Energy efficiency in Asia:
SWITCH-Asia highlights best practices in policy, finance and SMEs
The SWITCH-Asia Programme’s regional conference and networking event on “Advancing Energy Efficiency through SCP and Green Finance” was held in Jakarta, Indonesia, on 7-8 July 2015. The event successfully brought together SWITCH-Asia projects, international and national policy makers, financial experts and practitioners to further the discussion on solutions for energy efficiency in Asia, in particular the ASEAN region.
The unprecedented economic growth in Asia has led to a rapid increase in energy consumption and energy efficiency has become an important pillar for energy security and climate change mitigation in all Asian countries. Against this background, the event received particular attention from international and local experts. About 80 participants attended the conference to receive updates on latest national policies and regulations, available financing schemes for energy efficiency and international best practices. The event also received strong interest from the Indonesian media.
Support from national and regional policy makers
Solving the challenges of energy efficiency and energy security requires a sound regulatory framework that will ensure its translation into appropriate energy efficiency initiatives and projects. Commitment of policymakers is therefore essential to advance the discussions beyond the SWITCH-Asia regional conference for implementations of energy efficiency measures through regulations.
These points were highlighted by Mrs. Ria Noviari Butarbutar from the EU Delegation to Indonesia, Mr. Sanjayan Velautham, Executive Director of the ASEAN Centre for Energy, Mr. Sabin Basnyat, Coordinator of the SWITCH-Asia Regional Policy Support Component, and Mrs. Farida Zed, Director of Energy Conservation, Ministry of Energy and Mineral Resources (MEMR) of the Republic of Indonesia. The keynote addresses offered the audience the latest information on regional and national policies and strategies for energy efficiency, in the ASEAN region and in individual countries such as Indonesia, Malaysia and the Philippines.
Due to its fast growing economy, Indonesia experiences challenges to its energy supply. Indonesia currently relies on fossil fuel as its main source of energy. It is estimated that Indonesia will see an increase in energy demand of about 7% between 2010 and 2019. Therefore, energy efficiency can play an important role in Indonesia’s national strategy for energy security, said Mrs. Farida Zed. (The presentation is available here)
Mr. Jeya Seelan Subramaniam, representing the Government of Malaysia, explained how energy efficiency is integrated into Malaysia’s Sustainable Consumption and Production (SCP) Blueprint. The SCP Blueprint emphasises the role of the government to initiate energy efficiency programmes in an integrated approach. Through leading by example, the Malaysian government aims to give a clear message to industry and citizens. (The presentation is available here)
In the Philippines the energy situation looks similar to its neighboring countries, where the energy demand is forecasted to grow by about 78% between 2014 and 2030, with an average annual growth rate of 3.5%. Mrs. Maria E. Balamiento from the SWITCH-Asia National Policy Support Component (NPSC) explained the Philippine Government’s Energy Efficiency and Conservation Roadmap 2014 – 2030 that will address the main energy challenges, including issues like development of energy service companies (ESCOs), minimum energy performance standards (MEPS) and demand response programmes. (The presentation is available here)
The importance of energy efficiency, besides the use of renewable energy, was further underlined by Mr. Christopher G. Zamora, Deputy Director of ASEAN Plan of Action for Energy Cooperation (APAEC). Since ASEAN is one of the fastest growing economic regions in the world, diversification of energy resources and supply sources and measures to mitigate the energy gap are high on ASEAN’s policy agenda, he said. ASEAN therefore is on track to reduce its regional energy intensity by 8% by 2015 based on 2005 level. (The presentation is available here)
All governmental representatives agreed that energy efficiency is a critical issue that needs to be tackled in the Asian region through implementing sustainable consumption and production (SCP) of energy. Adopting national targets and policy measures such as energy labeling initiatives, green procurement and energy efficiency incentives are important elements. SCP would not only bring about improved energy efficiency, but also contribute to greenhouse gas (GHG) emission reductions. Communication, education, and raising public awareness also are critical tasks that need to be effectively implemented to address the problems and enhance energy efficiency in the region. Finally, in most Asian countries the issue of subsidies for fossil fuel generated power resulting in low energy prices which put energy efficiency measures at an economic disadvantage, needs to be addressed by policymakers.
Innovations in financing for energy efficiency
Throughout the sessions participants highlighted the issue of access to finance. Energy efficiency projects are still struggling to obtain financing to implement energy efficiency measures or to introduce new efficient technologies. To explain solutions to this issue, two representatives from leading Asian finance institutions (FIs) shared their approaches of providing financing to companies or projects.
Ms. Nuraini Yuanita, Head of Division of Banking Architecture, Indonesian Authority for Financial Services (OJK), informed the audience of a new scheme that was recently established by the Government of Indonesia for green finance. (The presentation is available here)
Mr. Mek Meksarikul from Kasikorn Bank, one of the largest banks in Thailand, explained the bank’s innovative investment scheme for energy efficiency and their cooperation model with Energy Service Companies (ESCOs). (The presentation is available here)
Both presentations offered good examples for other countries, where these schemes could be replicated to offer financing mechanism for green products. Both schemes are continuously being developed further and are subject to revision in the near future.
