## apccea

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### Executive Summary
- Asia and the Pacific’s green transition will have far-reaching implications for the global economy.
- The region became the engine of global economic growth while remaining relatively heavy in coal reliance and energy intensity.
- Achieving net zero by 2050 requires an energy transition at an unprecedented scale and speed, while ensuring energy security and affordability.
- The region comprises many countries highly exposed to climate hazards increasing in severity and frequency with global warming.
- If managed well, the green transformation in Asia and the Pacific can create opportunities for inclusive and sustainable growth.
- The paper draws on novel surveys of country authorities and the public in the region to distill climate ambitions and challenges and to identify major gaps in achieving mitigation and adaptation goals.

### Asia and the Pacific in the emissions landscape — key findings and statistics
- The region accounts for nearly 40 percent of total global greenhouse gas (GHG) emissions in 2020.
- Rapid economic expansion and energy use:
  - In 2021, the Asia-Pacific region accounted for 40 percent of global GDP (in 2017 purchasing power parity dollars), up from 20 percent in 1990.
  - Primary energy consumption in Asia-Pacific more than tripled since 1990.
  - Energy consumption in China was one-third of the level of the United States in 1990, but is now 70 percent higher than in the United States.
- Big emitters and distribution:
  - China, India, Indonesia, Japan, and Korea are Asia’s large five emitters (“the Big Five”), accounting for a third of the global GDP and 40 percent of global emissions in 2021, up from 20 percent in 1990.
  - Per capita emissions remain relatively low in China and India; India ranked among the lowest in the Group of Twenty countries.
  - National emissions are low in Singapore and some ASEAN economies, but per capita emissions are relatively high; Singapore is among the highest in per capita emissions from energy.
- Sectoral composition:
  - Agriculture accounts for nearly 15 percent of the region’s total GHG emissions, equivalent to 48 percent of the global emissions by the sector.
- Energy mix and coal reliance:
  - Globally: oil 31 percent, coal 27 percent, natural gas 24 percent.
  - In the Asia-Pacific region, coal accounts for nearly 50 percent of the region’s energy mix, translating into nearly 80 percent of global consumption from coal, compared to 10 percent in the rest of the world.
- Energy intensity and decoupling:
  - Japan is the only country in the region where energy consumption has declined in the past two decades or so.
  - Elsewhere, energy intensity remains high and growth has not yet decoupled from growth in primary energy consumption.

### Gaps, risks, and the policy conundrum
- Current regional goals and efforts still fall short of what is needed to limit global average temperature increases to well below 2 degrees Celsius above preindustrial levels.
- Large gaps remain as emission reduction goals and policies often fall well short of the emission reductions needed to achieve the Paris Agreement objectives.
- Closing these gaps requires fundamental changes in production and consumption patterns and transformation of energy, transportation, and land use.
- The mitigation challenge involves reconciling economic development with GHG emissions reduction, with significant global implications.

### Policy recommendations and measures to close mitigation and adaptation gaps
- Adopt a holistic, multipronged approach to climate mitigation:
  - Renewables must be complemented by investments in energy efficiency, electrification, and other emerging green technologies along with infrastructures to address intermittency problems.
  - Carbon pricing should ideally play a more central role in the policy mix as it contributes to synergies across policy instruments.
  - To maximize carbon pricing efficacy, accompanying structural reforms are needed so price signals best align incentives of different economic agents.
  - When carbon pricing is not feasible, alternative (but equivalent) approaches are needed (feebates, energy efficiency standards, regulations, or green subsidies).
  - Sectoral policies can fill policy gaps, including feebates, fossil fuel subsidy reforms, carbon sink measures, and regulations (for example, energy efficiency standards).
- Manage potential side effects to ensure a just and durable transition:
  - Address rising energy costs for households and firms, labor displacement, and regional disparities in transition impacts.
  - Recycle revenues from carbon pricing to cushion vulnerable groups and increase public acceptance.
- Build public ownership of climate policies:
  - Raise awareness of climate change impacts and how mitigation policies work.
  - Educate the public about benefits of acting now versus costs of inaction to garner support for translating mitigation and adaptation strategies into policies.
- Strengthen adaptive capacity and finance adaptation:
  - Urgently quantify investment needs for adaptation—“what is not measured is not funded.”
  - Integrate assessments of investment needs and financing gaps into medium-term fiscal frameworks.
  - Strengthen climate public financial management and infrastructure governance.
- Mobilize climate finance:
  - Revenue mobilization and spending prioritization and efficiency will help create domestic financing resources while easing growth-debt trade-offs.
  - Concessional financing and grants from multilateral development banks and the international community are alternatives for low-income countries with limited fiscal space.
  - Unleashing substantial private capital is critical to finance investment needs.
- Mobilize private finance through a sound climate ecosystem:
  - Create conducive business environments supported by climate taxonomies, disclosure requirements, regulations, and climate data that meet international standards to maximize cross-border green investment and minimize regulatory arbitrage and greenwashing.
- Address global implications and international cooperation:
  - The region’s mitigation needs have global implications as it leads in innovation, production, and adoption of clean and low-emission technologies.
  - Concerns about geopolitical fragmentation and concentration of access to critical minerals underscore the importance of international cooperation for technology transfer and financial assistance.
  - Green industrial policy measures can promote state-driven structural transformation under NDCs but should remain narrowly targeted to specific objectives and address market failures.

### Pathways to Net Zero — ambitions, policies, and implementation
- NDCs and targets:
  - “Carbon neutrality” targets CO2 only; “Net zero” targets all GHGs.
  - End targets in advanced economies typically align with net zero by 2050 and are often codified in law; EMDEs’ targets vary considerably and some rely on international assistance.
  - Box: 80 percent of Asia-Pacific countries have an end target of net zero emissions or carbon neutrality.
  - Country examples: India end target net zero by 2070 with interim goal reducing emissions intensity by 45 percent from 2005 levels by 2030; Thailand committed to net zero GHG by 2065 following carbon neutrality by 2050; China anticipates a peak before 2030 with adjustments toward 2060.
- Mitigation instruments in use:
  - Market-Based Instruments:
    - ETSs: Korea national ETS; China and Indonesia launched a mandatory, intensity-based ETS for power generation; Vietnam committed to implementing an ETS; India designing a carbon credit trading scheme.
    - Carbon taxes: Japan and Singapore have a carbon tax in place.
    - Carbon pricing measures globally cover more than 40 percent of total GHG emissions in 2021.
    - China’s ETS is the single largest carbon pricing instrument in the world.
  - Sectoral policies and technology support:
    - Feebates used across transportation, power, industry, buildings, forestry, agriculture.
    - India’s Unnat Jyoti by Affordable LED for All program installed over 368.6 million LED bulbs, resulting in an annual savings of 47.87 billion kilowatts of electricity and annual emissions reduction of 38.78 metric tons of CO2.
    - Indonesia requires companies to develop energy conservation plans enabling energy audits and tradable energy savings certificates.
    - China supported domestic solar industry with multi-tiered feed-in tariffs and tax incentives; Made in China 2025 aimed to promote domestic content to 70 percent by 2025.
    - India’s National Solar Mission promotes solar power with production-linked incentive schemes for domestic battery and solar panel manufacturing.
  - Carbon sinks and forestry measures:
    - Afforestation identified by Cambodia, Japan, Lao P.D.R., Thailand; Indonesia’s 2022 enhanced NDC targets forest management; Vietnam experienced a forest transition due to direct government interventions.

### Ambition and implementation gaps
- Global assessments and regional implications:
  - UNEP 2022: global economy needs to reduce GHG emissions by 45 percent from the 2021 levels by 2030 to meet Paris-compatible pathways.
  - Other study (Black and others 2021) estimates required reductions in range of 25 to 50 percent below 2021 levels by 2030.
  - If reductions were equiproportional, Asia and the Pacific would need to reduce emissions by around 10 gigatons of CO2 equivalent by 2030.
  - Updates to NDCs since COP26 expected to reduce GHG emissions by an additional 0.5 gigaton of CO2 equivalent.
- Gap definitions:
  - Implementation gap: between implemented policies and NDCs (median).
  - Ambitious gap (emissions gap): between NDCs and pathways limiting global warming to specific levels.

### Public perceptions, political economy, and awareness
- Public awareness and willingness:
  - Dabla-Norris and others 2023: 85 percent of respondents globally recognize climate change as a serious problem; almost half report personal experience of climate change impacts.
  - Concern higher on average in the 11 countries surveyed in the region.
  - Around 80 percent of the region’s respondents (75 percent in the rest of the world) report willingness to reduce energy consumption to help address climate change.
- Public support for mitigation policies in Asia-Pacific:
  - 78 percent support introduction of either subsidies to renewable energy, a carbon pricing mechanism, or emission regulations—compared with 72 percent in the rest of the world.
  - Subsidies to renewable energy: 64 percent support in Asia-Pacific, 60 percent in the rest of the world.
  - Support for carbon pricing: 58 percent in Asia-Pacific, 45 percent in the rest of the world.
  - Support for emission regulations: 52 percent in Asia-Pacific, 42 percent in the rest of the world.
  - Knowledge gaps: Only 37 percent of respondents in Asia-Pacific have heard of carbon taxes; 31 percent are aware of emissions trading systems.
- Governments’ perceived constraints:
  - Political infeasibility cited for carbon taxes in some countries (Australia, Cambodia).
  - Opposition from industry groups, labor unions, consumer groups, and lack of parliamentary consensus cited across countries.
  - Distributional concerns: 23 percent of respondents in Asia and the Pacific said low-income households would lose a lot from carbon pricing; 11 percent said so for middle-income households; 6 percent for high-income households.
- International cooperation:
  - 64 percent of respondents (66 percent in Asia-Pacific) think all countries should pay to reduce carbon emissions.
  - 69 percent globally (70 percent in Asia-Pacific) believe climate policy will only be effective if most countries adopt measures.

