FOREWORD

Facilitating financing of energy efficiency investments is a critical issue that needs to be addressed by policy makers in charge of energy, environment and industrial sector development. This publication presents selected materials that may be informative and useful for this policy development and decision making process.

Like in other parts of the global economy, investors and industry developers in the Asian and Pacific region are increasingly aware of the growing need for environmental protection. At the same time, however, intensifying national and international competition also compels industrial sector managers to minimize production and capital costs. A wealth of studies have identified the many technical options for making manufacturing processes more energy or resource efficient. However, options for improving energy efficiency are often ignored, in particular in those situations in which considerable additional first costs have to be incurred. In the Asian and Pacific region, the recent unprecedented financial and economic crisis has particularly aggravated this situation. Energy efficiency investment options are often perceived as "non-essential" and are postponed or accorded "low priority" if no sufficient external support is provided.

Investments in energy efficiency often require higher first costs, but result in lower operational costs, lower energy costs and positive external environmental effects. However, without financial incentives many potential energy efficiency improvements remain unrealized. Hence, the development of an effective policy framework promoting investments in energy efficiency will likely remain a challenging task during the years ahead.

During 1999 and 2000, the ESCAP secretariat organized two seminars on the subject of promotion of energy efficiency in industry and financing of related public and private sector investments. The first regional seminar was held in Bangkok, Thailand, 30 November - 02 December, 1999. A follow-up sub-regional workshop on the same subject was held in Almaty, Kazakhstan, 11-12 May 2000. The materials presented in this publication derive from papers and presentations prepared for and discussed at these events.

This publication is divided into five parts: Part One presents an introductory overview to the policy issues involved in promoting investments in energy efficiency and productivity development in industry. Part Two gives an overview on financing options for investors. Part Three describes policies and experiences of three selected industrialized and newly industrializing countries which have emphasized active energy efficiency investment prevention to counter the growing energy import dependencies of their respective economies. Three individual resource persons from Japan, Republic of Korea and Thailand have contributed discussion papers. Part Four discusses the particular difficulties faced by the countries with economies in transition in the promotion of investments for energy efficiency. Finally, Part Five presents an outlook to international cooperation in financing energy efficiency investments, which is expected to gain additional scope as international consensus develops on regional or global cooperation to counter the threats of climate change.

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The introductory overview presented in Part One was compiled by Ralph D. Wahnschafft, Energy Resources Section, ESCAP. Part Five was also prepared by the Secretariat which the assistance of Ga-Hyeong Hur, Seoul National University, Republic of Korea. The papers presented in Parts Two, Three and Four were authored by invited experts and resource persons and thus reflect individual views and not necessarily those of the Secretariat. The manuscript for this publication was prepared during the first half of 2000.

Several experts have contributed to this publication as consultants or resource persons. These experts include Krishna Mohan Rao (M.K. Raju Consultants, Chennai, India), Ayako Sato (Energy Conservation Center of Japan, Tokyo, Japan), Kwan-Hong Shin (Korea Energy Management Corporation KEMCO, Republic of Korea), Pongpisit Viseshakul (Energy Division, National Energy Policy Office, Bangkok, Thailand).

Following experts from countries in Central Asia have also contributed materials included in this publication: K. Suleymanov (Ministry of Power, Industry and Trade, Kazakhstan); B. Nurdjanov (Kazakhstan Energy Association, Almaty, Kazakhstan); V.V. Stoyak (Almaty Institute of Power Engineering and Communications, Almaty, Kazakhstan); A. Tyumenbaev 9State Energy Agency, Bishkek, Kyrgyzstan); D. Mansurov (Tadjik Power Company, Dushanbe, Tadjikistan); H. Abdullaev (Ministry of Power Engineering and Electrification, Tashkent, Uzbekistan); and T. Nasyrov (Energy Center of Uzbekistan, Tashkent, Uzbekistan).

ESCAP wishes to acknowledge with appreciation these contributions. In the preparation of this publication, the secretariat has greatly benefited from voluntary extra-budgetary contribution received from the Government of Japan for operational activities to promote energy efficiency during fiscal 1999 and 2000. The generous technical and financial support provided to the secretariat is herewith gratefully acknowledged.

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