apec bali 2013
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TRANSCRIPT
IPEEC is an Autonomous Entity
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Established in 2009 at the G8 summit in Italy; Reports to G20, Clean Energy Ministerial & others
Facilitates Rapid Deployment of Clean Technologies Worldwide
The IPEEC Secretariat is located in Paris, France
Members account for over 80% of world GDP and energy use.
Italy
Russia
Japan
Republic of Korea
China
India
Australia
Germany
United Kingdom
France
Canada
USA
Mexico
Brazil
EU
South Africa
Global addi)onal investment by end-‐use sector
Transport
0
200
400
600
800
1 000
1 200
2015 2020 2025 2030 2035
Services Residen)al
Industry
Billion
dollars (2
011)
Addi$onal investments required in end-‐use efficiency are $11.8 trillion over 2012-‐2035; saving consumers $17.5 trillion in energy expenditures in this period
(Source: IEA)
The Efficient World Scenario rela2ve to the New Policies Scenario
Global primary energy demand by scenario
12 000
13 000
14 000
15 000
16 000
17 000
18 000
2010 2015 2020 2025 2030 2035
Mtoe
New Policies Scenario
Efficient World Scenario
EWS total primary energy demand
Mtoe
2010 2035
Other renewables 112 650
Bioenergy 1 277 1 749
Hydro 295 476
Nuclear 719 1 094
Gas 2 740 3 541
Oil 4 113 4 061
Coal 3 474 3 274
Primary energy savings achieved in the Efficient World Scenario in 2035 are equivalent to 18% of global energy demand in 2010
Oil import bills in selected countries by scenario
0
150
300
450
600
Billion
dollars (2
011)
2011
New Policies Scenario, 2035
Efficient World Scenario, 2035
Japan China United States
European Union
India
Energy efficiency cuts fossil fuel import bills by $570 billion in the Efficient World Scenario. Almost 70% of these savings accrue from lower oil import bills.
Barriers to Energy Efficiency
Barrier Examples
Market • Market organisa)on and price distor)ons prevent customers from appraising the true value of energy efficiency.
• The principal agent problem, in which the investor does not reap the rewards of improved efficiency (the classic case being the landlord-‐tenant situa)on).
• Transac)on costs (project costs are high rela)ve to energy savings).
Financial • Up-‐front costs and dispersed benefits discourage investors. • Percep)on of EE investments as complicated & risky -‐ high transac)on costs. • Lack of awareness of financial benefits on the part of financial ins)tu)ons.
Informa2on and awareness
• Lack of sufficient informa)on and understanding, on the part of consumers, to make ra)onal consump)on and investment decisions.
Regulatory and ins2tu2onal
• Energy tariffs that discourage EE investment (such as declining block prices and fuel subsidies).
• Incen)ve structures encourage energy providers to sell energy rather than invest in cost-‐effec)ve energy efficiency.
• Ins)tu)onal bias towards supply-‐side investments.
Technical • Lack of affordable energy efficiency technologies suitable to local condi)ons. • Insufficient local capaci)es to iden)fy, develop, implement and maintain
energy efficiency investments.
Methodological challenges
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Challenge Proposed Approach
Multi-‐dimensionality Track global performance on energy intensity complemented by energy intensity of major economic sectors and efficiency of energy industry Move towards better tracking of targets, policies, institutions, investments
Intensity vs. Efficiency Track energy intensity for countries and major regions/blocks, where feasible complement with efficiency decomposition to strip out structural effects
Market Exchange Rate vs. Purchasing Power Parity
Track purchasing power parity
Primary vs. final energy Track global energy intensity in terms of primary energy demand Track sectoral energy intensity in terms of final energy consumption
Volatility Track a five year moving average trend
Last decade shows slowing rates of improvement in energy intensity (higher when adjusted)
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-‐1.61%
-‐0.99%
-‐1.30%
1990-‐2000 2000-‐2010 1990-‐2010
-‐1.77%
-‐1.21%
-‐1.49%
1990-‐2000 2000-‐2010 1990-‐2010
CAGR Energy Intensity (PPP)
Adjusted CAGR Energy Intensity
Source: IEA, WDI
East Asia accounted for the lion’s share of energy saved, even as Middle Eastern energy intensity deteriorated
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Energy Intensity Trends by Region Share of Cumulative Savings by Region, 1990-2010
Source: IEA, WDI
-‐1.7% -‐1.3%
-‐2.3%
-‐3.2%
0.8%
-‐1.1% -‐0.5%
-‐1.5% -‐1.3%
-‐0.5% -‐0.1%
-‐1.1%
0
10
20
30
40
-‐4%
-‐2%
0%
2%
NAm EU EE CCA WA EA SEA SA Oceania LAC NAf SSA
CAGR 1990-‐2010 (left) EI in 1990 (right) EI in 2010 (right) MJ/$2005 PPP
EA (58%) NAm (17%) EU (10%) EE (6%) SA (4%) CCA (2%) LAC (1%) SSA (1%) Oceania ( <1%) SEA (<1%)
Service sector contributed the most to energy savings during last 20 years
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Energy Intensity Trends by Sector
Share of Cumulative Savings by Sector
Source: IEA, WDI
-‐1.4%
-‐2.2%
-‐1.4%
0
5
10
-‐3%
0% Industry Agriculture Services
CAGR 1990-‐2010 (left) EI in 1990 (right) EI in 2010 (right)
MJ/$2005 PPP
Industry
40% Service 56%
Agriculture 4%
Note: Services include services, transport, and residential
Areas where International Expertise can Help
Financial mechanisms to promote EE;
Enhanced EE in industry and buildings;
Improved energy management;
Data collection and indicators;
Development of policies and action plans; and
Enhanced coordination of regional actions.
