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Asia Needs Long-Term Vision for a Stable Long-Term Energy Supply

MD Staff



Amid declining global oil prices and uncertainty around a possible deal to lift sanctions imposed on Iran, political and industry leaders told that long-term vision is required to mitigate oscillations in the price and supply of energy in Asia.

“We also have to come to terms with the fact that it is a cyclical industry where prices will go up and down. But the light at the end of the tunnel is that, in the long term, demand is growing and over the next two to three years we will see prices come to an optimum level,” Shahril Shamsuddin, President and Group Chief Executive Officer, SapuraKencana Petroleum, Malaysia.

Melody Boone Meyer, President, Chevron Asia Pacific Exploration and Production Company, Chevron Corporation, Singapore, said the extreme price volatility was not uncommon to the energy industry. “While there is a surplus of supply right now, inevitably we believe that decline will occur,” she said. “We take a long-term view of prices. Our investments in oil and gas developments are long-term so we have to take a long-term view. We continue to believe that global demand for oil and gas will continue to grow.”

The security of energy supplies is a critical catalyst to continued development in a fast-growing region. Natig Aliyev, Minister of Energy of Azerbaijan, said it is a priority: “Energy is the main factor in stability and development in each country. To develop our economy we have to secure our energy supply and demand.”

As one of the strongest-growing regions in the world, where consumption will continue to expand, Asia is expected to be a net importer of oil in the coming decades. While low oil prices have allowed the Indonesian government to reduce fuel subsidies, Sudirman Said, Minister of Energy and Mineral Resources of Indonesia, said the nation is looking beyond fossil fuel to geothermal, hydro and solar power to stabilize the future of its energy mix.

“It is time to think about mixing the energy more in renewables,” he said, “Yes, we are declining in terms of fuel, but actually Indonesia has a lot of choices in terms of renewable energy. That is the new direction that we have to set up in the future.”

Looking more broadly at regional geopolitical concerns in the South China Sea, Harry Harris, Commander of the United States Pacific Fleet, US Navy, said that stability is “good for business” and “prosperity requires unfettered access throughout the waters of the world”. He added: “Seven of the world’s 10 largest militaries are in the Indo-Asia Pacific region so we are awash in a sea of uncertainty and that certainly affects energy security, trade and commerce.”

To counter tensions in the resource-rich South China Sea area, Shamsuddin suggested a collaborative model with which ASEAN countries could share the profits of construction and extraction in disputed areas.

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Sustainable energy at affordable prices precondition for prospering economies in OSCE region and beyond

MD Staff



Lukáš Parízek, State Secretary of the Ministry of Foreign and European Affairs of Slovakia, speaking at the opening meeting of the Mediterranean Contact Group, Vienna, 19 March 2018. (OSCE/Salko Agovic)

Energy security, the protection of critical energy infrastructure, the development and integration of renewable energy and the best use of digitalization for energy security were the focus of the OSCE Mediterranean Contact Group meeting held today in Vienna.

Today’s discussion was the first conducted under the 2018 Slovak Chairmanship of the Mediterranean Contact Group. Participants highlighted that sustainable and reliable energy at affordable prices is the precondition for prospering economies and peace and security throughout the OSCE region and its Mediterranean partner countries (Algeria, Egypt, Israel, Jordan, Morocco and Tunisia).

„Secure, affordable and available energy is vital for national and regional economies across the OSCE region and beyond – a major driver for today’s policymaking and an important part of the 2030 Sustainable Development Agenda,” said the Slovak State Secretary of the Foreign and European Affairs Ministry and Special Representative for 2019 OSCE Chairmanship, Lukáš Parízek.

“Governments need to provide their citizens with affordable energy, at the same time meeting the growing energy demand by the industries, while making them more energy efficient and sustainable,” said Parízek. “Investing in new and more resilient energy infrastructure is crucial. Improved energy connectivity and co-operation in securing the energy supply, transit and demand chains can lead to a better future.”

Participants noted that there is hardly any domain other than energy in which the indivisibility of Euro-Mediterranean security is more consequential for the stability of states and the well-being of the people.

Representative of Italy’s OSCE Chairmanship and Chairperson of the Permanent Council Alessandro Azzoni said that Italy commends Slovakia’s decision to engage with Mediterranean Partners to foster co-operation in the energy domain. “Countries on both shores of the Mediterranean, and thus all OSCE participating States, stand to gain from increased energy security in the Euro-Mediterranean region.”

Azzoni recalled that while Italy was chairing the Mediterranean Contact Group in 2017, it launched the “OSCE GEMS Award for young green entrepreneurs in the Mediterranean region making a social impact”.  “The GEMS Award is a clear example of our efforts to promote co-operation between the OSCE and Mediterranean partners on issues including energy security,” he said.

Recent challenges such as blackouts caused by an increased amount of extreme weather conditions, terrorist and cyber-attacks on physical and digital infrastructure and a changing energy mix were also discussed.

