Energy Efficiency & the Energy Future in ASEAN

Amit Bando, Executive Director, IPEECBangkok, Thailand

5 June 2013

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What is IPEEC?1.

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IPEEC is a high level international forumProvides global leadership on energy efficiency by

identifying and facilitating government implementation of policies and programs that yield high energy-efficiency gains.

Aims to promote information exchange on best practices and  facilitate initiatives to improve energy efficiency.

Formally established in 2009 at the G8 summit in L'Aquila, Italy and resulting from the Heiligendamm Dialogue Process.

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IPEEC is an Autonomous Entity

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Established in 2009 at the G8 summit in Italy; Reports to G20, Clean Energy Ministerial & others

Facilitates Rapid Deployment of Clean Technologies WorldwideThe IPEEC Secretariat is located in Paris, France

Members account for over 80% of world GDP and energy use.

Italy

Russia

Japan

Republic of KoreaChina

India

Australia

GermanyUnited

KingdomFrance

Canada

USA

Mexico

Brazil

EU

South Africa

IPEEC - guiding principles Improving energy saving and energy efficiency is one of the

quickest, greenest, and most cost-effective ways to address energy security and climate change as well as to ensure sustainable economic growth 

All countries, both developed and developing, share common interests in improving their energy efficiency performance

There is abundant potential for international cooperation among them

Will contribute to improvement of energy efficiency at the global level

Developed countries need to play an important role in cooperation with developing countries

Accelerating dissemination and transfer of best practices, efficient technologies and capacity building in developing countries

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Basic research

Technologyjourney

Applied research Early demonstration Full demonstration Marketed product Warranted product

Proofof...Principle Concept Validity Viability Value Quality

Individual innovators

Companyjourney

Small group: start-up/unit in a company

Medium-size operation Large scale operation

Owncapital Venturecapital Revenues Prof it

s

Demonstration& sample distribution

Market journey

Early adopters & niches Rational economic purchase Technology& market evaluation

Awareness Positivepotential Marketpull Feedback

General regulation

Regulation journey

General regulation Specific regulation General regulation General regulation

Negativeoftenunintended Neutral Positive Positive Neutral orpositive

Transition Technologies, Productsand Services Follow Parallel Journeys

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ASEAN’s Energy Challenges

2.

ContextA

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UrbanizationBetween 2005-2010, urban

population overtook the rural population

rising from 49% to 51%

By 2030, a majority or 2.7 billion people will live in cities and towns

equivalent to adding a new town of 137,000 people every day for next 21 years!

In the last two decades the Asia-Pacific urban proportion has risen by 29%

more than any other region 10

Urban population, Asia-Pacific subregions, 1990 and 2010

Source: Statistical Yearbook for Asia and the Pacific 2011, UNESCAP

Energy Intensity

Today, Asia covers the lion’s share of the world’s primary energy consumption

Between 2007 and 2030, the region is projected to account for 45-50% of the increase in world primary energy demand

Non-OECD Asian nations will lead industrial energy demand by an average of 2.3 to 2.6% per year

projected annual growth in OECD nations of 0.5% / year 11

Global Primary Energy Intensity (2009)

Energy Access Worldwide, 1.4 billion do not have access to electricity

Almost 800 million in Asia-Pacific By 2030, 1.2 billion people globally are expected to remain without

electricity most of them in sub-Saharan Africa and South Asia

Worldwide, 2.7 billion people rely on traditional use of biomass for cooking

Almost 2 billion in Asia-Pacific In Asia-Pacific, the number of people using biomass is likely to

decrease from the current 1.937 billion to 1.769 billion

Global energy needs are estimated to grow > 50% developing countries contributing to nearly ¾th of this increase

To meet the target of achieving universal access to modern energy services by 2030, investments of US$ 756 billion (or US$ 36 billion per year) is needed (Source: Energy Plus Report, UN, 2012)

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ASEAN Energy Production

0

100

200

300

400

500

600

700

800

1990 1994 1998 2002 2006 2010

Mto

e Other renewables

Hydro

Geothermal

Coal

Gas

Biomass

Oil

Oil & gas sources in Brunei, Cambodia, Indonesia, Malaysia, Myanmar; Thailand and Vietnam;

Coal in Indonesia, Malaysia, Philippines, Thailand, Vietnam.

