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Project LINK meeting
Beyond growth: Towards a green future
Sweta C. Saxena
New York | June 19, 2019
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MAIN MESSAGES• Broadly stable growth outlook and low inflation
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MAIN MESSAGES• Broadly stable growth outlook and low inflation
• …has come at a cost of social inclusiveness and environmental degradation
Economy
SocietyEnvironment
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MAIN MESSAGES• Broadly stable growth outlook and low inflation
• …has come at a cost of social inclusiveness and environmental degradation
• Time to raise our ambitions beyond economic growth
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MAIN MESSAGES• Broadly stable growth outlook and low inflation
• …has come at a cost of social inclusiveness and environmental degradation
• Time to raise our ambitions beyond economic growth
• Need an annual additional investment of $434 billion ≈ 27₵/person/day ≈ 1 per cent of GDP to achieve a greener future.
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MAIN MESSAGES• Broadly stable growth outlook and low inflation
• …has come at a cost of social inclusiveness and environmental degradation
• Time to raise our ambitions beyond economic growth
• Need an annual additional investment of $434 billion ≈ 27₵/person/day ≈ 1 per cent of GDP to achieve a greener future.
• These ambitions are largely affordable with strong development partnership.
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Economic outlook for East and South Asia
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6.15.8
5.6 5.5
6.15.9
5.6
6.1
2017 2018 2019 2020
Perc
enta
ge
East Asia South Asia
Economic conditions in East and South Asia are largely stable
GDP growth, year on year
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Inflation remains at a relatively low level
Inflation
1.9 2.1 2.2 2.3
4.7
7.2
9.8
7.5
3.9 3.5
4.7 4.8
2017 2018 2019 2020
Perc
enta
ge
East Asia South Asia South Asia (without Iran)
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Bottom 10%
Middle 40%
Top 10%
Top 1%
100
150
200
250
300
350
400
450
50019
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Inde
xFocusing on growth alone has come at a cost to social inclusiveness…
Average income in Asia1980 = 100
Source: World Inequality database (accessed on 31 January 2019)
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… without further action, hundreds of millions will still live in extreme poverty
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Num
ber o
f peo
ple,
thou
sand
South Asia
East AsiaRest of the world
Data source: DESA estimation
Over 130 million people will still be living in extreme poverty in the East and South Asia by 2030!
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…and has come at a heavy cost to the environment…
Annual CO2 emissions in billion tonnes (GT)
Source: Carbon Dioxide Information Analysis Centre (CDIAC).
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5 out of the top 10 countries in the world that are most severely affected by climate change are located in the region
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For a future that we want: Investment in Sustainable Development Goals
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People Planet
Prosperity
From 17 Goals to 3 dimensions… spanning people, prosperity and the planet … supported by good governance and strong partnerships
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Survey 2019 estimates an investment gap of $1.5 trillion per year or 5% of GDP for developing Asia-Pacific …
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Survey 2019 estimates an investment gap of $1.5 trillion per year or 5% of GDP for developing Asia-Pacific …
Annu
al a
vera
ge, 2
016-
2030
$
billi
ons
in 2
016
cons
tant
pric
es
669
People Prosperity Planet
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Survey 2019 estimates an investment gap of $1.5 trillion per year or 5% of GDP for developing Asia-Pacific …
Annu
al a
vera
ge, 2
016-
2030
$
billi
ons
in 2
016
cons
tant
pric
es
669
People Prosperity Planet
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Survey 2019 estimates an investment gap of $1.5 trillion per year or 5% of GDP for developing Asia-Pacific …
Annu
al a
vera
ge, 2
016-
2030
$
billi
ons
in 2
016
cons
tant
pric
es
669
People Prosperity Planet
Affordable and clean
energy
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… or ≈ $1 per person per day
≈$1 43₵
NO POVERTY & ZERO
HUNGER
HEALTH AND EDUCATION
12₵
SUSTAINABLE INFRASTRUCTURE FOR ALL
37₵
CLEAN ENERGY FOR ALL
PROTECTION FOR NATURE
It’s within reach!
