Powering a new generation of net-zero transport with clean energy – in China, Japan, and South Korea – will cost US$12.4 trillion, a ING bank report has just revealed. This equates to over 90% of China’s 2020 GDP.
Authored by Rob Carnell, ING’s regional head of research, Asia-Pacific, the report claims this cost will be more manageable if the green transition starts today, and is spread over the next three decades - or four, in the case of China. In this scenario, the annual cost drops to 0.6% of current GDP per annum for Japan and Korea, and 1.8% for China, which remains heavily reliant on fossil fuels.
“By looking at transport - just one part of China, Japan and South Korea’s transition - we can begin to capture a sense of the daunting scale of what lies ahead,” commented Carnell. “We cannot underplay the gulf between the net-zero carbon goals and the paths set out to achieve those goals. Most governments have barely scratched the surface on tackling the transition, and the path ahead will no doubt lead to considerable disruption for existing industries.”
There is, however, the possibility that this process will serve to reinvigorate stagnating economies. Indeed, if the transition is not delayed, greening Asia’s transport sector is an achievable goal, explained Carnell.
ING’s report lands amidst intensifying international demand for China, Japan, and South Korea - which currently account for two-thirds of total Asian emissions - to upscale their decarbonisation efforts.
The price tag tied to this mammoth undertaking is likely to be shouldered by the private sector, via green bonds, sustainability-linked instruments, or indeed other financial tools yet to be developed.
Read ING’s full report here.