Under a high emissions scenario, the spectre of climate change looms large, potentially resulting in significant Gross Domestic Product (GDP) losses 35 percent for India by 2100, according to a recent UNESCAP report.
The Sustainable Finance: Bridging the Gap in Asia and the Pacific report said that Asia and Pacific region could face staggering economic setbacks, with projected GDP losses of 24 percent for developing Asia as a whole, 30 percent for South-East Asia, and 24 percent for the rest of South Asia. This dire situation is compounded by the escalating frequency and severity of storms, flooding, heat waves, and droughts, as warned by the Economic and Social Commission for Asia and the Pacific (ESCAP).
While regulators in the region are taking steps towards climate stress testing, critical challenges persist due to data gaps and limited capabilities. Among the trailblazers in conducting NGFS (Network for Greening the Financial System) stress testing are the Monetary Authority of Singapore, People’s Bank of China, Japan Financial Services Agency/Bank of Japan, and Bangko Sentral ng Pilipinas. Meanwhile, the Reserve Bank of India, Bank Indonesia, Bank of Korea, Bank Negara Malaysia, and the National Bank of Georgia are actively engaged in or planning to initiate this essential scenario exercise.
The International Energy Agency’s projections underscore the pivotal role of Southeast Asia, India, and China in global electricity demand growth, accounting for over 70 percent of the increase over the next three years. Furthermore, these regions operate coal-fired power plants with an average age of approximately 15 years, in stark contrast to Europe and America, where the average age exceeds 30 years. This emphasizes the need for urgent action to address the economic and environmental challenges posed by climate change in these pivotal regions.