Opening remarks by Ahmed M. Saeed, ADB Vice-President, Operations 2, at the Asia-Pacific Forum on Green and Low-carbon Development, 8 September 2022
Vice Governor Li of the People’s Government of Hunan Province, Vice Minister Zhao of the Ministry of Ecology and Environment, Deputy Secretary General Li of Hunan Provincial Government, excellencies, distinguished guests, ladies, and gentlemen,
Good morning for those in Changsha; good morning, afternoon, and evening for those joining virtually. It’s an honor to welcome you all to the Sixth Asia-Pacific Forum on Green and Low Carbon Development. Although I wished to be in Changsha welcoming you today, I can only do it virtually from Manila because of the current travel restrictions.
The Asian Development Bank has supported this important annual event since 2016, joining forces with Hunan to share leading green and low-carbon technology and policy innovations. I spoke at the last Forum in October 2021 and highlighted how advances in technology and science are key to helping make progress on addressing climate risks.
Ladies and gentlemen,
Since the last Forum, the price of fossil fuels jumped substantially as recovery from COVID-19 has gotten underway, and markets have been disrupted by the invasion of Ukraine.
Some believe that the measures taken in response including a pivot back to coal-fired power and fossil fuel subsidies to protect populations from severe inflationary pressures represent a fundamental departure from the path of decarbonization. I would beg to differ. It is more clear than it ever was before that green energy solutions are the only way to meet our goals of fairness and access, energy security, and environmental sustainability. Short-term tactical measures taken in an unanticipated crisis should only increase our long-term strategic resolve.
Energy transition will be the largest and most consequential effort in collective action ever undertaken. Every segment of the global economy must be transformed from transport and industry to agriculture and real estate. As some have noted, this is a process that demands both scale and speed. It must begin now and must progress rapidly against the shifting, and at times, deteriorating backdrop. This may sound like a dire and foreboding word of warning, but in fact, energy transition is also the greatest opportunity the world has ever seen to expand the scope of human flourishing and to restore balance between humanity and the world that we all inhabit together.
I would like to share three observations with you today: the first is about the role of technology; the second, on ensuring that we all move forward in this journey together; and the third, on the need to collaborate and innovate in addressing key structural impediments to energy transition.
First, on the role of technology. The standard macroeconomic prescription to address the climate challenge is to call for carbon taxes. This is good and sound advice. The crisis we face has its origin in the fact that pollution is an externality―a cost GHG emitters are able to impose on others. An inappropriate price on carbon would remove this incentive and help bring our world into greater balance. The irony about this certain truth is however, that it is also misleading. Approaching energy transition through carbon price alone would also significantly reduce global welfare. This brings us to the critical role played by technology, or to be more precise―by the role played by technology as it accelerates its path down the cross curve. The key technologies we need to get to a net zero world all already exist. But most must get much cheaper before they can be deployed economically and at scale. There are few higher priorities today than getting these prices down further. Paradoxically, as powerful as a carbon tax might be, investment is even more critical to energy transformation because this is the only way to make clean solutions cheaper.
This brings me to my second point about the importance of ensuring that this transition benefits all elements of society. A pivot away from fossil fuels should help the macroeconomic fortunes of poorer countries would no longer need to annually import significant amounts of fossil fuels. And if done right, it should have the potential to usher in an era of cheaper, more secure, cleaner, and more accessible energy for all, including for the approximately 3 billion people in the world who are currently without reliable access to power. The energy transition will not happen if it is not just. In order to achieve this goal, we will need to learn and improve our strategies and benefit from lessons learned from each other's experiences. Effective knowledge platforms such as the Asia-Pacific Forum on Low-carbon Development will be critical to this process. The Forum is a rich enabler for such knowledge-sharing―a benefit not only to the People's Republic of China but to the wider Asia-Pacific region and supports our quest to understand and adopt technological advances that support just energy transition towards carbon neutral economies.
The final point that I would like to make is that even if we design a process that is accelerated by technologies that are cheaper than existing alternatives, and even if we ensure that the benefits are shared broadly and have political support, there will be difficult problems in energy transition that can only be addressed through bespoke, carefully tailored solutions. ADB’s work on the energy transition mechanism is a case in point. Solar power is already the cheapest form of electricity globally―less expensive in many cases even than existing coal-fired power plants. But coal is a powerful incumbent. Legacy plants are protected by a host of legal, financial, and technical considerations from replacement. In an effort to construct a solution that fits this problem, ADB announced the energy transition mechanism at COP 26 in Glasgow. ETM is a market-based, scalable, blended finance mechanism that seeks to incentivize voluntary retirement or repurposing of fossil fuel power plants while simultaneously creating opportunities for renewable and clean energy technologies. ADB is currently working with Indonesia, the Philippines, and Vietnam on the pilot phase of ETM. If we get these three things right, driving down technology cost, ensuring that energy transition is just, and solving the specific problems associated with the transition process, we will have greatly advanced our shared agenda of moving towards a more sustainable, resilient, inclusive, and prosperous world.
Let me close by expressing appreciation to our hosts in Hunan. Last October, we signed an MOU with the Department of Ecology and Environment of Hunan on cooperation to promote green and low carbon development. The MOU reflects a long-standing program of engagement on these issues including for example, the Hunan Xiangjiang Inland Waterway Transport Project. Completed in 2018, this project has installed renewable energy capacity of 90 megawatts. It has significantly improved the river’s navigation capacity and accelerated the reform of water transport management across the province.
The ongoing Xiangtan Low-Carbon Transformation Sector Development Program is another example of our work together. This program will support Xiangtan as it transforms into a low-carbon, resilient, sustainable, and livable city, and we hope it will serve as an example of what is possible for other urban metropolises.
Ladies and gentlemen,
This year’s Forum will discuss how to achieve a Green Future Driven by Carbon Peaking and Carbon Neutrality―the two main climate goals put forward by the Central Government of the PRC in September 2020. These high-level objectives are reflected in the 14th 5-Year Plan, which contains ambitious targets for reduction of energy and carbon intensity.
Experts joining the Forum will present and discuss energy transition paths; innovative technologies across multiple sectors; the importance of digitalization; making urban, rural, and industrial development cleaner; and integrating carbon markets and new trends and frontiers in low carbon development.
I encourage all participants to actively engage in the Forum’s proceedings, and I hope each and every one of you benefits from lively discussions and knowledge sharing. Tremendous value can be harnessed from the Forum’s deliberations to promote substantive business cooperation among participants in promoting advanced low carbon technology research, development, transfer, and investments.
Let me once again, take this opportunity to thank Vice Governor Li for his leadership and cooperation in acting as co-host for this Forum. Thank you also to my ADB colleagues for working hard and overcoming many difficulties to prepare for today’s event.
Thank you very much.