WB Report: Energy Transformation Is Within East Asia's Reach -- At a Price

The six major energy-using countries of East Asia could stabilize their greenhouse gas emissions by 2025 without compromising growth, a new World Bank report has found.

The report, Winds of Change: East Asia's Sustainable Energy Future, says major investments in energy efficiency and a concerted switch to renewable sources of power in China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam could simultaneously stabilize greenhouse gas emissions, increase energy security while improving local environments.

According to the report, a 10-fold increase in GDP in East Asia in the last three decades has led to a tripling of energy consumption which is expected to double again in the next two decades as the urban population increases by 50 per cent and industrialization of the region continues.

The studies developed two scenarios in which development continues according to current government policies and an alternative, low carbon growth path. Under the alternative Sustainable Energy Development path, the report says renewable energy (including hydro, wind, biomass, geothermal, and solar) can meet a significant proportion of the region's power needs by 2030.

The report urges governments to take immediate action to transform their energy sectors towards much higher efficiency and more widespread use of clean energy before it's too late. "The window of opportunity is closing fast as delaying action would lock the region into long–lasting high-carbon infrastructure," the report says.

"What is required is a paradigm shift to a new low-carbon development model with sustainable lifestyles," said Jim Adams, World Bank Vice President for the East Asia & Pacific Region. "Countries need to act now to transform the energy sector towards much higher energy efficiency and widespread deployment of low-carbon technologies. While many countries are already taking steps in this direction, accelerating the speed and scaling up efforts are needed to reach a sustainable energy path."

The report estimates that to reach a sustainable energy growth path, the region needs a net additional investment of US$80 billion per year -- a figure it describes as a "major hurdle".

In assessing the progress made in the region, the report notes that several countries, notably China, have introduced measures to reduce their carbon footprints. China has reduced its energy intensity by 70 percent over the past 25 years and Vietnam has also made substantial progress.

"The speed and scale of urbanization presents an unrivalled opportunity to build low-carbon cities," says Xiaodong Wang, lead author of the report and senior energy specialist for the World Bank. "The technical and policy means already exist for the necessary transformation -- what's needed is political will and unprecedented international cooperation to meet the financing needs."

Among the reports' main recommendations:

• Policy and institutional reforms to achieve the huge energy efficiency potential in the region. A mix of energy pricing reforms, regulations such as economy-wide energy intensity targets, and financial incentives are required to promote energy conservation. Since nearly half the region's energy capital stocks (power plants, buildings, roads) needed by 2020 are yet to be built, this is the most cost-effective option.

•  Scaling up renewable energy to meet a major proportion of power demand by 2030. This can be achieved through financial incentive policies for renewable energy (wind, biomass, small hydro, geothermal, and solar) or tax on fossil fuels to provide a level playing field between the renewables and fossil fuels. China is already the world's largest producer of renewable energy.

• Accelerating innovation and new clean technologies. While proven technologies can meet the bulk of emissions reductions in the short- to medium-term, innovations and new technologies are critical to bending the emissions curve downwards over the long-term beyond 2030. Given the long lead time for technology development, research, development, and demonstration need to ramp up now.

•  Working across sectors for smart urban planning. Major reductions in energy demand and CO2 emissions can be achieved through smart urban planning based on higher density, more spatially compact cities, and more mixed-use design that allows growth near city centers and transit corridors to prevent urban sprawl. Smart urban planning also needs to go hand in hand with public transport and clean energy options such as green buildings and efficient vehicles.

• Developed countries need to transfer substantial financing and low-carbon technologies. Developing countries cannot do it alone. They need the support of the international community. Substantial concessional financing is required to cover the additional costs and risks of energy efficiency and renewable energy. Technology transfer and institutional strengthening is also needed.

(China Development Gateway April 19, 2010)