ESCAP Energy Committee Opening Session

Delivered at UNCC in Bangkok, Thailand

Distinguished delegates,
Ladies and Gentlemen,

Welcome to the inaugural meeting of the ESCAP Energy Committee.

I would like personally thank all the member States who have supported ESCAP to institutionalise and operationalise this Energy Committee. This Committee actually sets the stage for member States to promote enhanced regional cooperation that holds promise to enhance prospects for sustainable energy development. We meet as the global community works together to realise a target for limiting climate change through the Paris Agreement. The G20, under the presidencies of Germany and China, has endorsed effective cooperation on sustainable energy. In my remarks, I would like to reflect on the energy challenges and opportunities for which this Committee can develop regional strategies, solutions, guide us and hopefully implement what we agree upon.

The diversity of Asia and the Pacific leads to a diversity of challenges and opportunities that need to be addressed to secure its energy future. But as I mentioned with challenges come opportunities, and this platform is all about discussing opportunities and determining solutions. East Asia, Pacific Island and major countries of South Asia all have an overwhelming reliance on imported fossil fuels. Not only does this result in vulnerabilities to supply disruption and international oil price volatility, but also significantly limits Asia’s ability to provide universal access to electricity or affordable supplies of energy, that underpin social and economic progress. In contrast, many of the Central Asian republics as well as the Russian Federation have surpluses of gas and hydropower that need market access via cross-border energy networks to realise their benefits. All countries need to ratchet up carbon reduction ambition over time to bridge the greenhouse emissions gap for the two degree target. Air pollution has to be contained, as burning fossil fuels has reached extremely unhealthy levels across many of Asia’s urban centres, affecting population heath and reducing GDP. For example in the case of China it is estimated that GDP is affected by as much as 10 percent according to some estimates. 1 Recent deterioration of air quality is forcing a rethink of energy choices and infrastructure in urban areas. I highlight these matters upfront because the Sustainable Development process is all about inter-sectoral linkages and working in an integrated manner, however energy is the lifeline, and as such ESCAP has been striving to ensure there is a platform member States can reinforce energy sector reform and improved energy connectivity for sustainable development.

Despite this diversity of national circumstances, there are common challenges. We need more energy, from increasingly non-polluting and low carbon sources and must use it efficiently to boost productivity and ensure sufficiency. Energy must be secure and affordable. And it must be available to all - to both rich and poor, rural and urban. Sustainable Development Goal 7 provides an agreed future vision for the region’s energy – to ensure access to affordable, reliable, sustainable and modern energy for all by 2030.

The energy transition to take us to this future is inevitable; it is essential and has already started. Our task is to accelerate it.

Let me now turn to opportunities. The energy intensity of our economies is declining as we embrace greater efficiency and economies shift away from energy intensive industries. Costs of wind and solar technologies are tumbling, becoming competitive with fossil fuels. Global renewable energy investments have outpaced fossil fuel investment, globally rising to $160 billion, with half of this made in the Asia-Pacific in 2015. 2 Off-grid renewable technologies are flourishing in energy access markets, replacing the need for many grid extensions. Asia-Pacific has enormous potential to reorient its energy system to a sustainable and low carbon model as we have ample resources of solar, wind, hydro and gas which can be harnessed with emerging technologies, skills and capacities. Coal use in China peaked in 2013 and is on its way to decline.

Delivering an energy transition anchored on sustainable energy is no simple task. Consistent efforts along many parallel tracks are needed. Long-term and unwavering political support is needed to tackle the short-term costs and barriers. The political, corporate and institutional inertia that has from many decades been locked to the use of fossil fuel must be overcome. The private sector’s innovation and finance must be tapped to unleash new technologies and business models. The region’s approach to energy infrastructure planning must be recast to usher in a regional vision for trading of electricity and gas between countries. Modern policies that spur innovation, drive down costs and level the playing field for new technologies are needed. A scale up of both public and private investment in energy access projects is long overdue to bring modern energy to half a billion mainly rural poor across the region. ESCAP’s reports to this effect have reached the G20 on their requests for information on the Asia-Pacific region. I hope that through this information sharing process we will be able to galvanise action from the G20 to support us in these measures.

Adapting to the energy transition as it unfolds requires sound management of the multiple shifts that many member States will experience in common. For example the investment sector, including central banks, regulators, commercial banks and institutional investors will need to facilitate an unprecedented scale-up of clean energy finance. Taxation systems may need to adapt to changing realities as fossil fuel subsides are wound down and petroleum excise revenues decline from growing use of electric vehicles. As the same time we must tax environmental disregard. By leaving fossil fuels in the ground as the Paris targets require us to do, billions of dollars of fossil fuel assets may become stranded, with consequent financial instability risks. Energy regulators need to adapt more to decentralised energy as homes and businesses generate their own power, store it and feed it into the grid. Communities will need to embrace new energy technologies, delivery and pricing models. New skills will need to be acquired as the workforce transitions from old industries to “sunrise” industries with higher skill requirements. New forms of infrastructure in energy, buildings and urban design will take shape with the rise of decentralised energy, electric vehicles and energy storage. We at ESCAP plan for the future and plan in an integrated manner. Through our multi-sectoral reach we are supplementing dialogue across platforms. For example energy financing issues will also be addressed through our dedicated Financing for Development platform as well as some of the other issues that I have highlighted.

