Presented to Asean finance ministers last week ahead of their annual ministerial summit, the recommendations were a response to the disproportionate impact of climate change on the region, along with the growing need for private investment to help bridge infrastructure funding gaps. 

The Asian Development Bank (ADB) forecasts that, if left unaddressed, climate change could reduce the region’s gross domestic product (GDP) by 11 per cent by the end of the century. Moreover, the ADB says that Asean’s public sector can cover less than 50 per cent of the total investment required. To fill this gap, the bloc’s member states must take steps to promote greater private sector participation in infrastructure financing, the bank asserts. 

Under a paper titled “Financing Sustainable Infrastructure in Asean”, HSBC puts forward three recommendations for attracting private financing for sustainability linked infrastructure development in Asean. 

The first is launching an annual Doing Sustainable Infrastructure Report, followed by creating an Asean urban infrastructure network to build a regional smart cities network. The last recommendation is to develop an Asean blended-finance toolbox.

Mukthar Hussain, HSBC’s head of business corridors for Asia-Pacific, said that addressing environmental challenges is no longer simply a moral issue, but also an economic one. The development of sustainability linked infrastructure using public and private sector financing is the only way that Asean could address the challenges that climate change presents to its economies, he said.

Climate change affects individuals, countries, corporates and investors, and so finding and delivering constructive solutions should be a joined-up effort including global banks like HSBC, said Hussain.

“We hope these recommendations are a helpful contribution towards the delivery of long-term solutions,” he added.

An estimated investment of US$100 trillion (Bt1.39 quadrillion) is needed in new sustainable infrastructure globally over the next 15 years – including financing for clean energy infrastructure, sustainable transport, energy efficiency and waste management – to meet the goal of the Paris Climate Agreement to limit global temperature increases to “well below” 2 degrees Celsius over pre-industrial times, according to HSBC.

The third commitment under the Paris Agreement is “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.

Southeast Asia has already taken important steps to unlock private sector financing around addressing climate change. These include the launch of the Asean Green Bond Standards in November 2017 by the Asean Capital Markets Forum. This created a common framework to promote the growth of a new green asset class while enhancing transparency, consistency and uniformity of new issuance. This was followed by the launch of the Asean Social Bond Standards and Asean Sustainability Bond Standards in October 2018.

Last year, Malaysia set the goal of increasing the share of its electricity generated from renewable sources to 20 per cent by 2030.

Indonesia announced it would adjust its fiscal policies to create incentives to increase production of environmentally less harmful vehicles.

Vietnam is working to complete several mega solar-power projects later this year. 

In March 2019, the Philippines (together with Bhutan, Mongolia and Vietnam) signed a Declaration on South-South Cooperation to access climate finance, particularly the Green Climate Fund (GCF). This called for the highest policy commitment to combat climate change and pursue green growth as an urgent priority. 

The Monetary Authority of Singapore also launched the Singapore Green Bond Grant scheme in June 2017, which provides financial subsidies for the advisory fees associated with undertaking green financing.

Thailand is planning to build the world’s largest floating solar farms to power Southeast Asia’s second-largest economy and boost the country’s share of clean energy. 

Source: http://www.nationmultimedia.com/detail/Economy/30367353