Investing in Low-Carbon Energy Systems

Investing in Low-Carbon Energy Systems

Venkatachalam Anbumozhi Kaliappa Kalirajan Fukunari Kimura Xianbin Yao Editors Investing in Low-Carbon Energy Systems Implications for Regional Economic Cooperation 123

Editors Venkatachalam Anbumozhi Economic Research Institute for ASEAN and East Asia (ERIA) Jakarta Indonesia Kaliappa Kalirajan Crawford School of Public Policy Australian National University Canberra Australia Fukunari Kimura Economic Research Institute for ASEAN and East Asia (ERIA) Jakarta Indonesia and Faculty of Economics Keio University Tokyo Japan Xianbin Yao Asian Development Bank Manila Philippines ISBN 978-981-10-0760-6 ISBN 978-981-10-0761-3 (ebook) DOI 10.1007/978-981-10-0761-3 Library of Congress Control Number: 2016933243 Springer Science+Business Media Singapore 2016 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer Science+Business Media Singapore Pte Ltd.

The original version of the book frontmatter was revised: The book title was corrected. The Erratum to the book frontmatter is available at DOI 10.1007/978-981-10-0761-3_17.

Foreword Emerging economies of Asia have an essential role to play in promoting the global move towards energy security, economic growth, and sustainable development. Although their economic activities are circumscribed by developmental preferences, equity concerns, and industrial competiveness, they are important agents in implementing several measures which would mitigate global environmental challenges like climate change. The way in which the emerging economies manage their future energy systems and economic integration activities are critically important, as the global society increasingly expects. East Asia Summit region have begun responding to this challenge by in the form of intended nationally determined contributions and comprehensive economic partnerships. However, the observed effects of these commitments are often met with many regulatory barriers, technological hurdles, financial deficiencies, and lack of international cooperation, some of which are very specific to the region. At the same time, there is much scope for the regional cooperation countries working together through market and market mechanisms to complement and augment investment in low carbon energy systems, and thus provide a contribution to achieving energy security goals, and long-term reductions in carbon emissions. However, policy approaches to understand the synergies differ radically across the region and there is a need for mutual learning. This book is based on papers presented and discussed for the ERIA project on Low Carbon Energy Systems: Implication for Regional Cooperation and Integration. This project aimed to identify and elaborate on individual energy policy actions in major economies based on scenario analysis that is necessary to create low carbon economy at a scale required; and to review regional economic integration activities in the region and beyond, which facilitate such actions with suggestions for any improvements. This project brought together leading energy and economic experts from region, assessed country approaches, generated common insights and understanding and vii

viii Foreword weighed policy implications, and identified action plans, all of which are captured in this book. This book is being published as part of ERIA s effort to produce knowledge products that can be used to promote sustainable development, one of the three priority themes. I am confident that this book will contribute to policy development and academic understanding in an area where new insights are urgently needed. I hope this book will also help countries in ASEAN and East Asia to set up and implement robust policy measures and sustainably manage their critical energy resources for the long-term development of their people. August 2016 Hidetoshi Nishimura President of ERIA

Contents 1 Serendipity of Low Carbon Energy System and the Scope of Regional Cooperation... 1 Venkatachalam Anbumozhi and Xianbin Yao Part I An Evolutionary Analysis of Low-Carbon Energy Systems and Green Growth 2 Low Carbon Energy Systems in China: Visioning Regional Cooperation Through the Belt and Road... 31 Zhu Yuezhong, Tian Zhiyu, Liu Jianguo, Chao Feng and Liang Qi 3 A Multi-level Experience of Designing Low-Carbon Energy Systems in India... 55 Ritu Mathur and Malancha Chakrabarty 4 Toward a Low-Carbon Economy for Indonesia: Aspirations, Actions and Scenarios... 79 Arianto A. Patunru and Arief Anshory Yusuf 5 Greening the Economy with Low Carbon Energy System: Developments, Policy Initiatives and Lessons from Malaysia.... 111 V.G.R. Chandran Govindaraju 6 On the Dynamics of Low Carbon Green Growth in Thailand.... 131 Qwanruedee Chotichanathawewong 7 Functional Characteristics of Low Carbon Energy Systems and Need for Regional Cooperation in Vietnam... 185 Pham Khanh Toan, Nguyen Duc Cuong and Tran Thi Thu Huong 8 Low Carbon Energy Systems and Indicator Framework for Cambodia, Lao PDR and Myanmar... 215 Sivanappan Kumar ix

x Contents Part II Transition Experiments and Innovation in Regional Cooperation 9 Energy Policy and Regional Cooperation: Australia s Contribution to Low Carbon Green Growth Initiatives... 251 Gaminiratne Wijesekere and Arif Syed 10 Aiding the Transition: Innovations with Japan s Bilateral Offset Mechanisms.... 281 Akira Ogihara and Venkatachalam Anbumozhi 11 Regional Cooperation and Asia s Low Carbon Economy Transition: the Case of New Zealand.... 309 Douglas Hill 12 Low Carbon Energy Transition in EU: Lessons from Economic, Institutional and Management Approaches... 327 Matthias Helble Part III Regional Economic Integration and Implications for Low-Carbon Green Growth 13 The Influence of Regional Cooperation on Export Potential of the APEC 54 List of RCEP Countries.... 359 Kaliappa Kalirajan 14 Barriers and Options for Carbon Market Integration... 391 Lingshui Mo and Xuedu Lu 15 Domestic and International Finance in a Regional Perspective... 435 Tomonori Sudo Part IV Conclusion 16 The Hard Choices that Asia Must Make... 465 Kaliappa Kalirajan, Venkatachalam Anbumozhi and Fukunari Kimura Erratum to: Investing in Low-Carbon Energy Systems... E1 Venkatachalam Anbumozhi, Kaliappa Kalirajan, Fukunari Kimura and Xianbin Yao Appendix 1... 471 Appendix 2... 487 Appendix 3... 491 Index... 495