### Carbon pricing effectiveness, trajectories, and examples
- Carbon pricing remains an efficient instrument but effectiveness depends on design and coverage.
- IEA net zero scenario: carbon prices must increase to the range of $25 to $140 per ton by 2030.
- Country examples and figures:
  - Korea example: carbon price would have to be increased by more than $75 per ton from current $18 per ton by 2030 in absence of other measures.
  - Singapore: announced increase of carbon tax to S$50–80 (US$36.7–58.6) per ton by 2030 from current S$5 (US$3.7) per ton.
  - Japan: carbon tax legislated at JPY289 (US$2.65) per ton CO2e; estimated tax revenue JPY262.3 billion (US$2.4 billion) per year.
  - China’s national ETS commenced in July 2021, initially targeting power generation; China’s ETS is the world’s largest by scale.

### Transition risks, SOEs, and financial-sector preparedness
- Transition risks include fiscal costs, limited access to finance, stranded assets, and structural impediments.
- Utility indicators highlight variation in debt-to-equity and cost-recovery challenges across major utilities (figure axis to 3.0 for debt-to-equity; cost recovery ratio axis 0.5–1.2; network loss axis 0–20 percent).
- SOE and market distortions:
  - In India, some state distribution companies charge subsidized or zero prices for certain customers, undermining financial viability.
  - In China, about a third of electricity output is sold at market prices, limiting pass-through of ETS-implied carbon prices.
- Prudential and supervisory recommendations:
  - Require banks to establish climate risk management and stress testing capacity.
  - Develop processes to evaluate solvency impact of climate risk and hold compatible capital.
  - Publish supervisory guidance on climate-related risk management.
  - Issue Green Finance Guidelines for the Banking and Insurance Sector.
- Green financial market development:
  - Improve climate data and mandatory disclosures.
  - Establish green taxonomies to mitigate greenwashing (examples: China, Japan).
  - Build capacity in financial institutions and conduct climate scenario stress testing.

### Mobilizing finance and investments
- Global and regional financing needs:
  - Estimates of global financing span $120–130 trillion over the next three decades, an annual need of $4.0–4.5 trillion through 2050.
  - Some estimates show cumulative financing needs of $275 trillion.
  - Cumulative financing needs in Asia and the Pacific could be around $50–120 trillion over 2021–50 (average annual cost of 4.8–11 percent of 2021 GDP).
  - EMDEs financing needs of at least $1 trillion.
- Recent investment flows:
  - Global investment in clean technologies and grid networks reached $1.4 trillion in 2022, with renewables accounting for nearly a half of the total investment ($1.1 trillion).
  - Nearly half of global investments in clean technologies took place in China.
  - Top 10 investment destinations include India, Japan, Korea amounting to around $60 billion in clean technologies alone.
- Mobilizing external and private finance:
  - Example: expected mobilization of $20 billion through the Just Energy Transition Partnership for Indonesia.
  - Public investments can catalyze private investment; countries with debt sustainability concerns should restore sound macroeconomic footing first.
  - MDBs and concessional finance are critical for low-income countries and PICs.
- Barriers to green finance access:
  - Data and capacity constraints, lack of standards, high issuance costs, lack of disclosure, and lack of dedicated fiscal resources in some countries.
  - From 2019 to 2021, the region received about 30 percent of MDB adaptation finance.

### Adaptation and resilience — exposure, needs, and gaps
- Exposure and trends:
  - Asia-Pacific contains 8 out of the 10 countries most exposed to natural hazards (INFORM Global Natural Risk Index).
  - Over the last 50 years, the region has experienced about 100 natural disaster events per year.
  - Asia’s temperatures have risen two times faster than the world average.
  - Next eight decades: average temperature expected to increase by 1.4 to 3.7 degrees Celsius and sea levels by 120 to 200 centimeters.
  - Damage estimated at $50 billion annually over 2010–19 in the region.
  - Between 1980 and 2022, the region recorded the largest cost of damages related to natural disasters, averaging 0.5 percent of GDP per year.
  - Pacific Island countries face disproportionately high costs; Tonga example: four major disasters between 2014 and 2022 with average cost about 24 percent of GDP.
  - Average damage from natural disasters expected to increase by about 0.3 percent of GDP per year over the next decade (survey-based estimate, excludes PICs).
- Institutional frameworks and NAPs:
  - Many countries have NAPs, often integrated into NDCs (example: Indonesia).
  - NAPs include “hard” and “soft” measures; Bangladesh’s NAP noted as exemplary in identifying investment needs and financing gaps.
- Investment needs and macro-criticality (Dabla-Norris, Daniel, and Nozaki 2021 estimates):
  - Average annual cost of upgrading new investment projects: 0.7 percent of GDP.
  - Retrofitting existing physical assets by 2030: around 2.3 percent of GDP.
  - Protecting coasts by 2030: about 2¾ percent of GDP.
  - Average public sector investment cost for adaptation: around 3.3 percent of GDP.
  - Public sector adaptation cost for PICs: around 8 percent of GDP (on average).
  - Tonga example: climate-related investment needs estimated at 14 percent of GDP annually for 10 years.
- Fiscal integration and PFM:
  - Few countries report comprehensive climate budgeting frameworks; progress reported in Indonesia, Philippines, Thailand.
  - Early adopters of climate budget tagging: Nepal (2012), Indonesia (2014), Philippines (2015), Bangladesh (2018).
  - IMF Resilience and Sustainable Trust launched; Bangladesh is first Asia-Pacific member to benefit.
- Insurance and risk-transfer:
  - Global public-sector catastrophe bond issuance 2001–2021 around $10 billion; Asia-Pacific accounted for about 5 percent.
  - Asia-Pacific accounts for around 28 percent of the global market for non-life insurance but around 40 percent of world GDP—insurance penetration low.
  - Between $50 to $70 billion of losses from natural disasters 2020–2022 in the region, only $3 to $10 billion were insured.
  - Total climate funds approved to the region in 2020 amounted to $5.7 billion, of which 21 percent was for adaptation initiatives.
- Social protection and vulnerability:
  - Proportion with access to at least one form of social protection increased from 39 percent in 2015 to 44 percent in 2020; world average 47 percent.
  - Regional social protection spending about 7.5 percent of GDP (excluding health) vs. world average about 13 percent.
  - Barriers to scaling adaptive social protection: financing, delivery infrastructure, data for means testing, spatial risk assessment capacity.
- Catalyzing private finance for adaptation:
  - Out of $30 billion spent globally on adaptation in 2017–2018, only 1.6 percent came from the private sector.
  - Public actions to attract private finance: improve business environment, provide climate risk data, incentives, risk-sharing, PPPs (careful design to limit contingent liabilities).

### Conclusion and the way forward
- Asia-Pacific accounted for nearly 40 percent of total emissions in 2020 and must deliver large mitigation and adaptation efforts to meet net zero by 2050.
- No single policy suffices; a complementary policy mix is required:
  - Green technologies, secure supply chains, investments in clean transport, smart grids, retrofitting buildings, feebates, subsidy reforms, carbon sinks, and carbon pricing.
- Managing distributional side effects is critical to ensure a just and durable transition.
- Public ownership and accountability:
  - Translate climate ambitions into specific actions; raise public awareness of impacts, policy costs, and co-benefits.
- Financing and fiscal frameworks:
  - Urgently quantify mitigation and adaptation financing needs and integrate into MTFFs.
  - Strengthen green PFM, infrastructure governance, and PPP frameworks.
- Mobilize climate finance:
  - Unleash private capital and use concessional finance for the most vulnerable.
  - Align taxonomies and disclosure standards with international practice to attract cross-border green investment.
- International collaboration and leadership:
  - Asia-Pacific should lead by example in innovation, production, and adoption of clean technologies while ensuring technology transfer and financial assistance to those in need.

*Source: IMF — Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (selected sections).*

### Executive Summary ...............................................................................................vii

### Executive Summary

### Overview
- Asia and the Pacific’s green transition will have far-reaching implications for the global economy.
- The region became the engine of global economic growth over past decades while remaining relatively heavy in coal reliance and energy intensity.
- Achieving net zero by 2050 requires an energy transition at an unprecedented scale and speed, while ensuring energy security and affordability.
- The region comprises many countries highly exposed to climate hazards increasing in severity and frequency with global warming.
- If managed well, the green transformation in Asia and the Pacific can create opportunities for inclusive and sustainable growth for economies in the region and globally.
- The paper draws on novel surveys of country authorities and the public in the region to distill climate ambitions and challenges and to identify major gaps in achieving mitigation and adaptation goals.

### Asia and the Pacific in the emissions landscape — key findings and statistics
- The region accounts for nearly 40 percent of total global greenhouse gas (GHG) emissions in 2020.
- Rapid economic expansion and energy use:
  - In 2021, the Asia-Pacific region accounted for 40 percent of global GDP (in 2017 purchasing power parity dollars), up from 20 percent in 1990.
  - Primary energy consumption in Asia-Pacific more than tripled since 1990.
  - Energy consumption in China was one-third of the level of the United States in 1990, but is now 70 percent higher than in the United States.
- Big emitters and distribution:
  - China, India, Indonesia, Japan, and Korea are Asia’s large five emitters (“the Big Five”), accounting for a third of the global GDP and 40 percent of global emissions in 2021, up from 20 percent in 1990.
  - While China and India are among the largest emitters at the national level, their per capita emissions remain relatively low, with India ranked among the lowest in the Group of Twenty countries.
  - National emissions are low in Singapore and some ASEAN economies such as Malaysia and Vietnam, but their per capita emissions are relatively high, with Singapore among the highest in per capita emissions from energy.
- Sectoral composition:
  - Agriculture accounts for nearly 15 percent of the region’s total GHG emissions, equivalent to 48 percent of the global emissions by the sector.
- Energy mix and coal reliance:
  - Globally, the energy mix is oil 31 percent of the total, coal 27 percent, and natural gas 24 percent.
  - In the Asia-Pacific region, coal accounts for nearly 50 percent of the region’s energy mix, translating into nearly 80 percent of global consumption from coal, compared to 10 percent in the rest of the world.
- Energy intensity and decoupling:
  - Economic growth in Asia and the Pacific continues to be energy- and emissions-intensive.
  - Japan is the only country in the region where energy consumption has declined in the past two decades or so.
  - Elsewhere in the region, energy intensity remains high and growth has not yet decoupled from growth in primary energy consumption.

