a global overview of energy efficiency & investment trends

7/14/2010

1

Green Investment Summit 2010, Jakarta, Indonesia

A Global Overview of Energy Efficiency & Investment Trends


Renewable Energy and Energy Efficiency Partnership (REEEP)

Green Investment Summit 2010Jakarta, Indonesia13 July 2010

Maaike GöbelManager Southeast Asia & PacificREEEP



O iOverview

An example from Palau

Energy efficiency vs. conservation

Global energy efficiency overview

Economics of energy efficiency

Policy settings

RETscreen

REEEP’s response to the region’s changing priorities

7/14/2010

2





The journey to

7/14/2010

3





7/14/2010

4





7/14/2010

5





7/14/2010

6





7/14/2010

7





7/14/2010

8





7/14/2010

9





Three reasons for countries to focus on energy efficiency

7/14/2010

10



Security of supply : 2/3 of oil comes from politically sensitive areas of the world



The rise in energy demand will be driven primarily by emerging marketsg g

Source: BP Yearbook, IEA

China accounts for 15% of world energy demand, with 19% of the world’s population.

7/14/2010

11



The hidden benefit: 50% of increase in energy demand in the last 20 years has been absorbed by energy savingsy y gy g

Additional energy use without

savings

80

100

120

140

160

jou

les

50%

Actual energy use

0

20

40

60

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997

exaj

Source: IEA



There is still huge savings potential: today 80% of primary energy is wastedgy

Source: ABB 2007

7/14/2010

12



Stern identified that immediate action will cost far less than delaying y g



"Chi tt h g t i t t g ti P id t

Today’s leaders are aware of the importance of saving energy

"China attaches great importance to energy conservation.We … give top priority to conservation."

President

Hu Jintao

"We recognise that we have to act on climate change in our own interest … we have adopted an ambitious National Action Plan ... We are committed to ambitious time-bound outcomes that will increase the energy efficiency of our economy … "

Prime Minister

Manmohan Singh

Recognizing that the cleanest source of energy is more efficient energy use, the Presidents committed the relevant agencies … to accelerate energy efficiency improvements …

"If I were emperor of the world, I would put the pedal to the floor on energy efficiency and conservation …"

US Secretary of Energy

Steven Chu

PresidentBarack Obama

and

PresidentFelipe Calderón

7/14/2010

13



In absolute terms, China’s stimulus package has the largest green stimulus elements g



In many countries, green stimulus packages were used to target energy efficiency

5.8%

6.9%

8.3%

9.3%

12.0%

Spain

UK

Canada

Australia

US

2.1

2.5

2.6

7.1

12.4

UK

Australia

Canada

France

Japan

Green stimulus regional ranking in USD bn Green stimulus ranking as a % of total stimulus

g gy y

13.2%

21.2%

37.8%

58.7%

80.5%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Germany

France

China

EU

S. Korea

Source: HSBC 2009

13.8

22.8

30.7

112.3

221.3

0 50 100 150 200 250

Germany

EU

S. Korea

US

China

7/14/2010

14



Energy intensity continues to decline around the world

Source: IEA



Energy intensity continues to decline around the world

7/14/2010

15



18 0

20.0

Primary energy supply per GDP

Japan scores best and aims to further improve EE by >30% by 2030

6.0

8.0

10.0

12.0

14.0

16.0

18.0 Primary energy supply per GDP

Source: IEA 2006, METI

World

South K

orea

Russia

India

China

Indonesia

Middle E

ast

Thailand

Canada

Australia

US

EU

-27

Japan

2.0

4.0

Index: Japan=1



Above world average

Industry efficiency in China is significantly below world average

370

714

153

104.3

301

610

127

73

Coal consumption forpower supply (gce/kW h)

Energy consumption forsteel (kgce/t)

Energy consumption forcement (kgce/t)

Energy consumption forcrude oil processing

average

+ 20 %

+ 17 %

+ 23 %

+ 43 %

986

1314

73

629

1000

p g(kgce/t)

