HSBC urges greater ASEAN commitment to climate-change mitigation measures

SOUTHEAST ASIA needs to commit to major investments designed to address climate change, including projects in infrastructure, power, and food security, HSBC Group said.

Speaking at the Path to Net Zero webinar Thursday, Joseph Incalcaterra, chief ASEAN economist at HSBC Bank, said policymakers, governments and the private sector should ensure their projects are more responsive to climate change since the region is vulnerable to extreme weather disturbances.

Mr. Incalcaterra added that these early investments can also mitigate climate change’s impact on the region’s economy, noting that taking the same measures later will be more expensive.

He said infrastructure should be in place to protect against rising sea levels and flooding. The cost of infrastructure can be shared with the private sector to make it more manageable.

“There’s also implications on food security from global warming and climate change. This is a very present risk for Southeast Asian economies which have very large food weightings in CPI (consumer price index) baskets and any increase in prices and food disruptions will have a big impact on development,” he added.

The Philippines and Indonesia are among the most vulnerable to food security risk, he said citing the World Bank’s findings, noting that these countries are highly reliant on food imports.

Typhoons traversing the Philippines are also worsening, as are droughts, he said.

“This is another reason for policymakers in the region to take immediate action to prevent the negative side effects.

While Southeast Asia, and the rest of Asia, are vulnerable to climate change, he said the region is also among the largest emitters of greenhouse gases.

Much of the greenhouse emissions come from energy generated from fossil fuels like coal.

“For some countries over the recent years, the only way to effectively bring electricity to the masses, to industrialize, to reduce poverty, (was) coal… by far the cheapest option and the only option for energy security. That was the reality that many countries are facing,” he said.

He said HSBC expects the renewable energy capacity of ASEAN to double in the next decade, with signs pointing to the declining cost of renewables in India and Indonesia.

“Electrification will only be effective if we address and secure abundance supply of lowcarbon electrical power, so we’re going to see massive investment in renewable energy generation not just to displace electricity that’s currently generated by burning fuels, but to also displace the transport system and... energize growth opportunities in many Southeast Asian countries,” according to Jonathan Drew, a managing director at HSBC.

On the demand side, climate change mitigation also calls for consumers to reduce their power consumption to reduce their carbon footprint.

Mr. Drew said there is a need to raise capital and fund projects to address climate change mitigation, which the bank estimates at $100 trillion by 2030 globally and across all sectors.

He said half of that investment is expected to happen in Asia with Southeast Asia accounting for a large part.

Investment in the transport sector is expected to be the largest component, followed by energy, power and water.

He said capital to support the renewable shift is available from the private sector and fixed-income markets.

“This is no longer a niche market, this is a huge, high volume of capital flowing to address this challenge,” Mr. Drew said. —