Southeast Asia—a region that British Columbia and others have been touting as a possible market for liquefied natural gas (LNG) exports—stands to gain US$12.5 trillion if average global warming is held to 1.5°C, but lose $28 trillion if warming is allowed to exceed 3°C by 2070, the Deloitte Economics Institute concludes in a new analysis this week.
B.C. Premier John Horgan has been betting heavily on the region to fuel an LNG boom in his province, and his government is believed to have doubled fossil fuel subsidies since it took office in 2017. But the Deloitte study suggests the countries on Horgan’s potential client list have a lot to lose from an emissions-heavy energy path, Bloomberg reports.
“The region’s gross domestic product could grow by an average of 3.5% per year over the next five decades if it nurtures industries and technologies to keep average global warming to around 1.5°C, compared to a baseline scenario of climate inaction,” the news agency writes. But “if Southeast Asia doesn’t significantly reduce its emissions and warming reaches more than 3°C by 2070, economic losses are estimated at $28 trillion in present-value terms, reducing GDP growth by an average of 7.5% per year over that period.”
The report, released Monday, says Southeast Asia’s $3-trillion economy “has historically enjoyed rapid growth and development powered by heavy use of fossil fuels,” a factor that has “pushed nations in the region to make only modest pledges to cut emissions under the Paris Agreement,” Bloomberg says. Deloitte concludes that “decarbonization can serve as a new growth engine for Southeast Asia,” but “faced with a ‘narrow’ window of opportunity to be a ‘frontier’ player, decisive policy action is needed to send price signals, transform supply chains, and enforce broad changes to its energy mix and industrial bases.”
While those shifts will carry “significant structural adjustment costs,” the news story adds, “unchecked global warming would lead to losses in agriculture and tourism, while worsening people’s health,” with seal level rise taking low-lying land out of production and extreme weather degrading infrastructure and other assets.
“Unmitigated climate change threatens to wipe out decades of hard-won economic growth in Southeast Asia,” Deloitte concluded, with potential losses of $9 trillion through 2070 hitting sectors like manufacturing, retail, tourism, construction, mining, and gas that account for 80% of the region’s economic output.