More than a year after the World Health Organisation (WHO) declared the Covid-19 outbreak a public health emergency, the Association of Southeast Asian Nations (Asean) – a region with a combined GDP of US$9.34 trillion (S$12.7 trillion) and a population of more than 650 million – has not recovered from the global economic tumult resulting from the pandemic.
While some economies in the region do appear to be recovering, Asean governments are still prioritising the disbursement of stimulus measures for short-term economic relief.
As of May 28, Asean countries had authorised a total of US$730 billion, equivalent to 7.8 per cent of its total GDP in stimulus dollars.
While Asean governments have demonstrated a willingness to boost economic recovery and strengthen socioeconomic resilience during the ongoing crisis, the higher-order challenge is to what extent they can leverage this crisis to equip themselves against climate change, a slow-onset crisis of the same or even bigger magnitude as Covid-19.
Green recovery policies and strategies can equally help to put a country on the path to economic recovery while bringing environmental and sustainability benefits.
However, few Asean countries and development partners have tied green components to their Covid-19 stimulus packages, and in effect, environmentally harmful measures are also embedded in the present stimulus packages.
What is green recovery?
Economists and development experts introduced the concept of green recovery measures to encourage governments to decarbonise the economy and enhance resilience in facing future health and climate shocks
The Institute for European Environmental policy suggests that governments introduce sustainable economic policies to tackle the Covid-19 crisis.
1. Fiscal measures with a long-term vision: Industry bailouts must be conditional to ensure that the private sector does not return to business as usual after Covid-19 and to enhance fairness, transparency, and positive environmental impacts.
2. Fossil fuel subsidy reform: The dramatic drop in oil prices and decreased consumption as countries tighten their lockdown measures provides an opportunity for governments to cut fossil fuel subsidies and reallocate spending to more sustainable projects.
3. Environmental taxation: Introducing and increasing carbon taxation is an important tool to push industries to implement green practices. When green stimulus measures are difficult to implement, sustainable activities can be achieved by adjusting market expectations to align with a future context of higher carbon prices.
4. Natural capital investment: Providing capital investment to protect water, biodiversity, and other natural resource activities will not only bring a more sustainable economic multiplier effect with positive climate impacts but also ensure ecosystem resilience as global crises caused by animal-human viral transmission, climate change and biodiversity loss are increasingly interlinked.
5. Increasing research and innovation to advance decarbonisation: Research and innovation are increasingly important to ensure policymakers and business players can leverage technologies and available tools to make their economies more competitive while transforming and scaling up sustainable practices.
Countries can invest in decarbonisation pathways in critical economic sectors, which significantly contribute to carbon emissions such as energy efficiency and renewable energy adoption, clean transport, and green construction.
For countries that are vulnerable to climate risks such as extreme weather and drought, building up institutional capacities for resilience, for example, agriculture and food security, nature and biodiversity protection, and disaster risk reduction and preparedness will ensure that communities are equipped to face climate crises of the future.
As a region, Asean’s collective efforts for green recovery are articulated in the Asean Comprehensive Recovery Framework adopted at the 37th Asean Summit.
Under the framework, green recovery – including green growth, green jobs, green infrastructure, and decarbonisation pathways – is one of the suggested measures at the country level.
In particular, the framework highlights the need for member states to accelerate renewable energy transition and decarbonisation pathways by establishing cross-sectoral coordination to frame and sustain an Asean energy transition.
This can also be done by designing economic stimulus packages at the national level which consider green measures such as having clean electricity sources, expanding and modernising power grids, improving the energy efficiency of appliances, and increasing the spread of cleaner transport.
Finally, member states can also enhance collaboration and partnerships to ensure Asean’s capacity to access innovations and deploy emerging technologies and strengthen the energy supply chain through diversification to enhance resilience from future disruptions.
What are the green components in Asean governments’ stimulus packages
Moving into the medium and long term, Asean governments are prioritising national vaccination programmes to ease economic reopening.
Some are beginning to build green components into their Covid-19 stimulus packages to future-proof their economies according to domestic challenges and priorities.
Singapore’s 2020 Unity Budget complemented by supplementary Covid-19 stimulus packages, with a total amount of S$93 billion, was largely directed towards supporting households and businesses, and preserving and enhancing workforce development.
Although there were some ecological protection measures in the stimulus packages – such as a S$5 billion coastal and flood protection fund to protect against rising sea levels, with support to the SG Eco Fund for community partnerships on sustainability initiatives built in – we note these may be pre-existing measures not necessarily in direct response to the pandemic.
Other programmes such as the HDB Green Towns Programme, incentives for low-income households to buy energy-efficient household appliances, and building up electric vehicle (EV) charging stations including rebates on EV registration fees were also introduced in the Unity Budget to help the country transition to clean energy.
This year, the government introduced even more green components in their yearly budget and Covid-19 stimulus packages.
The Singapore Green Plan 2030 was launched to enhance sustainable practices across industries.
The plan includes S$60 million for the Agri-Food Cluster Transformation Fund, S$30 million for accelerating EV adoption, and the issuance of S$19 billion of green bonds.
Malaysia introduced similar stimulus packages to encourage energy efficiency and renewable energy transition as part of their Covid-19 recovery measures.
Measures such as improving LED street lighting, rooftop solar panels and transmission lines were introduced as part of a 13 billion ringgit (S$4.2 billion) stimulus for infrastructure upgrades. Measures to help the country roll out solar-energy generation projects were also included.
Likewise, Myanmar’s Covid-19 Economic Relief Plan has a component for renewable energy infrastructure, and the government there has introduced a tender of 30 solar projects, totalling 1,060MW in capacity.
In defining green components in their respective stimulus packages, Indonesia and the Philippines target community adaptation and resilience instead of direct measures to reduce carbon emissions or energy transition.
Indonesia, with assistance from the Asian Development Bank (ADB), will utilise a US$500 million loan to enhance the Disaster Resilience Improvement programme aimed at reforming the country’s risk management and health emergency programmes.
Similarly, the government of the Philippines, through the Duterte administration’s 4-Pillar Socioeconomic Strategy Against Covid-19, rolled out support for food-security and agrifishery programmes for enhancing the most vulnerable sectors against future health and climate crises.
The Philippine government also received a US$1 million loan from the World Bank and the ADB for disaster management, which includes strengthening the country’s policy and institutional framework and the community’s capacity to recover from environmental disasters.
Environmentally harmful stimulus measures exist too
While Asean governments have been increasingly integrating a small proportion of green components in their respective Covid-19 stimulus packages, they have not avoided measures that are environmentally harmful.
In the case of Indonesia, while the government did not increase subsidies on fossil fuels during the pandemic, they did provide tax incentives to oil and gas companies to save employment in this industry.
Unfortunately, the government’s incentives did not come with a conditional clause that those oil and gas companies receiving tax incentives must demonstrate sustainability practices, or at least, invest in improving their capacity to decarbonise in the long term.
Experts fear that this move will undermine the government’s vision to decrease the nation’s dependence on fossil fuels and will only further lock Indonesia into a high-carbon future.
Indonesia recently announced a plan to temporarily remove a luxury tax on cars to help the automotive industry recover. The country had seen the sale of cars plunge by up to 48.5 per cent last year from 2019.
But in implementing this plan, the government may have inadvertently missed the chance to decarbonise private transport. Instead of simply reducing taxation, the government could have started small initiatives to incentivise the adoption of electric vehicles (EV).
This is cleaner and creates new job opportunities, even though the domestic EV…