Posted on 19 Jan 2023
The 2022 United Nations Climate Change Conference or Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC), commonly referred to as COP27, is scheduled to be held from 6 – 18 November 2022 in Egypt.
Since 1992, the event has been used by governments to agree on policies to limit global temperature rises and adapt to impacts associated with climate change.
While global movement towards decarbonisation is accelerating, the efforts are mostly driven by the “wealthier” western world. So, where is ASEAN heading to?
ASEAN’s Efforts in Decarbonisation
ASEAN is an intergovernmental organisation, in which decisions are based on consensus amongst the individual ASEAN Member States (AMS). Such structure allows it to accommodate the diversity and disparity among the AMS. On this note, climate change (and other) efforts at the ASEAN level tend to be broad and multi-tiered.
The ASEAN State of Climate Change Report (ASCCR), released in October 2021, aims to
a) provide an overall outlook of the state of play of climate change issues, including the adaptation and mitigation efforts and cooperation taken at the national, regional and global level in the context of ASEAN,
b) provide an analysis of the gaps, needs, challenges, lessons learned and best practices in addressing climate change in the region and among AMS,
c) provide recommendations on key priorities / potential areas of cooperation for the development of regional strategy for climate change adaptation and mitigation in ASEAN to strengthen regional climate action;
This report is probably the most comprehensive regional report on climate change policies in ASEAN. It examines challenges faced in the region. It also looks at the current status of climate change adaptation and mitigation efforts.
With that, it provides a broad policy framework on using the Acquaint, Integrate, Involve and Motivate (AIIM) framework for adaptation and mitigation actions towards 2030 and 2050.
The ASEAN Taxonomy for Sustainable Finance (Taxonomy) was released in November 2021. It aims to serve as a common building block that enables an orderly transition and fosters sustainable finance adoption by AMS. It will be an overarching guide for AMS that caters to the different ASEAN economies, financial systems and transition paths. It is conceived as a multi-tiered framework comprising:
The activity classification system will allow categorise activities into green, amber, or red colour codes, based on its contribution to the environmental objectives of the Taxonomy. Following the issuance of this Version 1 of the ASEAN Taxonomy, inputs are being sought from key stakeholders for further development of the ASEAN Taxonomy.
AMS Efforts in Decarbonisation
ASEAN Member States’ (AMS) progress towards decarbonisation is mixed. 5 out of ASEAN-6 countries have committed to a net zero target by 2050 or 2060. Philippines has not yet announced their commitment.
Of the 6 largest ASEAN economies (ASEAN-6), only Singapore is ahead with a fully implemented carbon tax system and is establishing an international carbon trading exchange by end of 2022. In October 2022, Singapore confirmed a net zero target by 2050 and made commitments to reduce emissions further.
Singapore’s carbon tax of SGD 5 / tCO2e was implemented in 2019, on companies emitting more than 25,000 tonnes of greenhouse gases (GHG) a year. The tax is now set to rise to SGD 25 / tCO2e in 2023, SGD 45 / tCO2e in 2026 and to reach SGD 50 – 82 / tCO2e by 2030.
Singapore’s Climate Impact Exchange (CIX) has started up with auctions of carbon credit a few weeks ago. As announced in the 2022 Budget, businesses are allowed to trade up to 5% of their taxable emissions from 2024. This will cushion the impact for affected companies as well as to create local demand for high-quality carbon credits and eventually lead to the development of carbon markets.
Indonesia submitted their Long-Term Strategy for Low Carbon and Climate Resilience 2050 (LTS-LCCR) to United Nations before COP26 last year. Since then, the country has been implementing various measures for climate change mitigation.
Indonesia introduced a carbon tax of about USD 2/tCO2e on the energy sector, but this has been postponed since July 2022 due to the weakening global economy.
Indonesia has passed the laws on carbon tax and have imposed the implementation of continuous emissions monitoring systems on the key industrial sectors including steel. It is a matter of time that the carbon tax is fully implemented in Indonesia. Plans are also underway to develop a carbon trading system there.
Thailand established the Thailand Greenhouse Gas Management Organisation (TGO) in 2007. TGO is responsible for the reduction of greenhouse gas (GHG) emissions in Thailand. Since then, a carbon reporting system is up and running and there are private / public businesses participating in voluntary carbon trading efforts in Thailand.
