Here's what could really help ASEAN's drive for efficient energy use

ASEAN countries have some way to go in using energy efficiently. This despite the region’s energy intensity - the amount of energy used to produce each dollar of gross domestic product (GDP) – declining steadily over the years.

Between 2005 and 2009, ASEAN countries reduced their energy intensity by 4.97 per cent, bringing them closer to reducing regional energy intensity in 2015 by at least 8 per cent from 2005 levels.

However, a conclusion from the 30th ASEAN Ministers on Energy Meeting (30th AMAM) last year was that energy consumption looks set to rise by 4.4 per cent per year till 2030 under business-as-usual conditions, driven by continued urbanisation and expanding populations.

With energy security taking precedence of late in national agendas, ASEAN governments are taking a harder look at energy efficiency. And rightly so, as energy efficiency is an untapped fifth fuel – that together with fossil fuels, nuclear, renewables and coal – can power ASEAN economies as they aim for sustainable economic growth, ensuring universal energy access for all and mitigating the onset of climate change.

The government as role model

Governments have to take the lead in furthering energy efficiency and for some of them, housekeeping is in order. Several ASEAN countries have existing policies and market incentives to promote energy efficiency, but need to ensure better enforcement and development of the requisite monitoring and evaluation systems.

There are also numerous best practices to follow, which have addressed consumer and industrial energy demand while ensuring that legal mechanisms support the above as well as new schemes to enhance efficiency.

Take the example of Thailand. In the 1990s, a fund was set up to support energy efficiency projects, using proceeds from taxes on petroleum products. Simultaneously, demand-side management plans such as public awareness campaigns and energy efficiency standards for buildings and appliances were launched.

In 2002, realising that local banks could play a role in funding a greater number of projects, the Thai government decided to offer credit lines to local banks to provide loans to developers of energy efficiency projects. By 2010, this Revolving Fund had financed projects worth US$453 million with energy cost savings of around US$154 million each year.

ASEAN’s emerging economies should aim to harvest some low-hanging fruit. They can begin to institute building codes and fuel efficiency standards in the transport sector, switch to LED lights for street lighting and traffic lights, and label appliances to promote the purchase of efficient appliances. They can draw on existing multilateral funding to promote greater consumer awareness in energy efficiency.

The Asian Development Bank, for instance, has consistently funded energy efficiency projects – between 2005 and 2011, its investments in projects with a demand-side energy efficiency component totalled US$1.8 billion.

It is also setting up a new Energy Efficiency Technical Support Unit to provide technical policy and financial support in accelerating energy efficiency investments in its developing member economies.

Over the longer-term, as energy efficiency becomes a more widespread priority, new regulations can be formulated to take efficiency standards to the next level. Singapore, which already has mandatory efficiency labeling for appliances, this year introduced an Energy Conservation Act requiring energy-intensive companies to appoint an energy manager, monitor and report energy use and greenhouse gas emissions, and submit energy efficiency improvement plans to the government.

Breaking down barriers

While promoting efficiency, governments will have to address the long-standing barriers to more efficient usage of energy. These would range from the price of energy and the lack of political will to change this, the lack of human resources and finance to adopt innovative projects and a lack of coordinated efforts to promote efficiency in both the supply and demand side.

The failure to price energy at its market cost is probably the most-talked about impediment to energy efficiency in Asia, and it is also a drain on public resources that could have gone towards investment in electrification and integration into the ASEAN-wide power grid. This will hopefully change further as a few ASEAN countries have recently demonstrated the political will to remove subsidies, even though such action is usually a flashpoint issue domestically.

An ability to measure the effectiveness of energy efficiency programmes is key to their further uptake. ASEAN integration in the coming years and regional platforms for discussion such as the Singapore International Energy Week (SIEW) can facilitate the transfer of technology and know-how.

In addition, countries like the Philippines, Thailand and Singapore that have developed capacity and standards for energy service companies (ESCOs) can assist others in creating ESCO accreditation systems.

And while demand-side management efforts continue across the transport, residential and industrial sectors, supply-side efficiency solutions cannot take a backseat. Lowering energy demand will mean less public infrastructure expenditure on power generation plants in the long-run but the impact of more efficient power generation in existing plants will be seen in the medium-term.

The power of five

Unfortunately even with its potential, energy efficiency on its own is not a silver bullet to ensure long-term energy security. Its key significance lies in reducing energy costs for businesses and nations alike while easing the growing burden on the environment.

Countries like Brunei Darussalam are keenly aware of the importance of each element in the fuel mix, and has set up the Brunei National Energy Research Institute (BNERI) to look at paving the way for a future where oil and gas plays a smaller role in fuelling the economy and where energy efficiency and renewables carry significant weight in the kingdom’s energy mix.

The rest of ASEAN too is making constant progress in pursuing resource diversification – a necessary strategy to prepare for the opportunities and uncertainties in an ever-volatile global energy landscape.