Getting East Asia onto a sustainable energy path

April 19, 2010

  • East Asia can maintain economic growth, mitigate climate change, and improve energy security.
  • This requires that governments take immediate action toward much higher energy efficiency.
  • The shift to a clean energy revolution requires major policy and institutional reforms.

SINGAPORE, April 19 2010 — A new report from the World Bank says that countries in East Asia can minimize greenhouse gas emissions without threatening their growth.

The report’s authors argue that the time for East Asian governments to act is now, because the decisions they make today will have an impact on emissions for decades to come.

Major investments in energy efficiency and a switch to renewable power in six East Asian countries could stabilize greenhouse gas emissions by 2025, improve the local environment, and enhance energy security, according to the World Bank report—Winds of Change: East Asia’s Sustainable Energy Future. The six countries are China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

“East Asia is definitely ahead of the rest of the world,” says Xiaodong Wang, one of the report’s lead authors. “First of all, East Asia’s economic growth has been the fastest in the world over the past three decades and this fast growth accompanied by rapid urbanization have brought two challenges—environmental sustainability and energy security. Many East Asian countries recognize these challenges—that’s why they’re getting on to a green growth path.”

About half the region’s energy infrastructure by 2020 will be built in the next 10 years—and what gets built, and how, will have an impact on energy emissions until 2050 and beyond. This is a solvable problem, as the policy and technological solutions already exist but getting the political support from the region’s leaders and the money from developed countries for a greener future will not be easy.

Vijay Jagannathan, energy sector manager for the East Asia and Pacific region of the World Bank says: “There are tremendously large requirements in terms of additional financing. The report estimates that around $80 billion dollars a year is needed over the next 20 years to make existing technology carbon-friendly or carbon-neutral. So that’s a big hurdle.”

Growing cities and rapid industrialization has seen a trebling of energy consumption in East Asia over the past 30 years. And that demand is expected to double again in the next 20 years.

Comparing the current and the low-carbon growth path scenarios

The report lays out two scenarios: one in which development continues according to current government policies and a second one which assumes a low-carbon growth path. Under the second scenario—known as the Sustainable Energy Development path—renewable energy (including hydro, wind, biomass, geothermal, and solar) is projected to meet a significant proportion of the region’s power needs by 2030.

But to get there, the current share of low-carbon technologies (renewable energy and nuclear) in power generation needs to increase three-fold from today’s 17 percent. Much of this increase would come primarily from hydropower, wind, 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.

The first step on the sustainable energy path is energy conservation. “In the near term, energy efficiency is the largest and lowest cost source of emission reductions,” the report says.

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.

East Asia has already made major strides in reducing its energy intensity. For example, over the last 10 years, China has reduced its energy intensity by 3.4 percent a year and now the Government is targeting a reduction of 4.2 percent per year. Under the Sustainable Energy Development path, China would need to reduce energy intensity by 4.3 percent annually over the next two decades. “This is a daunting goal given that China is at a developmental stage in which energy-intensive industries, driven by demand from domestic and export production, dominate the economy,” the report says.

The East Asia and Pacific region is already well acquainted with the impacts of climate change, being one of the most vulnerable areas of the world to its threats. Particularly vulnerable are the large numbers of people living along the region’s coastlines and on low-lying islands. And with crop yields in many East Asian countries projected to decline, due partly to rising temperatures and partly to extreme weather events, even more people are at risk.

The report quotes the 2006 Stern Review which estimated that, without immediate action, the
overall costs and risks of climate change could be at least 5 percent of global GDP each year and could cost more for vulnerable East Asia and Pacific countries.


The report recommends a number of key policy actions. Including:

  • Policy and institutional reforms to achieve the huge energy efficiency potential in the region. A mix of energy pricing reforms, regulations such as economy-wide energy intensity targets, and financial incentives are required to promote energy conservation. Since nearly half the region’s energy capital stocks (power plants, buildings, roads) needed by 2020 are yet to be built, this is the most cost-effective option.
  • Scaling up renewable energy to meet a major proportion of power demand by 2030. This can be achieved through financial incentive policies for renewable energy (wind, biomass, small hydro, geothermal, and solar) or tax on fossil fuels to provide a level playing field between the renewables and fossil fuels. China is already the world’s largest producer of renewable energy.
  • Accelerating innovation and new clean technologies. While proven technologies can meet the bulk of emissions reductions in the short- to medium-term, innovations and new technologies are critical to bending the emissions curve downwards over the long-term beyond 2030. Given the long lead time for technology development, research, development, and demonstration need to ramp up now.
  • Working across sectors for smart urban planning. Major reductions in energy demand and CO2 emissions can be achieved through smart urban planning based on higher density, more spatially compact cities, and more mixed-use design that allows growth near city centers and transit corridors to prevent urban sprawl. Smart urban planning also needs to go hand in hand with public transport and clean energy options such as green buildings and efficient vehicles.
  • Developed countries need to transfer substantial financing and low-carbon technologies. Developing countries cannot do it alone. They need the support of the international community. Substantial concessional financing is required to cover the additional costs and risks of energy efficiency and renewable energy. Technology transfer and institutional strengthening is also needed.