Energy efficiency most effective to tackle climate change

Energy efficiency topped the rankings as the most cost-effective measure to tackle climate and energy security in Asia, yet investments in this sector are not nearly enough, said an international development agency on Wednesday.

The United States Agency for International Development’s Regional Development Mission for Asia (USAID/RDMA) has launched a report which found that of 152 possible actions to push Asia towards a low-carbon energy supply, the top six were energy efficiency-related.

Yet, the Asian countries studied are coming up with only a small fraction of the necessary investment in energy efficiency, noted the report authors.

“There is a large disconnect between the potential of energy efficiency and its actual implementation,” they wrote.

Called Energy Trends in Developing Asia: Priorities for a Low-Carbon Future, the report compared the current and projected energy demands with the clean energy investment outlook of developing Asia’s highest energy consumers, including China, India, Indonesia, Philippines, Thailand, and Vietnam. It also studied data for the Asean nations of Brunei, Cambodia, Laos, Malaysia, Singapore and Myanmar.

It then assessed the potential for different clean energy initiatives including increasing renewable energy sources, carbon, capture and storage (CCS) options and energy efficiency actions, for reducing overall carbon dioxide (CO2) emissions.

By analysing the costs and effectiveness of low-carbon measures, the report authors aimed to provide Asia’s policy-makers, businesses, academics and non-governmental organisations (NGOs) with the necessary data to prioritise investment in a cleaner, more secure energy supply.

Investment in renewable energy has been steadily ramping up. The Energy Information Administration (EIA) has said that power from renewable energy sources is growing fastest in developing Asian countries, led by China and India.

Yet, even with the rapid growth in renewable energy investement, the EIA predicts that by 2035 electricity from renewable energy - most of which will be hydropower - will only make up 20 per cent of the region’s overall power supply.

The International Energy Agency (IEA) warned in its World Energy Outlook 2010 that energy efficiency would have to provide the bulk of the world’s future carbon dioxide (C02) emissions reductions through 2030. To avoid a global temperature rise of more than two degrees Celsius, the world would need to increase energy efficiency to make up 57 per cent of its overall emissions reductions.

“There is a lack of capacity in the region to plan, design, and finance energy efficiency on a scale commensurate with the urgency of the risks posed by energy insecurity and climate change,” wrote the report’s authors.

China alone has identified US$43 billion in yearly investments that will be needed if it is going to meet its energy savings targets.

Much of the region’s needed investment could come from the private sector if it can take advantage of the potential savings, say experts.

The USAID/RDMA report found that the six most cost-effective energy efficiency investments were in lighting, residential appliances and equipment, residential building efficiency, commercial building efficiency, motor-systems efficiency, and in more efficient passenger vehicles.

Earlier this month, a study published by global consultancy Roland Berger Strategy Consultants and the European Chamber of Commerce (Eurocham) found that in Southeast Asia alone, energy efficiency investments such as these could save US$15 billion to US$43 billion in energy costs and result in a 12 to 30 per cent decrease in energy consumption by the year 2020.

The same study found that, for the most part, the private sector was failing to tap into that potential market.

Global sustainability expert Dr Martin Blake, who is executive director of The GreenAsia Group consultancy, told Eco-Business in a phone interview that the key to generating investment from the private sector was to focus on the business case for energy efficiency.

“Bringing carbon into the argument only creates confusion,” he said.

Dr Blake added that energy savings was one of the greatest opportunities facing companies today, and that most businesses could save from 20 to 40 per cent after recouping energy efficiency investments.

“Once they realise that, the carbon emissions reductions will follow,” he said.

The biggest opportunities for increasing energy efficiency are in Asia’s growing cities,where energy demand is rapidly expanding for buildings, industries and transport, according to the USAID/RDMA report.

In China, for example, the daily operations of residential and commercial buildings consume about a quarter of China’s total energy use - this is more than its iron, steel and cement industries combined.

Asia’s cities will contain more than half of the world’s urban population by 2030.

According to the report, the combination of rapid urbanisation and growing per capita incomes, which raise people’s consumption levels, are driving a massive increase in the region’s energy demand.

Currently, developing countries within Asia consume only 28 per cent of global energy supplies, despite being home to nearly 50 per cent of the world’s population.

China, Asia’s largest consumer, uses 17 per cent of the total global output of energy. On average, the largest six Asian countries studied in the report consume about one tenth of the energy of the United States on a per capita basis.

But, the report notes, power generation in Southeast Asia, China and India is expected to double from 2008 to 2030.

Electricity from coal, which emits the most CO2 per unit of energy of all the fossil fuels, will grow by 77 per cent. Nuclear power will grow by a multiple of twelve; over 30 new nuclear power plants are planned for the region.

Electricity from natural gas will triple, and power from biomass is set to increase by 50 times, while hydroelectric power will increase by 44 per cent.

 

Of the major electricity sources, only crude oil is projected to decrease – by 15 per cent – but its use as a fuel for transportation will increase dramatically.

USAID/RDMA predicts that the region’s growing energy consumption will result in a 55 per cent increase in CO2 emissions from the six focus countries within the next 20 years - mostly from India and China, which together contribute 91 per cent of developing Asia’s energy-related emissions.

The study further found that the region’s rising energy demands are causing a growing reliance on fossil fuel imports, and thereby increasing threats to the energy security of developing Asian nations.

Oil imports into Asia have increased by 140 per cent in the past decade, and the amount of oil demand met by imports is projected by the IEA to increase from 55 per cent in 2009 to 85 per cent in 2030.

The percentage of natural gas imports to Asia is also predicted to rise dramatically. In 2008, Asia exported more gas than it imported. By 2030, the region will have to import 30 per cent of its natural gas supplies.

USAID/RDMA’s study was a project of its recently completed Environmental Cooperation-Asia Clean Development and Climate Program (ECO-Asia CDCP).

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