ADB report urges ‘green’ policies

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The Philippines could be the third fastest growing economy in a group of Southeast Asian countries by 2050, the Asian Development Bank (ADB) said in a new report, but growth could contract by 1 percent if the government does not address increasing greenhouse gas (GHG) emissions.

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In the report titled “Southeast Asia and the Economics of Global Climate Stabilization,” the Manila-based lender said assumptions under the Intertemporal Computable Equilibrium System (ICES) Model showed that for 2010 to 2050, the Philippines could become the third fastest-growing Developing Asia 5 (DA5) economy.

The DA5 is composed of Southeast Asia’s five biggest economies: the Philippines, Indonesia, Malaysia, Thailand and Vietnam.

“GDP is modeled to reach $1.1 trillion in 2050, primarily supported by the growth of the service sector,” it said, while also qualifying that the ICES projection does not reflect official ADB forecasts.

The report added that heavy industries would slightly increase their share of the economy, while the relative share of agriculture will shrink from 11 percent in 2010 to 7.7 percent in 2050.

Given this scenario, it said that energy consumption was projected to increase more than threefold, peaking at 4.3 exajoules in 2050.

“In the absence of climate or renewable energy policies, the energy consumption mix is modelled as remaining dominated by fossil sources, which account for over 90 percent of the total, with hydropower expected to double by 2050,” it said.

Mirroring this development scenario, and in the absence of climate-related policies, GHG emissions in the Philippines could increase from just above 150 metric tons of carbon dioxide equivalent (MTCO2eq) in 2010 to 400 MTCO2eq in 2050, the report continued.

Following a sectoral restructuring of the economy, there will be an increase in share of emissions from transportation services, fossil-fuel-based electricity, heavy industry and households, it added. In contrast, the share of emissions of the agriculture sector would decline from around 28 percent to 6.4 percent.

With increasing GHG emission and the lack of climate change measures, the report said the Philippines could post the highest economic losses in DA5 or a GDP contraction of roughly 1 percent in 2050.

Meanwhile, climate change could cause a GDP loss of 0.6 percent in the DA5 aggregate, much higher than the global average and that experienced in more developed regions such as the European Union and the United States.

“In general, economic losses determined by changes in tourism flows tend to dominate other impacts and are of particular relevance in the Philippines and Thailand. This is due to the relatively high contribution of the sector to GDP,” the ADB said.

With this scenario, Southeast Asia will likely sustain larger economic losses from climate change than most other areas in the world.

Moreover, these losses—the collective effect of impacts on agriculture, tourism, energy demand, labor productivity, catastrophic risks, health and ecosystems—may be larger than previously estimated.

Energy efficiency in most of Southeast Asia is improving more slowly than in other areas of developing Asia or the world as a whole, the report said, while coal and oil have been rapidly rising as sources of primary energy.

With this, the ADB said climate change mitigation could be achieved by reducing land-use emissions, increasing the efficiency of energy usage and replacing carbon-intensive fuels with cleaner alternatives.

Energy efficiency improvements through the adoption of more efficient technologies and changes in behavior would be the biggest sources of long-term emission reductions.

Achieving dramatic improvements in energy efficiency and substitution of cleaner energy sources for fossil fuels would require investments in green infrastructure.

“This may include new zero or low-carbon power generation facilities, smarter power grids that can match both centralized and distributed supply and demand sources, energy-efficient buildings, public transport facilities that enhance mobility and safety while reducing congestion, and charging and refueling networks for electric and alternative fuel vehicles,” it said.

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