I think there are two key forces driving the transition in the region.
We have to understand that Asia is particularly susceptible to climate change given its dense coastal populations, for example, and its weaker infrastructure. But what’s interesting is that Asian institutions—public and private—have come together to rise to the challenge of leading and addressing climate change impact. This is driven by two forces.
One is regulatory and policy action. The other is a big push to attract investment, not only in emerging climate technologies like carbon capture, but also in helping to modernize infrastructure such as the grid, to be able to take on renewable power.
When these two forces come together, it helps propel Asia’s transition to net-zero faster.
But Asia has a unique challenge of trying to balance achieving net-zero with looking at how countries can develop their economies and support their growing populations.
That is why McKinsey is launching a climate transition impact framework, or C-TIF for short, at COP29. This framework helps governments understand, when they are planning their nationally determined contribution pathways, how to balance net-zero goals with socioeconomic impacts they could see in light of that transition. It provides a very holistic view.
Asia has been able to attract investment. There has been a record number of investments, for example, in renewable energy in China and India in the past years. They are the largest consumers and producers of renewable energy.
But that’s not enough. The region still faces a massive gap of up to $40 trillion to ensure it meets its 2030 net-zero ambitions.