Asia's remarkable economic expansion over the last 2 decades has lifted millions out of poverty. With continued growth, by the middle of this century, an additional 3 billion Asians could enjoy living standards similar to those in Europe today. This future, however,is not preordained, and must be strategically supported by an energy system that is sustainable, affordable, and accessible for all Asians. New energy resources must be developed to include low-carbon renewable options, and greater emphasis must be given to energy efficiency, the lowest-cost energy resource of all.
Energy efficiency is a key solution to meeting energy and economic challenges in developing Asia. Unlike approaches that simply expand energy supply, such as building new power plants, energy efficiency prioritizes actions that first reduce the need for energy. Such reductions may occur by decreasing energy losses in the supply chain, an approach known as supply-side energy efficiency (SSEE). Another approach is to consume less energy for the same level of service, for example, when operating buildings, tools, products, and machinery. This strategy is known as demand-side energy efficiency (DSEE).
SSEE imperatives often take precedence in resource planning and related investment decisions. DSEE, by contrast, which may require interventions at hundreds or thousands of homes, businesses, industrial sites, and government facilities, can appear daunting. As a result, inertia often limits efforts to act on energy efficiency's potential, in both developed and developing countries. Yet its value cannot be ignored in a finance- and resource-constrained world. The continued rise in global carbon dioxide (CO2) levels and the implied threat of climate change, as linked to reliance on fossil fuels, add still greater urgency to calls for a new emphasis on energy efficiency, as a key strategy by which to curb burgeoning energy demand.
As this report identifies, a 1%–4% investment in energy efficiency, as a share of overall energy sector investment, can meet as much as 25% of the projected increase in primary energy consumption in developing Asian countries by 2030. This cost-effective investment, in turn, can boost regional energy security by tempering the need for imported energy, as most countries in the region, 2 decades from now, will produce 50% or less of the energy they require. More generally, robust deployment of energy efficiency can relieve pressure on existing energy infrastructure while reducing emissions and other pollutants that harm air quality and contribute to climate change.
Over the past decade, the Asian Development Bank (ADB) has succeeded in quickly scaling up its investment in energy efficiency and the development of renewable resources within its developing member countries (DMCs), through its Clean Energy Program. In recent years, ADB has been channeling approximately 50% of its energy sector investments into clean energy. ADB achieved an initial target of $1 billion in clean energy investment per year by 2008, then reached $2.1 billion in 2011—realizing its 2013 target 2 years ahead of time. In 2012, ADB achieved clean energy investments of $2.3 billion. DSEE investments ($721.5 million) represented 30% of all clean energy projects, while SSEE investments ($252.4 million) accounted for 11%. These results for 2012 show a significant role for DSEE, overall, in ADB's clean energy investments.
A more in-depth analysis of ADB's investments in energy efficiency, based on comprehensive data available on projects through 2011, sheds greater light on the types of initiatives and funding levels supported over the years as part of this investment. While the general trend in ADB's clean energy investments has been positive, investments in energy efficiency have lagged behind, particularly on the demand side. Building sector interventions, in particular, have been underutilized relative to their potential.
ADB has significant scope to scale up its technical assistance and funding for energy efficiency in Asia toward a more even portfolio of SSEE and DSEE interventions. Energy efficiency improvements at the level of households, commercial businesses, and industrial facilities may in turn be complemented by a focus on "green" city design. As Asia continues to urbanize, integrated planning for infrastructure can maximize efficiencies across the built environment, for mixed-use development in combination with renewable energy, new public transport options, and more efficient vehicles. Together, these changes promise to capture the next level of dramatic energy savings, toward vast economic and environmental gains.
This effort is critical in meeting growing regional energy demand in a sustainable manner, according to ADB's Strategy 2020. Based on recent in-depth analysis, further support for an expansion of ADB's energy efficiency investment and lending in its DMCs will be considered.
The following report accordingly identifies key areas of interest for accelerating energy efficiency investments. The report also examines global and regional trends that are driving Asia's energy demand and the resulting policy and regulatory environment for energy efficiency. It is hoped that this report and the strategy proposed within can help to unlock energy efficiency's potential toward an accelerated pace of investment in Asia and the Pacific. This notion—i.e., unlocking Asia's clean energy future—aims at providing more energy service with the same amount of energy.
Asia's future is one of near limitless possibilities. But cost-effective, low-carbon energy resources must be tapped to end poverty, expand energy access, and improve the quality of life for all. As a growing number of countries in Asia turn to energy efficiency as a least-cost, priority solution to meet energy demand, ADB stands ready to build on—and ramp up—its existing achievements in the sector. The cost of doing otherwise is simply too high.
Knowledge Management and Sustainable Development
Asian Development Bank