Economic ministers from the Association of Southeast Asian Nations (Asean) have endorsed a “visionary strategy” for carbon neutrality designed to complement Asean member states’ national initiatives in meeting their respective nationally determined contributions under the Paris agreement.

This strategy, commissioned by the Asean member states and with the support from the Australia for Asean Futures initiative, frames the need for Asean to pursue carbon neutrality with utmost urgency, and in doing so unlock the huge value potential of a green transformation of the region.

Asean is highly vulnerable to climate change, with five of the world’s 20 most at-risk countries located in the region. Unchecked climate change could drive down regional GDP by 11% by 2100, and lead to the displacement of 87 million people in high-risk flood areas in Indonesia, Malaysia, Myanmar, Thailand, and Vietnam.

Addressing the region’s carbon burden will not only help mitigate these critical risks but also offer a path to unlock significant socioeconomic opportunities.

According to an analysis conducted by Boston Consulting Group, efforts towards a carbon-neutral future could unleash between US$3.0 trillion and US$5.3 trillion GDP value-add by 2050, attracting a substantial US$3.7 trillion to US$6.7 trillion green investment and unlocking between 49 million and 66 million additional jobs for the region.

The economic benefits of carbon neutrality would accrue to all Asean member states. Cambodia, Lao People’s Democratic Republic, Myanmar, and Vietnam are projected to enjoy the greatest uplift, ranging from 9% to 12% of GDP by the end of the century.

Middle-income countries such as Indonesia, Malaysia, the Philippines, and Thailand would see an increase of 4% to 7%. High-income countries Singapore and Brunei would enjoy a more modest uplift of 1% to 2%.

Asean needs to bridge a 2.6-gigatonne carbon dioxide gap to achieve its carbon-neutrality goals but several conditions in the region are encouraging.

It has one of the lowest CO2 emissions per capita globally, at just 3.9 tonnes of CO2 (tCO2) per capita, below the global average of 4.8 tCO2, almost half of China’s (7.1 tCO2) and less than a quarter that of the United States (14.0 tCO2).

Eight-pronged strategy

Asean’s growing profile as an attractive financial location is also creating an appealing investment environment, with total investment into the region projected to grow at a compound annual growth rate of 12% between 2023 and 2030. This will double the total capital from US$962 billion in 2023 to more than US$2.1 trillion by 2030.

In addition, hydropower-rich member states can contribute significant volumes of zero-carbon energy, some have strong raw material bases for the production of green-technology nickel batteries, while others have robust foundations in the automotive industry that could power up electric vehicle (EV) manufacturing opportunities.

The Asean strategy for carbon neutrality aims to leverage these synergies, with a commitment to develop green industries, enhance Asean interoperability, embed globally credible standards, and unlock green capabilities. The strategy will reduce emissions across energy, industrial processes, and agriculture sectors, among others.

Eight targeted strategies, where regional cooperation is most beneficial to complement the Asean member states’ national initiatives, have been identified to achieve carbon neutrality. They are to: 1) accelerate green value chain integration, 2) promote regional circular economy supply chains, 3) connect green infrastructure and markets, 4) enhance interoperable carbon markets, 5) foster credible and common standards, 6) attract and deploy green capital, 7) promote green talent development and mobility, and 8) share green best practices.

The strategy now moves to adoption by the Asean Economic Community Council (AECC) and is to be acknowledged by the Asean leaders at the 23rd Asean Summit in September 2023. It will then be introduced to the relevant Asean stakeholders from September 2023 onwards, as the region continues to work together in unlocking the value of a carbon-neutral future.

“Asean has reached an inflection point, where decarbonization is paramount for the region’s continued economic growth,” says Asean secretary general Kao Kim Hourn. “The Asean strategy for carbon neutrality will provide the springboard to propel forward our green transition while unlocking huge economic potential for Asean’s citizens.”