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Cleaning up the economy

Increasing strains placed on resources and the environment will compel Asia to join the global drive toward cleaner and sustainable economic activity. By Anchalee Kongrut

Workers check on solar panels in Chuzhou in Anhui province of China. China is committing US$361 billion to renewable power generation by 2020. Photo: China Daily via Reuters

The Asia-Pacific region might be entering a golden era, at least if you look at the forecasts by international organisations that praise the resilience of its economies. In its Asia Pacific Regional Economic Outlook released in May, the International Monetary Fund said Asia Pacific continued to be "the world leader in growth", which it expects will reach 5.5% this year and 5.4% next year. For the World Bank, the outlook for developing East Asia and the Pacific is broadly positive for the next three years.

In fact, the astonishing transformation of the once conflict- and poverty-ridden region is still in its relatively early stages. By 2050, the Asian Development Bank forecasts that over 50% of global gross domestic product will originate from Asia Pacific, which will be home to half of the world population.

The figures certainly look impressive if business and investment appeal are the main criteria for success. But on the environmental front, the rising population, increased affluence and intensity of economic activity mean heightened demand for natural resources. People seem to forget that all this dizzying growth is taking place on the same stressed planet.

"The question is whether nature and the ecology can handle such a sizable economy. [By 2050], GDP will be four times greater than the current rate. Demand for products such as farm goods will increase up to 70%. Do we ever wonder if we will have the resources to support such sizable demand?" asked Prof Jian Liu, chief scientist of the UN Environment Programme.

He raised the rhetorical question at a forum titled: "Can Asia be Smarter, Greener, Cleaner?", held by the Foreign Correspondents Club of Thailand in May.

ONE STEP AHEAD, TWO STEPS BACK

The Asia-Pacific region will not need to wait another three decades for some of the answers. In fact, it is already feeling the pinch in some areas. Environmental calamity and resource scarcity are real and could become overwhelming.

"It is like one step forward, two steps back," said Peter King, an environmental scientist and senior policy adviser for the Institute for Global Environmental Strategies, who was also a panelist at the forum.

This is the most diverse region in the world, and its problems are equally diverse. Big countries such as China and India are facing mammoth tasks to deal with consequences of economic growth such as higher emissions and air and water pollution. South Korea and Japan are dealing with rapidly ageing populations which will further strain resources as economic growth stagnates.

The scenarios are even more alarming elsewhere. Some small islands in the Pacific, struggling with the existential threat of rising sea levels induced by climate change, could be wiped out by 2100 -- just eight decades from now.

According to GEO-6, a report by the United Nations Environment Programme, Asia Pacific has already been facing problems. Major challenges in the region include trans-boundary haze, especially in Southeast Asia; intensifying land degradation and declining biodiversity which affects not only the region but the world, as natural forests in Southeast Asia and the Pacific have been recognised as global diversity hotspots.

Coastal areas have experienced severe degradation including pollution and erosion. Sixty percent of mangrove forests have already disappeared from coastlines, affecting coastal marine resource reproduction and making coastal communities more vulnerable to erosion, rising tides and storm surge.

The region is also becoming more vulnerable to natural disasters, compounded by climate change that is making storms and typhoons more frequent, more severe and less predictable. Ninety-two percent of natural disasters are reportedly due to global warming and out of 65.3 million people worldwide displaced by such events, 14% are in Asia and the Pacific.

Natural disasters affect the economy and food security. For example, the most recent El Nino weather phenomenon caused $19.2 million in agricultural damage in the Philippines. In Cambodia, 18 out of 25 provinces face food insecurity with 2.5 million people affected.

Waste is becoming an ever-bigger problem. By 2030, the amount of waste generated in the region is expected to rise to 1.4 billion tonnes annually from 870 million in 2014, leading to leachate runoff, methane emissions and spontaneous fire combustion and other environmental problems. Eighty-five of the world's 100 most polluted cities in 2014 were in Asia Pacific, according to the World Health Organization.

The GEO-6 report also offers policy recommendations. Many focus on economic transformation that is based on sustainable and inclusive growth. One of the centrepieces of economic transformation is to "decarbonise" the economy by improving and marketing energy efficiency, greener transport systems and producing more clean and renewable energy.

The Asian Development Bank (ADB) last year estimated that if climate change continued unabated, GDP in the region could decrease as much as 3.3% in 2050, and 10% by 2100.

Wind turbines for generating electricity are seen in Guazhou in Gansu province of China. Photo: Reuters

GREEN ECONOMY

Amid such a doom-and-gloom scenario, there is hope for solutions. "The question is a matter of pace -- how fast the world community can change and can pick up," said Prof Liu.

