New US and Japanese 2030 emissions reduction goals accelerate the global race to attract investment in net zero emissions industries and infrastructure
The global race to attract private capital investment into net zero emissions industries and infrastructure has accelerated after President Biden committed the United States to reduce greenhouse gas emissions by 50-52 per cent from 2005 levels by 2030 and Prime Minister Suga committed Japan to a 46 per cent reduction from 2013 levels, ultimately aiming for 50 per cent below.
A recent analysis by AIGCC has shown that a Paris-aligned transition to net zero emissions will create a century-defining investment opportunity in the Asian energy sector of up to $US37 trillion by 2050.
“Strong emissions reduction targets are signals to global capital markets about how seriously a nation is taking the net zero transition and how intent it is in creating the enormous investment opportunities in new clean industries and infrastructure on offer. There are trillions of dollars in private capital that investors are looking to commit to the transition to net zero emissions. Asian economies who are not keeping pace with comparative global benchmarks for ambition, factoring in each nation’s stage of development, will be at an increasing competitive disadvantage in global capital markets.”AIGCC Executive Director, Rebecca Mikula-Wright
The new US target is one of the strongest emissions reduction commitments in the developed world, while Japan’s new target is a substantial increase on its previous pledge. The strengthened US, United Kingdom (UK), European Union (EU) and Japanese goals are now within striking distance of being on a Paris-aligned pathway to reach net zero by 2050. Other major economies across Asia have more work to do to increase their mid-term ambition to ensure they can compete in attracting the trillions of dollars in private capital that is looking for net zero investment opportunities.
The AIGCC has compared the 2030 emissions targets of the G20 nations :
- Commitment to updating targets in line with agreements made in Paris : In advance of COP26, countries have agreed to review and update their 2030 emissions targets and put in place a long-term strategy to achieve net zero emissions. In Asia, Japan and China have or are committed to enhance their 2030 targets in their formal submission to the United Nations. South Korea has updated its 2030 target from an intensity to an absolute baseline and stated it will enhance its ambition this year. India, Indonesia, Singapore and Saudi Arabia are yet to state if they will enhance their 2030 commitments.
- Per capita emissions and the emissions intensity of the economy if 2030 target is achieved (based on population and GDP projections from the World Bank and OECD) : In 2030, the per capita emissions of the majority of Asian G20 nations would sit in the middle of the pack. Indonesia and India would remain comparably low on this measure among G20 nations, as would Japan. Saudi Arabia would continue to have, by some distance, the highest per capita emissions. The emissions intensity of the economy is a proxy for competitiveness in a carbon-constrained world. On this measure, Japan’s competitiveness joins the likes of the EU, US and UK at the top end of industrialised nations on current G20 commitments. South Korea’s competitiveness is reasonably favourable to many other G20 nations, but behind the leaders. India and Indonesia would maintain a high emissions-intensity in their economy compared to other G20 nations.
- Comparison of targets vs 1990 and 2005 emissions : South Korea and Singapore’s emissions targets are weak-to-moderate compared with other relevant countries within the G20. Japan’s new goal is now more competitive with the EU, US and UK at the top end.
- National record on achieving past international emissions targets and current policy projections against existing 2025/30 targets : Most countries have achieved their past emissions targets and are on track to achieve their 2025/2030 targets. Australia, South Korea, Mexico and the US are not currently on track to achieve their current Paris emissions targets. Canada and Argentina are also currently off track but with new announced polices can achieve current 2030 targets. This does not assess the adequacy of targets against emissions pathways consistent with the objectives of the Paris Agreement. Most countries’ 2030 targets are not consistent with a fair contribution to meeting the objectives of the Paris Agreement.
Source: Climate action tracker; AIGCC; World Bank