US must assist with climate finance

By Kasit Piromya.

As US President Joe Biden is due to meet with leaders from Southeast Asian countries this week at the US-Asean Summit in Washington from May 12-13, one issue on which Washington bears an enormous responsibility — and from which Asean countries suffer enormous consequences — will be high on the agenda: climate change.

As the biggest economy in the world and the country responsible for more emissions than any other over the past three centuries, the United States ranks as the biggest single contributor to climate change, a dubious honour that China may be now chasing.

Meanwhile, Southeast Asia is among the regions where the climate crisis is the most destructive, as it threatens the livelihoods, security and rights of the more than 680 million people who live in areas prone to natural disasters, including typhoons, floods and droughts.

This kind of destruction is to a large extent caused by advanced economies like the United States and, to put it bluntly, they have an obligation to pay for the damage their model of development has inflicted on the planet. It is America’s responsibility to financially assist Asean, as well as poorer regions, in moving towards a just, sustainable and resilient green economy.

While our region has committed to achieve net-zero greenhouse gas emissions, the commitments of Asean members under the Paris Agreement are far from sufficient to halt global warming.

One of the main obstacles to speedier and stronger climate action in the region is not just the lack of political will, but also the costs involved. Transitioning from fossil fuels to clean and renewable energy sources requires enormous financial investments up-front. This is all the more difficult at a time when the region already needs to mitigate its debt crisis after having borrowed money to support the post-pandemic economic recovery. And here is precisely where the United States can and should help Southeast Asia, by making sure that Asean members get access to international climate funds and by financially contributing to support their energy transitions.

Sadly, the US government’s financial support for the bloc on this matter falls way short of the mark. At last year’s US-Asean Summit, President Biden pledged to double the climate finance contributed by his predecessor Barack Obama, raising the figure from US$3 billion (103.8 billion baht) to $5.7 billion, with the stated intention to “make the US a leader in international climate finance”.

However, that pledge does not reflect the US’s fair share of the $100 billion climate finance goal, promised by rich nations to less wealthy countries to help them mitigate and adapt to climate change. According to an analysis by the Overseas Development Institute (ODI), the United States should contribute between $43 billion and $50 billion each year to climate finance, based on its gross national income and cumulative emissions.

If Washington wants to protect its long-term strategic interests in Southeast Asia, particularly now that China is becoming increasingly assertive in the region, it should step up its commitment to climate finance at this week’s US-Asean Summit to help members of the bloc further reduce their carbon emissions.

Moreover, the US could use its preeminent position at the International Monetary Fund (IMF) to ensure a more equitable distribution to developing countries of the IMF’s Special Drawing Rights (SDRs). SDRs are international reserve assets that can be traded between the central banks of IMF member countries to support the global recovery process from Covid-19 and address the climate crisis in the Global South — Latin America, Asia, Africa and Oceania.

A test of Washington’s willingness to cooperate with Asean in ensuring the region’s economic stability and tackling the climate change crisis would be to use its influence at the IMF to support a reallocation for developing countries of the SDRs’ funds as non-repayable grants instead of loans.

By doing so, Asean would be able to accelerate its energy transition and commitment to the global climate change objective of reducing emissions.

The challenges posed by climate change cannot wait. Asean members should join forces at the summit this week to secure a meaningful and stronger commitment from the US for climate finance in the region, at a time when more ambitious climate-related improvements are urgently needed.

Kasit Piromya is a former Foreign Minister of Thailand, and a Board Member of Asean Parliamentarians for Human Rights (APHR).

This article first appeared in The Bangkok Post.