Energy consumption forethylene (kgce/t)

Energy consumption forsynthetic ammonia

(kgce/t)

Average in China W orld Average

+ 43 %

+ 57 %

+ 31 %

Source: National Energy Bureau

7/14/2010

16



Energy efficiency could deliver 54 % of emission reductions – why don’t we use all potentials

30

35

40

45

Gigatonnes

CCS

Renewables & biofuels

Nuclear

Energy efficiency

550 Policy Scenario

450 Policy Scenario

54%

23%

14%

9%

20

25

2005 2010 2015 2020 2025 2030

Reference Scenario 550 Policy Scenario 450 Policy Scenario

Source: World Energy Outlook 2008, IEA

Although there is a strong evidence of the effect of energy efficiency, practical implementation on the ground is still facing fundamental barriers.



7/14/2010

17



EE MAtrix

Energy efficiency - Asia

Singapore

China

Korea

India

Philippines

0

1

2

3

4

5

rke

t A

ttra

tiv

en

es

s

Singapore

Australia

Malaysia

Thailand

China

Korea

Vietnam

India

CambodiaAustralia

Malaysia

Thailand

Vietnam

Cambodia

Indonesia

6

7

8

9

00.20.40.60.811.21.4

Financial Attrativeness

Ma Cambodia

Philippines

Indonesia

Lao PDR



Market forces alone don’t deliver cost effective savings –supportive policies / incentives are needed

Source: IEA WEO 2008

The number of countries applying mandatory energy standards for buildings increased over 60% between 1994 and 2009; currently 61 countries have such codes implemented

7/14/2010

18



Effective energy savings programs must consist of a whole package of measures



7/14/2010

19





www.retscreen.net

7/14/2010

20



REEEP was established to accelerate RE/EE focusing on developing and emerging economies

• REEEP acts as a market facilitator by reducing market barriers for renewables and energy efficiency systems

• REEEP accelerates market development through a focus on:

• policy/regulation development and improvement

• finance and business models

• REEEP is driven by a bottom-up approach to meet the real needs on the ground

• REEEP works with governments as well as with the private sector

• REEEP is committed to the achievement of MDGs and aims to improve access to sustainable clean energy for the poor



REEEP’s response to the region’s changing priorities

Energy efficiency increases a nation’s security of

supply since it can now do more with less energy

thus reducing the amount of energy it has to import

7/14/2010

21



REEEP assists Chinese government in introducing special fiscal support to promote energy efficiency in buildings

Aim: Promote suitable financing models for energy efficiency interventions for building sector

Objectives:

Conduct market survey and barrier analysis on current financing mechanisms that promote EE in existing buildings in China

Develop two Chinese case studies on energy conservation evelop two C ese case stud es o e e gy co se vat o projects in existing large-scale public and residential buildings

Submit new recommendations to the Chinese government for financing mechanisms to accelerate EE in buildings

Implementing Partner: Energy Research Institute of National Development Reform Commission



Importance of energy efficient standards: REEEP supports LED standards in China

Aim:Support the inclusion of Light Emitting Diodes (LEDs) in the Chinese government’s promotion of energy efficient lighting solutions by developing standardized test methods and evaluation criteria for LED lighting products

Objectives:Market assessment of current LED industry in China, including existing national and international testing methods and evaluation criteria for LED lighting products

Develop appropriate LED testing methods and evaluation criteria for meeting current needs in China

Test the feasibility of the newly developed LED testing methods and evaluation criteria within China

Implementing Partner: National Lighting Test Center

7/14/2010

22



C ti g d l t d t t k h ld

Low-carbon tourism project in Fiji – sectoral approach

• Creating a model to adopt a stakeholder approach to a low-carbon tourism sector in Fiji

• Promoting a range of energy efficiency and small-scale renewable energy technologies available to the hotel & resort sector in Fiji

• Raising awareness of related carbon fi i t itifinancing opportunities

• Project outputs: – Reduce GHG emissions through

demand-side abatement initiatives in Fiji’s hotel and resort sector.

