China, Japan and South Korea will spend an estimated US$12 trillion to achieve net-zero carbon emissions in their transport industries, according to Dutch bank ING.
These three largest Asian economies account for almost two-thirds of all carbon dioxide emissions in Asia-Pacific, and approximately a third of global emissions, said the bank.
Two of the countries, Japan and South Korea have pledged to achieve net-zero carbon emissions by 2050, and China by 2060. Net-zero emissions involve removing more greenhouses gases from the atmosphere than produced.
The report finds that the US$12 trillion cost estimate is equivalent to more than 90 per cent of China’s 2020 GDP, according to Robert Carnell, ING’s Asia-Pacific head of research.
Furthermore, this cost will cover the electricity generating capacity needed by countries to supply new fleets of battery electric vehicles, electrified rail, hydrogen-powered trucks, sustainable aviation fueled planes, and ammonia-burning ships, the report notes.
However, this US$12 trillion is not inclusive of infrastructure spending needed to replace existing vehicle fleets, install electric vehicle charging points, or store new fuels in the industry, the report highlights.
China’s race towards achieving net-zero
If China, Japan and South Korea would not drag their feet now and start their energy transition process and spread out their efforts over the next 30-40 years, the cost to achieve net-zero carbon emissions in transportation will be manageable, the report indicates.
“Even so, while the sums sound on the margins of credibility, we believe these targets are achievable, though foot-dragging now could put them out of reach.”
Dutch Bank ING
Among these countries, China is the biggest carbon dioxide emitter. It also qualifies as the biggest carbon dioxide emitter globally and achieving net-zero carbon emissions will cost its transportation sector US$11 trillion— representing “1.8 per cent of GDP per year through to 2060”.
In its 2020 China Renewable Energy Outlook, ING pointed out that passenger car transport in China will more than double to 450 million by 2050— from 220 million vehicles in 2018.
Notably, China’s electric vehicle space has seen immense growth, and ING predicts that if the country fully adopts battery plug-in electric vehicles by 2060, the total energy demand from passenger vehicles by 2050 could decrease significantly.
That said, China’s marine industry would require the most investments to achieve net-zero carbon, adding that the demand for sea freight is estimated to grow to around 120 per cent of today’s levels by 2060.
Japan and South Korea race towards achieving net-zero
Meanwhile, Japan and South Korea together have set their targets at 2050. The report highlights it will cost Japan US$1 trillion to transition to a net-zero plan for its transport system, in terms of the electricity generating capacity required, according to ING’s forecast.
This accounts for “about 20 per cent of current Japanese GDP”— but that number can fall to “0.6 per cent of GDP per annum when spread between now and 2050.”
However, it would be impossible to achieve carbon neutrality without substituting diesel and liquefied natural gas with green ammonia, hence incurring extra cost of US$3.7 billion and an additional 433 gigawatts of electricity generating capacity.
According to the report, the total green energy capacity costs for transforming South Korea’s transport sector toward a net-zero carbon future is estimated around $400 billion, or 0.6 per cent of today’s GDP per year when spread over the next 30 years.
The report further notes, despite the fact that this spending by countries towards transitioning their transportation systems can be very ‘depressing’ it’s worthy to note that “all of this spending is going to show up as GDP”.
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