ADB: Cambodia Should Embrace Green Investment to Achieve Low-Carbon Economic Growth

• 27 August 2021
• Local News
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The recently published article by the Asian Development Bank (ADB) has suggested that the Cambodian government shouild embrace more green investment and clean energy production to achieve low-carbon economic growth in the long run.

Published on 25 August, the article entitled “Cambodia is making strides on the long road to low-carbon economic growth” is co-written ADB) Country Director for Cambodia Sunniya Durrani-Jamal and energy economist Darren Byers.

Both authors have suggested several key actions that the government, and other sectors in Cambodia, should consider for helping the country move toward low carbon economic growth.

Reducing deforestation, undertaking reforestation and promoting integrated resource management and cleaner fuels are among other actions suggested. These policies will only reduce Cambodia’s greenhouse gas emissions but also lower damages caused by climate changes while also reducing costly infrastructure rehabilitation.

The article also suggested that the government should consider creating incentives for green investment while the financial sector has to factor climate risk costs into its financing and pricing decisions.

Several policies are being tested to reduce pollution and increase green and clean investments. If there is one thing most economists seem to agree on, it is that a cost to emitting carbon i.e. a carbon price is one of the most visible means of incentivising emission reductions, according to the article.

An emissions trading system, or a carbon market, is one way to determine such a cost. From 2016 to 2020, Cambodia sold US$11.6 million worth of carbon credits. (Read more)

The two authors added that another policy instrument to reduce emissions is a carbon tax or a set price per ton of carbon emissions set by the government.

Regulation that requires companies to publicly disclose their environment and social impact to current and potential investors is yet another effective policy to incentivise firms to reduce their carbon footprint.

Last but not least, this ADB article also suggested that Cambodia considers switching from coal power to renewable.

Since 2020 with COVID-19, power demand has dropped, and the cost of renewables has continued to come down. The cost-effectiveness of Cambodia’s coal power investments should be reconsidered, especially as more and more investors and manufacturers are shunning coal power, given climate goals and disclosure requirements on socially responsible investors, read the report.

To choose between emission reductions or affordable access to energy is not a desirable decision for any government. To avoid it, governments should be considering the costs of generation from a full life cycle perspective and under the full range of carbon cost scenarios, financial and economic returns, and social benefits, the report added.

Taking these actions now may show that green investments including cleaner energy investments are not so expensive after all.

• Analysis
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• Energy and Environment