In addition, a draft Climate Change Bill (Bill) is set for approval in 2023. The Bill provides a regulatory framework for Thailand’s climate change response and stipulate policies and measures to tackle and reduce GHG emissions.
A National Climate Change Policy Committee (NCCPC) will be formed to formulate the development and integration of climate change policies, strategies, and plans including mitigation and adaptation frameworks. NCCPC handles policies while the Office of Environment and National Office of Natural Resources and Environmental Policy (ONEP) is the leading state agency responsible for the implementation of the Bill and for the coordination with other state agencies to address climate change challenges. This is expected to spur the country towards net zero by 2065.
On 26 July 2022, Vietnam’s Prime Minister approved the National Strategy on Climate Change by 2050 via the PM Decision 896. The objective is to adapt and mitigate losses and damages from climate change proactively and effectively reduce greenhouse gases (GHG) emissions towards net zero by 2050, in collaboration with the international community. Vietnam targets to reduce total GHG emissions by 43.5%t compared to the business-as-usual scenario (BAU). By 2050, total GHG emissions will reach net-zero, with the peak emission year set at 2035.
On August 5, 2022, Vietnam also issued PM Decision 942 to approve the Action Plan on Methane Emissions Reduction by 2030. The goal is to reduce total methane emissions by 30 percent by 2030 compared to the emissions level in 2020 from crop production, animal husbandry, solid waste, water treatment, petroleum exploitation, coal mining, and fossil fuel use.
Moving forward, Vietnam is working towards carbon pricing and a carbon exchange as part of its climate change strategy.
In Malaysia, a National Policy on Climate Change was introduced in 2009 to address climate change concerns through providing policies and strengthening institutions to reduce climate change impacts. A decade later, the government announced that they were ready to introduce a Climate Change Act. However, changes in the government delayed the introduction of the Act.
In September 2021, Malaysia's Prime Minister Ismail Sabri Yaakob has announced a goal for the country to become carbon neutral "as early as 2050", alongside a commitment to stop building new coal-fired power plants. At the same time, the 12th Malaysia Plan was announced. It included formulating legislation on climate change to increase coordination and enhance the effectiveness of climate change actions.
A year later, the Environment and Water Minister said the ministry was finalising the draft bill of the Act, which is expected to completed this year and to be tabled at the Parliament in early 2023.
Meanwhile, Malaysia has unveiled its Renewable Energy Roadmap which provide plans for the expansion of renewable energy usage and for decarbonisation in the energy sector. In addition, Malaysia has also awarded 2.2GW capacity in various large-scale solar (LSS) tenders.While Malaysia’s long-term climate change strategy still the works, it looks like efforts towards renewable energy is well underway.
To adapt to and mitigate climate change, the Philippines passed the Climate Change Act in 2009. The Act also led to the formation of the Climate Change Commission (CCC) as the main policy-making organisation on climate change issues. The Act also required local governments to develop a local climate change action plan, but implementation has been slow.
In April 2021, the CCC announced the new country’s objective is to reduce greenhouse gas emissions by 75% by 2030, up from a target of 70% set four years before.
Implications
All the above efforts show an accelerating effort in ASEAN to tackle climate change issues. While the implementation of key action plans is still at early stages in ASEAN, it is a matter of time before all the critical measures are rolled out.
What is critical and game-changing to the ASEAN steel industry is Carbon Tax and Carbon Trading. It changes the cost structure and competitiveness in the steel industry vis-à-vis imports, especially steel imports that are not penalised for carbon emissions. The ASEAN steel industry must work on pathways towards a low carbon future, if they are not yet doing so. One of the critical policies that is not in the works but is essential is a form of carbon border tax. This is similar to the one that the European Union is trialling right now, which will come into force in 2026.
So far this articles only covers climate change policies impacting the ASEAN steel industry. There will be challenges from customers, who are also working on low carbon efforts and their demands will continue to put pressure on the steel industry.
Some of these will be presented at the 2022 SEAISI Steel Mega Event and Expo from 14-18 November 2022, in Petaling Jaya, Malaysia. Hope to see you there.
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See You at SEAISI Events
Source:SEAISI
