A green energy transition is critical for Asia’s growth

Climate change poses a fundamental threat to Asia's macroeconomic and financial stability, warranting urgent government action for sustainable energy and resilience building.

- KRISHNA SRINIVASAN & ARUNABHA GHOSH

Asia contributes two-thirds of global growth and accounts for over half of the global greenhouse gas emissions largely due to its heavy reliance on coal. But it lacks adaptive capacity, including resilient infrastructure, early warning systems and social as well as financial safety nets to respond to climate change effects.

Climate-related shocks threaten economic growth and stability, exacerbated by development pressures, rising debt and decarbonisation challenges amid geopolitical fragmentation, making it a macro-critical challenge. For instance, analysis by the Council of Energy, Environment and Water (CEEW) finds that 75% of India's districts are extreme climate hotspots (vulnerable to cyclones, floods and droughts).

The solution lies in sustainable energy transition with adaptive capacity building. Pursuing energy independence and net-zero goals can enhance financial stability and alleviate balance-of-payment vulnerabilities. It is a growth imperative for Asia.

As major markets including the EU, Japan and Canada restrict non-green products, transitioning to sustainable energy becomes vital for maintaining market access, with failure risking exports. Embracing cheaper renewables and advancing clean tech across value chains will boost Asia's energy security and reduce economic volatility.