Why is Asia such an important region for clean energy deployment? WRI experts respond.
From June 22-24, the Asian Development Bank (ADB), the U.S. Agency for International Development (USAID) and the World Resources Institute (WRI) will co-host the premiere knowledge-sharing platform for clean energy investment in Asia, the 6th Asia Clean Energy Forum (ACEF). Taking place in Manila, Philippines, the event brings together energy leaders from around the world to discuss clean energy policy, regulation, financing and innovative business models.
I sat down with WRI experts who will attend the events in Manila and asked each of them, what is unique about Asia’s path to low-carbon development?
Opportunities of a Low-Carbon Economy
Large and small countries in Asia understand the opportunities of a low-carbon economy. We’re seeing these countries transition rapidly to renewable energy, and in doing so driving global markets. China, for instance, is leading the world in renewable energy investment, and others are looking to follow its lead. These successes may help drive even greater ambition among Asian countries, allowing countries to reap the economic, environmental and development benefits of a low-carbon economy.
— Jennifer Morgan, Director, Climate and Energy Program
Global Leadership and Innovation
The low-carbon transformation will be very different from technological transformations of the past because many of the innovations will come from developing countries, in particular countries from Asia.
These are the countries making large scale investments in energy infrastructure. They are transforming their economies to be competitive participants in the global clean energy value chain, as they make the transition from low cost, low skill manufacturing to high skill, high value-added manufacturing. They see the potential to become global leaders in the clean energy sector while meeting domestic energy challenges.
The Meaning of “Clean” Energy
Asia is home to a large proportion of the world’s poor, who either have no or very limited access to energy. And it’s also home to some serious gaps in governance. That’s why when we say “clean energy” we need to make sure we’re talking about both a type of fuel and an absence of corruption. There is no reason why vested interests will not become entrenched in the clean energy space, just as they have in the energy sector in the past.
So governments need to strive for more transparency, inclusive decision-making, and accountability. Business as usual will allow inefficiencies to continue, with little if any regulatory oversight.
Countries that exclude people from decisions about clean energy deployment run serious governance risks. To a farmer whose land is taken over without due process, it’s of very little consequence whether it’s for coal or for a solar PV plant. The governance challenges in the energy sector don’t go away just by calling it “clean.”
Scaling Up Smart Renewable Energy Policies
Asian countries are providing more and more examples of smart policies that lead to increased deployment of renewable energy in line with their broader development objectives. And they are learning from each other, instead of looking only to developed countries or international institutions for advice.
These countries can develop good models of what we refer to as “smart renewable energy policy”, but if they want to scale them up to the level that is necessary to meet the huge energy challenge Asia faces, they will need international financial support. For example, both India and Thailand pay guaranteed prices to renewable energy producers, paid for with a surcharge on electricity. They are supporting renewable energy with their own resources. Yet their resources are limited, so their support for renewables can only go so far. Donors need to step in, build on existing successes and help bring them to scale. A meeting like ACEF brings donor institutions and in-country experts together and provides an opportunity to form the partnerships necessary to expand on countries’ successes so far.
A Role for Entrepreneurs
Entrepreneurs in Asia are taking on the issue of energy access. There’s a lot of talk about large solar installations, but those come with their own storage and distribution challenges – how are you going to expand the grid to get that solar energy to a remote village? That’s why there is so much potential for decentralized clean energy, like solar lanterns, microhydro plants, and biomass gasification.
For the first time we’re starting to see a critical mass of companies that are selling these kinds of electricity products, and prices keep coming down. So it’s no longer an issue of technology, or price. It’s now about getting these technologies to consumers. That’s a really important shift, and entrepreneurs are coming up with creative solutions to tap into this very significant rural market.
Energy Efficiency Brings a Competitive Advantage
In Asia, there’s very real pressure for companies to invest in energy efficiency, both from governments and from large customers who want to squeeze carbon out of their supply chains.
So there’s this confluence of very strong policy drivers, very strong demand drivers, and industries that recognize the opportunity to gain a competitive advantage. These all create the conditions for a good market for energy efficiency technology.
The challenge now is that a lot of the low-hanging fruit for energy efficiency projects has already been achieved. The next step is for companies to make longer term investments, and for that many of them need external financing. If Asian countries can help companies address some of the financing and capacity barriers, they can jumpstart a lot of new technology and continue to drive costs down.
— Xiaoyu Shi, Associate, Climate & Energy Program
An Urgent Necessity
Right now Asia is at a crossroads. Energy demand in the region continues to grow rapidly and is expected to rise at a rate well above the global average. Asia must decide whether to meet this demand using traditional carbon-intensive technologies or switch to clean energy and enable the transition to a low-carbon economy.
Asian countries face serious threats from the potential impacts of climate change on their economies, their ecosystems and their people. This combined with rising prices for food and fossil fuels make the case for low-carbon future. This is no longer a matter of choice - it’s an urgent necessity. With Asia leading the charge on massive investments in wind, solar, biomass and geothermal, it has the opportunity to become a major hub for clean energy investments.