A new report from the Deloitte Economics Institute shows Southeast Asia must act now to prevent the region losing US$28 trillion in economic potential over the next 50 years due to unmitigated climate change. Southeast Asia’s turning point: How climate action can drive our economic future also reveals how the region could instead gain US$12.5 trillion in economic value over the same period by limiting rising global temperatures and realizing its potential to ‘export decarbonization’ to the world.
“There is an urgency for countries and governments to act quickly – within the next 10 years – to circumvent irreversible damage from climate change. Southeast Asia’s economies have made strong commitments in this direction; however, each are at different stages on their sustainability journey, owing to their unique geographic and economic circumstances. In order to alter the trajectory, Southeast Asia must seize the opportunity within this small window to lead the charge and take climate action, moving away from the narrative of cost towards one of economic growth and success,” says Philip Yuen, Chief Executive Officer, Deloitte Southeast Asia.
With no action taken on climate change, average global temperatures could rise by 3°C or more by the end of this century. This will make it harder for people to live and work as sea levels rise, crop yields fall, infrastructure is damaged, and other challenges emerge.
For comparison, the economic cost of unchecked climate change in Southeast Asia is equivalent to the economic damage from a significant earthquake occurring every 9 months between now and 2070.
Deloitte’s research also shows that if governments, businesses, and communities act boldly and rapidly in the next decade to address climate change, average global temperature rises can be limited to around 1.5°C by 2050—a scenario that would minimize the impact of climate change for Southeast Asia and the rest of the world. At the same time, Southeast Asia can achieve significant economic growth by supplying the products and services, and by providing financing solutions to a world that will need to limit temperature increases.
“Southeast Asia can stand to gain US$12.5 trillion in economic value over 50 years. In 2070 alone, it would mean a gain equivalent to 80% of Southeast Asia’s current economy,” says Marcus Ng, Economics Lead, Deloitte Southeast Asia. “The world needs to transform to adopt new, low-emissions pathways, and Southeast Asia should work together to better position our region for future growth.”
“It doesn’t take a miracle – some solutions to climate change already exist, world-leading enterprises have made Southeast Asia home, they’re already delivering the technology to address climate change risks for the region and globally,” says Yvonne Zhang, Risk Advisory Climate & Sustainability Leader, Deloitte Southeast Asia. “It takes a village. Collectively, we can chart a realistic path towards a low-emission future by leveraging supply chain human ingenuity, flexible manufacturing and responsible business practices to meet world needs.”
Deloitte’s report sets out four key stages for Southeast Asia’s climate transition. These start with nations and businesses making bold decisions to act on climate change now and develop or expand their related strategies. Those decisions will see economies start to decarbonise between now and 2030.
From 2030 to 2040, Southeast Asia and the world will need to complete large and coordinated shifts to reduce carbon emissions by tackling how energy is produced and consumed.
2040 to 2050 is the turning point decade, where the world avoids locking in temperature increases of 3°C or more. By 2050, the process of decarbonising high-emission industries should be almost complete, the cost of green solutions will have started to fall, and wider net economic gains will have begun to emerge.
After 2050, the economies of Southeast Asia will have been radically transformed and come to produce near-zero emissions while continuing to grow. At the same time, global temperature rises will have been limited to a maximum of 1.5°C by the end of the century.