China Global Think Tank Summit Presentation 2013

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  • EE improvement is often hampered by market, financial, information, institutional, and technical barriers. According to survey and interviews, while consumer awareness and low energy prices are two major barriers to EE commonly mentioned worldwide, the lack of affordable financing and the perceived riskiness of EE ranked especially high in the EBRD region.EE policy doesn’t deliverEE savings exist, but in small pockets trapped beneath the these barriers rather than beneath the earth’s surface.
  • http://eeasia.unescap.org/PDFs/Assessment-Report.pdf
  • China Global Think Tank Summit Presentation 2013

    1. 1. Role ofEnergy Efficiency in Asia Amit Bando, Executive Director, IPEEC June 2013
    2. 2. 1. What is IPEEC? 1
    3. 3. 2
    4. 4. IPEEC is an Autonomous Entity Members account for over 80% of world GDP and energy use. EU United Kingdom France Germany Italy Russia Canada USA Japan Mexico Republic of Korea China Brazil India South Africa Australia Established in 2009 at the G8 summit in Italy; Reports to G20, Clean Energy Ministerial & others Facilitates Rapid Deployment of Clean Technologies Worldwide The IPEEC Secretariatis located in Paris, France 3
    5. 5. 2 Context 4
    6. 6. More Than Just Energy Savings Government Action to Promote Energy Efficiency Sustainable Development: Enhanced Energy Access Climate Change Mitigation: Reduced GHG Emissions Energy Security: Reducing Energy Use Low Carbon Economy •Improved air quality • Jobs created • Lower energy cost 5
    7. 7. Global additional investment by end-use sector Billion dollars (2011) The Efficient World Scenario relative to the New Policies Scenario 1 200 Services Residential Transport Industry 1 000 800 600 400 200 0 2015 2020 2025 2030 2035 Additional investments required in end-use efficiency are $11.8 trillion over 2012-2035; saving consumers $17.5 trillion in energy expenditures in this period (Source: IEA)
    8. 8. The Efficient World Scenario Delays Carbon Lock-in 2017 2022 Gt 35 30 Other 2 °C trajectory 25 Transport Lock-in of infrastructure Room to manoeuvre in New Policies Scenario Efficient World Scenario in 2017 2022 20 15 Industry 10 Lock-in of existing infrastructure 5 Power generation 2011 2015 2020 2025 2030 2035 Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2°C trajectory – which is set to happen in 2017 – until 2022, buying five extra years
    9. 9. Barriers to Energy Efficiency Barrier Examples Market Market organisation and price distortions prevent customers from appraising the true value of energy efficiency. The principal agent problem, in which the investor does not reap the rewards of improved efficiency (the classic case being the landlord-tenant situation). Transaction costs (project costs are high relative to energy savings). Financial Up-front costs and dispersed benefits discourage investors. Perception of EE investments as complicated& risky - high transaction costs. Lack of awareness of financial benefits on the part of financial institutions. Information and awareness Lack of sufficient information and understanding, on the part of consumers, to make rational consumption and investment decisions. Regulatory and institutional Energy tariffs that discourage EE investment (such as declining block prices and fuel subsidies). Incentive structures encourage energy providers to sell energy rather than invest in cost-effective energy efficiency. Institutional bias towards supply-side investments. Technical Lack of affordable energy efficiency technologies suitable to local conditions. Insufficient local capacities to identify,develop, implement and maintain energy efficiency investments.
    10. 10. 3 Key Trends in Asia Pacific Region 10
    11. 11. Urbanization  Between 2005-2010, urban population overtook the rural population  rising from 49% to 51% Urban population, Asia-Pacific subregions, 1990 and 2010  By 2030, a majority or 2.7 billion people will live in cities and towns  equivalent to adding a new town of 137,000 people every day for next 21 years!  In the last two decades the Asia- Pacific urban proportion has risen by 29%  more than any other region Source: Statistical Yearbook for Asia and the Pacific 2011, UNESCA 11
    12. 12. Energy Intensity  Today, Asia covers the lion’s share of the world’s primary energy consumption  Between 2007 and 2030, the region is projected to account for 45-50% of the increase in world primary energy demand Global Primary Energy Intensity (2009)  Non-OECD Asian nations will lead industrial energy demand by an average of 2.3 to 2.6% per year  projected annual growth in OECD nations of 0.5% / year 12
    13. 13. Energy Intensity Trends  Global energy intensity has decreased by 1.4% p.a. since 1990  Largest reductions found in the regions with the highest energy intensities (China, CIS and India)  Industry and power generation accounted for almost ½ of that reduction (about 30% and 15%, respectively)  Per capita energy consumption to 2030 is likely to grow at about the same rate as in 1970 - 90 (0.7% p.a.)  Energy per unit of GDP – continues to improve globally, and at an accelerating rate This acceleration is important as restrains the overall growth of primary energy. Ex: During the 11th Five Year Plan in China, through various EE initiatives, energy consumption grew at an annual average of 6.6% compared to average annual growth rate of 11.2% for the national economy 
    14. 14. Energy Efficiency Financing Trends Asia Pacific deals by sector Source: Final Renewables Deals 2012 Review, PwC. 14
    15. 15. Energy Service Companies (ESCOs)  The ESCO industry in Asia Pacific is poised to grow From $3.0 billion in annual revenue in 2009 to $18.5 billion by 2016  421% increase from 2010 levels  Example: Despite not even being operational until 1998, annual revenues for China’s ESCO industry to reach $17 billion by 2015, increasing its share of the APAC regional market to over 90% (Source: Pike Research).
    16. 16. 4 Overcoming First Cost Barriers to Financing 16
    17. 17. IPEEC Clears Roadblocks to Successful EE Financing  Critical financial and market roadblocks that need to be addressed:  Fixed cost of lending incentivizes banks to focus on large corporate loans.  Information asymmetry between banks and borrowers:   Adverse selection: Average pricing will attract risky borrowers and turn away attractive borrowers; Moral Hazard: Risky behavior as borrower knows that bank has imperfect oversight.  Lack of credit bureaus & clear credit history increases risk-assessment costs.  Inadequate knowledge and experience with the product .  Inefficient price signals – consumption disconnected from cost.  Network of contractors & suppliers unavailable or inexperienced.
    18. 18. IPEEC is your partner. Thank you!  Any questions? Please contact: Amit.Bando@ipeec.org contact@ipeec.org 9 rue de la Fédération 75739 Paris France 18

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