Managing the Transition to a Low-Carbon Economy

Managing the Transition to a Low-Carbon Economy Low-Carbon a to Managing the Transition Managing the Transition to a Low-Carbon Economy Managing the Transition to a Low-Carbon Economy Perspectives, Policies, and Practices from Asia Perspectives, Policies, and Practices from Asia Asia must be at the center of the global About the Asian Development Bank fight against climate change. It is the ADB’s vision is an Asia and Pacific region free world’s most populous region, with high of poverty. Its mission is to help its developing economic growth, a rising share of global member countries reduce poverty and improve the quality of life of their people. Despite the greenhouse gas emissions, and the most region’s many successes, it remains home vulnerability to climate risks. Its current to the majority of the world’s poor. ADB resource- and emission-intensive growth is committed to reducing poverty through pattern is not sustainable. This study inclusive economic growth, environmentally recognizes low-carbon green growth sustainable growth, and regional integration. as an imperative—not an option—for Based in Manila, ADB is owned by 67 members, developing Asia. including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, Asia has already started to move toward equity investments, guarantees, grants, and low-carbon green growth. Many emerging technical assistance. economies have started to use sustainable development to bring competitiveness to About the Asian Development Bank Institute their industries and to serve growing green ADBI, located in Tokyo, is the think tank technology markets. of ADB. Its mission is to identify effective development strategies and improve The aim of this study is to share the development management in ADB’s developing member countries. ADBI has an experiences of developed Asian economies extensive network of partners in the Asia and and the lessons they have learned. The book Pacific region and globally. ADBI’s activities assesses the low-carbon and green policies are aligned with ADB’s strategic focus, which and practices taken by developed Asian includes poverty reduction and inclusive countries, identifies gaps, and examines economic growth, the environment, regional cooperation and integration, infrastructure new opportunities for low-carbon development, middle-income countries, and green growth. private sector development and operations. Asian Development Bank Asian Development Bank Institute 6 ADB Avenue Kasumigaseki Building 8F Editors Mandaluyong, 1550 Metro Manila 3-2-5 Kasumigaseki, Chiyoda-ku Philippines Tokyo 100-6008 Venkatachalam Anbumozhi Tel: +632 632 4444 Japan [email protected] Tel: +813 3593 5500 Masahiro Kawai www.adb.org [email protected] Bindu N. Lohani www.adbi.org Managing the Transition to a Low-Carbon Economy Perspectives, Policies, and Practices from Asia Editors Bindu N. Lohani Masahiro Kawai Venkatachalam Anbumozhi © 2015 Asian Development Bank Institute All rights reserved. Published in 2015. Printed in Hong Kong, China. Printed using vegetable oil-based inks on recycled paper; manufactured through a totally chlorine-free process. ISBN 978-4-89974-057-5 (Print) ISBN 978-4-89974-058-2 (PDF) The views in this publication do not necessarily reflect the views and policies of the Asian Development Bank Institute (ADBI), its Advisory Council, ADB’s Board or Governors, or the governments of ADB members. ADBI does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. ADBI uses proper ADB member names and abbreviations throughout and any variation or inaccuracy, including in citations and references, should be read as referring to the correct name. By making any designation of or reference to a particular territory or geographic area, or by using the term “recognize,” “country,” or other geographical names in this publication, ADBI does not intend to make any judgments as to the legal or other status of any territory or area. Users are restricted from reselling, redistributing, or creating derivative works without the express, written consent of ADBI. ADB recognizes “China” as the People’s Republic of China. Note: In this publication, “$” refers to US dollars. Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5, Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan www.adbi.org Contents List of Figures, Tables, and Boxes v Foreword xi Preface xii Contributors xvii Abbreviations xxii PART I: CONCEPTS AND MEASUREMENTS OF LOW-CARBON GREEN GROWTH Chapter 1: Pro-Growth, Pro-Job, Pro-Poor, Pro-Environment Emil Salim 3 Chapter 2: Toward a Low-Carbon Asia: Challenges of Economic Development Venkatachalam Anbumozhi and Masahiro Kawai 11 Chapter 3: Green Growth and Equity in the Context of Climate Change Jeffrey D. Sachs and Shiv Someshwar 45 Chapter 4: Evaluation of Current Pledges, Actions, and Strategies Stephen Howes and Paul Wyrwoll 85 PART II: DRIVING FORCES AND INCENTIVES OF LOW-CARBON GREEN GROWTH Chapter 5: Co-benefit Technologies, Green Jobs, and National Innovation Systems Sivanappan Kumar, Naga Srujana Goteti, and Prathamesh Savargaonkar 149 iii iv Contents Chapter 6: Societal Innovations and Lifestyle Choices as a Low-Carbon Development Strategy Brahmanand Mohanty, Martin Scherfler, and Vikram Devatha 175 Chapter 7: Reforms for Private Finance toward Green Growth in Asia Takashi Hongo and Venkatachalam Anbumozhi 251 Chapter 8: Flexible Incentives for Low-Carbon Inclusive Growth Venkatachalam Anbumozhi and Armin Bauer 279 PART III: REGIONAL COOPEratiON FOR MANagiNG THE TRANSITION Chapter 9: Climate Finance and the Role of International Cooperation Tomonori Sudo 309 Chapter 10: Regional Cooperation toward a Green Asia: Trade and Investment Kaliappa Kalirajan 335 Chapter 11: Narrowing the Gaps through Regional Cooperation: Institutions and Governance Systems Heinrich Wyes 355 APPENDIX Low-Carbon Green Growth in Asia: Policies and Practices 381 Figures, Tables, and Boxes Figures 2.1 Carbon Emissions of Selected Asian Economies 13 2.2 Changes in Carbon Intensity, Realized and Projected 14 2.3 Energy Use, Emissions, and Economic Growth 16 2.4 Decoupling of Economic Growth and Emissions in Japan 18 2.5 Emission Reduction Potential for Major Emitters 21 2.6 Geographical Distribution of CDM Projects and Sectoral Distribution in the PRC 24 2.7 Revenues from Environmental Tax 29 3.1 Estimates of the Global Damage of Climate Change 55 3.2 Equivalent Annual Cost of Climate Change in Africa, as a % of GDP 56 3.3 Mean Impact of Climate Change on Southeast Asian Countries and at the Global Scale, as a % of GDP 56 3.4 Adaptation Cost Estimates Based on Various Methodologies 57 3.5 Total Annual Cost of Adaptation for the National Center for Atmospheric Research (NCAR) Scenario, by Region and Decade 58 3.6 Costs from Stabilizing Long-Run GHG Concentration at 550 ppm Across Regions 60 3.7 Colorado Water Compact of 1922 68 4.1 Projected Energy Demand in the PRC, India, and Other Non-OECD Asia 89 4.2 Energy Import Dependency in Emerging Asia 90 4.3 Domestic Coal Reserves in Developing Asia Are Limited and/or Depleting Rapidly 91 4.4 World Energy Prices: Volatile and Rising 92 4.5 Global Emissions Projections: The Gap between Planned and Required Action 104 4.6 Mitigation in Developing Economies Only will be Insufficient 105 4.7 The Additional Transformation Required for Emissions Profiles Across Asia 111 v vi Figures, Tables, and Boxes 4.8 The Additional Transformation Required in the Power Generation Mix across Asia 113 4.9 Global Emissions Reductions by Source 114 4.10 The Additional Transformation Required for Energy Demand Profiles across Asia 114 4.11 The Innovation Chain for a New Mitigation Technology 117 4.12 The PRC’s Future: Low Energy Prices or High Energy Efficiency? Cross-Comparison of Electricity Prices, Gasoline Prices, and Energy Intensity 124 4.13 The Ratio of Investment to GDP for Developing Asia and the Average for OECD Economies 137 5.1 Technology Promotion and Innovation Policy Framework in Asia and the Pacific 168 6.1 Population Growth for World Regions, 1950–2050 177 6.2 Proportion of Urban Population, 1950–2050 178 6.3 Annual Per Capita Electricity Consumption, 2007 and 2030 181 6.4 Cars per 1,000 Population, 2014 182 6.5 Lifecycle Energy Use in Buildings 183 6.6 Municipal Waste 184 6.7 Projected Impact of Climate Change 186 6.8 Income and Happiness in the United States 187 6.9 Share of the World’s Private Consumption 189 6.10 Annual Energy Performance of a Net Energy Positive House in India, 2014 206 6.11 Creating and Satisfying Demand for Green and Fair Products 220 7.1 Financial Flows to Developing Countries 254 7.2 Banks’ Outstanding Loans to Asia and the Pacific 255 7.3 Changes in Carbon Price 259 7.4 Carbon Market after 2014 263 7.5 Structure of a Green Credit Line 264 7.6 CO2 Reduction: Case of Performance-Based Incentive 267 7.7 Carbon Market and Performance-Based Incentive System 268 7.8 Green Climate Fund and Its Performance-Based Incentive System 269 7.9 Feed-in Tariff (FIT), Green Certificate Market, and Viability Gap Fund 272 7.10 Forest Eco Fund 273 7.11 Transformation of Money Market 274 Figures, Tables, and Boxes vii 8.1 Carbon Dioxide Emissions and Gross Domestic Product per Capita in Selected Economies of Asia and the Pacific 281 8.2 Pervasive Energy Subsidies and Fiscal Debt in Selected Asian Economies 292 9.1 Climate Change Related Aid, 2008–2013 311 9.2 Share of Foreign Direct Investment Flows into Asian Developing

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