@ green | JULY-AUGUST , 2023

Nature and energy efforts will decide region ’ s ability to meet 2030 targets

The 2023 report in numbers

The report found that to achieve its NDC or emissions reduction commitments and unlock the green economy potential , the region must reduce greenhouse gas emissions by 33 per cent from business-as-usual levels in 2030 . Public and private sectors across SEA must harness a collective will to challenge the status quo .

Since the publication of the 2022 report , four SEA countries – Indonesia , Singapore , Thailand , and Vietnam – have committed to material emission reduction targets by 2030 . Eight out of 10 SEA countries have set carbon neutrality goals , while seven are either considering or have implemented carbon pricing mechanisms . SEA businesses signing on to Science-Based Targets Initiative commitments quadrupled to 109

SEA has a critical role to play in global climate action and decarbonisation

in 2022 .

However , green investments dipped seven per cent to US $ 5.2 billion in 2022 compared to 2021 , continuing a downward trend from previous years . While foreign investors continued to account for most of the region ’ s green investments , the nature of foreign investment in the Southeast Asia green economy is shifting . In 2022 , foreign investment from outside Southeast Asia had fallen by over 50 per cent compared to 2021 and 2020 .

Meanwhile , intraregional investments doubled . Over half of the green investments in the region go towards Indonesia and Singapore , which have been steadily growing over the last couple of years . Renewable energy remained investors ’ favourite theme as the share of renewable investments remained stable at 70-75 per cent .

“ Southeast Asian governments must focus on proven solutions to balance rising energy demand while reducing carbon emissions . The everything , everywhere , all at once mantra is not going to get the job done nor build the clarity needed to scale investment and impact ,” said Dale Hardcastle , Global Head of Carbon Markets and Director of Global Sustainability Innovation Center at Bain & Company , based in Singapore .

“ Regulations and investment should be focused on deploying proven and profitable technologies that are here today and can have an impact while we lay the track to take on hard-to-abate industries with new technologies and innovation in the longer term .”

Southeast Asia faces a unique set of challenges , making decarbonisation particularly difficult . The region ’ s largest challenges are high dependency on fossil fuels and reliance on international funding .

Adapting economies to change in the face of an emerging middle class that is driving energy demand while simultaneously reducing carbon emissions is an enormous task for governments and leaders in the region . Southeast Asia must double down on its decarbonisation efforts to achieve the dual purpose of economic growth and decarbonisation .

“ SEA has immense potential to contribute to global decarbonisation . But we need a holistic approach and a concerted effort across all stakeholders , including governments , businesses , academia , and individuals . At Temasek , we invest long-term to help create a better future for generations ,” said Wai Hoong Fock , Head of Southeast Asia , Temasek .

“ We believe there are immense opportunities to catalyse sustainable growth and innovation and foster resilience in our economies , communities , and businesses in the transition towards net zero .”

The report highlighted that the nature and energy sectors , which contribute 85 per cent of Southeast Asia ’ s total emissions reduction targets , will be most critical to the region meeting its NDC goals .

Despite abundant renewable energy resources , the slow approval and launch of infrastructure , lack of financial attractiveness , and regulatory uncertainty are holding back the region ’ s ability to realise its potential fully .

The energy sector must streamline its permit process , accelerate grid modernisation efforts to reduce congestion and curtailment risks and increase financial incentives for renewables to accelerate the energy transition .

Nature-based solutions ( NBS ,) such as protecting intact lands , sustainable agriculture , and restoration of deforested lands , present significant abatement potential for the region .

However , key barriers include ineffective forest conservation policy enforcement , nascent carbon markets and NBS , and insufficient smallholder financing . To unlock nature ’ s untapped potential , countries in SEA need to build institutional capacity for conservation policy enforcement , incentivise the restoration and protection of natural ecosystems ( e . g ., forestlands ,) and align domestic carbon project standards internationally .

“ Southeast Asia presents significant opportunities for green investments . It is home to some of the world ’ s most dynamic economies , with a growing number of green initiatives and innovative solutions being developed in the region ,” said Frederick Teo , Chief Executive Officer of GenZero .

“ Regional cooperation is critical to unlocking the full potential of an effective green economy by crowding in necessary