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Eastern Asia would benefit from more renewable energy: report

Countries in East Asia can minimise greenhouse gas emissions without threatening their growth by using renewable energy, according to a new report from the World Bank, but governments must act now.

A switch to renewable energy and major investments in energy efficiency in 6 countries could stabilise GHG emissions by 2025, improve the local environment, and enhance energy security, explains Winds of Change: East Asia’s Sustainable Energy Future. The report examines China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

About half of the region’s energy infrastructure by 2020 will be built within the next decade, and what is built during that period, and how, will have an impact on emissions until 2050 and beyond.

This is a solvable problem, the report explains, as policy and technological solutions exist but it will not be easy to obtain political support from the region’s leaders and the money from developed countries for a greener future that includes renewable energy.

“There are tremendously large requirements in terms of additional financing,” explains Vijay Jagannathan of the World Bank. “The report estimates that around US$80 billion a year is needed over the next 20 years to make existing technology carbon-friendly or carbon-neutral, so that’s a big hurdle.”

Renewable energy will require funding to expand

The report says US$25bn per year would be required as concessional financing to cover the incremental costs and risks of renewable energy and energy efficiency. Substantial grants are also needed to build capacity of local stakeholders.

Energy consumption in East Asia has trebled over the past 30 years due to growing cities and rapid industrialisation, and demand is expected to double again in the next 20 years.

The report provides two scenarios: one in which development continues according to current government policies and a second which assumes a low-carbon growth path.

Under the second scenario (the Sustainable Energy Development path) renewable energy is projected to meet a significant proportion of the region’s power needs by 2030.

Share of renewable energy must grow 300%

The current share of low-carbon technologies (renewable energy and nuclear) in power generation needs to increase three-fold from today’s 17%, the report notes. Much of this increase would come primarily from wind, hydropower and biomass in China; hydro, biomass and geothermal in Indonesia; geothermal and hydro in the Philippines; imported hydro and biomass in Thailand; and hydro in Vietnam.

“In the near term, energy efficiency is the largest and lowest cost source of emission reductions,” the report adds. For many countries in the region, that means introducing new policies and regulations that increase the incentives to introduce energy efficient technologies in industries, use energy efficient appliances, and build less carbon-intensive cities.

“Scaling up renewable energy requires putting a price on carbon and providing financial incentives to deploy renewable energy technologies,” it adds.

Recommendations call for scaling-up of renewable energies

The report recommends a number of key policy actions, including:

  • Scaling up renewable energy to meet a major proportion of power demand by 2030 through financial incentive policies for wind, solar, biomass, small hydro, geothermal) or tax on fossil fuels to provide a level playing field between renewable energy and fossil fuels;
  • Policy and institutional reforms to achieve the energy efficiency potential in the region;
  • Accelerating innovation and new clean technologies;
  • Working towards smart urban planning;
  • Developed countries need to transfer substantial financing and low-carbon technologies.

“The World Bank Group is committed to scale up policy advice, knowledge sharing, and financing in sustainable energy to help the region’s governments make such a shift,” the report adds.

“The World Bank needs to increase efforts and focus future Bank energy business in East Asia on energy efficiency, renewable energy, and new technologies. Better integration of new and existing financing sources can increase the magnitude and speed of the shift to a sustainable energy path.”

Renewable energy can hedge against fossil fuel price volatility, the report notes. Increasing fuel prices by 20% increases generation costs by 16% for gas and 6% for coal, but leaves renewable energy practically untouched.

A relatively large share of intermittent renewable energy (such as solar and wind) in power grids may affect reliability of power supply, but unreliability can be addressed in various ways such as hydropower (including pumped storage), load management, energy storage facilities, interconnection with neighbouring provinces and countries, and smart grid management.

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