A report by Bain & Company, Temasek, and Microsoft reveals that Southeast Asia's decarbonization efforts are falling short, despite more governments in the area pledging to net-zero emissions.
According to the report, the region still has a 3 Gt (gigatonnes) CO2 emissions gap, which is the equivalent of removing 647 million cars off the road for a year.
Despite the fact that just two countries had net-zero ambitions a year ago, eight out of 10 now do.
After accounting for minor improvements in emission levels based on the most recent Nationally Determined Contributions (NDCs) and policy projections, the report concluded that no country in the region is expected to achieve the emission reduction compatible with the 1.5 degree Celsius scenario by 2030.
To accomplish that target, countries would need to reduce carbon dioxide emissions by at least 45 percent from 2010 levels by 2030, according to the research, which was released on Tuesday (Jun 7).
"Southeast Asia is ... well short of where it needs to be on carbon and investment to reach 2030 goals," the report read.
Meanwhile, the 108-page analysis indicated that climate financing is insufficient to encourage additional decarbonization efforts to meet countries' unconditional NDCs.
Current investment levels are less than $20 billion, well short of the $1 trillion to $3 trillion anticipated to be necessary to close the emissions gap.
While green, social, and sustainability bonds have risen rapidly in Southeast Asia, with bonds worth about US$19 billion issued last year, the report estimates that the volume has to climb 15 to 20 times by 2030 to cover the investment shortfall.
To coincide with the new aspirations, the research emphasized the need for updated roadmaps at the national and key sector levels, such as energy, as well as clear regulations and incentives for fossil fuel phase-out.
The report also identified various barriers to further investments and climate action in the region. There is a lack of incentives for needle-moving decarbonization levers to scale quickly, a lack of attention to proven low-risk solutions, and a lack of information on energy transition system costs.
The research proposed a more comprehensive decarbonization program to overcome the gap and boost green investment. It also advocated establishing funding sources and processes to attract new investments, as well as revealing the actual costs of renewable energy transition.
The report advocated that governments in the area harness the financial services sector to build abatement investment solutions that cut the cost of funding for enterprises transitioning to green finance.