### Gaps, risks, and the policy conundrum
- Current regional goals and efforts still fall short of what is needed to limit global average temperature increases to well below 2 degrees Celsius above preindustrial levels.
- Large gaps remain as emission reduction goals and policies often fall well short of the emission reductions needed to achieve the Paris Agreement objectives.
- Closing these gaps requires fundamental changes in production and consumption patterns and transformation of energy, transportation, and land use.
- The mitigation challenge in the region involves reconciling economic development with GHG emissions reduction, with significant global implications.

### Policy recommendations and measures to close mitigation and adaptation gaps
- Adopt a holistic, multipronged approach to climate mitigation as all policies entail costs and benefits.
  - Renewables are key and must be complemented by investments in energy efficiency, electrification, and other emerging green technologies along with infrastructures to address intermittency problems.
  - Carbon pricing should ideally play a more central role in the policy mix as it contributes to synergies across policy instruments.
  - To maximize carbon pricing efficacy, accompanying structural reforms are needed to ensure price signals best align incentives of different economic agents.
  - When carbon pricing is not feasible, alternative (but equivalent) approaches are needed to achieve mitigation goals.
  - Sectoral policies can fill policy gaps, including feebates, fossil fuel subsidy reforms, carbon sink measures, and regulations (for example, energy efficiency standards).
- Manage potential side effects to ensure a just and durable transition:
  - Address rising energy costs for households and firms, labor displacement, and regional disparities in transition impacts.
  - Recycle revenues from carbon pricing to cushion vulnerable groups and increase public acceptance.
- Build public ownership of climate policies to ensure reform durability and efficacy:
  - Raise awareness of climate change impacts and how mitigation policies work.
  - Educate the public about benefits of acting now versus costs of inaction to garner support for translating mitigation and adaptation strategies into policies.
- Strengthen adaptive capacity and finance adaptation:
  - Urgently quantify investment needs for adaptation—“what is not measured is not funded.”
  - Comprehensive assessment of investment needs enables identification of viable projects and determination of financing gaps to be integrated into medium-term fiscal frameworks.
  - Strengthen climate public financial management and infrastructure governance to improve government accountability.
- Mobilize climate finance:
  - Revenue mobilization and spending prioritization and efficiency will help create domestic financing resources while easing growth-debt trade-offs.
  - Concessional financing and grants from multilateral development banks and the international community are alternatives for low-income countries with limited fiscal space.
  - Unleashing substantial private capital is critical to finance investment needs.
- Mobilize private finance through a sound climate ecosystem:
  - Create conducive business environments supported by climate taxonomies, disclosure requirements, regulations, and climate data that meet international standards to maximize cross-border green investment and minimize regulatory arbitrage and greenwashing.
- Address global implications and international cooperation:
  - The region’s mitigation needs have global implications as it leads in innovation, production, and adoption of clean and low-emission technologies.
  - Concerns about geopolitical fragmentation and concentration of access to critical minerals underscore the importance of international cooperation for technology transfer and financial assistance.
  - Green industrial policy measures can promote state-driven structural transformation under NDCs but should remain narrowly targeted to specific objectives and address market failures; authorities should resist using such tools to provide competitive advantage to domestic industries.

### Structure and evidence base of the paper
- The paper presents an overview of climate change goals, policies, and shortfalls in Asia and the Pacific and brings a regional perspective on issues.
- It draws on IMF surveillance, novel country climate surveys of authorities, public perception surveys, and related studies.
- Chapter 2 focuses on climate mitigation (emissions landscape, ambitions, implementation gaps, policy options).
- Chapter 3 focuses on adaptation and resilience (exposure, institutional frameworks, investment needs, macro-fiscal implications, risk-sharing mechanisms).
- Chapter 4 draws conclusions and the way forward.

*Source: IMF — Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (Executive Summary).*

### 1. Evolutions of GDP and GHG Emissions by Region,

### 1. Evolutions of GDP and GHG Emissions by Region, 1990–2019

### Key empirical patterns
- Charts compare Total GHG emissions (MtCO2e) and Total GDP in PPP (constant 2017 international $ in billion) on log scales for 1990–2019 (sum of the country value in each region).
- Asia and the Pacific account for the bulk of global production in several emission-intensive sectors:
  - More than two-thirds of the global supplies of crude steel, iron, cement, and aluminum are produced in Asia and the Pacific.
  - GHG emissions from these industrial processes account for about 8 percent of total emissions of the region.
- Primary energy consumption and CO2 emissions show strong region-level and country-level concentration (log-scale presentations for 2000 and 2021; Asia-Pacific CO2 and energy consumption in 2021).

### Per-capita and sectoral relationships (2021)
- Per capita comparisons presented on log scales for GDP in PPP (constant 2017 international $) and per capita energy consumption (gigajoule).
- Per capita CO2 emissions from energy plotted on log scales comparing Year (2000) and Year (2021).

### Data sources and notes
- Sources: BP Statistical Review of World Energy, 2022; Climate Watch Historical GHG Emissions, 2022; World Bank; and IMF staff calculations.
- Notes:
  - MtCO2e = metric tons of carbon dioxide-equivalent.
  - PPP = purchasing power parity.
  - Underlying GHG data include emissions from land use change and forestry.
  - Primary energy consumption comprises commercially traded fuels, including modern renewables used to generate electricity.
  - CO2 emissions reflect only those through consumption of oil, gas, and coal for combustion-related activities.

### Regional energy mix snapshot (2021)
- Figure 2 highlights high reliance on coal but less on gas for energy consumption in Asia-Pacific.
- Energy consumption by source in Asia-Pacific is shown as percent share in total energy consumption (country ISO labels used).

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### Asia-Pacific: GHG Emissions by Sector and Primary Energy (1990–2019; 2021)
- Panel on sectoral emissions (1990–2019) displays Asia-Pacific emissions by sector in MtCO2e over time (1990–2019 series).
- Primary Energy Consumption and CO2 Emissions in Asia-Pacific, 2021 presented on log scales showing country-level dispersion of CO2 emissions (million tonnes) against primary energy consumption (exajoules).

---

### Drivers of emissions: hard-to-abate sectors
- Figure 3 demonstrates Asia’s contributions to global production/sales in hard-to-abate sectors:
  - Shares in Asia-Pacific for sectors summarized (crude steel production 2021; iron 2019; hydraulic cement 2019; primary aluminum 2022; petrochemical sales 2021).
  - Regional shares computed using production levels in million tons (steel), thousand metric tons (aluminum), and percent (petrochemical sales).

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### B. Pathways to Net Zero: Distilling Asia’s Ambitions, Commitments, and Policies

### Overview of climate ambitions and NDCs
- Since 2015 many Asia-Pacific countries have submitted and updated NDCs; progress toward achieving NDCs has been slow.
- NDC end-target typologies:
  - “Carbon neutrality” targets CO2 emissions only.
  - “Net zero” targets all GHGs.
- End targets in AEs (advanced economies) typically align with net zero emissions by 2050 and are often codified in law; intermediate targets focus on emissions reduction goals or emissions intensity.
- EMDEs’ targets vary considerably in sectoral and gas coverage; some explicitly rely on international assistance.

### Ambition characterization (Figure 4 highlights)
- Dimensions used to characterize ambition include: end target type, year of end target, form of commitment, intermediate target measure.
- Examples from region:
  - THA: Carbon neutrality end target framed as a pledge, with intermediate reduction against BAU; listed year 2050 and in another entry 2060 (policy).
  - MYS: Emissions intensity intermediate targets.
  - LAO: Net Zero (GHG neutrality) end target 2050, form = Policy, intermediate reduction against BAU.
  - CHN: Emissions intensity intermediate measure.
  - IND: 2070 pledge with emissions intensity intermediate target.
- Thailand committed to reach net zero GHG emissions by 2065, following the target of carbon neutrality by 2050.

---

### Mitigation policies and instruments in use
- Countries apply a multipronged policy approach: market-based instruments, sectoral policies, regulatory policies, and other policies for carbon removal.
- Nearly all responding economies rely on deployment of green technologies through means other than carbon pricing.
- Specific policy notes:
  - Market-Based Instruments:
    - Emissions Trading Systems (ETS) have been introduced in several countries (Korea national ETS; China and Indonesia launched a mandatory, intensity-based ETS for power generation).
    - Japan and Singapore have a carbon tax in place.
    - Carbon pricing measures globally cover more than 40 percent of total GHG emissions in 2021.
    - China’s ETS is currently the single largest carbon pricing instrument in the world.
    - Vietnam has committed to implementing an ETS in the near future; India is designing a carbon credit trading scheme.
    - Several EMDEs (Malaysia, Philippines, Thailand) are conducting feasibility studies for carbon pricing; Brunei Darussalam, Cambodia, Lao P.D.R. are considering implementation.
  - Sectoral Policies:
    - Feebates (revenue-neutral sliding fees/rebates) used increasingly across transportation, power, industry, buildings, forestry, agriculture.
    - Vehicle-related measures: Australia (ACT), Japan, Singapore, Thailand have vehicle taxes determined by fuel consumption or CO2 emissions; Singapore’s Enhanced Vehicular Emissions Scheme defines rebate/surcharge by emissions standards; China offers tax discount for efficient vehicle purchases.
    - Fuel and energy subsidy reforms considered in some countries; Lao P.D.R. and the Philippines consider subsidy reforms as part of mitigation mix.
    - Energy efficiency and clean cooking: India’s Unnat Jyoti by Affordable LED for All program installed over 368.6 million LED bulbs, resulting in an annual savings of 47.87 billion kilowatts of electricity and annual emissions reduction of 38.78 metric tons of CO2.
    - Indonesia requires companies to develop energy conservation plans enabling energy audits and tradable energy savings certificates.
  - Carbon Sinks:
    - Afforestation identified by Cambodia, Japan, Lao P.D.R., Thailand; Indonesia’s 2022 enhanced NDC targets forest management (lower deforestation plus reforestation); Vietnam has experienced a forest transition due to direct government interventions.
  - Technology and green finance:
    - China supported domestic solar industry with subsidies (multi-tiered feed-in tariffs) and tax incentives; Made in China 2025 plan aimed to promote domestic content to 70 percent by 2025.
    - India’s National Solar Mission (2010) promotes solar power with production-linked incentive schemes for domestic battery and solar panel manufacturing.
    - Japan, Malaysia, Thailand emphasize targeted subsidies for industry to develop/deploy low-carbon technologies.
    - Australia, Japan, Thailand identified tax incentives for R&D and innovation as important.