These challenges are so diverse and complex that fragmented national approaches will not be sufficient to overcome them. Regional cooperation can make an enormous difference to the scale and speed of progress, particularly for the least developed countries in our region. It can allow successful policy experiences to be shared and scaled up, particularly in capturing the co-benefits of sustainable energy across the three pillars of sustainable development and for capacities to be enhanced and technical knowledge to be exchanged.

Let me close by outlining for your consideration some of the ways in which this Committee can be positioned as a key instrument in regional cooperation on energy.

Firstly, the Committee can catalyse action for achieving SDG7. Providing an inclusive policy forum, this Committee will engage member States in dialogue, develop strategies and enhance energy policies to realize SDG7 and its associated three targets. This will feed into our work on the Regional Roadmap for Sustainable Development which is currently being deliberated by member States and will be discussed at the Asia-Pacific Sustainable Development Forum. Everything in ESCAP is interlinked which is in the spirit of the SDG agenda to exploit the interdependence of development.

Secondly, the Committee can advance regional energy connectivity. Cross-border grid interconnections and gas pipelines can bridge the region’s energy gaps bringing benefits for exporting, transit and importing countries alike.

Thirdly, in the electricity sector, the Committee can promote the creation of larger demand pools through interconnection that can tap diverse generation sources including renewables, lower peak demand, and increase reliability, affordability and energy security for all consumers. Enhanced, interconnected grids lend themselves to low carbon energy development as they connect renewable energy resources to markets, reduce the curtailment of variable renewable energy output and raise renewable energy penetrations.
To develop these connections we do not need to leave the Asia-Pacific region. While ESCAP always encourages partnership across continents, these connections can be achieved with resources, skills, expertise, knowledge and capabilities that are within our region itself. Asia-Pacific has some of the most advanced science, technology and innovation economies that are generating the knowledge and solutions to meet the energy sector’s needs.

Fourthly, the Committee needs to deliberate on establishing cross-border energy connections may yield high net benefits, but initiatives are proceeding at a painstakingly slow rate, well below the region’s potential. 3 Progress is observed through projects such as the CASA 1000 powerline and the TAPI gas pipeline, which link Central Asia with South Asia. The Greater Mekong Subregion has pioneered cross-border energy markets, saving $19 billion in energy costs since its inception. The ASEAN power grid has 11 cross-border interconnectors 4 in operation sharing electricity across Southeast Asia.

ESCAP welcomes the Belt and Road Initiative of China, which proposes five economic corridors, comprising amongst others, energy connectivity infrastructure. Also welcome is the establishment of the Global Energy Interconnection Development and Cooperation Organization, represented here today, an organisation focused on enhancing energy connectivity through transmission linkages. Reinforcing these initiatives, ESCAP’s research has concluded that electricity grid interconnection could be accelerated by establishing a regional institutional governance mechanism to guide energy connectivity and integration process and projects. We emphasise that establishment of the “hard connectivity” physical infrastructure needs to be accompanied by “soft connectivity” - political will, political trust, regulations, transparency, supportive policies , harmonization of standards and enhanced technical capacities. This Committee is well positioned to catalyse much of this cooperation and I look forward to your deliberations on this.

In conclusion, the need of regional energy cooperation is evident in the transboundary nature of many energy challenges – energy security, air pollution, water resource management, cross-border energy infrastructure, integration of renewables in diesel grids, cleaner use of fossil fuels and joint energy project development. The Committee, with your contributions, can promote regional cooperation through shared understanding of the development of effective solutions and initiatives in the energy sphere for many of these challenges. You may wonder why I have so much passion for this subject. I come a rural part of Sindh Province in Pakistan where the significant levels of poverty are made worse by the lack of electricity availability. For 15 years I lived in the Philippines where protracted blackouts hampered development. Today the Philippines has been able to overcome its power crisis which resulted in a positive change in societal and economic growth as these issues were addressed. Hopefully my country, Pakistan, through all the investments it is undertaking with the support of a number of stakeholders present here, will overcome this problem.

The half a billion people in Asia and the Pacific who have no access to electricity, predominantly in rural areas, are who we must bear in mind when we deliberate on this Committee’s agenda. In our region, demand outstrips supply and the gap will widen unless we address the root cause of the problem which is the fact that we have surpluses and deficits and we need to match the supply and demand.

I thank you and I look forward to this Committee’s outcomes.

1World Bank (2016), The Cost of Air Pollution, Washington D.C.

2FS-UNEP Collaborating Centre, Global Trends in Renewable Energy Investment 2016

3The recently commenced CASA 1000 electricity grid connection between Central Asia and South Asia has been under development since the 1990’s. The TAPI gas pipeline has had a similarly long gestation period.