitting 40 percent of global greenhouse gas in 2012, according to ADB. Around 90 percent of the economies in developing Asia have made pledges to mitigate their greenhouse gas emissions under the Paris agreement.
The ADB warned that if left uncontrolled, climate change could cut the region’s GDP by more than 10 percent by 2100.
It pointed out that the costs to mitigate impacts brought by climate change in Asia are lower than in other parts of the world. Developing a regional market for carbon credit transactions could reduce the costs by 50 percent, compared with countries acting alone.
The ADB is aiming to double its annual climate financing from $3 billion in 2015 to $6 billion by 2020. It sold $1.3 billion of global green bonds last month to about 70 institutional investors in a bid to back low-carbon and climate-resilient projects.