Report: Southeast Asia needs $2T in sustainable infrastructure investments

Investing $2 trillion over the next decade in sustainable infrastructure can greatly reduce Southeast Asia’s greenhouse gas emissions, according to a new report from Bain & Company, Microsoft and Singapore’s Temasek Holdings.
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Southeast Asia infrastructure needs

Southeast Asia map
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The report, titled “Southeast Asia’s Green Economy: Opportunities on the Road to Net Zero,” emphasized investments in areas such as renewable energy, electric vehicles, and waste management.
According to the report, green investments totaled only U.S. $9 billion last year. The report’s authors said Southeast Asia’s corporate, public, and philanthropic sectors must work together to attain the $2 trillion investment figure, the report noted.
Southeast Asia is highly vulnerable to climate change, as it suffers from disproportionately large numbers of climate disasters.

Road to net-zero

Though fighting COVID-19 currently remains a high priority for most governments, a lot of attention in Southeast Asia last year went to climate actions and thinking about what entails a green economy, according to Dale Hardcastle, co-director of Bain’s global sustainability innovation center.
The report found that about 90% of Southeast Asia’s carbon emissions can be addressed by transitioning away from fossil fuels to cleaner energy sources like wind and solar, valuing nature and making the region’s agricultural production of food more efficient.
“While we are seeing many encouraging changes in Southeast Asia’s Green Economy and the overall trend is positive, there is still much more to be done,” said Dale Hardcastle, a partner in Bain & Company’s Singapore office and co-director of the firm’s Global Sustainability Innovation Center (GSIC). “Southeast Asia presents specific conditions which provide both challenges and opportunities for a full-scale sustainability transformation. The region needs to act now and take three steps to translate these opportunities into tangible results: define its road to Net Zero, catalyze the journey and outcomes together, and unlock capital flows.”
Achieving net-zero as a region demands individual action by businesses, investors, governments, and communities, as well as collective action at an ecosystem level.

CNBC’s “Street Signs Asia” interviewed Hardcastle as part of the climate conference Ecosperity. Hardcastle said governments are beginning to look at cross-regional cooperation more often, whether it’s examining green finance, energy transition or other issues.

Ingredients for collective action

According to the report, three ingredients are crucial for collective action.
Firstly, the report cited “ecosystem-wide co-innovation.” That would “accelerate commercialization of low-carbon tech that suits SEA’s needs, such as agri-tech and carbon capture; increase sharing of data/tools/standards through value chain-wide alliances; and mobilize public and private capital to conserve and restore SEA’s natural carbon sinks.”
Furthermore, “collective transition support, leveraging public-private partnerships and blended financing” will help improve “access to capital and build capabilities of SMEs/smallholders, mitigate impact of stranded assets for hard-to-abate sectors, and upskill and retrain SEA’s workforce for the green economy.”
Lastly, the report emphasized the importance of regional collaboration. Within that, the report cited the importance of developing a “holistic SEA Net Zero transition plan,” establishing a cross-border carbon trading system, and reassessing “energy security by exploring a regional grid to more efficiently connect demand to supply.”
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