HONG KONG: Asia will have a hard time achieving zero carbon emissions, given it is the most populous continent, and most countries within are developing, S&P Global Ratings says.
In a statement on Monday, it said the region does have one big policy advantage: its governments typically control at least one national oil company (NOC).
S&P Global Ratings expects the NOCs will set the pace in Asia in slashing carbon emissions, even if this undermines their profits and credit standing.
This is according to report published on Monday, titled,"Asia's oil giants will be key to global climate fight."
"Asian NOCs will likely find it difficult to transition to an entirely new business model," said S&P Global Ratings credit analyst Danny Huang.
"They may strand assets in the process, and they probably will not be as successful in renewable energy, carbon capturing, electric vehicle recharging, and they like, as they are at making and selling fossil fuels."
Moreover, the transition could happen much more quickly than the rating agency now anticipates, which could be in five to 10 years instead of 10 to 20 years.
A fast transformation may be messy and disruptive.
Asia carbon cutting will be critical to the effort to reduce global warming. The region releases more carbon dioxide than the rest of the world combined.
Yet the move to carbon neutrality is one of the biggest policy challenges facing any nation. In Asia, much of the burden rests on the shoulders of the NOCs.
Many have already committed to targets that outpace the government's carbon goals.
"The firms are simply the most obvious and effective lever that states can pull in achieving net-zero emissions. But what is good for the planet may not be good for the credit metrics or ratings on the NOCs," said Huang.