### Table summary (selection of policy instruments)
- Table 1 enumerates policy instruments across categories A–D (Market-Based Instruments; Technology, Low Emission Infrastructure, and Green Finance; Regulations; Carbon Sinks) showing availability status by country (examples listed include Australia, Hong Kong SAR, Japan, China, Malaysia, Thailand, Cambodia, Lao P.D.R.).

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### C. Ambition and Implementation Gaps

### Global and regional gap assessments
- The first global stocktaking planned in late 2023 will evaluate progress toward global targets and chart pathways.
- UNEP 2022 assessment: global economy needs to reduce GHG emissions by 45 percent from the 2021 levels by 2030 to meet Paris-compatible pathways.
- Other study (Black and others 2021) estimates required reductions in range of 25 to 50 percent below 2021 levels by 2030.
- If reductions were equiproportional across regions, Asia and the Pacific would need to reduce emissions by around 10 gigatons of CO2 equivalent by 2030—implying substantial cuts in consumption of coal, oil, and natural gas combined.
- Updates to NDCs since COP26 are expected to reduce GHG emissions by an additional 0.5 gigaton of CO2 equivalent, mainly from more ambitious targets announced by Australia, Indonesia, and Korea.
- UNEP assessment validated little progress in reducing the implementation gap since COP26 in 2021.

### Definitions and gap types
- IPCC defines two types of gaps:
  - Implementation gap between implemented policies and NDCs (median).
  - Emissions gap between NDCs and pathways limiting global warming to specific levels (e.g., 1.5 degrees Celsius).
- The report labels the latter as the “ambitious gap” following Black and others (2021).

### Political economy and implementation challenges
- Achieving Paris goals requires radical economic and societal transformation and a dramatic energy transition.
- Authorities must:
  - Ensure a just transition.
  - Realize co-benefits of reforms.
  - Reach out to public to communicate benefits and garner support for implementation.
- Public ownership of reform programs is indispensable for behavioral change and long-term durability of reforms.

---

### D. Country Views and Enablers for Renewables and Green Technologies
- Table 2 summarizes country views on factors to promote renewables and green technologies (countries considered: AUS KHM JPN LAO MYS THA).
  - Targeted subsidies to industries to develop technologies: indicated (√) for multiple countries.
  - Tax incentives for R&D: indicated (√√√) for select countries.
  - Imports of new technologies developed by other countries and commitment for support by AEs to transfer technology are noted across multiple countries.
- Other enabling factors listed include loans/equity investments by government agencies, grants, international financial assistance, collaboration with partner countries, development of clean energy supply chains, and bilateral/multilateral partnerships.

*Source: IMF DEPARTMENTAL PAPERS • Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (figures and tables as described in the source PDF).*

### 1. Global Economy: Historical versus Scenario-based

### 1. Global Economy: Historical versus Scenario-based

### GHG Emissions — Historical versus Scenario-based
- Charts compare GHG emissions (GtCO2e per year) for:
  - Global Economy: axis labels show values "0", "10", "20", "30", "40", "50", "60" and timeline "1990 2000 2010 2030".
  - Asia-Pacific: same scale and timeline.
- Sources cited: Climate Analytics and NewClimate Institute, Climate Action Tracker; and IMF staff calculations.
- Note: GHG = greenhouse gas; GtCO2e = gigaton of carbon dioxide equivalent.
- “Big-five emitters” include China, India, Indonesia, Japan, and Korea.

### Energy Transition Needs and Scenario
- Achieving net zero by 2050 requires dramatic energy transitions globally; Asia must contribute.
- The goal of reducing GHG emissions and reaching net zero is expected to change the energy mix at historical scale and speed, with reliance on fossil fuels declining to around 20 percent of total energy (Figure 7).
- The green transition needed within 30 years will require enormous investments and fundamental changes in energy consumption and production patterns.
- Behavioral changes are critical; the energy transition requires awareness of mitigation needs and active participation by household and firms (IEA 2021a).
- Policy measures needed to shape incentives include raising the carbon price; where carbon pricing is not feasible, alternatives (but equivalent) include feebates, energy efficiency standards, regulations, or green subsidies, possibly applied to specific sectors like industry, power, buildings, forestry, and extractives.
- The International Energy Agency’s net zero emissions scenario assumes that carbon prices, differentiated by climate ambition and income levels, must increase to the range of $25 to $140 per ton by 2030, including to incentivize adoption of green technologies.
- Figure 7 highlights:
  - 1. The Global Economy Has Been Relying on Fossil Fuels for Centuries (global energy consumption by source; terawatt per hour).
  - 2. More than Three-Quarters of Energy Came from Fossil Fuels in 2020 (share in total energy consumption by source; percent).
  - 3. A Green Transition Is Needed within 30 Years.
  - “Net Zero by 2050” is a scenario assuming net zero emissions by 2050, envisaged by the International Energy Agency.
  - Renewable categories: includes wind, solar, biofuels, and other renewables; hydropower included in a separate grouping in some panels.

### Perceived Challenges to Achieving Net Zero — Public and Authorities
- Public awareness and perceived imminence of climate change:
  - A recent cross-country study (Dabla-Norris and others 2023) shows that 85 percent of the respondents across the globe recognize climate change as a serious problem, and almost half of the sample reports a personal experience of climate change impacts.
  - Concern is even higher, on average, in the 11 countries surveyed in the region.
  - Around 80 percent of the region’s respondents (75 percent in the rest of the world) report that they are willing to reduce energy consumption to help address climate change.
- Public support for mitigation policies in Asia-Pacific:
  - 78 percent of respondents in the Asia-Pacific countries support the introduction of either subsidies to renewable energy, a carbon pricing mechanism, or emission regulations—compared with 72 percent in the rest of the world.
  - In terms of individual policies:
    - Subsidies to renewable energy: 64 percent support in Asia-Pacific, 60 percent in the rest of the world.
    - Support for carbon pricing: 58 percent in Asia-Pacific, 45 percent in the rest of the world.
    - Support for emission regulations: 52 percent in Asia-Pacific, 42 percent in the rest of the world.
  - High support for subsidies is often due to poor understanding of the fiscal costs entailed by this policy (Dabla-Norris and others 2023).
- Governments’ perceived political-economy constraints:
  - Despite public awareness and support, governments point to political economy constraints as a major impediment to implementing climate mitigation policies.
  - Examples: Australia and Cambodia cite political infeasibility for a carbon tax; opposition from industry groups (Cambodia, Malaysia, Thailand), labor unions (Japan), consumer groups (Cambodia), and lack of consensus in parliament (Indonesia, Malaysia) are cited.
- Distributional and socioeconomic concerns:
  - Top concerns for authorities and the public include higher energy costs and growth impact from lower production in carbon-intensive industries.
  - Governments in almost all countries mention the impact on vulnerable households as a major obstacle to implementing mitigation policies, particularly carbon pricing.
  - In the public perception surveys, 23 percent of respondents in Asia and the Pacific stated that low-income households would lose a lot from a carbon pricing policy, with 11 percent saying so for middle-income households and only 6 percent for high-income households.
- International cooperation and perceived obstacles:
  - 64 percent of respondents (66 percent in Asia-Pacific) think that all countries, not only rich countries, should be paying to reduce carbon emissions.
  - 69 percent globally (70 percent in Asia-Pacific) believe that climate change policy will only be effective if most countries adopt measures to reduce emissions.
  - Country climate surveys point to limited international collaboration as a key obstacle; specific concerns include lack of financial support (Cambodia, Indonesia, Lao P.D.R., Thailand) and lack of technology transfer (Indonesia, Lao P.D.R., Thailand).

### Transition Risks, Financial Constraints, and Structural Impediments
- Transition risks include fiscal costs of green transitions, limited access to finance, and structural impediments to deliver decarbonization.
- Country climate surveys highlight:
  - Strong concerns about higher economy-wide and sector-specific production costs, and possible social unrest from employment losses.
  - Gaps in regulatory and supervisory frameworks to assess and address climate-related risks.
  - Financial risks of stranded assets in fossil fuel and carbon-intensive industries.
  - Virtually all countries expressed concerns about budgetary costs of acquiring necessary infrastructure and technology to support energy transitions.
  - EMDEs emphasize limited market access (Cambodia, Lao P.D.R.) and high upfront costs of securing green finance (Indonesia, Lao P.D.R., Malaysia, Thailand).
  - Structural impediments include lack of technical capacity and expertise (Australia, Thailand).

### Understanding of Opportunities from the Green Transition
- Authorities and the public in the region see opportunities in the transition to net zero:
  - Widespread acknowledgment that the green transition will reduce climate change risks and create co-benefits, including improved health outcomes, enhanced conservation of natural capital, creation of green jobs, and improved quality of economic growth.
  - Both authorities and the public agree that revenues from carbon pricing can be recycled for socially desirable purposes.
  - Example: A plan by Thai authorities to reinvest some ETS proceeds into social safety nets aligns with 51 percent of Thai respondents who would support carbon pricing policies if revenues were used to help low-income households cope with higher costs of living.
  - Reinvestment in climate-related projects and general social support are recognized as viable destinations for carbon pricing revenues.

*Sources: Climate Analytics and NewClimate Institute, Climate Action Tracker; BP Statistical Review of World Energy; IEA (2021a); Our World in Data on Vaclav Smil (2017); IMF Public Perception Survey; Country Climate Surveys 2022; Dabla-Norris and others (2023); and IMF staff calculations.*

### 2. High Public Support for Multilateral Action

### 2. High Public Support for Multilateral Action

### Public support and perception of climate policies
- Public perception surveys indicate stronger-than-expected general support for climate mitigation policies in the region, but support for specific measures (for example, carbon pricing) remains limited and requires more effort to build.
- Filling information gaps is a priority to garner support for key policies such as carbon pricing.
- Highlighting policy co-benefits and designing policy packages aligned with people’s preferences are important to foster public buy-in.
- Survey question example preserved: Share of responses who agree with the statement “All countries should contribute to reduce carbon emissions, not only rich countries.”