Energy efficiency initiatives on the ground: harmonisation of standards and labelling schemes
The event offered insights into specific policy and finance mechanisms for energy efficient appliances and equipment in Asia. The representative of the SWITCH-Asia project “AEMAS”, Mr. Rio Silitonga, explained how the project has improved energy efficiency of industries in ASEAN by establishing the ASEAN Energy Manager Accreditation Scheme (AEMAS). (The presentation is available here)
Mr. Bek Chee Jin from the SWITCH-Asia project “Efficient Air Conditioners” described how the project works to increase the market share of higher efficient air conditioners (ACs) in the ASEAN region through harmonisation of test methods and energy efficiency standards, adoption of common Minimum Energy Performance Standards (MEPS), and changing consumer purchasing attitudes in favour of energy efficient ACs. (The presentation is available here)
Mr. Harris Yahya from the Directorate of Energy Conservation, Indonesia’s Ministry of Energy and Mineral Resources (MEMR), explained the details of Indonesia’s government regulation No. 70/2009 on energy conservation. The regulation has been the basis for national endeavors in advancing energy efficiency. MEMR further issued a ministerial regulation for energy efficiency of home appliances, such as an energy efficiency label for CFL lamps, and MEPS and labels for high efficient ACs. (The presentation is available here)
Representing Japan’s JICA-CMEA Technical Cooperation Project, Ms. Noriko Hase offered insights into energy efficiency and carbon trading initiatives that have been implemented in the building sector in Tokyo. This scheme is potentially applicable to cities in the ASEAN region, one of the main challenges are the availability of data, monitoring and evaluation. (Click here for the presentation)
Upon receiving input from project-level experts and from the MEMR, Mrs. Shinta Sirait, Acting Head of Center for Green Industry and Environment from Indonesia’s Ministry of Industry, provided new insights of how energy efficiency measures can be implemented among Indonesian industries, in particular through the newly initiated Energy Efficiency and Conservation Programme in the Industrial Sector 2015-2025. (The presentation is available here)
Financing energy efficiency in Asian SMEs
Drawing on experiences from the SWITCH-Asia “MEET-Bis Cambodia” project, Mr. Chhun Kosal in his presentation shared three financing models implemented by the project to promote energy efficient equipment upgrades among SMEs, which can also be implemented in different countries. These financing models follow the ESCO approach, end-user financing model and a product-based leasing model.
Mr. Sabin Basnyat from UNEP shared international experiences of financing energy efficiency projects. One of the challenges for SMEs is that energy efficiency is financeable, but not bankable. SMEs often cannot provide a clear risk-sharing scheme that banks would love to see. By making the risk sharing scheme clear, there is a higher probability for SMEs to receive funding. He also emphasised that the main criteria for leveraging energy efficiency financing are the monetary savings resulting from energy efficiency improvements. (Click here to see the presentation)
Low-interest rates or subsidies provided by governments are additional but secondary incentives. Mr. Dicky Hindarto, Head of the Indonesia Joint Crediting Mechanism (JCM) Secretariat, introduced the JCM which has so far helped finance larger enterprises in Indonesia who are able to fulfill JCM’s ‘higher than business as usual’ requirements. (The presentations is available here)
SWITCH-Asia Programme provides leading examples in policy and practice
Several SWITCH-Asia projects presented their experiences and models for energy efficiency. The projects presentations “Waste to energy in rice milling sector” (Cambodia), “Biomass SP” (Malaysia), “Bio-energy project” (Nepal), and “Sri Lanka renewable energy” explained how they are working to promote waste-to-energy solutions in their respective industries and countries. By closing the loop, the technologies and practices promoted by these projects reduce the need for fossil fuel inputs in the energy supply. This session was joined by Mrs. Lina Moeis, Executive Director of Yayasan Rumah Energi, who shared her experience in fostering domestic biogas programmes in Indonesia. (Presentation available here)
The SWITCH-Asia projects “High efficiency motors” (Philippines) and “Higher efficiency of transformers” (China) discussed how technology innovation can promote energy efficiency among Asian SMEs. The challenges both projects mastered included the introduction of higher standards for manufactures of efficient motor systems and transformers, and the uptake of these enhanced technologies by SMEs.
Mr. Ardi Moeharyoso from Indonesia’s Association of Lighting and Electrical Industries (AILKI), a cooperation partner of UNEP’s en.lighten initiative, provided in his presentation examples of how standards and labelling can play a decisive role for industries and consumers to adopt new and more efficient technologies. The importance of efficient lighting equipment was also highlighted by Ms. Marie Leroy from UNEP's en.lighten initiative with the launch of a new publication on “Developing Minimum Energy Performance Standards for Lighting Products”.
Rounding up the discussion, the SWITCH-Asia National Policy Support Components (NPSCs) from the Philippines, Malaysia, Indonesia (presentation available here) and Sri Lanka (presentation available here) shared their experience of working with governments to develop new SCP policies specifically related to energy efficiency through consumption behavior and lifestyle changes. The SWITCH-Asia project “Green public procurement” from Bhutan showed the importance of linking green public procurement to promote sustainable consumption and production (SCP) and energy efficiency.
Finally, realising the importance of scaling up successful approaches, the last panel discussion offered policy makers and experts the opportunity to bring forward new ideas, strategies or methods to further promote energy efficiency in the future. EU-ASEAN cooperation on issues such climate change and sustainability will deepen in the future. Through the Jakarta conference the SWITCH-Asia Programme has demonstrated that its tested approaches are important elements of this ongoing cooperation between the EU and the ASEAN region.
A picture gallery of the event is available here.
Written by: Kartika Anggraeni, Patrick Schroeder
Edited by: Uwe Weber, Silvia Sartori