ADB Financing of Energy Efficiency in Asia-Pacific

Transcription

1 ADB Financing of Energy Efficiency in Asia-Pacific 2013 Policy-Industry Dialogue Bangkok, Thailand 6 November 2013 Presentation by Georges Heinen Senior Advisor, Asian Development Bank

2 Asia s Energy Challenge Energy consumption in Asia to rise from 30% in 2010 to over 50% by 2035 (as a share of world energy consumption) Asia cannot rely solely on its own endowment to secure adequate energy Asia s GHG emissions will soon swamp global targets if current energy path continues Affordable energy for the poor is key to inclusive growth

3 ADB s Approach Three-pronged approach to ensure: Energy security Environmental sustainability Affordable access Tapping cleaner energy supplies Reducing energy demand Fostering regional market synergies

4 Overall Investments In 2012 ADB invested USD 2.3 billion in Renewable energy (59%) Energy efficiency (41%) Historically, ADB focused more on energysupply side projects than on demand-side energy efficiency (EE) projects Today this gap is narrowing because of the gains to be had from EE investments

5 Boosting clean energy supply Greater use of renewable energy: realize promise from wind and solar expand well-established hydropower develop biofuels to dramatically lower transport emissions (e.g. use of algae) Unfortunately renewable energy will not be enough - apply new technologies: carbon capture and storage explore Asia s substantial shale gas reserves role of nuclear power?

6 Fostering regional market synergies Important gains to be achieved from integrated energy markets (e.g. integration of power transmission in GMS) ADB assists in lifting political and regulatory barriers inhibiting market integration (multilateral grid agreements, standardized regulations, etc.)

7 Promoting PPPs ADB believes PPPs are a crucial tool for achieving the region s development objectives Infrastructure financing needs far exceed what the public sector (including national governments, bilateral and multilateral donors) can provide Private sector not only has the financial means, but also the technological and managerial know-how to complement the gap PPPs strive to combine the advantages of private sector financing/management with common interest and risk-sharing arrangements with the public sector

8 Project Examples (Production) Mongolia : ADB advises on PPP for heating and power plant in Ulaanbaatar, replacing old and inefficient coal-based plants assists the government in structuring the transaction (tender & documentation) follows ADB s earlier support in drafting a Concession law and set up a PPP unit

9 Energy Production (cont.) China : Support joint ventures between a foreign investor (Dalkia SAS) and municipal governments to acquire, rehabilitate and operate district heating networks Corporate finance loan (USD 150 million) channeled as equity into sub-project SPVs (plus syndicated loan of USD 200 million)

10 Energy Production (cont.) Cambodia : BOT transmission line to import electricity from Thailand landmark PPP between a state utility and a single-purpose private company (CPTL) 15-year long-tenor loan by ADB (USD 7 million), together with a consortium of international lenders

11 Energy Demand - 1 Energy prices have to reflect true costs to send the right signals to households and firms (issue of subsidies) Urban planning, mass transport and fuel switching can radically reduce CO2 emissions Behavioral change is essential to counterbalance incremental demand from rising incomes

12 Energy Demand - 2 Energy efficiency is the low-hanging fruit of the energy challenge 1%-4% investment in energy efficiency can meet as much as 25% of projected increase of primary energy consumption by 2030 Work on the policy side: Enact EE standards / labeling programs Raise awareness / build capacity Monitor enforcement / fine-tune incentives

13 Project Examples (Demand) Philippines: USD 100 million loan to establish an Energy Service Company (ESCO) to provide financial and technical support to companies to reduce energy consumption retrofit government office buildings and public lighting systems give away 13 million energy-saving lights (CFLs) to homeowners and businesses USD 1.5 million grant cofinancing by Asia Clean Energy Fund (Japan)

14 Energy Demand (cont.) Southeast Asia Energy Efficiency Project: Innovative multi-currency/multi-project loan ($20 mio) in cooperation with Cofely Singapore (a unit of France s GDF Suez) Consolidated investment program to reduce transaction costs of small EE projects Demonstrate the limited risks and reliable returns associated with energy efficiency investments Dissemination of energy efficiency case studies, advocacy of technologies and financing structures Encourage more EE investments

15 ADB Publications Asia s Energy Challenge (special chapter of 2013 Asian Development Outlook) (April 2013) Financing Low-Carbon Urban Development in South Asia: A Post Context (October 2013) Economics of Climate Change in East Asia (October 2013)

16 For More Information

17 Why focusing on Energy Efficiency? (ii) Cheapest Low-Carbon Solution

18 Two-thirds of the global economic potential of energy efficiency remains untapped. Economically viable efficiency measures can halve world energy demand growth to A Huge Opportunity Energy Efficiency creates net economic gains estimated at $18 trillion to 2035, after additional investments of $11.8 trillion, concentrated in Asia. Energy Efficiency Opportunities by Sector (IEA)

19 ADB s Demand-Side Energy Efficiency Investment High Residential Individual Retail Labor intensity Low opportunities are being overlooked because they are too small for financing. Low Offices Education Hospitals Light Industry Multicurrency loan to Cofely bundles small Capital Intensity Process Industry District Heating High