### Closing ambition and implementation gaps — overview
- Governments need a multipronged approach to close sizable ambition and implementation gaps to avoid costly delays in achieving global temperature goals (net zero by 2050).
- Country authorities should address distributional implications of the green transition by providing targeted support to households and firms as needed.
- Sources of major gaps identified include:
  - Low carbon pricing levels and limited effectiveness of existing instruments.
  - Structural design issues in ETSs (for example, generous free allowances, intensity-based permits, ex post adjustments).
  - Limited sectoral coverage of ETSs (for example, ETS limited to the power sector in some countries).
  - State-owned enterprises setting administrative energy prices that limit pass-through of ETS-implied carbon prices.
  - Fragmented existing fuel duties.

### Carbon pricing effectiveness, trajectories, and country examples
- Carbon pricing remains one of the most efficient instruments to reduce emissions, but effectiveness depends on market structure and mechanism design.
- Considerations to enhance ETS effectiveness:
  - Partial or full auctioning of allowances (cited example: China).
  - Broadening coverage to address market fragmentation.
  - Careful deregulation of electricity markets to avoid increasing market concentration.
- Political economy trade-offs:
  - ETS with freely allocated permits may be politically easier, while carbon taxes cover broader emissions sources and facilitate revenue recycling and administration.
- Credible communicated future trajectories of carbon prices matter for investment and decarbonization incentives:
  - Example projection: the carbon price would have to be increased by more than $75 per ton on all fossil-based CO2 emission from the current level of $18 per ton in Korea by 2030 in the absence of other measures (Parry 2021a).
  - Singapore example: announced increase of the carbon tax to a S$50–80 (US$36.7–58.6) range by 2030 from the current price of S$5 (US$3.7) per ton.
- Countries in the Asia-Pacific should assess and communicate long-term implications of the Carbon Border Adjustment Mechanism, established by the European Parliament in May 2023, with a carbon border tax on specific imports rolled out by the European Union in phases starting in October 2023.

### Sectoral and complementary policies
- IMF bilateral surveillance highlights the importance of sectoral policies to complement carbon pricing, including:
  - Scaling up existing coal taxes (examples: China, India, Korea).
  - Implementing feebates with improved waste management.
  - Tightening vehicle emissions standards (examples: India, Korea).
  - Promoting EV use and charging infrastructure (examples: China, India, Korea; India has policy to rollout nationwide charging infrastructures and provides fiscal incentives).
  - Feebates on EVs could benefit some ASEAN countries (Indonesia, Malaysia, Vietnam).
  - Reviewing tax treatment of vehicles in the Philippines is warranted to reduce emissions and mobilize revenues.
- Growth-friendly mitigation policies and well-designed fiscal policies can make transitions durable while addressing short-term distributional costs (examples of trade-offs especially acute in India and Indonesia).

### Table 3 — Complementary policies (summary of recommended actions)
- Improving public awareness of carbon pricing efficacy:
  - Introduce carbon taxation initially at a low rate to raise public awareness and build reform durability.
- Designing comprehensive packages of policy reforms:
  - Promote productivity, employment, and green investment for inclusive growth.
  - Mainstream policy reforms in the medium-term budget framework (MTBF).
- Reforming energy subsidies:
  - Gradually phase out fossil-fuel subsidies to support carbon pricing introduction and broaden ETS coverage (target groups include Big-5 emitters and EMDEs: Bangladesh, Lao PDR, Malaysia, Philippines, Thailand, Vietnam).
  - Subsidy reforms can mobilize additional revenues.
- Carbon sinks:
  - Forestry and land use (FOLU) measures can offer lower abatement costs than carbon pricing used in isolation and help preserve natural endowments.
- Revenue recycling:
  - Use revenues from carbon pricing for targeted support to the vulnerable (households and firms), R&D, investment in green technologies, and climate-resilient agriculture; revenues can help finance income tax reforms.
- Establishing a climate finance ecosystem consistent with international standards:
  - Develop well-defined climate taxonomies and disclosure to narrow data gaps for assessment of climate risks and improve effectiveness of carbon pricing.

### Green technology, finance, and public investment gaps
- The region lags in technology penetration and green finance needed for net zero by 2050 despite some countries having sizable market shares in green technology manufacturing.
- Replacing existing coal-fired power plants remains expensive when accounting for grid and storage investment costs.
- Gaps in access to green finance at affordable prices hinder EMDEs’ transitions; limited data and climate disclosure exacerbate this.
- Pervasive gaps in public investments constrain benefits of clean technologies:
  - Limited reliability of renewables cited as key impediment in China, Japan, Malaysia, Thailand.
  - Investments in distribution networks and storage capability lag behind renewable capacity additions.
- Investments in fossil fuel–based projects must consider implications for green transition costs to avoid costly delays; early decommissioning of coal entails amortizing fixed costs over a shorter period, raising transition costs.

### State-owned enterprises (SOEs) and financial sustainability
- The long-term financial viability of state-owned utility companies must be maintained to attract private investments in renewables and electrification.
- Structural factors affecting SOE viability and market signals:
  - In India, some state electricity distribution companies charge subsidized or zero prices for certain customers (for example, agriculture and residential), causing financial viability issues and dampening price signals.
  - In China, only about a third of electricity output is sold at market prices, limiting SOEs’ ability to adopt renewables and pass through ETS-implied carbon prices.
- Policy actions needed: improve governance and oversight, operational efficiency, tariff structures, and ensure policy mandates are fully funded.

### Mobilizing external and private finance; role of MDBs and IMF
- Countries with limited fiscal space should leverage direct private financing for decarbonization investments (for example, power grid upgrades).
- Governments must pursue revenue mobilization and spending prioritization and efficiency to finance infrastructure and technology adoption.
- Public investments can catalyze private investment flows, including in hard-to-abate sectors.
- Countries with debt sustainability concerns should first restore sound macroeconomic footing to attract private capital.
- External financing can play a pivotal role:
  - Example: expected mobilization of $20 billion in external financing through the Just Energy Transition Partnership to support early decommissioning of coal-powered electricity plants and accelerate renewable investment in Indonesia.
- Forestry and land use in Indonesia account for about half of the country’s GHG emissions on average, making FOLU mitigation potentially efficient in the short term.

_Italic: Source — apccea - 2. High Public Support for Multilateral Action (apccea - 2. High Public Support for Multilateral Action), IMF Departmental Papers, Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps._

### 1. Debt-to-Equity Ratio

### 1. Debt-to-Equity Ratio

### Utility balance-sheet and operational indicators
- Debt-to-equity ratio figure (axis from 0 to 3.0) displays the following utilities (labels shown in figure):
  - NTPC (India)
  - TNB (Malaysia)
  - Eletrobras (Brazil)
  - PLN (Indonesia)
  - Meralco (Philippines)
  - CFE (Mexico)
  - Eskom (South Africa)
  - SEC (Saudi Arabia)
  - Kenya Power and Lighting
- Cost Recovery Ratio and Network Loss (figure axes and ranges):
  - Cost recovery ratio shown on axis spanning 0.5 to 1.2.
  - Network loss (percent) shown on axis spanning 0 to 20.
- Source for these utility indicators: IEA (2021b).
- Note: Data labels use ISO country codes. Countries with dark blue represent Asian economies, including India, Indonesia, Korea, Malaysia, Philippines, Thailand, and Vietnam.

*Key implications from utility indicators in the figure*
- The figures highlight variation in debt-to-equity positions across major utilities and suggest cost-recovery and network-loss challenges that are material for utilities’ financial sustainability and their ability to finance green transitions.

### Prudential and financial-sector policy discussion
- Major messages:
  - The green transition requires stronger prudential policies of climate risks to safeguard financial stability.
  - The Big Five and other economies have identified major transition risks, but they have not yet addressed them.
  - Countries with high GHG emissions and/or higher probability of severe weather-related events face elevated transition and physical risks, requiring stronger prudential policies.
- Recommended supervisory and regulatory actions (as described in text):
  - Require banks to establish comprehensive climate risk management practices with analytical capacity for stress testing.
  - Develop processes to evaluate the solvency impact of climate risk, and hold capital compatible with that evaluation.
  - Publish supervisory guidance on climate-related risk management and client engagement (example cited: Japan’s Supervisory Guidance).
  - Issue Green Finance Guidelines for the Banking and Insurance Sector to guide climate-related financial risk management (example cited: China).

### Suite of policy options to develop green financial markets
- Better climate data and disclosures:
  - Set mandatory minimum standards for financial institutions, corporates, and investment funds to disclose climate-related metrics (example: Japan).
  - Bring green finance disclosure requirements closer to international standards (example: China).
- Green taxonomy:
  - Set up an official ecosystem of climate-related activities to mitigate greenwashing and provide common grounds to market participants (examples: China, Japan); taxonomy to encompass financial products.
- Capacity development:
  - Build expertise on climate finance among financial institutions to promote green financial markets.
- Stress testing:
  - Conduct scenario analyses to identify climate-related risks and take preemptive measures.
- Supervisory guidance:
  - Guide financial institutions to strengthen monitoring and management of climate-related financial sector vulnerabilities, with due consideration to avoid overstretching regulator capacity.

---

### 3. Adaptation and Resilience to Climate Change

### A. Institutional frameworks to cope with natural disasters — exposure and trends
- Regional vulnerability and trends:
  - Asia-Pacific contains 8 out of the 10 countries most exposed to adverse impacts of natural hazards (based on INFORM Global Natural Risk Index).
  - Over the last 50 years, the region has experienced about 100 natural disaster events per year, higher than other regions.
  - Asia’s temperatures have risen two times faster than the world average.
  - In the next eight decades, the region’s average temperature is expected to increase by 1.4 to 3.7 degrees Celsius and sea levels by 120 to 200 centimeters.
  - Warmer temperatures have increased the frequency and severity of weather-related natural disasters, with damage estimated at $50 billion annually over 2010–19 in the region.
- Frequency and cost of natural disasters:
  - Between 1980 and 2022, the region recorded the largest cost of damages related to natural disasters, averaging 0.5 percent of GDP per year.
  - Pacific Island countries (PICs) face more frequent natural disasters with disproportionately high average cost of damages relative to economy size.
    - Example: four major natural disasters hit Tonga between 2014 and 2022, with the average cost of damage estimated at about 24 percent of GDP.
  - Going forward, the average damage from natural disasters is expected to increase by about 0.3 percent of GDP per year over the next decade (survey-based estimate). (Note: this excludes PICs.)

