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How Asia is facing an $800 billion climate financing shortfall
Asia contributed about two-thirds of global growth last year and is projected to do so again in 2024. However, its heavy reliance on burning coal for energy means that it contributes more than half of harmful global greenhouse gas emissions, which has significant implications for global sustainability.
The Asia-Pacific region is facing an $800 billion climate financing shortfall, exacerbated by the pandemic’s impact on public finances. To address this, a coordinated effort is needed from governments, central banks, financial supervisors, and multilateral institutions.
Key Takeaways
- The Asia-Pacific region faces an $800 billion shortfall in climate financing, requiring coordinated efforts by governments, central banks, and financial supervisors to unlock the potential of private capital.
- Asia’s pivotal role in global sustainability is underscored by its heavy reliance on coal for energy and the region’s urgent need for at least $1.1 trillion annually to meet mitigation and adaptation needs.
- To address the funding gap and challenges in accessing climate finance, actions such as phasing out fossil fuel subsidies, expanding carbon pricing, and strengthening data, taxonomies, and disclosures are crucial, along with collaboration between local and global entities.
Strategies include phasing out fossil-fuel subsidies, expanding carbon pricing, and promoting innovative financing and public-private partnerships. Asia’s pivotal role in climate action is emphasized due to its economic growth and high greenhouse gas emissions.
The funding gap for mitigation and adaptation needs in the region is significant, with challenges for small economies and issues with investor trust in sustainable debt instruments.
Why is climate finance urgent?
Progress is too slow. Global temperatures are set to surpass the critical 1.5 degrees Celsius threshold above pre-industrial levels. Efforts to halve 2019 levels of greenhouse gas emissions by 2030 fall alarmingly short, targeting only an 11 percent reduction. Without stronger action, our warming planet imperils homes, health, and food security. Mobilizing more climate finance is vital not only for mitigating emissions but to build adaptive capacity through investments in climate resilient infrastructure. This is especially important for Asia, which is home to several of the largest emitters and a region acutely vulnerable to climate change due to high population density and geography.
What makes Asia’s role pivotal?
The region’s transition to greater sustainability has global implications. Asia contributed about two-thirds of global growth last year, and will again in 2024, but its heavy reliance on burning coal for energy means that it contributes more than half of harmful global greenhouse gas emissions. Asia’s economies recognize how climate hazards directly impact lives and livelihoods, and have made deeper commitments, as their revised Nationally Determined Contributions under the 2015 Paris Agreement show. Asia can aid the climate fight by demonstrating how to balance economic growth and environmental sustainability.
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