THE Energy Studies Institute (ESI) has embarked on what will be a landmark study to understand what Singapore would look like in a carbon-priced world.

The global economy's failure to price carbon, largely regarded as the main culprit for climate change by scientists, has been dubbed the 'greatest market failure the world has ever seen' by British economist Lord Nicholas Stern.

But this looks set to change when world leaders meet in Copenhagen in December to negotiate a global deal that will likely put a cap on pollution and a price on carbon.

The ESI report will study issues surrounding this scenario and what the cost will be to businesses and households in Singapore, ESI senior fellow Elspeth Thomson told The Straits Times on Friday.

It will also examine the impact on Singapore's economy in the hypothetical event that the Republic is re-classified from a Non-Annex I to an Annex I country.

Under the current Kyoto Protocol deal which ends in 2012, Non-Annex I nations do not have to cut emissions whereas Annex I countries do.

'I think this is a step in the right directions, to get the ball rolling and shed light on a few things that might happen in the future,' said Dr Thomson.The report is due in November.

She was speaking at a seminar on Friday on a recently launched report by the Asian Development Bank (ADB) on the economics of climate change in Southeast Asia.

ADB assistant chief economist Juzhong Zhuang, who spoke at the seminar, highlighted that the region is highly vulnerable to climate change due to its densely populated coastal areas and reliance on climate-sensitive sectors.

Total damage could be as much as losing 6.7 per cent of GDP annually by 2100, he said. Dr Zhuang said he hoped that the report, funded by the British government, and its recommendations will be considered by key policymakers around the region.