Regional Cooperation in Renewable Energy Trade: Prospects and Constraints in meeting the Paris Agreement

Transcription

1 Regional Cooperation in Renewable Energy Trade: Prospects and Constraints in meeting the Paris Agreement Venkatachalam Anbumozhi Economic Research Institute for ASEAN and East Asia Kaliappa Kalirajan Australian national University 2017

2 Energy Consumption by Source, 2013

3 INDC National Emission Reduction Targets Common But Differentiated Responsibilities High Income Upper-Middle Lower-Middle Reductions below BAU Korea: 37% Brunei: 63% Thailand: 20% (25%) Vietnam: 8% (25%) Indonesia: 29% (41%) Cambodia: (27%) Absolute Reductions Emissions Intensity Australia: 26-28% below Japan: 26% below NZ: 30% below Singapore: 36% below China: 60-65% below Malaysia: 35% (45%) below India: 33-35% below 2005 Source: ERIA, 2016

4 INDC = Δ Emissions intensity = Decomposition of Energy Use Δ CO 2 = Δ GDP x Δ CO 2 /GDP = Δ GDP x Δ Energy/GDP x Δ CO 2 /Energy Energy intensity (Energy/GDP) technological improvements within each industry/product structural change within the economy Carbon intensity (CO 2 /Energy) fossil fuels replaced by renewable or nuclear power or CCS end use energy efficiency Annual changes usually much smaller than Δ Energy/GDP But decisive in the longer term

5 Need for Regional Cooperation Global decarbonisation requires the cooperation of all nations, which could happen through Paris agreement and INDC. If INDC are not implemented effectively by all nations, fossil fuels not used in some countries will be used in others. Effective implementation of INDC depends not only on the cost of renewable technologies, but also easy access to those technologies. This necessitates cooperation across countries, that is facilitated through trade and investment.

6 Energy and GHG Emissions: INDC scenario [Source: IEA (2015) Energy and Climate Change, p. 37.]

7 Tariff structure of APEC Economies: 54 List 7

8 Non-Tariff Barriers: APEC s LCG exports Source: de Melo and Vijil (2014) 8

9 List of Renewable Energy goods HS Code Description Steam or other vapour generating boilers ; super-heated water boilers Parts for auxiliary plant for boilers, condensers for steam, vapour power unit Parts for steam and other vapour turbines Gas turbines, except turbo-jets and turbo-propellers, of a power exceeding 5,000 kw Parts of gas turbines (841182) Engine and motor parts, nesoi (Wind turbine blades and hubs) Instantaneous or storage water heaters, non-electric (other than instantaneous gas water heaters) Parts of machinery, plant or laboratory equipment for the treatment of material involving temperature change (except domestic machinery), nesoi.

10 List of Renewable Energy goods HS Code Description AC generators (alternator), of an output exceeding 750 kva Other electric generating sets: Wind-powered Electric generating sets and rotary convertors: other Parts suitable for use solely or principally with the machines of heading 8501 or Parts for electrical transformers, static converters and inductors Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes Optical devices, appliances and instruments, nesoi Parts and accessories for optical devices, appliances and instruments, nesoi.

11 Analytical Framework Regional cooperation has become an important conduit for transferring low-carbon energy technologies, knowledge sources and financial needs. RCEP is the regional grouping that is considered for analysis. Analysis at country level is done to identify specific regional cooperation issues to eliminate or reduce some of the national hurdles in promoting low carbon renewable energy goods exports that have the great potential for expansion.

12 Illustration of a Meta Exports Frontier

13 Methodology and Assumptions Suppose that there are K number of country groups and a separate stochastic frontier gravity (SFG) model is defined for each group. The underlying assumption is that the exporting countries in each group exhibit the same technology.

14 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of India , US dollars AUS BRN KHM CHN IDN JPN KOR MYS NZL PHL SGP THA VNM

15 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of China , US dollars AUS BRN KHM IND IDN JPN KOR MYS NZL PHL SGP THA VNM

16 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of Australia , US dollar BRN KHM CHN IND IDN JPN KOR MYS NZL PHL SGP THA VNM

17 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of Indonesia , US dollars AUS BRN KHM CHN IND JPN KOR MYS NZL PHL SGP THA VNM

18 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of Japan , US dollars AUS BRN KHM CHN IND IDN KOR MYS NZL PHL SGP THA VNM

19 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of Malaysia , US dollars AUS BRN KHM CHN IND IDN JPN KOR NZL PHL SGP THA VNM

20 Renewable Energy Goods Export among Selected RCEP Countries R.E. Goods Export of Vietnam , US dollars AUS BRN KHM CHN IND IDN JPN KOR MYS NZL PHL SGP THA

21 Empirical Framework 1. Regional frontier is constructed from the frontier of the following two groups within the region: -. Group A: (Relatively more exports of renewable energy goods to RCEP) China, India, Japan, Korea, Malaysia, and Singapore. -. Group B: ( Relatively less exports of renewable energy goods to RCEP) Australia, Indonesia, New Zealand, Philippines, Thailand, and Vietnam 2. How the individual countries export potential is compared to the group potential and how the group potential is compared to the regional potential?

22 Time-varying decay inefficiency model Number of obs = 99 Frontier Regression Result of China lntv Coef. Std. Er. Z-Value lngdpper lngdpperp lndist lntar lnex y y _cons mu eta sigma gamma

23 Time-varying decay inefficiency model Number of obs = 99 Frontier Regression Result of India lntv Coef. Std. Er. Z-Value lngdpper lngdpperp lndist lntar lnex y y _cons mu eta sigma gamma

24 Time-varying decay inefficiency model Number of obs = 99 Frontier Regression Result of Japan lntv Coef. Std. Er. Z-Value lngdpper lngdpperp lndist lntar lnex y y _cons mu eta sigma gamma

25 Conclusions 1. The Group A has realized about 72% of the regional potential in the exports of low carbon renewable energy goods among RCEP member countries. 2. China, Japan, and Singapore have achieved about 80%, 77%, and 72% of their export potential within Group A. 3. The Group B has realized about 53% of the regional potential in the exports of low carbon renewable energy goods among RCEP countries. 4. Indonesia and the Philippines have achieved about 68% and 62% of their export potential within Group B.

26 Policy Implications 1. Realization of the full potential of Group A and Group B will increase the phase of achieving Paris Agreement targets by RCEP member countries through enhanced exports of low carbon renewable goods. 2. Major constraints to realize the full export potential are the non-tariff barriers, which were represented by the one-sided error term with truncated above zero normal distribution. 3. More intensive programs to eliminate the non-tariff barriers need to be undertaken within RCEP.