East Asia is helping the rest of the world decarbonize and encouraging the domestic adoption of renewable energy. But there is an imbalance: Even as the region’s innovation and investment improve global access to green technologies, the region’s own emissions continue to grow, because of the reluctance to penalize carbon-intensive technologies.
The region has helped advance green tech development and diffusion
Countries in the region, notably China, are contributing significantly to the development and global diffusion of green technologies.
The division of labor and high levels of competition across countries in the region—such as Viet Nam in solar panels and Thailand in vehicle components—have led to significant reductions in costs.
China and other EAP countries hold a large share of downstream segments of clean energy supply chains. As a global manufacturing hub, the region is uniquely positioned to harness the green transition to boost its own economic growth.
But the region's own progress in decarbonizing is slow and uneven
The pace of decarbonization has differed significantly across countries within the region. The adoption of solar and wind grew exponentially in some countries but much more slower in others.
Full Report: English
Summary: English
One reason is the persistence of policies that inhibit diffussion of green technologies
Subsidies for fossil fuel and tariffs on imports of green products impede the domestic deployment of cleaner technologies in the region.
And, like much of the rest of the world, the region has been reluctant to implement measures like significant carbon taxes to encourage the adoption of green technologies that are not yet viable.
Another reason is the market failures that limit green technology diffussion
EAP countries have only just begun to remedy failures in markets for green products, especially those arising from imperfect information in capital markets (which may partly account for the large share of financing cost in the levelized cost of energy) and inadequate coordination in infrastructure and skills (which are likely to dampen private investment needed to both produce and use green goods).
Thus both policy action and inaction influence the penetration of green technologies.
Full Report: English
Summary: English
Synchronized policy reform can encourage domestic diffusion and foster international cooperation
The diffusion of technology can exhibit strong path dependence, especially because the dominance of fossil fuels creates significant inertia. Learning-by-doing can reduce technology costs, new plants take time to build and are slow to depreciate, and complementary inputs may be in short supply.
Addressing this path dependence therefore requires multiple policy instruments. These include removing policy biases favoring coal, using standards to jump start markets for technologies like solar, to introducing carbon taxes and green subsidies.
Measures to encourage the domestic diffusion of cleaner technologies will not only improve the global environment; by boosting domestic demand, they may help also diffuse international tensions.
What is the appropriate policy balance?
Eliminating distortionary policies—such as fossil fuel subsidies and barriers to trade and investment—would deliver both economic and environmental benefits.
Complementary measures—such as assistance for low-income beneficiaries of fuel subsidies and retraining for workers in fossil fuel industries—would enhance the economic benefits and reduce the political difficulty of reforms.
Win-wins could also be harvested by addressing domestic market failures, such as those arising from imperfections in information (which limit green credit) and coordination (which limit investment in green infrastructure).
Remedying such market imperfections unilaterally will be difficult for small low-income countries, which lack the necessary institutions, and they will need external support.
Going further toward inducing the adoption of not yet viable technologies, through carbon taxes or green subsidies, involves incurring an economic cost to secure an environmental benefit.
How far EAP countries are willing to go in this respect depends on the commitments they have already made as well as the benefits they receive in return, through emission cuts, assistance, and technology transfers by the rest of the world.
The first two actions unambiguously increase national welfare and can be undertaken unilaterally as soon as the necessary complementary reforms and support are in place.
Whether the third improves national welfare depends on what the rest of the world does and therefore can be undertaken at a pace and on a scale determined by past international commitments and future international cooperation.
In general, deeper reform of the region’s climate, trade, industrial, and innovation policies is likely to foster mutually beneficial international cooperation in each of these areas.
Authors
|
|
Trang Thu Tran |