The world is now counting on the Paris climate accord, which is considered to be the world's most comprehensive plan to fight climate change. For the world community, conservationists and businesspeople alike, the Paris Agreement offers hope, partly because it is accompanied by practical solutions based on business viability.

Another enabling factor to help the world deal with climate change and environmental degradation can be found in the United Nations Sustainable Development Goals (SDG) The SDG is a set of 17 global goals intended to reduce poverty, develop better water resources, reduce pollution, improve healthcare, narrow gender gaps, build inclusive economic growth, reduce climate change impact and create affordable and clean energy.

In terms of inclusive economic growth and clean energy, The UN Economic and Social Commission for Asia and the Pacific (Escap) has been promoting energy connectivity. The scheme encourages countries in the region to develop a trans-boundary energy grid, from China to Russia. Off-grid communities in remote areas such as Mongolia and parts of South Asia can then have access to energy connectivity.

Renewable energy projects such as natural gas in Russia, or even renewable energy from wind and solar farms can be hooked into trans-boundary grid and be used throughout the region, reducing the burden that comes with relying too heavily on coal, or building dams on pristine rivers.

Prof Paul Ekins, a renowned British academic specialising in sustainable development, said in the same forum that the clean energy industry will be game changer to shift the current extractive economy into an inclusive and sustainable one.

The achievement of the Paris Agreement offers a lesson, given that there seemed to be an unbridgable gap between the developed and developing worlds not long ago.

"In 2009, the climate change issue was about burden sharing and it was felt that climate change mitigation was going to be expensive and painful," said Prof Ekins, director of the UCL Institute for Sustainable Resources and also the UK Energy Research Centre.

"And of course developing countries were thinking that these mitigation requirements were going to choke off their rights to development, while rich countries did not want to pay their fair share for previously occupying atmosphere with emissions since the industrial revolution."

Now, however, sustainability is being seen not only as achievable but also as potentially very profitable.

A report titled "Better Business, Better World Asia", prepared by the Business and Sustainable Development Commission (BSDC), identifies numerous new market opportunities in line with SDGs and sustainable business. It sees business opportunity worth $5 trillion and the potential to generate 230 million jobs in Asia by 2030.

The BSDC is a London-based non-profit organisation, under the UN umbrella, with aims to promote sustainable development as the greatest economic opportunity. Its commissioners are a Who's Who of business and civil society leaders, including Alibaba founder Jack Ma, Temasek CEO Ho Ching and Olam Group CEO Sunny Verghese.

Released last month, the report breaks down the estimated $5 trillion of economic value across four key sectors: energy and minerals at $1.9 trillion, urban infrastructure such as cleaner transport, sustainable and waste treatment at $1.5 trillion, food and agriculture at $1 trillion, and health and well-being at $670 billion.

In Asia, India and China are vying to penetrate the nascent clean energy industry as solar power is becoming significantly cheaper than coal-fired power stations. China will put $361 billion into renewable power generation by 2020, in a bid to move away from dirty coal power toward cleaner energy. Within this plan, the Beijing government will spend $146 billion to boost solar energy installations by five times, the equivalent of 1,000 solar farms.

A report released last month by Bloomberg states that solar energy costs will drop another 66% by 2040, and onshore wind costs will decline by another 47% over the same period.

"China is not a charity and the country is looking to grow its economy through the future and wants to become an economic superpower in the 21st century. It identifies with this group of technologies … clean technology and clean energy technology are going to be the industrial technologies of the future," said Prof Ekins.

LOOK TO THE FUTURE

These success stories and economic figures are capturing the attention of politicians and business leaders who are looking into the future rather than the past. "Yet, there is a perception among politicians, perhaps among Thai politicians when you refer to environmental conservation, that the environment and economy is a trade-off relationship.

"Saying that if you want a good environment, we need to sacrifice the economy … that is untrue," said Prof Ekins, commenting on the decision by Thailand's current military government to pursue a large coal-fired power plant in Krabi, an environmentally sensitive province that is also popular with tourists attracted to the Andaman Sea.

"In that respect, the Thai government is not only acting against the environment by building a coal-fired power plant but it is acting anti-economically," he said.

There are enormous opportunities in the green economy for businesspeople who have the vision to grasp them, said Prof Ekins.

"There will be successful businesses in countries that take this opportunity on , such as we can see in China, Japan, and to some extent in Germany to Europe. These are the countries that are going to be successful and I am afraid that those who deny this fact, like US President Donald Trump's policy to go back to the coal industry, are simply going back to the past."

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