### A. Institutional frameworks — national adaptation planning (NAPs) and coverage
- NAPs status and scope:
  - Many Asian countries have NAPs, often integrated into NDCs (example: Indonesia).
  - NAPs include “hard” measures (for example, management of water resources) and “soft” measures (mapping hazard-prone areas, early warning systems).
  - The region’s AEs, Bhutan, and Thailand are noted as best performers on adopting and implementing disaster risk reduction frameworks.
  - Examples of adaptation measures in the region: restoring mangroves, protecting coral reefs, adopting local adaptation plans.
- Country examples on NAP inclusion:
  - Some countries include NAPs as part of national climate action plans (China, Indonesia, the Philippines, Samoa, Sri Lanka).
  - Others develop separate adaptation frameworks (Mongolia, Papua New Guinea, Thailand, Vietnam).

### B. Adaptation challenges in Asia — principal gaps
- Main shortcomings identified by country climate surveys:
  1. Limited assessment of investment needs to achieve climate adaptation goals.
  2. Disconnect between adaptation strategies and budget and fiscal frameworks.
  3. Limited transfer of risks to primary insurers or reinsurers (for example, catastrophe bonds, traditional private insurance).
  4. Limited postdisaster responses through adequate social protection programs.

### B. Investment needs assessment and macro-criticality
- Inadequate assessment of investment needs:
  - NAPs often lack systematic estimates of costs of increasing risks and assessment of investment needs under adaptation strategies.
  - Bangladesh’s NAP is noted as exemplary for identifying investment needs, financing gaps, and potential sources of financing.
- Estimated adaptation investment needs (from Dabla-Norris, Daniel, and Nozaki 2021; figures shown in the chapter):
  - Average annual cost of upgrading new investment projects: 0.7 percent of GDP.
  - Retrofitting existing physical assets by 2030: around 2.3 percent of GDP.
  - Protecting coasts by 2030: about 2¾ percent of GDP.
  - Average public sector investment cost for adaptation: around 3.3 percent of GDP.
  - Public sector adaptation cost for PICs: around 8 percent of GDP (on average).
  - Example: Tonga — climate-related investment needs estimated at 14 percent of GDP annually for 10 years.
- Policy implication:
  - High adaptation costs highlight urgency of “building better” to avoid accumulation of vulnerable assets; estimating investment needs yields material benefits and high returns on adaptive infrastructure investment.

### B. Fiscal integration and budgetary frameworks
- Disconnect with medium-term fiscal frameworks (MTFF):
  - Few countries report developing comprehensive climate budgeting frameworks (examples reporting progress: Indonesia, Philippines, Thailand).
  - Countries that integrate adaptation in budgets commonly identify climate-resilient investment projects in annual budgets.
  - Practices observed:
    - Some define climate-resilient investment projects for line ministries and agencies (Bangladesh, Philippines).
    - Some have dedicated units to promote climate-resilient infrastructure investment (Korea, Philippines).
    - Inclusion of buffers in budgets (budget provisions, dedicated funds) for catastrophic events exists in some countries.
  - Early adopters of green public finance management (PFM) include Bangladesh and Nepal; examples of fiscal risk statements covering natural disasters include Indonesia, New Zealand, and the Philippines.
  - Some countries introduced climate budget tagging: Nepal (2012), Indonesia (2014), Philippines (2015), Bangladesh (2018).
  - Example: Bhutan’s budget includes estimates of explicit and implicit contingent liabilities in fiscal risk assessment.

### B. Limited risk-sharing mechanisms and insurance markets
- Catastrophe bonds and risk transfer:
  - Global public-sector catastrophe bond issuance from 2001 to 2021 was around $10 billion, with Asia-Pacific accounting for about 5 percent of that issuance.
- Traditional insurance market size and penetration:
  - Asia-Pacific accounts for around 28 percent of the global market for non-life insurance but around 40 percent of world GDP.
  - The relatively low insurance penetration leaves households and businesses vulnerable to rising climate risks.
- Implication:
  - Given frequent and severe disasters, public resources can be strained; transferring risk via catastrophe bonds and insurance is necessary but currently underdeveloped in the region.

---

*Italic source: IMF DEPARTMENTAL PAPERS — "Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps" (selected pages and figures from the supplied content).*

### 1. Non-Life Insurance Penetration

### 1. Non-Life Insurance Penetration

### Insurance penetration and the insurance gap in Asia-Pacific
- Between $50 to $70 billion of losses induced by natural disasters between 2020 to 2022 in the region, only $3 to $10 billion were insured (Lim and others, forthcoming).
- Therefore, the share of uninsured losses from natural disasters (the insurance gap) remains large in Asia.
- In 2020 total climate funds approved to the region amounted to $5.7 billion, out of which 21 percent was for adaptation initiatives (Climate Funds Update 2021).

### Social protection and vulnerability
- Proportion of people with access to at least one form of social protection in Asia-Pacific increased from 39 percent in 2015 to 44 percent in 2020 (ILO 2021).
- Average coverage in the region remains below the world average of 47 percent.
- The region spends on average about 7.5 percent of GDP on social protection (excluding health), far below the world average of about 13 percent of GDP.
- Social issues under climate change are multidimensional and commonly include: physical health and health problems; stress associated with lack of resources; greater prevalence of distress and depression; lack of access to housing; difficulty with obtaining and receiving aid; posttraumatic stress; and other issues (Country Climate Surveys 2022).
- Lack of financing is the most commonly cited constraint to extend social protection to natural disasters, particularly in low-income countries in the region.
- Example: Fiji rapidly scaled up its Poverty Benefit Scheme following Tropical Cyclone Winston in 2016.
- Other constraints to scaling adaptive social protection: cash delivery infrastructure, collecting socioeconomic information for means testing, limited capacity for spatial risk assessment.

### Mainstreaming adaptation into budget and macro-fiscal frameworks
- Mainstreaming adaptation into the budget process is critical; a robust MTFF can help realistically incorporate adaptation priorities into medium-term fiscal planning (Bellon and Massetti 2022).
- Many countries need to strengthen national legal frameworks to better integrate adaptation policies into PFM processes.
- Addressing weaknesses in public investment management should be a priority before scaling up adaptation investments.
  - IMF staff analysis shows that, across the world, over one-third of resources are lost in the process of managing public investment (IMF 2015; Baum, Mogues and Verdier 2020).
- Climate-related fiscal risks should be identified, estimated, and included in the overall fiscal risk statement; contingent liabilities from natural disasters should be budgeted and discussed in fiscal risk statements (IMF 2018; OECD and World Bank 2019).
- About 50 percent of Poverty Reduction and Growth Trust–eligible countries with a debt sustainability analysis were at high risk of debt distress in the region as of the end of 2022 from 44 percent prior to the pandemic.
- Building adequate fiscal buffers is necessary:
  - Budget provisioning is appropriate for small- and medium-scale natural disasters.
  - Contingent reserves and natural disaster funds are commonly used mechanisms.
  - Natural disaster–prone countries need to adopt safe debt anchors that are lower than debt limits to accommodate more frequent and large natural disaster shocks (Caselli and others 2022; Akanbi, Gbohoui, and Lam 2023).

### Mobilizing and scaling public resources
- Domestic resources should be prioritized to finance adaptation needs; budget adequacy signals commitment and can help leverage private investment.
- Improving VAT collection is an avenue to mobilize resources: Figure 22 reports Standard Value-Added Tax Rates, by Region (Average 2021, percent): 11.7, 12.0, 13.7, 14.9, 15.5, 20.8.
- Reforming fossil fuel subsidies could yield sizable savings: the region accounts for about 50 percent of the world’s total (explicit and implicit) subsidies.
  - Full price reforms, targeting both explicit and implicit subsidies, could raise an additional revenue by about $1.8 trillion or 4.4 percent of GDP in East Asia and the Pacific (Black and others 2023; Lim and others, forthcoming).
- Streamlining and scaling up multilateral climate funds is urgently needed, particularly for small island countries; access to climate funds remains challenging due to lack of capacity (for example, absence of NAPs) and stringent PFM requirements.
- From 2019 to 2021, the region received about 30 percent of MDB adaptation finance, primarily financing energy, transport, and infrastructure projects.
- The IMF launched the Resilience and Sustainable Trust offering long-term and affordable concessional financing for countries to reduce their vulnerability to climate change while catalyzing other financing.
  - Bangladesh is the first Asia-Pacific member to benefit from the Resilience and Sustainable Trust.
- Donor funding remains critical for the most vulnerable countries to finance adaptation investment and post-disaster reconstruction (example: Tonga).

### Catalyzing private finance for adaptation
- Out of $30 billion spent globally on adaptation in 2017 and 2018, only 1.6 percent came from the private sector (Climate Policy Initiative).
- Barriers to private-sector financing for adaptation: lack of taxonomy, confidentiality requirements, large informal sector, lack of country-level climate risk data, limited clarity on government financing gaps, low perceived returns.
- Public sector actions to attract private finance:
  - Improve the supportive business environment: ease of doing business, regulations, rule of law, quality of infrastructure.
  - Raise awareness of the business case for adaptation finance.
  - Provide nonfinancial incentives such as localized climate risk data.
  - Offer incentives through risk-sharing, tax incentives, and guarantees.
  - Set up institutional arrangements for multisector adaptation planning.
- Public-private partnerships (PPPs) can attract private finance for bankable, long-term adaptation projects but require careful design and risk assessment due to potential contingent liabilities (guaranteed debt or minimum revenue guarantees).