– Enhance Fiji’s ecoTourism credential.



Energy efficiency opportunities in Indonesia

7/14/2010

23



Working with local governments across Indonesia

Indonesia Kemitraan project

Working with local governments across Indonesia

Increased investment flow into energy efficiency

Identifying suitable investment opportunities

Technical and financial analysis

Outcomes

High interest from local governments in climate High interest from local governments in climate protection

Practical opps:

Street lighting

Waste management



Conditions for success

Street lighting

Conditions for success

Involvement of DGEEU & PLN

Equitable risk sharing between ESCOs and client

Financing

Direct financing

Debt financing Debt financing

Bonds

ESCOs

7/14/2010

24



ESCOs

Street lighting

ESCOs

Performance contracts

Third party financing



Collection of waste in Indonesia 40-50%

Waste management

Collection of waste in Indonesia 40-50%

New law passed in 2008 on waste management clear signal of the government commitment to improving municipal waste management

10milion t annually of waste

Potential for 400milion m3 of methane

80MW of power generation

US$10m in carbon credits revenue

7/14/2010

25



Direct financing from government limited and

Financing options

Direct financing from government limited and supplemented by donor funding

Project finance difficult – market is unstable

PT Gikoko – gas flaring project

Programme management approach instead of individual project finance

Arranged for ERPA – received advanced payment for CERs



RE & EE policy solutions have to be tailor-made to best fit into national circumstances there is no best solution

Emerging lessons

• The greatest barrier for energy efficiency is lack of information, institutional support and not technology

Standards and labels are the most effective policy for end use EE

circumstances – there is no best solution

Activities only deliver sustainable results if they are part of the whole energy value chain

The public sector role as a major energy consumer and investor must be mobilised

RE & EE have to be an integrated part of energy planning and legislature – this is also true for low carbon plan

• Standards and labels are the most effective policy for end-use EE

• SWH are the most effective low carbon energy option in cities and buildings

• Rural energy programmes must address the thermal energy needs and generate income to ensure success

• Local funds are available but cannot be utilised due the lack of instruments

• Political support is crucial to achieve high impact – work with your government

• Have a look at www.retscreen.net to help you assess the financial viability of your intended measure

7/14/2010

26



thank you



Renewable Energy & Energy Efficiency Partnership

thank you

Southeast Asia and Pacific Regional Secretariat

18 Kavanagh St

Southbank VIC 3006

Melbourne

T: +61 3 9929 4100

www.reeep.org

[email protected]

www.reegle.info

7/14/2010

27



Renewable Energy and Energy Efficiency Partnership

i t ti l t hi t bli h d t th 2002 W ld S it an international partnership established at the 2002 World Summit on Sustainable Development in Johannesburg

working primarily in developing countries and in countries in transition



REEEP’s focus

facilitating the development of market conditions for the accelerated uptake of renewable energy and energy efficient technologies through:

structuring policy and regulatory initiatives for clean energy, and

facilitating financing for clean energy projects

REEEP adds unique value of bringing the private sector to the table

7/14/2010

28



REEEP partners- businesses- G8 countries- developing

countries

Currently some 300 partners:

• 42 Governments

• International organisations, NGOs and businesses, universities

- NGOs



Regional Secretariats delivering value

7/14/2010

29



REEEP’s goals:

i th t i bilit f d d d l id increase the sustainability of demand and supply side of energy systems

reduce market barriers and financial obstacles for renewables and energy efficiency systems

establish on-the-ground project activities that are targeting policy improvements and innovative finance mechanisms mechanisms

improve energy access for the poor through reliable and clean energy services

replicate success across the developed and developing world

a global overview of energy efficiency & investment trends

Documents

energy efficiency

investmenttrends

energy efficiency

resort sector

energy demand

evaluation

local governments

indonesiaaglobaloverviewofenergyefficiencyamp