The choices that the big three Asian economies – China, Japan and South Korea – make on their own development and the rest of the world will likely be the key pivot point for the climate challenge and transition to zero-carbon development worldwide over the next year.
Last year the six big development banks in the region – the Asian Development Bank (AsDB), Asian Infrastructure Investment Bank (AIIB), China Development Bank (CDB), Japan International Cooperation Agency (JICA), Korea Development Bank (KDB) and the World Bank Group (WBG) – disbursed over USD 1.7 trillion in loans both within and beyond their own countries. China Development Bank alone is a major source of finance for both brown and green infrastructure. The CDB, and by extension the decisions of the Chinese government that guide the CDB, has considerable power to shift financial flows towards sustainable infrastructure. At the end of October E3G will publish new analysis of these big six banks operating in Asia and the progress, or otherwise, on Paris Agreement alignment.
Asia has huge untapped zero carbon energy and emissions reduction potential and will shape the world’s climate change mitigation response. At the same time, it is at risk of suffering some of the most severe climate impacts and risks by investing in carbon lock-in to a degree that endangers the goals of the Paris Agreement. Fatih Birol, the Executive Director of the International Energy Agency, has said the growth of coal-fired power in Asia is concerning because new generation capacity would “lock in the emissions trajectory of the world, full stop”. He has also said that "how we are going to deal with this problem is for me the nerve centre of the climate change debate today".
The hope is next year’s COP26 in Glasgow will prove a key turning point in this field. The UK is both a knowledge hub for green finance and a shining example of an energy system phasing out coal at a rapid pace, driven by a powerful concoction of regulation, carbon pricing and pure economics. If the UK can use its international diplomatic clout in the run up to COP26 and encourage others to come forward with meaningful commitments, it will already be a significant achievement for the UK and Italian Presidency.