“One of the central energy security challenges of today is how to effectively protect critical energy networks from existing and emerging security threats such as natural and man-made disasters and terrorist cyberattacks,” said the Co-ordinator of OSCE Economic and Environmental Activities, Vuk Žugić. “We stand ready to provide a platform to exchange best practices and build capacity, effectively addressing these issues.”

The Mediterranean Contact Group meeting brought together a number of experts to share perspectives on energy security from both sides of the Mediterranean, with a focus on the growing role of technology.

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Energy is at the heart of the sustainable development agenda to 2030

Dr Fatih Birol



Three years ago, all countries of the world adopted 17 ambitious policy goals to end poverty, protect the planet, promote gender equality, or ensure prosperity, as part of the United Nations Sustainable Development Agenda, and vowed to achieve specific targets by 2030.

Energy is at the heart of many of these Sustainable Development Goals – from expanding access to electricity, to improving clean cooking fuels, from reducing wasteful energy subsidies to curbing deadly air pollution that each year prematurely kills millions around the world. One of these goals – commonly known as SDG 7 – aims to ensure access to affordable, reliable, sustainable and modern energy for all by the end of the next decade.

All these topics are fundamental to the work of the International Energy Agency. As the world’s leading energy authority, the IEA has unmatched analytical capabilities based on its unique data collection, technological network, research, and policy recommendations, which we put in the service of understanding the energy system. As I have often said – in the world of energy, data always wins.

The adoption of energy specific sustainable development goals was a milestone in moving the world towards a more sustainable and equitable system. The IEA continues to support this critical goal with unbiased data and projections. This has long been a personal and professional priority for me. Fifteen years ago, we recognized this basic fact when we first compiled data for electricity access and mapped out a scenario for delivering universal electricity access by 2030 in the World Energy Outlook, the IEA’s benchmark publication.

As a result, the IEA has been tracking country-by-country progress on energy access (SDG 7.1) on an annual basis since 2002. As the world’s most authoritative source of energy statistics, the IEA is also the lead custodian agency for reporting progress towards substantially increasing the share of renewables in the global energy mix (SDG 7.2) and doubling the global rate of improvement in energy efficiency (SDG 7.3).

The United Nations will have the first in-depth review of SDG 7 goals at the High-level Political Forum on Sustainable Development organized in New York, in July this year. This will be a good time to assess where we stand with our global energy goals, where existing national policies are taking us, and how to steer the global energy system towards a more sustainable path. To assist this critical process, the IEA has decided to create a new online resource to centralize all of our data and scenario projections in support of the 2030 Agenda.

It is clear that the energy sector must be at the heart of efforts to lead the world on a more sustainable pathway. But our data and analysis show that the current and planned policies fall well short of achieving our critical energy-related sustainable development objectives.

There has been tremendous progress in delivering universal electricity access (SDG 7.1.1) in Asia and parts of sub-Saharan Africa, with the number of people without access declining to 1.1 billion in 2016, from 1.7 billion in 2000. But on the basis of current progress, more than 670 million people are still projected to be without electricity access in 2030. Much work remains to be done in this field.

The picture is even dimmer when it comes to access to clean and modern cooking facilities (SDG 7.1.2). About 2.8 billion people rely on polluting biomass, coal and kerosene to cook their daily meals, a number which has not changed since 2000. Without greater ambition, 2.3 billion will still remain without clean cooking access in 2030, with grave health, environmental and social consequences.

The share of modern renewables in global final energy consumption (SDG 7.2) has been growing steadily in the past decades, reaching nearly 10% in 2015. However, to achieve a truly sustainable energy system, this share needs to more than double to 21% by 2030. But while wind and solar deployment has accelerated, thanks to falling costs and policy support in many parts of the world, this goal is still out of reach under current policies.

Finally, 2015 was an impressive year for energy efficiency (SDG 7.3), with global energy intensity falling by 2.8%, the fastest annual improvement since 1990. However, the average improvement between 2000 and 2015 of 2.2% still falls short of the 2.6% target needed to achieve the SDG target, and the 3.4% annual improvement needed to meet more ambitious long-term climate objectives.

Tracking progress towards these goals is only one aspect of our sustainable development work. Through our new Sustainable Development Scenario, introduced in 2017, we also seek to map an integrated path for achieving critical global goals in the next three decades: delivering universal energy access by 2030, an early peak in carbon emissions (SDG 13), and reducing deadly air pollution (SDG 3). One of the main finding of this new scenario is that these three goals are not incompatible. Indeed, our analysis shows they can successfully be met together.

But there is an urgent need for action on all fronts, especially on renewables and energy efficiency, which are key for delivering on all three goals – energy access, climate mitigation and lower air pollution. The IEA is committed to keep leading this agenda, and stepping up efforts to support the clean energy transition. We will do so with our unparalleled data, unbiased analysis, and our determined policy support to help move the world towards delivering the 2030 Agenda.

