NEWS

By Cai Ordinario

Southeast Asian countries need to invest $3.1 trillion for climate-adjusted infrastructure in the region by 2030 to recover from the pandemic, according to a new report from the Asian Development Bank (ADB).

In the report titled Green Finance Strategies for Post-Covid-19 Economic Recovery in Southeast Asia, ADB said the investments are needed to develop and grow green economies and create jobs for around 650 million people.

However, ADB said these investments must be financed by innovative, environmentally sustainable, and climate-resilient financing instruments such as green and transition Covid-19 bonds, blue credits, and green securitization efforts.

“A green recovery for Southeast Asia is needed to encourage long-term, sustainable job creation in a region with more than 650 million people,” said ADB Vice President Ahmed M. Saeed, who will speak at the forum on October 9.

“It will boost equitable growth, protect the environment, and help governments meet the Paris climate agreement targets. This timely book shows how green finance can spur growth in the region and overcome the challenges of climate change and a global pandemic,” he added.

ADB said green finance refers to all financing instruments, investments and mechanisms that contribute to climate and environmental sustainability goals.

These aim to reduce greenhouse-gas emissions, boost climate resilience, and improve environmental protection, such as air and water quality, ecosystems and biodiversity.

These have been in demand given climate-change efforts are in need in regions such as Southeast Asia. For one, cities and rivers in the region are among, if not, the most visible manifestation of the impact of overusing and polluting natural capital resources.

The report said over half of the plastic entering the world’s oceans can be traced back to five growing economies, four of which—Indonesia, the Philippines, Thailand and Vietnam—are in Southeast Asia.

It also noted that Myanmar, the Philippines, Thailand and Vietnam ranked in the top 10 countries most affected by extreme weather due to climate change in the last 20 years, according to the Global Climate Risk Index.

With this, ADB said governments should also use green finance to build upon national green targets and programs and steer away from fossil fuel or carbon-intensive investments.

While some countries have embarked on green projects and bonds, ADB said much more needs to be done to help Southeast Asia’s economies meet their large financing needs and accelerate economic recoveries in a sustainable manner.

The Philippines, ADB noted, has embarked on the Green Program which aims to provide P2.5 billion in assistance to make 145 cities more livable and sustainable.

The program is already part of the “Build, Build, Build,” the national infrastructure development program of the government of the Philippines.

“[The report] aims to emphasize the critical role that such instruments can play in leveraging scarce public sector funds to mobilize green funds from all sources, such as private pension and insurance funds, commercial banks, and the capital markets. Blending such funds will be critical to Southeast Asia’s recovery from Covid-19 amid the worsening infrastructure financing gap, which was at more than 60 percent before the pandemic hit,” said Association of Southeast Asian Nations (Asean) Catalytic Green Finance Facility (ACGF) Unit Head Anouj Mehta.

The ACGF is an ADB-administered fund and is part of the Manila-based multilateral development bank’s support for green infrastructure, including thematic bonds, national green finance vehicles, green projects, and other initiatives.

With a growing green finance market in developing Asia, ADB committed $6.5 billion in climate finance from its own resources in 2019.

ADB aims to reach a cumulative $80 billion from 2019 to 2030 in climate financing under its Strategy 2030, with a commitment to make 75 percent of all ADB projects climate relevant by 2030.

Source: Business Mirror