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ASEAN and Energy Efficiency

Energy efficiency (EE) is a technical term in the energy sector that means using less energy to provide the same level of energy service or using same energy to provide more. When everybody is heading to the high energy prices or in simply high oil prices, and yes in the correlation with the high rate demand growth, EE seems to be of the most cost-effective ways of enhancing energy security and addressing climate.

In ASEAN case itself, the region’s economic growth had a consequential increase in the Total Final Energy Consumption. The region’s final energy consumption increased at an annual rate of 3.8% from 241 MTOE in 1995 to 375 MTOE in 2007. The industrial sector had the fastest growth in consumption at an average annual rate of 6.1% resulting to its increased share from 23.1% in 1995 to 28.9% in 2007. The transport sector had the second fastest average annual growth rate at 3.5%. Its share to the total decreased from 27.7% in 1995 to 23.9% in 2007. The “Others” sector which include the residential, commercial, transport and non-energy sectors had the slowest growth rate of 2.2%. As a result, its share to the total consumption decreased from 49.2% in 1995 to 47.2% in 2007.

Base on the projection that ACE-IEEJ conducted and published in the 3rd ASEAN Energy Outlook, for the future, under the business-as-usual (BAU) scenario, the total final energy consumption of the ASEAN is projected to grow at a slightly higher annual rate of 4.4% from 2007 to 2030 reaching almost 1,018 MTOE. This is very much higher than 1.25 of IEA projection on the world energy demand growth.

But, with in the Alternative Policy Scenario, final energy consumption will grow at a lower annual rate of 3.6%. This lower growth is a result of implementing the Energy Efficiency and Conservation (EEC) programs in all sectors, excluding use as non energy in every ASEAN Member Countries. Compared to the BAU, the energy savings potential of the transport sector in the APS will be around 22.4%, while for the industries and other sectors, the energy saving potential will be 19.3% and 14.5% respectively. Overall, the average total energy saving in final consumption will be around 17.2%. Its means more space for energy security for ASEAN.

Another study that was carried out by a group of Singapore-based business consultants, ReEx Capital Asia, on a report entitled “Energy Efficiency Investment Potential” in Southeast Asia, launched by the British Embassy in Bangkok earlier this month, it was estimated that the total market size for the six countries of ASEAN, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam is about US$6.6 billion. The study was estimated the potential for energy efficiency investments, examining size, profitability, payback period, and regulatory environment in the industrial sector would worth US$2.9 billion and the commercial sector US$3.7 billion. The study also pointed out that the six countries could save about US$1.4 billion by reducing energy consumption. The average payback period for energy efficiency investments was estimated to be 4.6 years, with 3.2 years for the industrial sector and 7.2 years for the commercial sector.

The above potential of investment in energy efficiency would need to be developed in the context of regional cooperation for better results and for more effective contribution to regional energy security.

Last week, I attended two workshops in UNCC, Bangkok-Thailand. First is ACE-ESCAP Subregional Workshop on Strengthening Institutional Capacity to Support Energy Efficiency in South East Asia (19 and 20 April 2011) and second is Regional Workshop on Supporting Energy Efficiency in Asia and the Pacific Bangkok (21 and 22 April 2011). Both of these workshops intend to strengthen the institutional capacity of Asian countries to develop policy options in support of promoting EE.

In this connection, subregional and regional cooperation must address the energy needs of all related sectors, including housing, power generation and transport and to promote the integration of energy efficiency into the development process and the establishment of strategies on energy security.

I will share the workshop resume and a very useful tool that we’ve discussed in the workshop on the next article.

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