Q: What was the Asia Climate Summit 2023 experience like in Tokyo?

Federico: Overall, it was a dynamic event with a substantial turnout of around 600 participants, making it a noteworthy gathering comparable to the North American climate summit. While it holds historical significance, especially for Asian companies, the summit indicates a growing interest and presence of the industry in Asia, which is great to see.  

As is customary in such conferences, I think it leaned toward market participants and infrastructure-focused companies, with a noticeable emphasis on the Japanese side, given the event's location. The discussions delved into the unique features of the Asian market, acknowledging that models and approaches from Europe and North America may not seamlessly apply in this diverse and evolving carbon markets landscape.

How did the focus on Japan shape the discussions at the conference?

The choice of Japan this year was driven by the GX League, GX ETS, and the “green transformation” program of the Japanese government, potentially setting a milestone for the entire region. Discussions emphasized the nation's approach as a developed, market-oriented, and demand-driven economy leveraging carbon markets for ambitious environmental goals. The event also shed light on Asia's distinct business models, policies, and approaches, emphasizing a growing awareness that one size does not fit all. 

What were the key takeaways from the discussions at the summit?

One key takeaway from the discussions that I heard was the growing awareness of Asia's unique features, emphasizing that established models and policies might not seamlessly align with the region's diverse initiatives. I think the number of policymakers attending the event underscored the centralized role of governments in Asian economies and the ongoing discussions around Article 6, cooperation between countries, and private sector engagement.  

The conference's annual rotation between Singapore, Japan, and next year's destination in India adds a dynamic layer, each location representing different facets of the carbon ecosystem. Singapore, a hub for carbon services, contrasts with Japan's emphasis on the buy-side dynamics, while India explores how complex economies can contribute to the carbon ecosystem.

How do climate strategies differ between Europe, North America, and Asia? 

In Europe, we’ve seen the EU ETS, a top-down system, has been a notable success, which involves purchasing emissions allowances, aligning with EU decarbonization ambitions. The American approach leans heavily on voluntary initiatives, where corporate action plays a more prominent role than federally or state-driven efforts, with exceptions like California, which stands in contrast to Europe's emphasis on the EU ETS and its associated innovations. While the U.S. federal government does provide financing, subsidies, and support for technology innovation—paralleling European efforts—it tends to support corporate-led initiatives rather than spearheading discussions with individual states, resulting in a more decentralized and bottom-up approach, particularly driven by technology advancements.  

For example, the Inflation Reduction Act of 2022 marked a historic shift, as it provides substantial funding, programs, and incentives aimed at expediting the transition to renewable energy. I think that leveraging these incentives, particularly through avenues like tax credits, is instrumental in not only diminishing greenhouse gas emissions but also propelling the swift adoption of clean energy practices.

Asia presents a mix, with China leaning towards an allowance-based system, and Japan, with its voluntary phase and corporate-defined targets, taking a unique bottom-up approach through initiatives like the GX League.

So, what we see is a global collection of initiatives without a dominant pattern, with countries at varying levels of maturity in the carbon markets all adjusting and adapting based on their national way of looking at things. The absence of a dominant pattern indicates a region adjusting climate initiatives to its national context, echoing the spirit of the Paris Agreement's bottom-up approach. This aligns somewhat with the ethos of the Paris Agreement, a sentiment reiterated during the conference on multiple occasions.

How does the spirit of the Paris Agreement reflect in the conference discussions?

Because the Paris Agreement encourages a more nuanced, bottom-up approach, it acknowledges each nation's unique contribution, nurturing individual goals and measures while fostering a common language for collaboration, as outlined in Article 6. In my address, I emphasized the importance of moving away from the mindset of the Kyoto Protocol. Unlike the Kyoto Protocol, which simplified the world into two blocks—those required to pay and those expecting compensation - The Paris Agreement adopts a more nuanced and collaborative approach. I would say that the Asia Climate Summit underscored the importance of embracing diversity in climate strategies, recognizing regional nuances, and finding a common ground for collective action. 

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