Cambodia has become the first ASEAN nation to submit its Long-Term Strategy for Carbon Neutrality (LTS4CN) to the United Nations finding an economic impact of 449,000 additional jobs and an additional 2.8% of annual GDP growth by 2050 if the Kingdom can be carbon neutral.
Carbon neutrality can be achieved by either balancing emissions of carbon dioxide with its removal or by eliminating emissions.
In the report the Cambodian Government Energy Minister Say Samal said the country was looking for a long-term transition strategy for its economy towards carbon neutrality.
He added shifting direct financing into green and sustainable development was becoming more popular for the international community and Cambodia was ready to utilize these finance options.
Private investment must lead the way
By 2050, the private sector is projected is forecast to invest nearly $1.4 billion each year, mostly in energy, transportation, and forestry sectors, with some significant investment in the industrial sector.
Economic analysis shows the strategy havs the potential to create 449,000 additional jobs, and deliver an additional 2.8% of annual GDP growth by 2050 for Cambodia.
It added, the returns in terms of private sector operating expenses are over six times the investment and come from a wide range of actions. Significant benefits come from energy efficiency ($3.4 billion), vehicle electrification ($1.1 billion) and rail and freight haulage ($1.1 billion).
Cambodia Investment Review, previously reported on the importance of the private sector leading the way for Cambodia’s climate policy agenda after the inaugural Cambodia Climate Change Summit (CCCS21).
The CCC21 summit brought together a host of climate change experts, business leaders, and the public sector to take positive action against the impacts of climate change and to showcase Cambodia’s vision for a sustainable future.
Allen Dodgson Tan, Director General of the Mekong Future Institute, the non-profit Singapore-based think-tank holding the conference outlined policymakers working effectively with investors and the private sector will be a key factor in moving beyond policy and to action.
Green financing is still untapped in Cambodia
According to the Asian Development Bank (ADB) there has been a strong increase globally in demand for green and social bonds which has been reflected in the strong growth in the category’s bond issuances.
They added, between 2016 and 2019, global issuance of green, social, and sustainability bonds quadrupled from approximately $100 billion to $400 billion.
However, in a recent opinion piece published the organization stated a key challenge to making this happen is that despite recent progress, Cambodia’s corporate bond market is still at a nascent stage.
On the demand side, it lacks a sound and diversified base of domestic institutional investors and although commercial banks have become major investors in this market, pension funds and insurance companies continue to keep cash in bank accounts, they stated.
According to the International Monetary Fund: “Without action, the population exposed to an extreme river flood could grow by around 4 million by the 2040s, while the damming of the Mekong River, as well as the large-scale dams built on its tributaries, may alter future flood dynamics.”
“Climate change trends indicate more severe floods and droughts, which is projected to reduce absolute GDP by 9.8 percent in 2050,” they added.