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Energy Efficiency Market Penetration
Energy efficiency firms attracted nearly $1.1 billion in venture capital in 2010, almost double that of 2007.
LIGHTING: LED is the fastest growing market at a CAGR of 14.9% from 2011 to 2016: Asia will witness the highest growth (CAGR of 16.6%).
BUILDINGS: EE market $87.0bn in 2012. GREEN IT: Cloud computing revenue to continue worldwide
growth at a compound annual growth rate (CAGR) of 28.8%: Market increase: US$46 billion (2009) to US$210.3 billion (2015). EE measures could drive total data center energy expenditures down
from $23.3 billion in 2010 to $16.0 billion in 2020 (28% reduction in GHG emissions from 2010 levels).
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Energy Efficiency Financing Trends
Asia Pacific deals by sector
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Source: Final Renewables Deals 2012 Outlook 2011 Review, PwC.
Energy Service Companies (ESCOs)
The ESCO industry in Asia Pacific is poised to grow: From $3.0 billion in annual revenue in 2009 to $18.5
billion by 2016. 421% increase from 2010 levels.
Example: Despite not even being operational until 1998, annual revenues for China’s ESCO industry to reach $17 billion by 2015, increasing its share of the APAC regional market to over 90% (Source: Pike Research).
Roadblocks to successful EE financing?
An economic actor perspective – financial actors and market actors:
Fixed cost of lending incentivizes banks to focus on large corporate loans.
Information asymmetry between banks and borrowers: Adverse selection: Average pricing will attract risky borrowers and turn away
attractive borrowers; Moral Hazard: Risky behavior as borrower knows that bank has imperfect oversight.
Lack of credit bureaus & clear credit history increases risk-‐assessment costs.
Inadequate knowledge and experience with the product .
Inefficient price signals – consump)on disconnected from cost.
Network of contractors & suppliers unavailable or inexperienced.
IDENTIFIED GAPS FOR ENABLING ESCO PROJECTS (EBRD - 2012)
Technical gaps: • Lack of awareness and
information • Clients lack of expertise and
resources for preparing ESCO projects/tenders
Regulatory gaps: • No clarity of legal procedures
regarding ESCO projects: • procurement • budgetary treatment • Lack of administrative
instructions/guidance • Lack of contract and tender
templates • Lack of M&V protocols and
unstable customers
Financing gaps: • Internal funding by public
building: • lack funding • debt ceilings reached
• External funding: • ESCOs do not finance
long-term on balance sheet • banks lack experience in
ESCO projects and don’t offer forfeiting (buying accounts receivables) + require high level of collateral for loans
What is Needed for ESCOs to be Successful?
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1. Strong legal framework a) Contract enforcement, b) Market transparency,
2. Monitoring & Verification procedures (M&V),
3. Possibly, fiscal incentives or other policies supporting ESCOs,
4. Rational energy prices . Without these conditions, ESCOs have to
focus on basic services: • Purchasing, installa)on & maintenance,
• Management & upgrade of equipment.
The complexity of the EPC depends on the type of market
1. Technical & practical experience.
2. Capacity to arrange & manage financing, and to mitigate financial risks.
3. Business entrepreneurship & project/client management skills.
Source: Sun, Zhu, Taylor (2011)
ESCOs need Specific Skills
Some Innovative Financing Instruments
• Innovative EE financing instruments in key areas:
• Innovative funds for securing private financing include : • Interest rate buy down fund; • Partial risk guarantee/loan loss recovery fund; • Venture capital fund, etc.
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Area of Innovation Innovative Instrument
Lending Revolving Loan Fund Repayment On Bill Financing Source of capital Revenue Decoupling,
Energy Conservation Bonds
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Thank you!
Any questions? Please contact: [email protected]
[email protected] 9 rue de la Fédération
75739 Paris France