From heatwaves to floods, Southeast Asia is one of the most vulnerable regions in the world to the impacts of climate change. Demand for energy is also growing rapidly and improving access to energy is fundamental to the region's development goals. Yet most of the energy supplying the region comes from fossil fuels which are intensifying extreme weather events. Reaching Net Zero and transforming the way energy is used is therefore crucial to protecting jobs, infrastructure and lives.
The Carbon Trust worked with the UK government on the Association of Southeast Asian Nations (ASEAN) Low Carbon Energy Programme (LCEP), delivering energy efficiency measures which stabilise demand and bring the region closer to meeting its development targets.
The programme delivered across five principles for enhancing energy efficiency:
- Improving awareness helps facilitate energy-saving behaviours: LCEP identified stakeholders' key concerns around changing energy usage and provided the exact type and format of information they needed to make a difference. The programme connected women to cost-saving lighting and cooling choices, as women often have the biggest influence over energy decisions in the home.
- Strong governance ensures that actions follow ambition: LCEP helped to tie energy efficiency programmes to Nationally Determined Contributions in Thailand, the Philippines and Vietnam, and set clear metrics for success to keep organisations on track.
- Coordinated green finance instruments unlock necessary funding: LCEP worked with the Thai and Malaysian governments to identify a financial mechanism to de-risk energy efficiency projects and make them more attractive to funders.
- Innovative technology and business models create efficiencies which save energy and cost: in Thailand, LCEP piloted an innovative 'paid from savings' cooling service model to replace inefficient refrigerators in 'mom and pop' shops.
- Outreach to vulnerable groups ensures that energy efficiency helps deliver a just transition: LCEP used inclusive interventions to help women-owned businesses in Thailand access the finance needed for energy efficient refrigerators.
Net Zero is essential to prevent further catastrophic climate impacts in Southeast Asia
President Ferdinand Marcos Jr. of the Philippines blamed climate change for the recent deadly onslaught of Tropical Storm Nalgae. He’s right to. The climate crisis is amplifying the intensity and frequency of storms. The vast scale of Nalgae’s torrential rains have killed at least 100 people and displaced over 800,000.1 Southeast Asia is one of the most uniquely exposed regions of the world to the ravages of a changing climate, with heatwaves, droughts, flooding and other extreme weather events threatening not just livelihoods, but lives. Vietnam, Indonesia and Thailand are among the six Asian countries home to a combined 225 million people who will be at risk of disruptive flooding by 2050. Reaching Net Zero is therefore imperative to limit global warming and protect vital infrastructure and precious lives.
ASEAN needs energy to develop, and lots of it
Net Zero also has a vital role to play in meeting the ambitious development targets to lift millions out of poverty set by ASEAN. Crucial to this development is, of course, access to the energy needed to power homes, transport and industry. Demand for energy has grown fast across Southeast Asia over the past two decades and is forecast to rise by 80% by 2040 according to the International Energy Agency (IEA).2 At present however, much of this demand for energy is met by the very fossil fuels wreaking havoc on the climate. Although ASEAN has recognised the considerable benefits of breaking the link between development and energy derived from fossil fuels3 and six Southeast Asian countries have committed to Net Zero targets4, the energy transition will require a huge transformation in the region’s approach to energy. So, how can it be achieved?
The ‘first fuel’: energy efficiency’s role in decoupling development from CO2 emissions
Decoupling development from emissions requires three fundamental tactics: targeted investment in renewable technologies to deliver greener supply, strategic retirement and repurposing of fossil-fuel power generation, and strategic measures to improve energy efficiency to stabilise demand. Investment in renewables in ASEAN will need to be great; the IEA has put the figure at around US$2.5 trillion of investment in energy supply by 20405. But energy efficiency measures are no less significant: they can reduce the energy requirements of ASEAN’s development by redirecting this so-called ‘first fuel’ towards impactful economic activities. The UN’s Economic and Social Commission for Asia and the Pacific (UNESCAP) highlights that energy efficiency measures in Asia could save the region 35% of energy consumption over the business-as-usual case by 2035.
To support ASEAN on its sustainable development pathway, the Carbon Trust worked with the UK Government on the ASEAN Low Carbon Energy Programme (LCEP), funded by £15m of UK Prosperity Programme funding.
Many ASEAN countries already have national energy efficiency targets, but delivering on them is proving complex and challenging. The Carbon Trust’s holistic, systems-led approach to improving energy efficiency across the region centred on the ability of five key enabling conditions to accelerate progress towards Net Zero: awareness, governance, finance, technology and innovation, and a just transition. The Net Zero Intelligence Unit outlined the value of combining these five conditions ahead of COP27, but they were truly put through their paces in the Carbon Trust’s work on the LCEP. The result? Enhanced energy efficiency measures that promise to make ASEAN’s development targets more achievable.
Five principles for enhancing energy efficiency in Southeast Asia
Critical to any ambitious target is knowing what the end goal is. The LCEP worked to improve widespread awareness of the benefits energy efficiency can bring to both the climate and personal finances. In Laos and Cambodia, and in Myanmar prior to 2020, the programme deployed a multimedia awareness campaign that included on-street, print and digital advertising that reached hundreds of thousands of homes and businesses to help change behaviours around energy usage. LCEP used local research and focus groups to identify stakeholders’ key concerns and understanding on how and why to lower energy demand, and to determine the type and format of information required by them to make a difference. In particular, LCEP research revealed that women played an important role in promoting energy efficiency in households as they often lead purchasing decisions and manage energy use. The Programme concentrated on improving their awareness of simple cost-saving steps, such as lowering air conditioning usage or ensuring unneeded lights are switched off, to enable informed decision-making.
