Region focuses on energy efficient ways-
Amidst burgeoning energy demand led by rapid urbanisation and universal electrification in Southeast Asian (SEA) countries, energy efficiency has emerged as a vital strategy for optimising energy consumption. Often referred to as the “fuel of the future”, energy efficiency entails active implementation of energy-saving measures by households, industries, the transport sector and commercial establishments, among others. Energy efficiency initiatives help reduce the investment needed to increase green power generation capacities, help conserve conventional resources and reduce greenhouse gas emission. Taking cognisance of the role of energy efficiency in promoting energy security and combating climate change, many SEA countries have taken steps to implement programmes and policies to save energy across various sectors in recent years.
SEA countries have also set an ambitious energy efficiency target as part of the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-20. Accordingly, the SEA countries have collectively set a goal of reducing energy intensity by 20 per cent by 2020 and 30 per cent by 2025 (with the 2005 level as the baseline). Energy intensity is a measure of the energy efficiency of an economy and is calculated as units of energy use per unit of gross domestic product (GDP). In addition, SEA countries have also set national energy efficiency targets. Further, the governments in many countries are focusing on eliminating fossil fuel subsidies to promote efficient utilisation of resources.
National energy efficiency targets and initiatives
The region has made significant progress in energy efficiency in recent years, as a result of which the target of reducing energy intensity by 8.5 per cent by 2015 set by the APAEC for the 2010-15 period was achieved in 2013 itself. Many countries have launched programmes for the industrial and residential sectors to meet their energy efficiency targets. For instance, Singapore launched the standards and labelling programme in 2015 to meet the target of reducing energy intensity by 36 per cent by 2030.The Singapore government has also notified certain amendments to the Energy Conservation Act that are expected to come into effect during 2018. The amendments include mandating companies to undertake regular energy efficiency opportunity assessments and introducing minimum energy performance standards for common industrial equipment and systems.
The Philippines has a target of reducing energy intensity by 40 per cent by 2030 compared with 2005 levels. The Department of Energy recently released the Energy Efficiency and Conservation Roadmap 2017-40, which includes a wide range of measures, such as setting building energy efficiency codes and introducing standards and labelling systems for appliances, incentivising finance for energy efficiency activities, etc.
Thailand’s Energy Efficiency Plan has set a target of reducing energy intensity by 30 per cent by 2036, compared to 2010 levels. The country’s action plan includes constructing energy efficient buildings, minimum energy performance standards, and subsidies for energy efficiency improvements in industries.
Indonesia aims to reduce its energy intensity by 1 per centannually to achieve the final energy savings of 17 per cent by 2025 (considering 2010 levels as the baseline). The Draft National Energy Saving Master Plan 2013 estimates an energy saving potential of between 1 per cent and 35 per cent across the residential, commercial, industrial, transportation and other sectors in the country. The steps being taken include regular energy audits in industries, promoting green buildings and energy efficient technologies for vehicles, and fuel substitution programmes in the transport sector, among others
Malaysia’s National Energy Efficiency Action Plan targets reducing electricity consumption by 8 per cent in 2025 as compared to the business as usual (BAU) scenario. The plan highlights measures such as rebate for purchase of 5-star labelled energy efficient appliances, minimum energy performance standards for vehicles, promotion of cogeneration, and energy audits in government, commercial and industrial buildings, etc. Recently, the Malaysian energy ministry launched an innovative programme based on behavioural science and data analytics to achieve energy efficiency objectives. The programme, namely Home Energy Report enables consumers to manage their energy consumption, while reducing monthly electricity bills.
Vietnam is focusing on reducing industrial energy intensity. It has set a target to reduce the energy intensity of energy-intensive industries by 10 per cent by 2020. In March 2018, the World Bank and Vietnam’s Ministry of Industry and Trade jointly launched a $102 million project to fund the adoption of energy efficiency technologies by industrial enterprises. Under the project, loans will be provided to industrial units to invest in energy efficiency projects.
Brunei has set a nationwide target to reduce its energy intensity by 25 per cent and 45 per cent by 2030 and 2035 respectively (based on the 2005 level). To achieve this target, the government is devising energy conservation schemes and incentives for consumers.
Other SEA countries including Lao People’s Democratic Republic (PDR), Cambodia and Myanmar have set energy efficiency targets but the on-ground implementation is rather tardy. These countries even lack basic standards and labelling programmes for appliances. As per the International Energy Agency’s (IEA) Southeast Energy Outlook 2017 report, the lack of institutional resources and capabilities necessary to implement efficiency policies is hindering energy efficiency initiatives in these countries. Besides, given the dismal state of electrification, policymakers are directing more resources to extend electricity access than for energy efficiency initiatives.
The way forward
Energy efficiency can play a crucial role in reducing energy demand in the SEA countries. In the Southeast Energy Outlook 2017 report, the IEA projects in its New Policies Scenario that the end-user energy demand would be around 10 per cent higher in 2040 without energy efficiency improvements and targets. The New Policies Scenario takes into account existing policies and measures as well as announced policy intentions in the 10 ASEAN countries and projects a total final energy consumption of 714 million tonnes of oil equivalent (mtoe) by 2040 in the ASEAN.
That said, the implementation of energy efficiency initiatives is also fraught with challenges. There is a need to strengthen the institutional and regulatory mechanisms in many SEA countries to collect accurate energy data, increase consumer awareness, enforce standards, and finance energy efficiency programmes. It has been observed that the implementation of standards and labelling programmes for electrical appliances in quite weak in certain countries. In order to overcome this, it is essential for government institutions to partner with manufacturers and retailers of appliances.
The deployment of energy saving lamps and appliances can also go a long way in reducing electricity demand given that lighting and appliances will account for 70 per cent of total electricity demand by 2040 in the SEA region. Cues can be taken from India’s Energy Efficiency Services Limited (EESL) which initiated bulk procurement of LEDs under a central government-sponsored programme, UJALA, which led to a decline in the price of LEDs by nearly 25 per cent and distribution of over 291 million LEDs (as of March 2018). Noting UJALA’s success, the Malaysian government decided to collaborate with EESL to replicate the programme in Melaka in 2017.
Securing investments for energy efficiency is also a challenge. The IEA projects that demand-side investment, primarily in energye fficiency technologies, will account for nearly one-fourth of total cumulative energy sector investment (of $1,243 billion) until 2040. It has been seen that commercial enterprises or industries are often reluctant to invest in energy conservation, as it requires high initial investment and yields limited savings in the short term. Some enterprises may simply not have adequate financial resources for the initial investment. Therefore, it is necessary for enforcement authorities to demonstrate profitable and technically feasible energy efficiency projects, as well as devise innovative incentive/financing mechanisms.
Going forward, SEA countries need to overcome the barriers impeding the adoption of energy efficient solutions in order to rebalance their energy mix and save vital resources.