Source: IEA, National University of Singapore

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Energy Demand Exceeds Energy Production

ASEAN Primary Energy Demand (Mtoe)

Source: ASEAN Center for Energy, 2011

Increasingly, ASEAN will have to rely on energy imports;

Coal’s importance in the ASEAN energy mix is growing.

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Main Energy Challenges in the RegionEnergy Security:

Coal use will increase, Energy consumption in the transport sector is

expected to rise from 87 Mtoe in 2007 to 300 Mtoe in 2030.

Energy Poverty: Out of the 567 million people living in the

ASEAN region, 160.3 million do not have any access to electricity.

For example, only 10% of rural Myanmar has access to electricity.

Energy efficiency (EE): EE remains low in most sectors.

Source: National University of Singapore, 2012

Energy Efficiency Trends in the Asia Pacific Region

B

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Energy Intensity Trends Global energy intensity has decreased by 1.4% p.a. since 1990

Largest reductions found in the regions with the highest energy intensities (China, CIS and India)

Industry and power generation accounted for almost ½ of that reduction (about 30% and 15%, respectively)

Per capita energy consumption to 2030 is likely to grow at about

the same rate as in 1970 - 90 (0.7% p.a.)

Energy per unit of GDP – continues to improve globally, and at an accelerating rate

This acceleration is important as restrains the overall growth of primary energy.

Ex: During the 11th Five Year Plan in China, through various EE initiatives, energy consumption grew at an annual average of 6.6% compared to average annual growth rate of 11.2% for the national economy

Energy Efficiency Regulatory Trends Globally

BUILDINGS A EU Directive on the energy

performance of buildings (2009) harmonised standards for new buildings, making mandatory buildings certificates for the sale or rent of dwellings

In most countries, standards exist for both dwellings and service sector buildings, except in Africa and in Asia where most often standards only apply to non-residential buildings

Regions with efficiency standards on new buildings

Source: WEC Survey, 2010

Energy Efficiency Regulatory Trends Globally - 2

LABELLING AND APPLIANCE STANDARDS

EU has mandatory labelling for several electrical appliances

In OECD Asia and America, about 70% of the countries have implemented labels for refrigerators

In Africa, the Middle East and non-OECD Asia, labels are not widespread: they exist for refrigerators in less than 20%

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Source: WEC Survey, 2010

Energy Efficiency Market Penetration

Energy efficiency firms attracted nearly $1.1 billion in venture capital in 2010, almost double that of 2007.*

LIGHTING: LED is the fastest growing market at a CAGR of 14.9% from 2011 to 2016

Asia will witness the highest growth (CAGR of 16.6%)BUILDINGS: EE market $87.0bn in 2012GREEN IT: Cloud computing revenue to continue

worldwide growth at a compound annual growth rate (CAGR) of 28.8%

Market increase: US$46 billion (2009) to US$210.3 billion (2015)

EE measures could drive total data center energy expenditures down from $23.3 billion in 2010 to $16.0 billion in 2020 (28% reduction in GHG emissions from 2010 levels)

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Energy Efficiency Financing Trends

Energy Efficiency & Renewable Energy deal value rose 40% year on year in 2011

The rise was fuelled by a big increase in US$1bn plus deals - almost all from a wave of solar, EE and wind power deals

The total number of 2011 deals dipped 6% year on year but still high at 570 Rebounded in 2010 off the 2009 low of 319

Increased deal value is not just coming from the largest deals Median deal value rose 25% year on year, from US$28.1m to US$35.2m

Asia-Pacific targets accounted for US$4.6bn but Asia Pacific buyers completed US$9.4bn of transactions in 2011

Just under half of this bidder total was accounted for by the two big European purchases by Toshiba and China National Bluestar.

Energy Efficiency Financing Trends

Asia Pacific deals by sector

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Source: Final Renewables Deals 2012 Outlook 2011 Review, PwC.

ESCOs

The ESCO industry in Asia Pacific is poised to grow From $3.0 billion in annual revenue in 2009 to

$18.5 billion by 2016 421% increase from 2010 levels

Example: Despite not even being operational until 1998, annual revenues for China’s ESCO industry to reach $17 billion by 2015, increasing its share of the APAC regional market to over 90% (Source: Pike Research). 

