Lack of relevant research splits South-east Asia’s net zero path forward

THE complexities of decarbonising developing South-east Asia came into sharp relief this week when United Overseas Bank (UOB) excluded large parts of the oil and gas sector from its net zero emissions commitments.

At the heart of that decision lies uncertainty over how to create a “just transition” for the developing nations of South-east Asia. Better data and research relevant to the realities of this region are sorely needed to help.

In explaining its decision not to commit to net zero targets for downstream oil and gas activities, UOB said that fossil fuels are still required to support economic development and livelihoods in many parts of South-east Asia.

The bank argued that existing pathways do not account for those circumstances, and that there is no consensus between those pathways. Withholding loans from downstream oil and gas activities without accounting for their social and economic impact might therefore be inconsistent with a just transition for the region, UOB said.

DBS is not as ambivalent, however. In explaining its targets for the sector, DBS said that “economic development and inclusive growth and prosperity towards net zero do not rely on expansion or continued use of current levels” of oil and gas products altogether.

Each bank has taken a position on a matter of serious importance for South-east Asia. If UOB is correct, it could mean that an overly aggressive pursuit of decarbonisation in the region would be detrimental to millions in the region. If DBS is right, an overly cautious stance towards decarbonisation in the name of a just transition would impede global efforts to curb climate change.

Climate change is a critical problem for the world, and companies should ideally err on the side of ambition when confronted with uncertainties about global warming. But the social and economic impact of transitioning cannot be ignored, and unless addressed can impede climate progress.

The problem lies with figuring out how to accomplish a just transition. UOB’s dissatisfaction with existing net zero pathway models is shared by many in the markets. Most of the available industry pathways, such as the one created by the International Energy Agency, encompass much larger regions than just South-east Asia, which means that they are skewed towards much larger economies in the West or in Asia.

Even when pathways might be applicable to the region, they are often focused on narrow, technical questions of how to obtain a certain level of energy output without careful deliberation into the social and economic costs of the proposed substitutions.

SEE ALSO

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Research into region-relevant net zero pathways is sorely lacking, and underlying that gap is a need for good data and open collaboration. South-east Asian governments and businesses must work together to close that gap, because the responsibility lies within the region, and the outcomes will benefit all.

This is separate from the question of whether current uncertainties justify the current approach to decarbonisation. In fact, perfect forecasts are a utopian fantasy, and businesses and governments must be prepared to make tough choices in the absence of good information. But there is little question that a lack of visibility creates just as many convenient opportunities to excuse inaction as it does to advise genuine prudence.

The current divergence on the correct net zero pathway for South-east Asia needs better data, better research, and a better focus on the region.