IPEF's Clean Economy Agreement to boost $10-15B investment for carbon removal in the Indo-Pacific, including the Philippines

March 18, 2024

Last March 14, the Indo-Pacific Economic Framework (IPEF) released the Clean Economy Agreement, which could help its fourteen partner countries catalyze a $10-15B investment for carbon removal, including the Philippines. 

The IPEF is an initiative launched by the United States in May 2022 together with Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam, which represent 40% of global GDP and 28% of global goods and services trade. This framework aims to boost economic activity and promote sustainable and inclusive growth across the region. 

Its most recent collaborative effort is the Clean Economy Agreement (CEA), which aims to mobilize climate-related solutions for various sectors. The main areas of cooperation include energy security and transition, sustainable environment solutions, and innovative carbon capture and removal technologies among others.

This agreement sets a collective goal of raising at least US $10-15 billion in investment for carbon removal in the region by 2030 that will support and drive the development of carbon markets, financing, and public-private partnerships.

For carbon markets, there is an interest among IPEF partners to study existing regional carbon market priorities with the end goal of identifying strategies that will boost the enabling conditions for its widespread development. 

The agreement also encourages public- and private-sector entities to invest and implement high-quality mitigation activities such as those implemented under Article 6 of the Paris Agreement to boost a credible supply and demand in international carbon markets.

Additionally, the CEA also has a provision for the sustainable management of forests and other natural ecosystems. Some of the specific points in the agenda include identifying drivers of deforestation, promoting legally harvested timber, and enhancing forest restoration initiatives. 

These efforts are part of a broader move towards a clean economy, which puts a spotlight on the role of ecosystem-based approaches for climate change mitigation and adaptation.

Anticipating future developments

As the upcoming IPEF ministerial meeting on June 6 in Singapore approaches, both the scientific community and development sectors eagerly await concrete outcomes of this ambitious framework along with potential opportunities that will emerge. This meeting also coincides with the inaugural IPEF Clean Economy Investor Forum which unites major investors, governments, and project developers and aims to facilitate investment opportunities.

Within the broad objectives outlined by IPEF, there remains unanswered questions specific to its impact on nature restoration. For Wovoka, we are most concerned about some clear gaps involving:

  • Local Community Involvement: The framework emphasizes stakeholder engagement and equitable transition, but the language surrounding the involvement of indigenous and local communities in the executive of restorative projects is not clear. 
  • Impact on Biodiversity: While the IPEF discusses carbon removal and clean economies, there is less focus on biodiversity conservation. How will nature restoration initiatives under the IPEF contribute to the protection and enhancement of biodiversity?
  • Allocation of Funds: It is unclear how much of the framework’s funding will be directly allocated to nature restoration projects in the Philippines and other partner countries. Nature-based solutions remain to be the most potent in terms of net emission reductions and most economical mitigation option identified by the IPCC. Why do technology-based solutions get more funding opportunities than rehabilitation of deforested areas?

The IPEF’s CEA signifies a collective ambition of pioneering a cleaner and more resilient future for the Indo-Pacific. Indeed, these large investments can jumpstart substantial progress for carbon removal initiatives and development of carbon markets in the region.

However, the path towards realizing these goals is complex and multifaceted, which require clear strategies to ensure equitable transition for all. Ultimately, the success of the solutions that will come out of this agreement will not be measured by the investments it attracts or the carbon it removes but by its ability to protect and restore the natural world upon which all life depends.

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