Regional cooperation for green growth in Asia

In the 21st century, after a sustained period of rapid growth, Asia has become the world’s largest regional economy. Its economic rise has, however, produced environmentally damaging side effects such as air pollution, sea pollution and significant greenhouse gas (GHG) emissions. The success of global joint efforts for green and sustainable development depends on Asian action to mitigate the adverse effects of its economic growth. Despite each country’s independent efforts, progress on the Sustainable Development Goals (SDGs) has been uneven across Asia. In particular, the region has struggled to suppress the increase of GHG emissions driven by high economic growth. COVID-19 could slow the trajectory of the shift to a low-carbon economy as governments concentrate on the urgent medical response and economic rescue. The challenge for the region will be finding a way to decouple carbon dependency and other environmental burdens from economic growth. Although there is great variation within and across Asia in terms of commitment to climate action, governments are increasingly aware of the risks of climate change. This is pushing them to undertake ambitious climate policies. China’s declaration that it aims to be carbon-neutral by 2060, pledges by Japan and South Korea to be carbon-neutral by 2050, and India’s renewable deployment goal of 450 gigawatts (GW) of capacity by 2030 are examples of such ambitions. Regional frameworks such as ASEAN, the East Asia Summit framework and the China–South Korea–Japan tripartite cooperation all address the green growth and sustainable development agenda. All statements, however, need to be backed up with detailed action plans and implementation. Regional integrated action will achieve far greater impact than individual countries acting alone – for example, through an interconnected electricity transmission line across ASEAN members or region-wide efforts to promote innovation that targets green technology. Strong leadership on this has not yet emerged in the region. With economic integration through initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, promotion of innovation in the world’s largest market could generate good outcomes. The financial community has an influential role to play in green growth and sustainable development. Capital flows are desperately seeking greener and more sustainable projects to finance, spurred by external pressure on environmental, social and governance (ESG) considerations. Despite the COVID-19 crisis, financial markets have some degree of capital flow, particularly through quantitative easing by central banks across the developed economy that could provide favourable funding opportunities for investment projects. Appropriate sourcing of such capital flows to green, sustainable projects could boost their implementation. New regional forums, which involve the financial community from the early stage of conceptualization and design, could support such approaches.