Editors and Contributors About the Editors Venkatachalam Anbumozhi is a Senior Economist at the Economic Research Institute for ASEAN and East Asia (ERIA), Indonesia. His previous positions include Capacity Building Specialist and Senior Fellow at Asian Development Bank Institute and Assistant Professor at the University of Tokyo. A distinguished fellow of Asia Pacific Rim University (APRU) Forum on Development and Environment, he also advised ADB, JICA, JBIC, UNESCAP projects on sustainable development. He has published several books, authored numerous research articles, and produced many project reports on natural resource management, climate friendly infrastructure design, and private sector participation in green growth. Anbumozhi was invited as a member of the APEC Expert Panel on Green Climate Finance and the ASEAN Panel for promoting climate-resilient growth. He has taught resource management, international cooperation, and development finance at the University of Tokyo and has speaking engagements at some of the leading international organizations. He obtained his Ph.D. from the University of Tokyo. Kaliappa Kalirajan is a Professor in the Crawford School of Public Policy at the Australian National University, Australia. He is also a Visiting Professor at the Madras School of Economics, India and International University of Japan. His areas of major interest include macroeconomic and trade policies, sources of growth, regional cooperation in low carbon energy systems, and technology issues in emerging Asian countries. He has 150 publications in those areas in refereed academic and policy journals. He has authored and edited 15 books. He is currently serving on the editorial board of the following journals: Journal of Asian Economics; Agricultural Economics; Australian Journal of Agricultural and Resource Economics; The Developing Economies; The Journal of Applied Economic Research; Journal of Social and Economic Development; and Asia and the Pacific Policies Studies. He has been a consultant to different national and international organizations from time to time. xi

xii Editors and Contributors Fukunari Kimura has been Professor, Faculty of Economics, Keio University, Tokyo, Japan since 2000 and Chief Economist, Economic Research Institute for ASEAN and East Asia (ERIA) since 2008. He is also a co-editor of the Journal of the Japanese and International Economies. He was born in Tokyo in 1958 and received his Bachelor of Laws from the Faculty of Law, University of Tokyo in 1982, Master of Science and Ph.D. from the Department of Economics, University of Wisconsin-Madison in 1990 and 1991. He worked for the International Development Center of Japan as Researcher during 1982 1986, the Department of Economics, State University of New York at Albany as Assistant Professor during 1991 1994, and the Faculty of Economics, Keio University as Associate Professor during 1994 2000. He was also the President of Japan Society of International Economics during 2010 2012. His major is international trade and development economics. In particular, he has recently been active in writing academic/semi-academic books and articles on international production networks and economic integration in East Asia. Xianbin Yao is the Director General of the Pacific Department of the Asian Development Bank (ADB). Mr. Yao leads the department that formulates ADB s operational strategies for the Pacific developing member countries, including economic analyses, policy analyses, and country performance reviews; and develops associated country operational programs for ADB assistance. Prior to this, Mr. Yao was the Director General for ADB s Sustainable Development and Climate Change Department, leading and coordinating the development and implementation of ADB s financing and technical assistance programs on climate change, low carbon green growth and social development. Mr. Yao holds a doctoral degree from Michigan State University, USA. Contributors Venkatachalam Anbumozhi Economic Research Institute for ASEAN and East Asia, Jakarta, Indonesia Malancha Chakrabarty The Energy and Resources Institute, New Delhi, India Qwanruedee Chotichanathawewong Thailand Environment Institute, Nonthaburi, Thailand Nguyen Duc Cuong Institute of Energy and Environment of Vietnam, Hanoi, Vietnam Chao Feng China University of Mining and Technology, Beijing, China V.G.R. Chandran Govindaraju University of Malaya, Kuala Lumpur, Malaysia Matthias Helble Asian Development Bank Institute, Tokyo, Japan Douglas Hill University of Otago, Dunedin, New Zealand

Editors and Contributors xiii Tran Thi Thu Huong Australian National University, Canberra, Australia Liu Jianguo Energy Research Institute of National Development and Reform Commission, Beijing, China Kaliappa Kalirajan Australian National University, Canberra, Australia Fukunari Kimura Economic Research Institute for ASEAN and East Asia, Jakarta, Indonesia; Faculty of Economics, Keio University, Tokyo, Japan Sivanappan Kumar Asian Institute of Technology, Pathumthani, Thailand Xuedu Lu Asian Development Bank, Manila, Philippines Ritu Mathur The Energy and Resources Institute, New Delhi, India Lingshui Mo Asian Development Bank, Manila, Philippines Akira Ogihara Institute for Global Environmental Strategies, Hayama, Japan Arianto A. Patunru Australian National University, Canberra, Australia Liang Qi Energy Research Institute of National Development and Reform Commission, Beijing, China Tomonori Sudo Ritsumeikan Asia Pacific University, Oita, Japan Arif Syed Bureau of Resources and Energy Economics, Canberra, Australia Pham Khanh Toan Institute of Energy and Environment of Vietnam, Hanoi, Vietnam Gaminiratne Wijesekere Australian National University, Canberra, Australia Xianbin Yao Asian Development Bank, Manila, Philippines Zhu Yuezhong Energy Research Institute of National Development and Reform Commission, Beijing, China Arief Anshory Yusuf Padjadjaran University, Bandung, Indonesia Tian Zhiyu Energy Research Institute of National Development and Reform Commission, Beijing, China