IGNORE COP26 AT OUR PERIL

…And how we can (quickly) prepare for it.

The findings from the Sixth Assessment Report (AR6) from the Intergovernmental Panel on Climate Change (IPCC) will be the main feeder to the 26th UN Climate Change Conference of the Parties (COP26) to be held?in Glasgow on 31 October – 12 November 2021. This is THE event that everyone needs to attend as new global targets will be set here and countries will be expected to make ambitious commitments in support of those targets.

Unfortunately, with developed countries having already announced large 2030 CO2 reduction targets e.g. the US (4% of the world’s population consuming 25% percent of global energy) pledged 52% and the EU 55%, the focus to close the gap will be on the developing world with worrying observations (whether rightly or wrongly) being made of some big emerging economies like Brazil and Indonesia not moving, or even going backwards, on cutting emissions.

Having a say in how the anticipated new targets are set is vital as, moving forward, countries and local companies failing to meet it will be severely ‘punished’ e.g. sovereign and corporate ratings will be downgraded (impacting costs of borrowings) or domestic businesses cut off from global supply chains. Malaysia is also very much at risk as our economy is highly dependent on environmentally ‘dirty’ sectors e.g. fossil fuels and palm oil. We need to mitigate this perception and rapidly evolve to survive the new world order.

It is not too late if the Government immediately activates, at the highest levels, a broad plan guided by the four goals set by COP26 as follows:

1.??????Secure global net zero by 2050

2 out of the 4 major activities listed to meet this goal have a major impact to Malaysia:

a.??????accelerate the phase-out of coal

As of 2018, 31% of total electricity generation capacity for Malaysia came from coal. TNB will need to lead the transformation of our existing power generation infrastructure towards other forms of sustainable sources (e.g. biomass, solar, biogas and mini hydro contributes to less than 4% during the same period); and

b.??????curtail deforestation

The Government now needs to go beyond its floor commitment of 50% total forests coverage (currently at 54%) and, dare I say it, announce reforestation measures to meet the coverage amounts of what we used to enjoy in the early 2000s (i.e. 84%). In addition, the authorities need to take very strong punitive action against parties who commit deforestation activities (whatever happened to the case of the Pahang illegal durian orchards earlier this year and the clearing of Cameron Highlands for vegetables?).

2.??????Adapt to protect communities and natural habitats

This is principally targeted towards the protection and restoration of ecosystems. The UN estimated in 2016 that it would cost developing countries between USD$280 to USD$500 billion per year to adapt to climate change. Before we can understand the cost impact to Malaysia and plan accordingly, we need to firstly have a fundamental mindset shift and acknowledge that we (and every country in the world) are at climate risk - Contrary to an official announcement made earlier this year. Acknowledging this enabled Singapore in 2019 to identify an estimated S$100b investment requirement to protect it from rising sea levels.

Currently, the closest hint of a plan is the Government announcement last year of the formation of the initial RM20million MySDG Trust Fund but, as reported in June this year, this was still in the tail end of launching with no details on its utilisation towards climate change. The Government had also stated that environmental sustainability is 1 of the 3 core pillars in developing the RMK12 (the country’s 2021 – 2025 Masterplan) but the latest budget does not seem to support this assertion (Environment and Water was allocated 4.2% of total budget). Furthermore, our plans must be science based and as such, technology will be the main driver to ensure successful climate adaptation (but only 0.6% of total 2021 budget was earmarked here).

3.??????Mobilise finance

Based on the previous target and recognising the huge financial requirements needed, developed countries had committed in 2015 to contribute?at least USD$100bn per year?in climate finance to developing countries. However, the OECD estimated only $79b was mobilised in total by 2018. It is unlikely that larger funding will be made available as USD$11t has already been incurred globally in CoVid responses and anything left in the larder will continue to be used by current leaders to survive the present health challenges - Leaving the future climate headache to others.

This logic is flawed as the planetary dangers of CoVid and climate change are not mutually exclusive and must be addressed in parallel; decisions made today will determine whether present leaders and citizens will (literally) survive the future world.

However, the Malaysian Government can pivot climate change from a threat to an opportunity by making it affordable and even profitable for the private sector to participate in climate solutions:

a.??????long term tax incentives / credits for companies to transition from old technologies and processes into the green economy e.g. from fossil fuels to RE sources, oil palm companies to install methane capture technologies at their mills and refineries and incorporating nature into plantation design (e.g. the Orang Utan oasis by Sime Darby), using oil drilling technologies to harness geo thermal and the list goes on;

b.??????ensuring that a high percentage of Government monies are allocated to growing domestic eco-tech and properly mobilised by Cradle, Penjana Capital and MAVCAP (for early start-ups) and further sourced from local institutional investors like EPF, KWAP and LTAT for investments in companies of mid-level stage of growth upwards;

c.??????set up the carbon emissions exchange to allow local and international companies to trade and generate green income (and thus tax such proceeds). As at the date of writing, the Government has made the welcome announcement of starting a Domestic Emissions Trading Scheme;

d.??????dedicated funding infrastructure for local SMEs to transition effectively; and

e.??????incorporate circular economy planning in all public sector areas and city planning e.g. solar power installed in every new public development and buildings.

A stick approach could also be employed:

a.??????implement carbon / GHG emissions tax; and

b.??????mandate each GLC to commit a (high) percentage from their yearly budget into eco-tech

So instead of hopelessly playing a catch-up game in the ‘old’ tech, Malaysia can reinvent itself into the new green economy and take advantage of literally trillions in USD available from investors hungry for opportunities in this nascent sector.

4.??????Work together to deliver

Malaysia cannot work alone in ensuring the global targets set at COP26 are equitable for all and are not advantageous only to developed countries and its allies; we need to go in with the joint voice representing close to 700 million people i.e. ASEAN. Calls need to be made at the highest levels to at least have a top level understanding of what ASEAN will work towards with regard to climate change as, unfortunately, the closest joint declaration was made on 13 Nov 2018 in response to COP24 and the latest reference to the IPCC report was to AR4 in 2015.

In addition, the Government must recognize that climate change and sustainability must be addressed horizontally across all ministries / authorities and a whole of government approach needs to be employed. As such, any announcements must be made and driven by the Prime Minister (either at PMO or EPU) with clear climate change KPIs for each ministry to meet. Parties must also cross the political divide and recognize that our mutual survival is a joint effort and not to be used as bullets to discredit each other.

In summary, a clarion call against climate change must be made by the highest level of leadership (including our royal institutions) underpinned by a solid plan that ties all stakeholders towards a common objective that transcends race, religion and political ideologies. It must also be focused on areas where our country faces the most threats (coal and deforestation) as well as relying on our natural advantages (e.g. the equatorial zone provides a sweet spot for optimal solar power generation and monetizing our forests as the lungs of the world). Real resources need to be dedicated towards this objective (both from public coffers and talents) supplemented by clever monies sourced from private means. Slavish implementation must be continually conducted just like our lives depend on it (which it does) and not done to score points or gain bragging rights.

I hope readers will join me to convince our Government to embark on this madcap, crazy adventure into the unknown as, at this juncture of time, we need the brashest and most fearless of approaches. Anything less will steer us down the path that is too terrible to contemplate.