The purpose of this book is to identify a promising modality of energy efficiency cooperation within East Asia. Energy efficiency is of interest to all countries in the region, and a key pillar for climate change mitigation. In order to explore cooperation opportunities in greater detail, international research experts collaborated for one year. This book is the product of their collaboration.
We reviewed existing energy efficiency policy and international cooperation in East Asia and found the following:
- All countries in East Asia already have some energy efficiency policies in place, and many have made great progress. But there still exists a large potential and an acute need for further energy efficiency improvement. Energy efficiency policies require ongoing adjustment and revitalization as technology advances. International cooperation can promote energy efficiency improvement and realize multiple benefits, including energy security, economic stability and environmental quality.
- In terms of cooperation mechanisms, there is growing importance placed on policy development cooperation beyond policy dialogue to support host countries in creating a top-down push and incentives for energy efficiency improvement to leverage private and government financing.
- In terms of the institutional structure of such cooperation, we observe a growing role for independent, international networks that facilitate the development of energy efficiency policies.
- Concerning sectors targeted by cooperation, there is greater attention being paid to more distributed targets such as appliances, buildings and demand-side management. The industrial sector remains important, due to its large share of energy consumption. In industrial sector cooperation, we observe a trend from hard technology demonstration to soft and more comprehensive policy tools, including voluntary agreements and energy management systems.
- Despite existing cooperation efforts, there are still massive opportunities for government intervention in energy efficiency improvement to accelerate the uptake of new, efficient technology. In contrast with the high-level political attention to energy efficiency improvement, energy efficiency agencies are chronically understaffed, underfinanced, and lack the capacity to develop and implement necessary energy efficiency
- While existing international organizations are financing several policy development activities, the resources have not been sufficient to support many worthwhile activities. In addition, host countries have frequently found the need for a quicker response than multilateral institutions can typically provide.
In sum, most governments understand that energy efficiency improvements have multiple benefits including energy security, economic efficiency, pollution reduction and climate change prevention. However, political attention and resource allocation have rarely been enough to consistently implement energy efficiency policies on the ground. Many countries lack dedicated institutions with the scientific expertise and industrial participation that are necessary to regularly update regulations and monitor compliance. In many countries, there is only a handful of staff in charge of energy efficiency policies. Thus there is a need to strengthen the energy efficiency institutions and to enhance their activities through international cooperation. We propose a Policy Development Fund for East Asian Energy Efficiency Cooperation to address these needs (see Figure ES1). policy.
The Fund is intended to:
- meet national priorities of participating countries;
- aim for massive energy savings and significant emissions reductions through market transformation and the leveraging of private sector resources; an
- commit to concrete actions and support policy mechanisms for such actions.
The major characteristics can be summarized as follows:
1. Political Agreement
The Fund begins from a small number of countries and expands later. It starts with a multilateral agreement from the outset to avoid capture by narrow interests, but the number of initial participants is kept small to emphasize areas of agreement and to achieve alignment of interests.
2. Design of the Fund
- The fund is new and dedicated to energy efficiency. A new and dedicated fund can respond more quickly, in contrast to lengthy project procedures required by international organizations established for other purposes, such as development aid.
- The management structure (Chief Executive Officer, Executive Board, staff) is independent and professional in order to insulate the entity from short-term political changes.
- The activities are restricted to the region and to energy efficiency issues in order to secure alignment of interests and effective management.
- Like-minded countries in East Asia join the independent Fund. Financial contributions are voluntary. Expected initial scale is US$10 million annually. Private sponsors may also contribute.
- The Fund supports the formulation and initial implementation of energy efficiency policy in member countries. Recipients commit themselves to implementation.
- Recipients, not donors, retain discretion over types and stringency of policy measures.
- CEO makes decisions, including project selection, under guidance of Executive Board. CEO is nominated by the Executive Board.
- Projects are selected by the CEO using cost effectiveness as a key criterion. Cost effectiveness is defined as energy savings or CO2 emission reductions per amount of grant.
- The Fund supports new projects and provides co-financing for existing efforts.
The Fund’s potential target technologies and sectors are numerous, given the broad definition of the Fund—policy development for energy efficiency. Since nearly all sectors in developing countries need further policy development—including information gathering, law stipulation, standard setting, monitoring, enforcement and revision—there is almost an infinite list of potential areas of cooperation. An indicative list of projects is provided in Table ES1. Four examples are provided in the main text to further illustrate how the Fund works.
The estimates of the cost to a government to institute and maintain an energy efficiency policy that induces cost-saving energy and emission reductions have been scarce so far, but some early estimates indicate that the costs are typically less than US$0.10 per ton of carbon.
Table ES1. Indicative list of target sectors under the Policy Development Fund.
Note: The details for projects in italics are given in Chapter 6.
- ^ In this book we define East Asia as Japan, Korea and China with ASEAN countries.
This is a chapter from Cooperative Climate: Energy Efficiency Action in East Asia (e-book).
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