Opening remarks by Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development, at the Indonesia Ministry of Finance-Asian Development Bank 2021 International Climate Change Conference: A Just and Affordable Transition toward Net Zero, 22 July 2021
Your excellency Vice-Minister Suahasil Nazara, President Asakawa, Professor Hoesung Lee, Professor Lord Nicholas Stern, distinguished speakers, colleagues, and participants.
It is my great pleasure to join you today at this 2021 International Climate Change Conference, organized together with the Indonesian Ministry of Finance. We are here to discuss how to reach our common vision of an inclusive, net zero, and resilient future. And there are ways our Asia and Pacific region can lead in this very important work.
We have heard from Vice-Minister Suahasil Nazara, President Asakawa, Dr. Hoesong Lee and Lord Nicholas Stern on the urgency to tackle climate crisis. And they highlight the opportunity for us to take leadership through climate actions.
COVID-19 recovery is an opportunity
Rising populations and growing economies have contributed considerably to global greenhouse gas emissions. And with this, our vulnerability to climate change is also growing. As we try to move beyond the pandemic response and into recovery, we must plan now to put climate action front and center. It is an opportunity we cannot miss.
As we see daily, the Asia and Pacific region continues to face severe health and economic challenges caused by the COVID-19. Despite the needs of dealing with the immediate crisis, governments must not lose sight of the climate challenge. Understandably, the short-term focus will be on getting people back to work and getting economies growing again. But beyond that, countries need to think about more far-reaching changes that make their economies and societies lower-carbon, more resilient, and more equitable.
Climate crisis continues
The COVID-19-induced lockdowns reduced global emissions in 2020, but by 2021, there has already been a rebound. As economies reopen, energy-related carbon dioxide emissions are expected to rise nearly 5% this year.
Most governments so far have not directed COVID-19 stimulus to support green measures. Based on the Vivid Economics’ Greenness of Stimulus Index, just 28% of the $17.2 trillion of announced stimulus will go toward sectors that impact climate change, biodiversity or local air quality.
This is a cause for alarm.
Last year, ADB published a policy brief, introducing a framework to help countries tackle the climate crisis and build resilience as an integral part of their recovery from the pandemic. The framework shows that the objectives of addressing climate change and stimulating the economy do not clash. Rather, ambitious climate action can boost economies, create good jobs, and boost health benefits.
This framework forms the basis of ADB’s ongoing support to a number of countries, including Indonesia, in their COVID-19 recovery planning in general—and in particular, in developing a methodology for assessing fiscal response measures that support a low-carbon and resilient recovery. Our experience to date shows that we must focus on three things:
- Putting people at the center;
- Translating commitments into action; and
- Mobilizing the financial resources.
Let me briefly talk about each.
First, the recovery must be people centered.
The pandemic is not just a public health crisis. It highlights the many vulnerabilities and persistent socioeconomic gaps. ADB estimates that 78 million people across our region have been pushed back into extreme poverty—under $1.90/day—after the onset of the pandemic. Using the $3.20 threshold, it rises to 182 million. In Indonesia alone, by September 2020 there had been an increase of 2.76 million poor people in just 1 year. These numbers alarm us of the importance to pursue a just and affordable recovery instead of falling into a “k-shaped” one — the one in which growth trends up for some people and down for others.
As part of ADB’s holistic approach to climate adaptation and resilience, we are strengthening our community-based intervention through an ambitious community resilience partnership program. The program will work with governments and communities in scaling up pro-poor resilience investments locally and will contribute to expanding livelihood opportunities. Such a community-based approach directly helps build local capacity for achieving the Sustainable Development Goals. We look forward to closely partnering with the Government of Indonesia to implement this program.
Second, we must ensure that commitments turn into action.
It is important to remind ourselves that we are not at the start of a journey. Countries have already made positive strides in developing national climate plans and policies in line with their Paris Agreement commitments—through Nationally Determined Contributions, or NDCs, and National Adaptation Plans. It is increasingly becoming clear that countries must raise their NDC ambitions and ensure these commitments translate into action.
Similarly, multilateral development banks, including ADB, are raising ambitions to align the investments with the Paris Agreement. ADB is also supporting our countries through various technical assistance programs focusing on NDCs, carbon pricing, and climate finance. Whether in energy, transport, industry, or agriculture—and at the national, provincial, local and community levels, a multi-pronged approach is needed for successful and well-coordinated actions.
Finally, we must mobilize sufficient funds.
Sound policies are the first step to a resilient, inclusive, and sustainable recovery—and their implementation needs to be paid for. We need an effective menu of financing instruments and mechanisms to secure the resources required. We must make the transition affordable and ensure financing flows to those countries in our region that are committed to climate action.
Public financing alone will not be sufficient. For example, ADB estimated years before the pandemic that developing Asia needs to invest on infrastructure $1.7 trillion annually through 2030, in order to maintain its growth momentum, tackle poverty, and respond to climate change. It is safe to assume that the infrastructure financing gap has grown even larger after the pandemic struck. Scarce public funds, now under added pressure due to COVID-19, must be cleverly used to attract and leverage private sector finance.
Even before the pandemic, markets signaled a shift towards more sustainable and inclusive development. Green finance was flowing into the region. We need to build on this progress and scale up action. As many of you know, in 2019 ADB launched the ASEAN Catalytic Green Finance Facility to accelerate green infrastructure investments through technical assistance and access to over $1 billion in loans from cofinancing partners. As an initiative of the ASEAN Infrastructure Fund, the facility set up a green recovery program—including $300 million from the green climate fund. In Indonesia, we are also developing a green finance facility through the “SDG Indonesia One—Green Financing Facility” platform.
Asia-Pacific can be a leader
As President Asakawa said, the battle against climate change will be won or lost in the Asia and Pacific region. We have a tremendous responsibility and tasks ahead. This is the time to remember that the transition to net zero works much better if we reinforce national efforts with regional and global cooperation. Indonesia will be the chair of G20 next year and ASEAN in 2023. This offers a great opportunity for the country to lead in taking this cooperation forward.
As we open the plenary session on the theme of the “Road to COP26 and Beyond,” let me pose three questions to our speakers and participants:
- How do we address the often-competing objectives of rapid transition to net zero and affordability of the measures involved?
- How do we foster strong coordination across and within governments on the pathway to net zero?
- And how do we best use technology to enable actions?
Asking hard questions helps build concrete and cooperative actions on the ground. And we cannot afford any delays. We are at the critical juncture with a unique opportunity to pursue a green, resilient and inclusive recovery. We must be smart. We must be swift. And we must be transformational.
Thank you, and I look forward to your insights.