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Energy Efficiency: Opportunities & Challenges

3.

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Energy Saving Potential in the Region

Based on a Business as Usual (BAU) Scenario & the Alternative Policy Scenario (APS)

Source: 3rd ASEAN Energy Outlook, 2011

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EE Targets in the ASEAN Region

For the region: 15% reduction in energy intensity (2005 – 2015)

Brunei, Indonesia, Singapore & Thailand: 20% energy intensity reduction (2005 to 2020–2030, depending on the country)

ASEAN Primary Energy Intensity 1990 - 2030

Source: ASEAN Center for Energy, 2013

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Main Barriers to EE

Many regional organizations have overlapping mandates;

Target of decreasing energy intensity by 8% (by 2015) for the ASEAN region is not allocated by country or sector;

The vertical linkages in decision making need improvement: top level decision makers are hard to reach;

EE action plans are not thoroughly developed - hinders their timely implementation;

Overall lack of training, capacity & international expertise;

EE related data are lacking; regional information clearing house could be established;

Source: WEACT Workshop, 2011

Energy Efficiency Planning in Asia-Pacific

Strengths• Increases sustainability• Increases energy security• Creates of market leader• Increases energy access

Weaknesses• Cost of investments• Lack of skilled personnel • Lack of consumer

awareness on need for Energy Efficiency

• Weak in-country R & D

Opportunities• Increased value and

lifespan• Investment relief (tax)• Market for new

innovations• Socio-economic co-

benefits• Competitive advantage

Threats• Rebound effect (effort

does not reduce energy consumption as planned)

• Fall in energy prices leading to “expensive” conservation

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Strategies to Promote EEStrategy Action

Develop EE Policies & Build Capacity

1. Develop clear policies and plans to promote EE.2. Set national targets & develop plans to monitor

the results.3. Strengthen human capacity and enhance

infrastructure.Raise awareness & disseminate information

1. Develop and run EE campaigns to raise awareness.

2. Disseminate information using all appropriate medias (including energy labels).

3. Demonstrate best energy practices and successful cases,

Promote best practices

1. Develop regulation &/or provide incentives to encourage best practices in facilities.

2. Build up capacity for all stakeholders.Facilitate EE Financing

1. Develop mechanisms to enhance financing for EE2. Increase the involvement of national &

international financial institutions.

Source: WEACT Workshop, 2011

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Energy Efficiency: More Than Just Energy Savings

Government Action to Promote Energy Efficiency

Climate Change Mitigation:

Reduced GHG Emissions

Sustainable Development:

Enhanced Energy Access

Energy Security:Reducing

Energy Use

Low Carbon Economy• Improved air quality

• Jobs created• Lower energy cost

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Next Steps? 5.

Moving Forward

Governments need to commit by:Providing an overarching policy framework combining

mandatory and voluntary policies and strengthening enforcement

Promoting greater awareness of EEPlaying an essential role as integrator of the value chain Establishing funding mechanisms to jump-start EE financing

Particularly in the short term Institutionalizing standard-selling & enhancing

professionalism within the industry by creating proper accreditation & certification standards

Publicizing accurate information about EE product suppliers and ESCOs

Removing/rationalizing other barriers that distort markets Such as energy subsidies

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Moving Forward - 2

And Businesses need to Move towards an integrated value chain approach where

suppliers extend their service portfolio to offer complete solutions (auditing, installation, maintenance and financing solutions)

Develop innovative financing vehicles for EE projects by collaborating with financial institutions & develop expertise in EE project financing

Increase awareness of EE and enhance industry professionalism

Adopt a more active role in promoting EE and in professionalizing the industry from within by setting standards and benchmarks – energy suppliers and ESCOs can lead effort

Bring in the best practices from experiences in other countries – multinationals can act as catalysts

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Areas where International Expertise can Help

Financial mechanisms to promote EE;

Enhanced EE in industry and buildings;

Improved energy management;

Data collection and indicators;

Development of policies and action plans; and

Enhanced coordination of regional actions.

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Thank you for your attention!

Any questions? Please contact: contact@ipeec.org

9 rue de la Fédération75739 Paris

France