Rapid decarbonization in Southeast Asia to translate to $12.5 trillion economic gains by 2070

by Danessa Rivera – The Philippine Star, 30 Aug 2021

MANILA, Philippines — The Southeast Asian region stands to reap $12.5 trillion in economic gains by 2070 if they pursue bold actions to achieve low-emission economies, according to the latest report of global professional services firm Deloitte.

The report titled “Southeast Asia’s turning point” said rapid decarbonization in the region would translate to an average of 3.5 percent annual growth to 2070.

“In our forecasts, these economic benefits would be observed from the first year that bold climate policy decisions started delivering rapid investment and technology development consistent with limiting global average warming to 1.5 degrees Celsius by 2050,” Deloitte said.

On the other hand, the report also showed that the regional bloc could suffer bigger economic losses – approximately $28 trillion in present value terms, which account for almost 16 percent of the region’s GDP by 2070 – from climate change inaction.

This is if the region does not significantly reduce emissions that could lead to global average warming of three degrees Celsius in 50 years.

“Unchecked climate change will, in average annual terms, reduce Southeast Asia’s economic growth by 7.5 percent per year over the period to 2070,” Deloitte said.

Apart from economic losses, the region could suffer from lower labor productivity due to heat stress, loss of productive land through rising sea levels, stalled productivity and investment, diminished health and wellbeing, disrupted flow of global currency, and losses in the agriculture sector.

To avoid such losses, the report said the region needs to implement policy and investment decisions in the next few years.

“Southeast Asia is at the frontier of a new economic era and the development of a new system of production. By making the right choices now, it could chart a more prosperous path toward a low-emission future, accelerating progress in the rest of the world by exporting key technologies, processes, and know-how,” Deloitte said.

According to the report, from this year to 2030, the region should set bold climate plays, as “the decisions by government, regulators, business, industry and consumers would reinforce initial progress and create market conditions to deliver decarbonization at pace and scale.”

From 2030 to 2040 is the phase of coordinated change, wherein the member economies would experience the hardest shifts in industrial policy, energy systems and consumer behavior, as well as register modest economic benefits compared to those realized in the initial phase, it said.

The climactic and economic turning point will only be experienced from 2040 to 2050, when decarbonization of high-emitting industries would nearly be completed and efforts to curb emissions would start to manifest in terms of lower global average temperatures.

“Economic gains realized throughout the region would continue to rise steadily – reaching more than 10 percent in 2070 – as a result of the direct economic benefits of decarbonization and the avoided costs of unmitigated climate change,” Deloitte said.