There is a strong case for improving awareness of what Net Zero will require amongst governments, businesses and financial institutions, but there is an equally compelling case for improving awareness of the steps that individual energy consumers can take. When part of wider collective action, individual actions are crucial to realising the potential benefits of the energy transition by ensuring that this ‘first fuel’ can be prioritised for impactful economic activities.
As with any step towards Net Zero, there is a risk that ASEAN’s energy efficiency ambitions will remain just that - ambitions for the future. Strong governance mechanisms are needed to ensure targets are followed by meaningful action. Through LCEP, the Carbon Trust supported governments in Thailand, the Philippines and Vietnam to implement elements of their nationwide energy efficiency programmes with robust benchmarks for success aligned to Nationally Determined Contributions (NDCs). With adequate government interventions and reporting mechanisms in place, energy efficiency can become common practice within businesses, saving vast amounts of energy. In Malaysia, LCEP looked at how to turn ambition into action in the industrial sector by benchmarking best practice in the Malaysian context and analysing the energy saving potential within energy-intensive factories. This study will support Malaysia’s Energy Commission and the Ministry of Energy and Natural Resources in their preparation of the Energy Efficiency and Conservation Act, which aims to introduce new regulations for demand-side thermal energy management. Setting and embedding regulations will ensure ASEAN’s energy efficiency targets are meaningful milestones in the energy transition.
While renewable energy infrastructure in ASEAN will need huge amounts of financial support, so do energy efficiency projects. Combining the Carbon Trust’s experience in green finance and policy design, LCEP assessed the landscape for energy efficiency finance in Malaysia, Philippines, and Thailand to identify a number of opportunities to mobilise finance for energy efficiency projects. In Thailand, LCEP worked with the government’s Department of Alternative Energy Development and Efficiency to identify a financial mechanism that would de-risk energy efficiency projects so they are more attractive to banks for loans or investment. This work was part of the implementation of the government’s New Energy Plan 2022. In Malaysia, LCEP supported the enhancement of the government’s green technology directory MyHijau to inform financial institutions on energy efficiency project financing decisions and to validate the performance and quality of different technologies. Coordinated development of more green finance mechanisms will help to unlock the crucial finance needed to catalyse energy efficiency in the region.
Technology and Innovation
Throughout the delivery of LCEP, the Carbon Trust prioritised projects that explored business model innovations and the bringing together of influential business leaders to collaborate on energy efficiency solutions. In Thailand, LCEP engaged with technology suppliers and local businesses to pilot an innovative ‘paid from savings’ cooling service model that replaced existing inefficient refrigerators in small ‘mom and pop’ shops. Partnering with an energy efficient refrigerator supplier and an energy services company allowed the financial burden to be taken out of the hands of those that could not afford an upgrade. This business model increased the commercial attractiveness of appliance replacement by saving energy and costs for Thailand’s small and medium local enterprises. Innovations like this can harness the power of the ‘first fuel’ which is critical if ASEAN is to meet the surging energy demand required for its cooling needs. Cooling is expected to occupy 30% of peak electricity demand by 2040 under current policy scenarios of ASEAN countries6. As a result, operational efficiencies through technology and innovation are vital to avoid huge strain on energy systems.
A Just Transition
Ensuring Net Zero policies lead to a fairer future is essential for gaining the widespread support many behaviour change measures depend upon. The transition must be navigated responsibly to avoid reinforcing existing social inequalities, and work to address negative unintended consequences for communities, workers and other affected stakeholders. Throughout the LCEP, the Carbon Trust took steps to ensure energy efficiency measures could help deliver a more equitable future. The Carbon Trust collaborated with local partners to strengthen outreach to communities and marginalised groups most adversely impacted by extreme weather brought about by climate change. When LCEP piloted innovative business models for the cooling service sector in Thailand, inclusive interventions were used to ensure women-owned businesses were supported in accessing financing for replacing inefficient refrigerators. It is essential that these communities are involved in, and have a say in, the changes that will impact them.
Conclusion: five principles for unlocking ‘first fuel’ on the road to Net Zero
Southeast Asia’s development needs are translating directly into increased energy demand, but the old model of burning more and using more won’t lead to the kind of stable future ASEAN aims to create. A new approach of ensuring energy supply comes from predominantly renewable sources, and energy demand is consciously and carefully managed, will ensure a brighter future for ASEAN’s climate-vulnerable population. The ‘first fuel’, uncovered through enhanced energy efficiency, can accelerate ASEAN’s transition to Net Zero by making available energy work smarter. Many of the steps on the road to Net Zero require interconnected, systems-led thinking. The five principles outlined here provide a framework for bringing the pieces of the puzzle together.
The Net Zero Intelligence Unit would like to thank Eloise Burnett for her contribution to this insight.
- Tropical Storm Nalgae hits the Philippines | ActionAid International
- Key findings – Southeast Asia Energy Outlook 2022 – Analysis - IEA
- ASEAN Development Outlook - ASEAN Main Portal
- Net Zero Tracker | Welcome
- ASEAN Low Carbon Energy Programme - GOV.UK (www.gov.uk)
- The Future of cooling in Southeast Asia – Analysis - IEA