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Reducing Greenhouse Gas Emissions through Energy Efficiency – and Learning from One’s Peers

MD Staff



China, India, Indonesia, the Philippines, Pakistan, and Vietnam are critical for global climate action. Why? Among other reasons, because three-fourths of all new coal-fired power plants to begin operations before 2020 globally will be in these six Asian countries. Fostering more energy efficiency will be imperative in the countries’ efforts to adopt a low carbon energy path.

One initiative that supports efforts to scale up energy efficiency and clean energy – and lower greenhouse gas emissions – in these six countries is the Energy Transition in Asia program managed by the Energy and Extractives Global Practice.

Comprising of knowledge exchange and capacity building on key issues, the program recently held a workshop in Singapore to share lessons learned on energy efficiency, following last year’s learning forum on solar auctions, also held in the city-state. Participants agree that peer-to-peer learning works. After sharing best practice efforts in China, India, Japan, Korea, Mexico, the United Kingdom, and host country Singapore, team spirit and friendships strengthened, along with confidence, productivity and learning outcomes.

By the end of the three-day workshop, participants from governments not only requested follow-up assistance but also to learn more from their newfound friends about conserving more energy. “We were able to advance country engagement with the clients on energy efficiency,” explained Xiaodong Wang, team leader for the Energy Transition in Asia initiative. “Conducive policies that combine mandatory regulations with financial incentives are essential drivers to create market demand for catalyzing investments in energy efficiency.”

Results are already encouraging. China is a leading example. From 1990 to 2010, more than half of global energy savings took place in China, thanks to the government’s ambitious targets, stringent regulatory policies, generous financial incentives, and effective institutions – all of which reiterate strong commitment to energy efficiency. Reducing energy intensity was made a mandatory target, allocated to each province and 17,000 energy intensive enterprises. Efficiency standards for appliances, buildings, and vehicles were upgraded and complemented with billions of dollars of financial incentives in output-based subsidies, rebates for energy efficient consumer products, and compensation for the phase-out of inefficient stocks. All these efforts were monitored across the country.

India also led by example. Energy savings targets – at least for energy intensive industries – were made mandatory with the Perform, Achieve, and Trade scheme (PAT), which also allows the trade of Energy Savings Certificates to achieve targets in a least-cost way. Non-compliance at the end of the three-year cycle incurs a financial penalty. The results of the first phase surpassed targets. The second phase began in April 2017.

Workshop participants from India reminded, however, that these are early years. Following a visit to the district cooling system under Marina Bay Sands – the world’s largest underground facility and its most efficient – S.P. Garnaik, Chief General Manager of India’s Energy Efficiency Services Ltd. (EESL), a joint venture under the Ministry of Power, envisioned replicating such a system in India. But while a policy framework is being prepared to support the use of district cooling systems in rapidly urbanizing India, Garnaik admits that substantial results may take time, as “these are very new concepts.”

In addition to the mandatory output-based target approach in China and India, participants also noted Singapore’s green mark program, which combines mandatory building codes with financial incentives from the government for auditing and investment costs, as a model to emulate.

Indeed, the knowledge gap between participating countries is large. Yet even countries in the ‘nascent’ phase are eager to make progress.

Energy intensity in Asia is highest in Vietnam, with energy consumption by industry accounting for almost half of the country’s total energy use. Current efforts towards energy efficiency are encouraging. Labeling schemes have been established and energy management systems now require energy managers and auditors in large energy users. Indonesia is implementing a similar  system.

Learning from one’s peers can be galvanizing. As Trinh Quoc Vu of Vietnam’s Energy Efficiency and Sustainable Development Department at the Ministry of Industry and Trade explains, Vietnam is eager to learn from China’s and India’s shift to a mandatory target approach. Indonesia’s delegates were inspired by their peers’ experience in expanding pilot programs. The Bank is providing advisory services to both Indonesia and Vietnam in their efforts to scale up energy efficiency.

The workshop also highlighted the critical role of strong government support in developing the ESCO business. ESCOS are energy service companies which design and implement energy savings projects.  Energized by his peers, Trinh is now intent on exploring mechanisms for promoting and incentivizing the ESCO business in Vietnam.

The World Bank Group supports many energy efficiency financing mechanisms worldwide, including through credit lines, risk sharing facilities, dedicated funds, program-for-results (PforR), and development policy loans. Critical to success is a strong pipeline for deal flows, as well as technical assistance.

In India, the Partial Risk Sharing Facility for Energy Efficiency initiative, financed by the Clean Technology Fund (CTF) and Global Environment Facility (GEF) resources,  is supporting private sector ESCO-implemented energy efficiency projects through partial credit guarantees. The proposed new US$300 million India Energy Efficiency Scale Up Operation with EESL is expected to leverage over $1.5 billion of demand side energy efficiency investments across residential and public sectors. Similarly, the China Energy Efficiency Financing Project has leveraged the original World Bank financing eight times over, with a total investment of US$2.6 billion. The project has led to an annual reduction of 11 million tons of CO2 emissions.

Such figures may seem ambitious, but workshop participants were unfazed. Many are confident they will accomplish similar achievements. When learning from one’s peers, who all face challenges in their respective development journey, anything can seem possible.

World Bank

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