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OPINION: Advancing energy efficiency in Asia

Dr. Doddy Sukadri, Executive Director, Green Partner Foundation (Yayasan Mitra Hijau – YMH) writes about the efforts being taken by Asian countries to work towards Energy Efficiency and Sustainable Consumption and Production.

With more than half of the world’s population and emerging economies, Asian countries have the potential to play a significant role in reducing energy consumption through adoption of energy efficiency techniques. The SWITCH-Asia Network Facilities, in cooperation with the Ministry of Energy and Mineral Resources of Indonesia, UNEP, Asia Centre of Energy, and Yayasan Mitra Hijau (Green Partner Foundation), organised a conference entitled “Advancing Energy Efficiency in Asia Through SCP and Green Finance”, in Jakarta, Indonesia from 7-8 July 2015.

The conference was attended by more than 90 participants from different Asian countries including the Philippines, Malaysia, Sri Lanka, Bhutan, Mongolia, Cambodia and Indonesia. The conference successfully deliberated ways and means to reduce the energy consumption and financing alternatives in implementing energy efficiency in the region, through sharing of knowledge and best practices and experiences of governments, private sector, banks, practitioners, and researchers in Asia.

A continuing theme through the speeches of all keynote speakers brought forward an agreement that energy efficiency is a critical issue that needs to be tackled by the Asian Region.  Measures called forare implementationof Sustainable Consumption and Production (SCP), adopting energy efficiency national policy, labelling initiatives, green procurement, etc. The SCP would not only bring about energy efficiency, but would also contribute to GHG emission reduction. It is reported that a proper implementation of energy efficiency would result in about 35% of energy savings globally.Communication, education, and public awareness are also critical issues that need to be included while addressing the problems and undertaking energy efficiency in the region.

While discussing financial regulations related to energy efficiency, experiences of Indonesia in launching Indonesia’s Authority for Financial Services (Otoritas Jasa Keuangan –OJK)and Thailand’s Innovative Investment Scheme for Energy Efficiency came forward as good examples for other countries. Both schemes offer sustainability of financing mechanism for green products. Since both the schemes are still in development stages, they are subject to revision in the near future. Nevertheless, they may be replicated in other countries depending upon their circumstances.

With respect to the policy and mechanism for energy efficiency appliances and equipment, the conference appreciated ASEAN Energy Manager Accreditation Scheme (AEMAS) initiative by the Asia Centre for Energy (ACE) to certify energy managers and the end users to increase energy efficiency.  Anotherexcellent example of utilizing efficient air conditioners by the international Copper Alliance in China also came forward.The Government of Indonesia introduced their initiative on labelling household appliances for energy consumption. One of the challenges is that at present, 95% of the appliances consume fossil fuel energy. Policy and regulations to reduce the inefficiency need to be developed as an urgent priority.

Experience from Japan is a good example from a developed country in linking energy efficiency and CO2 emission reduction/trading, in particular. The Tokyo Emission Trading Scheme (TES) demonstrated how CO2 emissions and energy efficiencyare linked. The Join Credit Mechanism (JCM) is another example being implemented between Japan and Asian countries, including Indonesia. The Government of Indonesia introduced the Green Industry Principle, which requires efficient use of resources in producing industrial products, and the implementation of low energy intensity, as well as application of low carbon technology. UNEP and Indonesia’s private sector consortium proposed to have standardisation for green products to make it operational at the ground level.

Turning to the financial issue, Cambodia shared their experience in Financing SMEs in implementing energy efficiency by introducing ESCO Model, involving the bank, the producers, and the customers. The model allows the SME is getting access to finance energy efficiency products, in cooperation with the Business Innovation Support, and subsequently mainstreaming into the Government plans. From a financial perspective, however, energy efficiency is not bankable, even though it is financeable. As such, policy incentives, financing liability, and project feasibility are important ingredients for energy efficiency to work properly. Indonesia shared its experience on the Join Crediting Mechanism scheme. The scheme does not directly relate to energy efficiency, but some of the JCM projects focus on energy efficiency.

Moving to the waste to energy (WtE) solution, Malaysia shared its experience on the sustainable production of biomass industries, involving forestry and agricultural wastes, rice husk, etc. The project has been contributing to CO2 emission reduction, and increasing local employment. Moreover, experience from Nepal and Sri Lanka would be good in solving the problem of poverty, and meeting the energy demand for household.Indonesia, through the HIVOS projects basically follows the experience and knowledge from Nepal and Sri Lanka. Cambodia gets benefit from rice husk charcoal for increasing their agricultural products.

With respect to technology issues, Philippines introduced the High Efficiency Motors(HEMs) energy efficiency projectby replacing old machinery with the new ones at a sugar mill as a project pilot. The project successfully reduced the GHG emission up to 12,000 M tons of CO2 equivalent per year. Another project was demonstrated by representatives from China that showed the emission reduction up to 16,600 GT of CO2emissions per year. From their experiences it could be concluded that a holistic approach, including policy incentives (such as tax policy and fiscal incentives), capacity building, and other supporting policy instruments are required to materialize the concept of energy efficiency at the ground level. However, there are challenges stemming from asymmetric information, lack of market transparency, and pricecompetitiveness,resulting in discouragement of adopting technology in energy efficiency in this region. A private consortium of LED in Indonesia suggested adoption of product standardisation and unification of regulation in the region.

Finally, energy efficiency in SCP policies and regulation would not work well without any effort from key stakeholders, especially the government. Therefore, the conference listened and learned experiences from National Policy Support Components (NPSCs) from several countries, including Indonesia, Bhutan, Sri Lanka, and the Philippines. Indonesia shared among others its experience in working with Young Urban Middle Income Family (YUMIF)especially on issues relating to knowledge awareness, motivation and ability, as well as actual change. Bhutan talked about Green Industrial Development, including selection of “Green Major” in several cities. Sri Lanka is still in the planning stage, working to support the implementation of SCP; while Philippines reported that the Energy Efficiency Road Map has been prepared, and needs policy support and regulatory commitment, as well as engagement from the private sector.

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