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Investing in PEOPLE to realize basic human rights and human capacities
• Targeted cash transfer32
317
421
158
138
0
100
200
300
400
500
600
700
Additional investment inPEOPLE per year
billi
on, U
nite
d St
ates
dol
lar
• Social protection floor
• Nutrition-specific interventions
• Agricultural productivity
• Universal health coverage
• Universal access to quality education
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Investing in PLANET to secure our future through clean energy and climate action and living in harmony with nature
102
242
180
156
0
100
200
300
400
500
600
Additional investment inthe PLANET per year
billi
on, U
nite
d St
ates
dol
lar
• Universal access to electricity
• Universal access to clean cooking
• Renewable energy
• Energy efficiency
• Biodiversity
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Investing in PROSPERITY to improve access to infrastructure
126
56
14
0
20
40
60
80
100
120
140
160
180
200
Additional investment in thePROSPERITY per year
billi
on, U
nite
d St
ates
dol
lar
• Transport
• Information and communications technology
• Water and sanitation
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Investment gap varies significantly across the region, rising to 16% of GDP in LDCs and 10% in South Asia
Inve
stm
ent g
ap b
y su
b-re
gion
s an
dan
d co
untry
gro
up, %
of G
DP
Similarly, Pacific SIDS face steep challenges due to high vulnerability to climate change, but results are not shown given limited data availability.
02468
1012141618
Leastdevelopedcountries
South andSouth-West
Asia
South-EastAsia
East andNorth-East
Asia
North andCentral Asia
People Prosperity Planet
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Investing in SDG 7: Affordable and clean energy
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Methodology • Model: International Energy Agency’s World
Energy Model• Scenarios:
Current Policies Scenario (CPS)
New Policies Scenario (NPS)
Sustainable Development Scenario
(SDS)
Baseline scenario NDC scenario SDG integrated scenario
Policies and measures enacted or adopted by mid-2018.
Baseline scenario + policies announced but not implemented as of 2018.
Achieve SDG 7 + Paris Agreement.
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Methodology - continued• Group targets under Goal 7 to estimate
investment needs
o Goal 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services
o Goal 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix
o Goal 7.3: By 2030, double the global rate of improvement in energy efficiency
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Methodology: Goal 7.1 & 7.2
Additional investmen
t needs
Incremental capacity
needs
Unit capital
cost
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Methodology: Goal 7.1 & 7.2
Additional investmen
t needs
Incremental capacity
needs
Unit capital
cost
0
10
20
30
40
50
60
2016 2018 2020 2022 2024 2026 2028 2030
Pow
er g
ener
atio
n ca
paci
ty
• Future energy demand projectiono GDP growtho Inflationo Populationo Urbanizationo Historical energy demand
by different energy type (e.g. coal, solar, hydro, wind, nuclear etc.)
• Future energy demand by energy type, based on different scenarios
Existing capacity after power generation infrastructure retirement and depreciation
Required future capacity to meet future power demand Others
Nuclear
Wind
SolarHydro
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Methodology: Goal 7.1 & 7.2
Additional investmen
t needs
Incremental capacity
needs
Unit capital
cost
Country-level unit capital cost to build energy infrastructure by different energy type
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Methodology: Goal 7.3
Additional investmen
t needs
Demand for energy
efficient equipment
Additional amount to
procure such equipment
compared with a baseline
• Future demand for energy efficient equipment
o GDP growtho Inflationo Populationo Urbanization
• Future demand for energy-efficient equipment by sectors (transport, buildings and industry) in different scenarios
Demand for energy
efficient equipment
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Methodology: Goal 7.3
Additional investmen
t needs
Demand for energy
efficient equipment
Additional amount to
procure such equipment
compared with a baseline
• Additional procurement costs
o Taxo Freight costso Labor costs
related to installation
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Investing in SDG 7:The results
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Developing Asia-Pacific countries need an annual additional investment of $434 billion during 2018 – 2030 to achieve SDG 7 (Unit: billion USD, 2016 prices)
CPS NPS SDS
SDG7.1 Universal access to electricity - 8.6 10
SDG7.1 Universal access to clean cooking - 0.4 2.0
SDG7.2 Substantially increase renewable energy’s share in the energy mix 131 152 242
SDG7.3 Double energy efficiency 101 134 180
Total 232 295 434
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Most investment is needed to increase renewable energy’s share in the energy mix and improve energy efficiency
Incremental annual investment needs to achieve SDG 7 for Asia Pacific region in 2018 – 2030, by sector
0
50
100
150
200
250
300
350
400
450
CPS NPS SDS
billi
on, U
nite
d St
ates
dol
lar Double energy efficiency
Substantially increaserenewable energy's share inthe energy mixUniversal access to cleancooking
Universal access toelectricity
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China, India and South-East Asian economies need the most investment
Incremental annual investment needs to achieve SDG 7 for Asia Pacific region in 2018 – 2030, by country
0
50
100
150
200
250
300
350
400
450
CPS NPS SDS
billi
on, U
nite
d St
ates
dol
lar
Other developing Asia andthe Pacific
North and Cantral Asia(excluding Russia)
Russia
South-East Asia
India
Korea
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Investment in affordable and clean energy can largely contribute to reduction of CO2 emissions…
CPS
NPS
SDS14000
15000
16000
17000
18000
19000
20000
21000
22000
2017 2025 2030
Mill
ion
tonn
es o
f car
bon
diox
ide
Energy related CO2 emissions in Asia Pacific region
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… and improve air quality
CPSNPS
SDS6
8
10
12
14
16
18
2017 2025 2030
Mill
ion
tonn
esof
par
ticul
ate
mat
ter (
PM2.
