It is becoming increasingly obvious that global warming and environmental destruction are endangering human health and well-being worldwide. If 2021 was marked by anticipation that the world’s largest polluters were finally willing to set ambitious net-zero objectives, 2022 already appears to be the year of climate backsliding. A poisonous combination of political stubbornness, an energy crisis, and pandemic-driven economic reality has cast doubt on Southeast Asia’s progress towards a green world. 

We explore why businesses should care about climate change and how the climate tech startups Southeast Asia is home to should address the issue.

European conflict causes climate backsliding

As part of the 2015 Paris climate accord, most nations promised to accelerate reductions in greenhouse gas emissions to limit warming to less than 2 degrees Celsius (3.6 degrees Fahrenheit) over pre-industrial levels. However, things are not going as well as expected. The recent Russia-Ukraine conflict has raised the price of oil, gas, and coal tremendously. This fossil fuel price rise should be triggering alarm bells in climate-vulnerable regions. According to a report published by the International Monetary Fund, total emissions have climbed significantly above pre-pandemic levels.

We look at climate tech in Southeast Asia and how it is changing the business ecosystem

In Europe, both oil and gas are very close to their all-time price highs. Recently, natural gas hit a record high of €335 per megawatt-hour, meaning some power plants find it more economical to burn coal rather than gas. Given the war, the International Energy Agency (IEA) posed the conundrum of managing rising temperatures and rising energy demands. 

Despite the conflict, climate-vulnerable regions such as Southeast Asia continue to rely on coal and gas as their primary energy sources. Consider resource-rich Indonesia, which aspires to green manufacturing but where coal is still the primary source of energy, a key export, and directly contributes to global warming. The Philippines imports over 80% of the coal it uses for electricity generation, while Thailand is a big consumer of coal, oil, and even gas from other countries as its own reserves age. 

Why should businesses care about climate change?

The truth is that the cost of dealing with the physical effects of climate change is really expensive. It threatens to have a ripple effect throughout the economy, from consumers who may face higher insurance costs to businesses that rely on increasingly volatile commodity markets. In addition to raising temperatures, heat waves and humidity will increase energy demand, which means more development of power plants in Southeast Asia.

It is also worth noting that investors are already flocking to invest in green assets with the hope of generating higher returns over time. Nonetheless, COP27 is likely to stimulate the green finance industry, especially given that one of the summit’s objectives is to encourage private finance to enable the entire economy to transition to net zero emissions.

The integration of advancing technology, increased regulatory concerns for high-emission assets, and rising carbon emissions prices will open up new opportunities for climate tech startups. The rising cost of carbon, in particular, presents a considerable opportunity for firms that can develop carbon-credit-generating products and solutions.

How can the climate tech startups in Southeast Asia develop to address this issue?

With the decreasing cost of solar energy, climate tech startups can take advantage of the market. In the Philippines, Cleverheat aims to use solar power instead of electricity for refrigeration. The country’s exorbitant electricity rates have contributed to a high rate of post-harvest vegetable loss in the past. The invention of Cleverheat permits farmers to refrigerate their crops using heat power, resulting in less waste, increased income for farmers, and reduced carbon emissions.

Promoting the use of electric vehicles is another measure to reduce the burning of carbon dioxide. In May 2022, Indonesia signed a deal with Tesla to build a battery and EV plant in Central Java. The archipelago’s government aims to export 200,000 EVs by 2025, accounting for nearly 20% of total car exports.

Vinfast, a Vietnamese tech startup, aspires to be a significant player in the EV market, and its operations reflect Vietnam’s emphasis on integrating emerging technology with its manufacturing facilities. Vinfast has a manufacturing facility in the country with the capacity to produce approximately 950,000 EVs per year, and it is also rapidly expanding abroad.

Even though most countries’ climate backsliding has worsened, they must continue to reduce global warming. Businesses also play a significant role in climate change by assessing the impact of their operations on the environment, local populations, and the future economic stability of ASEAN. The climate tech startups Southeast Asia is watching emerge are paving the way for a brighter future by adopting digitally and technologically innovative techniques to address global climate challenges. Their accomplishments and impacts have the potential to benefit the entire planet and save the region from total destruction.