SINGAPORE (Apr 17): Covid-19 is now a defining crisis of our generation. But it is not alone. As we mark the 50th anniversary of Earth Day, we must consider what the next 50 years might bring if we fail to address the crisis of climate change.
Covid-19 has shown us societies, governments, and businesses can respond quickly to systemic existential crises. Unfortunately, it has also shown us the fragility of international cooperation and coordinated global responses to large-scale threats. The former gives us grounds for optimism; the latter requires inspired global and regional leadership.
The world is currently reeling from the social and economic shock of Covid-19. The shock of climate change is likely to be more extreme. Estimates point to a potential loss of 30% of GDP per capita by 2100 if temperatures reach 4°C above preindustrial levels, with substantial socioeconomic costs in employment, displacement of people, and risk to food and water systems. The impact on Southeast Asia could be closer to 90% loss of GDP per capita.
The public sector, private sector, and broader society have pivotal roles to play in meeting this challenge. Public sector leaders can leverage the post-Covid-19 recovery to progress the green agenda through renewable energy, low-carbon transport, and energy efficiency. Private sector leaders should build resilience in their business models by embedding sustainability, reducing emissions, boosting supply chain resilience, and investing in lower emissions portfolios.
Boston Consulting Group’s ongoing research highlights the need for investment in both mitigation to lower greenhouse gas footprints, and adaptation to prepare society for a warmer world. These measures must be at the heart of the Covid-19 recovery delivered by the nations of Southeast Asia.
Southeast Asia contributed 7.5% of global carbon emissions as of 2016. As economic growth restarts, so too does the risk of those emissions growing along with it. Of the 10 nations most impacted by climate change in the decades from 1998 to 2018, four were in Southeast Asia, with Myanmar, Vietnam, Thailand, and Philippines facing the sharp edge of this global challenge.
Projections estimate that 11.9% of the regional population is at risk of displacement due to rising sea levels if global temperatures increase above 2°C. Scientific consensus currently places our trajectory significantly beyond that temperature rise. Keep in mind too these are global averages, with some studies suggesting the equatorial region straddled by Southeast Asia may be more vulnerable still.
Over 70% of the region’s emissions come from four sectors — land use and forestry (36%), energy (16%), agriculture (13%), and transport (9%). Channelling investment into these sectors can both stimulate economic recovery and help achieve the long-term targets of our climate agenda.
Investments must target both mitigation and adaptation. For example, in land use and agriculture, mitigation incorporates peatland management and restoration to reduce emissions and risks of uncontrolled fires. At the same time, large numbers of people who make a living through agriculture live near the coasts. As sea levels rise, these populations need to be protected through planned displacement to safer areas or flood defences. Mitigation and adaptation target the same group in different ways.
Countries in the region can adopt a number of mitigation and adaptation actions in the context of recovering from the Covid-19 crisis:
Forestry and Agriculture: Invest in peatland restoration, reforestation, and sustainable land use practices that reduce carbon emissions while protecting carbon stores. This also improves the global competitiveness of export-oriented agriculture, where demand for sustainable products is increasing. At the same time, invest in crop resilience and improved agricultural practices in the face of higher temperatures to protect the sector.
Energy: Accelerate investment in renewables such as solar energy. The UK Energy Research Centre estimates that the number of jobs created by the renewables sector equates to 0.80 jobs per gigawatt hour of electricity, compared to 0.15 for conventional fossil fuels. This will be crucial in the context of post-Covid-19 economic recovery.
Efficiency: Invest in energy efficiency initiatives that demonstrate clear return on investment through cost savings i.e. offsetting near-term Capex requirements through recurrent Opex savings. BCG experience shows most companies in energy-intensive sectors can realise substantial energy gains with positive business cases. The International Energy Agency (IEA) reports that more than 50% of fugitive methane emissions can be abated with a positive return. The Carbon Trust has demonstrated investments designed to save ~15% of energy consumption yield an average internal rate of return of 48%.
Transport/Mobility: Expand public transport services and continue to invest in the long-term growth of electric vehicles. In some markets, the economic and environmental impact of biofuels may offer practical mid-term solutions to transition to a low-carbon economy, as a step towards zero-emission transport.
Thoughts for Singapore
Singapore is a nation that has shown how ambition can deliver national opportunity. Yet those ambitions must reach beyond its borders if it is to have a true impact on climate change. This is not a challenge which any nation can face alone. The Singapore government has expressed a need to invest $100 billion in climate resiliency over coming decades.
Singapore is the most developed economy in the region, and its efforts to fight Covid-19 reveal how its advanced infrastructure can be leveraged at a time of shared crisis. The postCovid-19 world is not only an opportunity for Singapore to double-down on safeguarding itself against the impact of climate change, but to also proactively work with its partners in Asean, and continue to facilitate cooperation to address this looming global threat. The nation should position itself as an Asean leader on climate action, and place itself at the forefront of tackling this shared regional challenge.
The lessons from this crisis must encourage us all to prepare for what follows. While climate change may impact more heavily on the next generation, the long-term efforts to battle this crisis must start now.
The writers are all from the Boston Consulting Group: Dave Sivaprasad is Managing Director & Partner; Stefanie Khaw is Principal and Anis Mohd Nor is Project Leader.