5)
Energy-related particulate matter (PM 2.5) emissions in Asia Pacific region
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… contributing to reduction of premature deaths
0.00.51.01.52.02.53.03.54.04.5
2017 2025 2030 2017 2025 2030
NPS SDS
Mill
ions
of p
eopl
e
Premature deaths due to air pollution in Asia-Pacific region
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Can we work on a goal plan?
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Prioritizing Goals: considering both progress and investment gaps
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Strong partnership between public and private sectors
Strong partnerships are critical to finance investment in clean and affordable energy
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Governments need to provide an enabling investment environment
Share of global investment in renewable energy projects in 2016
Private sector, 92%
Public sector
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Demand-side interventions: improve risk-return profile of investment opportunities
• Prioritize non-fossil fuel power generation as part of integrated energy planning and investment processes
• Provide policy framework to incentivize and reduce risks in private sector’s low-carbon investment
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Provide policy framework to incentivize and reduce risks in private sector’s low-carbon investment
Policy de-risking instruments: address the root causes of risks
• Support for renewable energy policy design• Implementation and enforcement of minimum energy efficient
standards
Financial de-risking instruments: financial products that transfer risks from private to public
• Loan guarantees• Public equity co-investments
Direct financial incentives: direct financial transfers or subsidies to low-carbon energy investments
• Removal of fossil fuel subsidies• Carbon pricing
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Removing fossil fuel subsidies
Fossil fuel subsidies (2014)
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Removing fossil fuel subsidies and introducing a carbon tax
Fossil fuel subsidies (2014)
Carbon tax revenue (2018)
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Removing fossil fuel subsidies and introducing a carbon tax can largely reduce the additional investment requirements for developing Asia Pacific
Fossil fuel subsidies (2014)
Carbon tax revenue (2018)
Additional annual investment needs to achieve SDG7
44%
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Supply-side interventions: shape the availability of private financing for low-carbon investments
Financial system reforms: align financial systems with sustainable development
• Bangladesh: Environmental Risks Management Guidelines for Banks and Financial Institutions
• Indonesia: Sustainable Finance Roadmap
New low-cost asset classes: emerging asset classes and sources for capital
• Green bondIn 2017, green bond issuance reached $43 billion in Asia and the Pacific, accounting for more than a third of the global volume.
• Impact investment• Digital finance
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Partnerships with MDBs
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• In 2014, China announced a $3.1 billion South-South Climate Change Fund.
• In 2017, India contributed $100 million to South-South cooperation trust funds and an additional $50 million to member States of the Commonwealth.
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Takeaway messages
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TAKEAWAY MESSAGES• Growth in Asia is not delivering a future that is
sustainable• Urgent actions are needed to transform to a low-
carbon economy• The ticket is affordable
at an additional $434 billion per year ≈ 27₵/person/day.
• …which brings co-benefits to PEOPLE and the PLANET
• We need strong development partnership to ensure NO ONE IS LEFT BEHIND!
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For a green future that we want!