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Climate Policy in the Asia-Pacific: Balancing Economic Growth with Environmental Sustainability

By Andy Nguyen

December 22, 2015

The past year witnessed noticeable improvements in the effort to address climate change in the Asia-Pacific. Countries across the region endeavored to broaden their energy mix to include a wider range of renewable energy sources and more efficient use of fossil fuels. Yet despite impressive efforts from the region’s key energy consumers, Asia-Pacific nations will continue to face immense challenges to achieving environmentally sustainable economic growth. Lasting results will ultimately depend on the will of states to collaborate on enabling cleaner fuels and technologies.

The Asia-Pacific is the world’s largest energy consumer and contributor to climate change. Six nations in the Asia-Pacific—China, the United States, India, Russia, Japan, and Indonesia—account for over 56% of the world’s greenhouse gas (GHG) emissions, a large part of which is due to energy consumption from fossil fuels. Likewise, the world’s top five energy consumers reside in the region, and non-OECD Asia is expected to account for 65% of global energy growth by 2035. In Southeast Asia 75% of new generating capacity being developed in the next few years is projected to be coal-powered, and by 2040 the International Energy Agency expects fossil fuels to make up 78% of Southeast Asia’s total primary energy demand. Without any changes, GHG emissions will likely surge.

Initiatives to Address Climate Change

China and the United States—the world’s top two energy consumers and GHG emitters—released a joint announcement on climate change and clean energy cooperation in late 2014 that included commitments to reduce emissions and increase the use of non-fossil fuel sources. In September 2015, during President Xi Jinping’s U.S. visit, both countries reaffirmed these commitments.

For the United States, a major policy development over the past year was the announcement of the Clean Power Plan, the nation’s first national standard for controlling carbon emissions from power plants, the largest source of carbon pollution in the country. Because fossil fuels will continue to make up a significant portion of the United States’ future energy mix, the plan calls for power plants to operate more efficiently. This initiative, however, has received a great deal of criticism from Republicans in Congress, and both the House and Senate passed resolutions voting against the plan. President Barack Obama, however, recently vetoed the resolutions.

China, the world’s largest GHG emitter, has invested more money in its renewable energy sector than any other country in the world and is home to 22 of the world’s 65 nuclear energy reactors under construction as of November 2015. In addition, President Xi announced that China would expand on its local market-based carbon-trading programs and create a nationwide cap-and-trade system by 2017. Although coal is still expected to dominate China’s energy mix, the country is improving efficiency by building ultra-supercritical coal plants and closing less efficient plants. Additionally, it has striven to increase the role of natural gas in its energy mix, which emits less carbon per unit of energy than either coal or oil. However, a November article by the New York Times revealed that China has been burning more coal than reported since 2000, which casts further doubt on the accuracy of Chinese statistics. Despite these concerns, China’s growth in coal consumption has been waning in recent years, and the country could still reach its goal of peaking CO2 emissions by 2030, if not earlier, even if these emissions are at a higher overall level. Last, despite noteworthy improvements—including increases in installed capacity for hydropower, nuclear, wind, and solar—clean energy sources make up just 10% of China’s energy mix according to data from the U.S. Energy Information Administration.

Elsewhere in the Asia-Pacific, the adoption of clean energy sources is increasingly viewed as a top priority. In August 2015, Japan restarted its first nuclear power plant since the 2011 Fukushima Daiichi disaster. It plans to restart more in the coming years, which would help lower import spending on fossil fuels and reduce emissions. In addition, Indonesia has vowed to increase the share of renewables in its energy mix from 5%–6% to 19% by 2019 and has received support from the Asian Development Bank and the United States to scale up renewable energy. For instance, the third-largest generator of geothermal electricity in the world (behind only the United States and the Philippines), Indonesia collaborated this year with the United States on developing ideas for further advancing geothermal production. The country even began to overhaul its notorious fuel subsidies program, which had crowded out funding for infrastructure development and alternative fuels and acted as an incentive for Indonesians to consume more oil and gasoline.

Challenges to Mitigating Climate Change

Even with this progress, there remain serious challenges for Asia-Pacific nations to effectively mitigate climate change. Generally speaking, developing countries have a more difficult time achieving ambitious climate initiatives as they prioritize poverty alleviation and economic growth. India, for instance, has long committed to alleviating poverty before addressing climate change, and has only recently stepped up its efforts to reduce GHG emissions. India and the rest of developing Asia, however, are still incredibly reliant on coal—India increased its coal capacity by 73% in the last five years—and it will be difficult to mitigate this dependency and shift toward cleaner energy sources. In addition, nearly all non–fossil fuel energy sources mentioned are more expensive to initially develop than coal and oil. Wind and solar are also irregular sources of energy, and more research needs to be done on power storage facilities to unleash their full potential.

Importantly, climate initiatives can also improve long-term energy security by shifting a country’s focus toward renewables. Proponents of increasing renewable energy’s share in mixes across the region highlight its relative affordability once installed and availability as a domestic energy source. The challenge, however, is the process of scaling up renewables and making the technology more affordable for developing Asia.

Conclusions

There are several indicators to watch in order to gauge the success of these initiatives. The first is the price of oil. Low oil prices will spur greater demand for oil and ultimately increase GHG emissions, thereby undermining efforts to fight climate change. The second indicator involves technological developments. If there are massive breakthroughs in power-storage facilities, battery technology, or solar and wind tech—along with cost reductions that make these technologies feasible in Asian developing countries—it will be easier to shift economies toward cleaner energy sources and to balance environmental goals with economic growth. The third indicator focuses on China and the United States. Regardless of what happens elsewhere, developments in these two countries will have a disproportionate impact on global emissions goals. The last indicator to watch is the Paris climate change agreement and any major developments that occur during the check-ins that follow. Although a final agreement has been reached, countries must implement these goals, which are now even more ambitious than before.

Lasting results in the effort to address climate change in the Asia-Pacific will ultimately depend on the will of nations to gracefully shift from the short-term satisfaction of fossil fuel needs toward the long-term reliability and sustainability of renewables and cleaner energy.



Andy Nguyen is a Project Associate in the Trade, Economic, and Energy Affairs group with the National Bureau of Asian Research (NBR). The views expressed are those of the author.



Strategic Asia 2015-16: Foundations of National Power in the Asia-Pacific examines how the region's major powers are building their national power as geopolitical competition intensifies. In each chapter, a leading expert analyzes a country’s economic, technological, human, and natural resources and assesses how well its political system translates those capabilities into military and diplomatic power. Learn more.