### Developing insurance markets and protecting the vulnerable
- Developing insurance markets is critical to address risks related to natural hazards and to support households and businesses exposed to natural disasters (World Bank 2020).
- Governments can support domestic insurance markets by leveraging their resources; the country climate surveys find examples of insurance coverage for farmers and SMEs in some Asian economies:
  - Australia: Government and private insurance for governments, households, farmers, businesses; ComCover, the Government’s self-managed insurance fund.
  - Japan: public and private coverage for households and farmers; Agricultural Insurance Mechanism; corporate fire insurance has optional flood coverage.
  - Macao, SAR: public and private property insurance products protect certain classes of properties; SME Catastrophe Property Insurance Scheme.
  - Philippines: public insurance via The Philippine Crop Insurance Corporation covering different crops, livestock, non-crop agricultural assets, and fisheries.
- Lessons from the Caribbean: state-contingent instruments (catastrophe bonds, CAT Deferred Drawdown Option, Caribbean Catastrophe Risk Insurance Facility) strengthen financial resilience.
- Strengthened social safety nets with better targeting can ensure prompt postdisaster response:
  - Savings, borrowing, and insurance can be limited for vulnerable populations, necessitating social protection development.
  - Cash transfers (conditional or unconditional) can build resilience, but fiscal space and direct cash transfer infrastructure must be strengthened.
  - Digital solutions can help identify and reach intended beneficiaries, including those in the informal labor market, improving targeting of cash transfers.

*IMF Departmental Papers — Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (selected sections).*

### 4. Conclusion and the Way Forward

### 4. Conclusion and the Way Forward

### Asia-Pacific’s role and challenge
- The region became the engine of global economic growth over the past decades and, with relatively more energy-intensive growth and heavy reliance on coal, accounted for nearly 40 percent of the total emissions in 2020.
- Achieving net zero by 2050 requires an energy transition at an unprecedented scale and speed while ensuring energy security and affordability.
- If managed well, the green transformation in Asia and the Pacific will create opportunities for economies in the region and globally.

### Policy mix and implementation
- No single policy can achieve net zero emission targets; a complementary policy mix is required.
- Key elements:
  - Green technologies (current and emerging) are essential to ensure an energy transformation at the speed and scale needed for climate mitigation.
  - Establishing and maintaining secure supply chains for green technologies to promote adoption and diffusion and reduce mitigation costs.
  - Investments in clean public transportation, smart electricity grids to incorporate renewables, and retrofitting buildings to improve energy efficiency.
  - Sectoral policies such as feebates, fossil fuel subsidy reforms, and carbon sink and nature conservation to support net zero pathways.
  - Carbon pricing should play a more central role to create synergies across policy instruments; accompanying reforms are needed so price signals better align incentives across economic agents.
- Managing side effects is critical: rising energy costs for households and firms, labor displacement, and unbalanced regional impacts must be addressed to ensure a just and durable transition.

### Public ownership and accountability
- Ambitious policies and strong public support are needed to avoid delays and derailments in the economic transformation to net zero.
- Climate ambitions must be translated into specific actions to ensure government accountability and policy efficacy.
- Policymakers should raise public awareness of climate change impacts and how mitigation policies work; educating about costs of inaction (pollution) and benefits of action (air quality, health, protection of low-income households) can increase public buy-in.

### Financing, MTFFs, and public financial management
- Comprehensive financing needs for mitigation and adaptation must be estimated and integrated into Medium-Term Fiscal Frameworks (MTFFs).
- Implementation responsibility is often spread across multiple line ministries and agencies; “what is not measured cannot be funded.”
- Actions needed:
  - Urgently quantify financing needs consistent with net zero targets and adaptation strategies.
  - Assess financing gaps and integrate viable and deliverable projects into MTFFs.
  - Strengthen capacity for green public financial management (PFM), infrastructure governance, and PPPs to improve accountability for climate objectives.

### Adaptive capacity and investment opportunities
- Building adaptive capacity requires substantial investment but also presents opportunities:
  - EMDEs in the region with large infrastructure needs and growing urban areas can ensure new building and construction are more resilient to climate risks.
  - Example: new roads could incorporate drainage or be built on higher ground to reduce flood risk, a relatively inexpensive solution.

### Mobilizing climate finance
- Moving to a new equilibrium to meet mitigation targets while ensuring energy security and affordability requires unleashing substantial amounts of private capital into profitable projects.
- Financing adaptation is equally important given large infrastructure needs in many countries.
- Revenue mobilization, spending prioritization, and efficiency will help ease growth-debt trade-offs.
- For the most vulnerable low-income countries and PICs with limited fiscal space, meeting adaptation needs will require concessional financing.
- Tapping all available financial resources is essential: capital markets, specific climate funds, grants, and concessional loans from the international community.

### Conducive business environment and standards
- Establishing a sound climate ecosystem underpinned by taxonomies, disclosure, and regulations that meet international standards is paramount to mobilize climate finance.
- Aligning taxonomies in Asia-Pacific with the European Union, for example, can foster regional climate finance development while reducing risks of regulatory arbitrage and greenwashing.

### International collaboration and regional leadership
- International collaboration is indispensable to close gaps in achieving climate goals; green industrial policy can promote innovation and diffusion but may reconfigure geopolitical dynamics.
- Public perception surveys indicate broad-based public support for multilateral action.
- Country climate surveys emphasize the need for wide-ranging collaboration covering knowledge and experience sharing, technology transfer, and financial support.
- Asia and the Pacific should contribute by example: the region is at the forefront of innovation, production, and adoption of clean and low-emission technologies, supported by green industrial policy.
- Access to critical minerals for green technologies is concentrated among a few Asian economies; Asia-Pacific should ensure access to green technologies for those most in need through technology transfer and financial assistance.

### Box summaries — Commitments, carbon pricing, and renewables gaps

- Box 1: Commitment levels and targets
  - Asia-Pacific has a high share of countries (80 percent) with an end target of net zero emissions or carbon neutrality.
  - Many economies aim for net zero by 2050, in line with the Paris Agreement.
  - Country examples:
    - China updated its NDCs in 2021 and anticipates a peak of greenhouse gas emissions before 2030, with backloaded carbon adjustments toward 2060.
    - India updated its NDCs in 2022 and sets an end target of net zero emissions by 2070, with an interim goal of reducing emissions intensity by 45 percent from 2005 levels by 2030.
    - Indonesia’s 2022 Enhanced NDC aims to reduce emissions by 32 percent unconditionally and by 43 percent conditionally with international financial support.
    - Japan and Korea share net zero by 2050 in law.
  - Only a few countries have net zero targets specified in law; ambition alone does not contain the deliverables needed to attain Paris Agreement goals.

- Box 2: Implementation of carbon pricing instruments — examples and figures
  - Japan:
    - Tax for Climate Change Mitigation legislated at JPY289 (US$2.65) per ton of carbon dioxide equivalent applied to all fossil fuels on top of existing petroleum and coal tax.
    - Estimated tax revenue was JPY262.3 billion (US$2.4 billion) per year.
    - At inception, the carbon tax aimed to reduce 80 percent of GHG emissions by 2050.
    - Government committed to expanding carbon pricing from current low levels beginning in fiscal year 2028.
  - Singapore:
    - Carbon tax initially set at S$5 (US$3.7) per ton of carbon dioxide equivalent for the first five years through 2023.
    - Planned increases to S$25 (US$18.3) in 2024–25, S$45 (US$33) in 2026–27, and S$50–80 (US$36.7–58.6) per ton of carbon dioxide equivalent by 2030.
    - The carbon tax covers 80 percent of total GHG emissions from selected facilities in manufacturing, power, waste, and water sectors.
  - New Zealand:
    - Introduced an emissions trading system (ETS) in 2008 designed to cover all sectors of the economy (except agriculture for now).
    - ETS covers nearly half of the country’s GHG emissions.
  - Korea:
    - Launched a national ETS in 2015.
    - Phase 3 (2021–25) applied to 684 companies covering 73 percent of national GHGs, up from 70 percent in Phase 2 (2018–20).
  - China:
    - National ETS announced in December 2017, initially targeting power generation; commenced in July 2021.
    - Coal-fired power plants account for nearly half of China’s carbon dioxide emissions from fossil fuel combustion.
    - China’s ETS is the world’s largest by scale, with a plan to extend coverage to other sectors.

- Box 3: Dependency and penetration of renewables — targets and constraints
  - Country renewable dependency targets:
    - Japan specified 36 to 38 percent target dependency rate on renewables by 2030.
    - Malaysia set a dependency rate of around 40 percent in 2035.
    - Cambodia targeted 65 percent in 2030 and 90 percent in 2050.
    - Vietnam targeted renewable energy to account for 47 percent of electricity produced by 2030, and 67.5 to 71.5 percent by 2050.
  - Constraints to penetration:
    - High installation and maintenance costs and limited access to affordable finance (Cambodia, China, Lao P.D.R.).
    - Dependence on advanced economies for technology transfers (China, Lao P.D.R.).
    - Gaps in regulatory guidelines (Thailand) and labor market implications (Australia, Malaysia, Thailand).
  - Need for supportive infrastructure and financing to address fluctuations in energy generation and supply and to improve reliability:
    - Country surveys indicate fluctuations in energy generation and supply are key impediments (China, Japan, Malaysia, Thailand).
    - Capacity factors show low scores for solar photovoltaics in the United States, despite global price declines over the past decade.
    - Complementary policies to establish grid connectivity and storage facilities, with adequate financing to install and maintain the ecosystem, are essential.

*Source: IMF DEPARTMENTAL PAPERS • Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (4. Conclusion and the Way Forward).*

### Box 4. IMF Public Perceptions Survey—Knowledge of Climate Mitigation Policies

### Box 4. IMF Public Perceptions Survey—Knowledge of Climate Mitigation Policies

### Survey findings on public awareness
- Knowledge of mitigation policies is limited, especially for carbon pricing.
- About two-thirds of respondents in Asia-Pacific countries have heard of:
  - subsidies to renewable energy, and
  - laws and regulations limiting carbon emissions (including emission standards for power plants, vehicles, and buildings).
- Only 37 percent of respondents in Asia-Pacific have heard of carbon taxes (a share similar to Europe’s).
- Only 31 percent of respondents in Asia-Pacific are aware of emissions trading systems (a share similar to Europe and the Americas).

