1. Role of Energy Efficiency in Asia
Amit Bando, Executive Director, IPEEC
June 2013

2. What is IPEEC?1.
1

3. 22

4. IPEEC is an
Autonomous Entity
3
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 Secretariat is located in Paris, France
Members account for over 80% of world GDP and energy
use.
Italy
Russia
Japan
Republic of
Korea
China
India
Australia
Germany
United
Kingdom
France
Canada
USA
Mexico
Brazil
EU
South
Africa

5. Context2
4

6. More Than Just Energy
Savings
5
Government Action to Promote Energy Efficiency
Climate Change
Mitigation:
Reduced GHG
Emissions
Sustainable
Development:
Enhanced Energy
Access
Energy
Security:
Reducing
Energy Use
Low Carbon Economy
•Improved air quality
• Jobs created
• Lower energy cost

7. Global additional investment
by end-use sector
Transport
0
200
400
600
800
1 000
1 200
2015 2020 2025 2030 2035
Services
Residential
Industry
Billiondollars(2011)
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)
The Efficient World Scenario relative to the New Policies Scenario

8. Power generation
Industry
Transport
Other
Room to manoeuvre
The Efficient World Scenario
Delays Carbon Lock-in
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
5
10
15
20
25
30
2011 2015 2020 2025 2030 2035
Gt
2 °C trajectory
Lock-in of existing
infrastructure
2017
Lock-in of infrastructure
in New Policies Scenario
in 2017
2022
35
Lock-in of infrastructure
in Efficient World Scenario
in 2022

10. 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.

11. Key Trends in
Asia Pacific
Region
3
10

12. Urbanization
 Between 2005-2010, urban
population overtook the rural
population
 rising from 49% to 51%
 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
11
Urban population, Asia-Pacific subregions,
1990 and 2010
Source: Statistical Yearbook for Asia and the Pacific 2011, UNESCA

13. 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
 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
Global Primary Energy Intensity (2009)

14. 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

15. Energy Efficiency
Financing Trends
Asia Pacific deals by sector
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Source: Final Renewables Deals 2012 Review, PwC.

16. 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).

17. Overcoming
First Cost
Barriers to
Financing
4
16

18. 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.

19. 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