### Country-specific awareness patterns
- Knowledge is often limited even in countries that already adopted carbon pricing and is not directly correlated with adoption or consideration of the policy in the country.
- Among surveyed countries where a carbon tax is in place:
  - more than 60 percent of respondents in Singapore have heard of this policy,
  - 20 percent of respondents in Indonesia have heard of it (where a tax was under consideration).
- In countries with emissions trading systems:
  - 40 percent of respondents are aware of such a policy in China and Korea,
  - about 20 percent of respondents are aware in Japan.

### Interpretation of Box Figure 4.1 (Percentage of respondents)
- The figure presents percentage responses by policy type (Subsidies for Renewable Energy; Emission Regulations; Carbon Tax; Emissions Trading Systems) across listed countries and regions.
- Note: Figure format and sample composition details are provided in Figure 9 (not reproduced here).

### Policy implications and recommendations
- Filling the information gap on mitigation policies should be a priority for policymakers.
- Given the importance of carbon pricing in the policy mix to achieve climate goals (Parry, Black, and Zhunussova 2022), governments should make every effort to increase people’s knowledge of carbon pricing.
- Educating the public on:
  - policy costs,
  - effectiveness, and
  - benefits in terms of revenue generation
  is key to garnering the necessary support for carbon pricing as a policy instrument.

*Sources: Dabla-Norris and others (2023); and IMF staff calculations.*

### Annex Figure 2.2. Global Sales in Electric Vehicles,

### apccea - Annex Figure 2.2. Global Sales in Electric Vehicles

### Global sales in electric vehicles (2017–21)
- Figure title: "Annex Figure 2.2. Global Sales in Electric Vehicles, 2017–21 (Thousands)".
- Regions shown in the figure: China; Other Asia; United States; Europe; Other.
- Note in figure: "Includes both battery electric vehicles and plug-in hybrid electric vehicles."
- Source cited in figure: IEA (2022a).

### Context from adjacent annex material on low-carbon technologies
- Hydrogen projects:
  - Figure: "Annex Figure 2.3. Scaling Up of Green Hydrogen Projects Around the World and in Asia-Pacific (Cumulative capture capacity, million tons per annum)".
  - Project types distinguished by color: Green hydrogen projects (relying on renewables), Blue hydrogen projects (relying on fossil fuels with carbon capture and storage), Grey hydrogen projects (relying on biomass and other technology).
  - The underlying projects are categorized by status, including operational, feasibility study, final investment decision, construction, concept stage, demonstration, and other.
  - Specific notes:
    - The number represents a sum of projects for each five-year period.
    - "HyDeal Ambition" identified as expected to produce 11.6 million tons of H2 annually and described as the largest giga-scale renewable hydrogen project globally, with initial phase started in Spain in 2022.
    - Liquid organic hydrogen carriers (LOHC) are noted as organic compounds that can be used as storage for hydrogen.
- Hydrogen project trends and highlights (labels and figure captions):
  - "1. Green Hydrogen Projects Expand Through 2030 (Number of projects)"
  - "2. Europe Takes the Lead in Green Hydrogen Projects (Number of green hydrogen projects)"
  - "3. Hydrogen Uses for Mobility and Power Generation Dominate (Number of green hydrogen projects)"
  - "4. Gains in Production Capacity Expected by 2030 (Normalized capacity in MtH2/year)"
  - "5. Australia Tops in Gains for Production Capacity Through 2030 (Normalized capacity in MtH2/year)"
  - "6. Production of Hydrogen Is Expected to Surge by 2030 (Normalized capacity in MtH2/year)"
  - Mobility and power generation are listed among the dominant uses; other uses include Ammonia, Iron and steel, Biofuels, Combined heat and power, Grid injection, Refining, Synthetic fuels, Methanol, Domestic heat, LOHC, MeOH (Methanol), H2, Various, CH4 (Methane).
  - Regional labels include: Other Asia; Other Europe; and country ISO codes shown (examples in figure: SWE, BEL, CHN, IRL, IND, PRT, FRA, BRA, EGY, GBR, OMN, MRT, USA, ESP, DNK, NLD, ARG, DEU, CHL, AUS).

### Carbon capture, utilization, and storage (CCUS) overview (adjacent figure captions)
- Figure: "Annex Figure 2.4. Carbon Capture, Utilization, and Storage (CCUS): Australia Is Regional Leader (Cumulative capture capacity, million tons per annum)".
- Underlying data starts in 1972.
- Components shown in figure:
  - "1. Operational Facilities by Type, 2000–22"
  - "2. Location by Country and Region, 2000–22"
  - "3. Facilities by Industry, 2022" (industry list includes Direct air capture; Chemical production; Oil refining; Natural gas processing; Hydrogen production; Methanol production; Iron and steel production; Power generation; Ethanol production; Fertiliser production; Synthetic natural gas)
  - "4. In-Pipeline Facilities by Type, 2022–30" (Dedicated geological storage; Enhanced oil recovery)
  - "5. Country and Region, 2022–30" (Europe defined to include Belgium, Denmark, Finland, France, Iceland, Ireland, Italy, The Netherlands, Norway, and Sweden; “Middle East and other” includes Brazil, Qatar, and the United Arab Emirates; “Other Asia-Pacific” includes Indonesia, Korea, New Zealand, Thailand, and Timor-Leste)
  - "6. Facility Industry, 2022 and 2030"

### Nuclear capacity projections (adjacent figure captions)
- Figure: "Annex Figure 2.5. Asia-Pacific, Particularly China and India, Will Lead the Expansion of Nuclear Electrical Capacity in the Coming Decade".
- Panels:
  - "1. Asia-Pacific Is Projected to Add Most Capacity (Total net electrical capacity; gigawatt)"
  - "2. Projected Gains Are Most in China and India (Top 20 countries in nuclear electrical capacity, gigawatt)".
- Note: "Based on the data in 2022."
- Regions referenced: North America; Asia-Pacific; MENA and CCA; Latin America; Sub-Saharan Africa; Europe.

### Annex Box 2.1 — Emerging hydrogen supply chains in Asia-Pacific (selected findings)
- Regional examples and developments:
  - Australia and Japan:
    - Australia signed a hydrogen export deal with Japan in January 2022.
    - A pilot project transported hydrogen from Australia to Japan by the world’s first liquified hydrogen tanker in April 2022.
    - A hydrogen energy supply chain project was announced in March 2023 to produce hydrogen from brown coal.
  - Malaysia:
    - PETRONAS and ENEOS conducted a feasibility study in 2022–23 for commercial hydrogen production and a clean hydrogen supply chain between Malaysia and Japan.
    - A final investment decision is expected by the end of 2023.
  - New Zealand and Singapore:
    - Signed an arrangement in 2021 to team up on studies to establish a hydrogen-based carrier supply chain; shape global standards, regulations, and certifications of hydrogen product; and enable joint research and development.
  - Thailand:
    - A memorandum of understanding has been signed by a Japanese company and the Electricity Generation Authority of Thailand to build a clean hydrogen and ammonia value chain in Southern Thailand.
- Annex Box Figure 2.1: schematic flow showing feedstocks (Water; Electricity), transformation (Electrolysis; CO2(with capture); CCS), storage and carriers (Ammonia; LOHC; Synthetic fuels), and end uses (Agriculture; Industry; Power generation; Transportation; Building and Residence). Note: "Red indicates hard-to-abate sectors."

### Annex 3 — Gaps in accessing green financing (key figures and findings)
- Global and regional financing needs:
  - Estimates of global financing span $120–130 trillion over the next three decades, which translates to an annual financing need of $4.0–4.5 trillion through 2050.
  - One estimate shows cumulative financing needs of $275 trillion (MGI 2022).
  - Some estimates show cumulative financing needs in Asia and the Pacific could be around $50–120 trillion over 2021–50 (average annual cost of 4.8–11 percent of 2021 GDP).
  - Other estimates show financing needs in EMDEs of at least $1 trillion.
- Recent investment flows:
  - Global investment in clean technologies and grid networks reached $1.4 trillion in 2022, with renewables accounting for nearly a half of the total investment ($1.1 trillion) in clean energy (BloombergNEF 2023).
  - Nearly half of the global investments in clean technologies took place in China, followed by the United States.
  - Top 10 investment destinations include large emitters (India, Japan, Korea) in Asia-Pacific, amounting to around $60 billion in clean technologies alone.
  - OECD (2022) finds developed countries provided EMDEs $83 billion in total in 2020, with financing for mitigation accounting for two-thirds of the total and adaptation the rest.
  - Asia has received 42 percent of the total public financing to EMDEs and was the main beneficiary of private climate finance.
- Institutional and policy actions cited:
  - People's Bank of China refining climate taxonomy and green finance disclosure alignment (Jeasakul and Xiao 2023).
  - Bank of Japan implementing national climate strategy to manage climate finance risks.
  - Ministry of Finance in India issued its first sovereign green bonds in early 2023.
  - Indonesia has issued green sukuks since 2018 and launched the first Green Taxonomy in January 2022.
  - Australian government announced in April 2023 plan to launch sovereign green bond in mid-2024.
- Major impediments to accessing green finance (from country climate surveys and Annex Table 3.1):
  - Data and capacity constraints to estimate climate-related risks.
  - Lack of industry-wide standards and regulations on climate finance products.
  - High cost of issuing green financial instruments.
  - Lack of dedicated fiscal resources for climate action in several countries (Cambodia, Japan, Malaysia, Mongolia, Vietnam).
  - Lack of disclosure requirements and data gaps hamper assessment of firms’ exposure to climate change risk and amplify transition risks.
- Figure: "Annex Figure 3.1. Challenges with Introducing Disclosure Requirements" lists challenges including Data gaps; Lack of capacity to analyze available information for identification and reporting; Lack of implementation and reporting of climate-related stress testing; Legal frameworks; Governance and transparency; Lack of standards. Source: Country Climate Surveys 2022.

*IMF DEPARTMENTAL PAPERS • Asia's Perspectives on Climate Change: Policies, Perceptions, and Gaps (annex figures and tables as cited in source content).*

### References

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*Asia’s Perspectives on Climate Change: Policies, Perceptions, and Gaps, DP/2023/008*

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_Source: https://www.imf.org/-/media/files/publications/dp/2023/english/apccea.pdf_