Sustainable Energy and Technology Asia 2017 (SETA 2017)
Delivered in Bangkok, Thailand
Ladies and Gentlemen,
The theme for this conference, “Towards a Low Carbon Society” is integral to the 2030 Sustainable Development Agenda, which calls for energy transformation. Asia-Pacific countries are at different stages of progress in adopting low carbon paths. The United Nations Economic and Social Commission for Asia and Pacific or ESCAP, a multi-sectoral holistic intergovernmental organization, is supporting its member countries to embark on a regional road map to implement the Sustainable Development Goals (SDGs). Among others, effective and concurrent implementation of sustainable energy and climate change goals holds promise for nurturing low carbon economies by exploiting clean energy sources to enhance supply, increase efficiency of use and to bring modern energy to all.
Providing additional momentum to a low carbon energy future, ESCAP’s member States have established an intergovernmental Committee on Energy which will focus on promoting sustainable energy through enhanced regional energy connectivity. In moving forward, there are opportunities to transition from fossil fuels to newer and cleaner energy technologies as the region pursues and collaborates on the implementation of the Belt and Road Initiative, the ASEAN Power Grid and Eurasian energy corridors.
Energy transition is critical as air pollution is disrupting not just the health of people, but hurting the growth potential of entire cities and economies. Increased greenhouse gases in the atmosphere are pushing the global climate system out of equilibrium and the Asia-Pacific region now accounts for over half of global emissions. To achieve the 2 degrees warming limit set by the Paris Agreement, climate science indicates that emissions must reduce by 40 to 70 percent from current levels by mid-century.
The scale of this challenge calls for unprecedented action and cooperation within the region and globally, and the engagement of multiple stakeholders. A future where energy is clean, climate friendly, affordable and universally available is not an abstract or utopian vision. Newer technologies and the proper governance of policies, and regulatory frameworks will take us to this future.
Allow me to outline some key areas where efforts must be focused.
First, renewable energy technology represents one of the most promising pathways towards a low carbon future and its contribution will grow over time. Progress in the areas of wind and solar technology has been remarkable. Over the last five 5 years, the cost of global wind power has fallen by 20 per cent, and solar photovoltaic power by 60 per cent, driven by manufacturing in Asia. Private and public sector finance has followed these opportunities with $160 billion invested in Asia Pacific in 2015, more than in coal and gas combined. This progress is driven by innovative technology, economies of scale, as well as financing and business innovations. Future technological progress continues to brighten the outlook through new PV cell technologies, offshore wind and energy storage.
Second, energy efficiency is further poised to deliver significant savings of energy and emissions over the coming decades. The IEA estimates1 that enhanced energy efficiency, through more advanced buildings, vehicles, lighting and appliances, can deliver 40 per cent of the emissions savings needed for the 2 degree target by mid-century. At the same time, realizing these energy savings can raise productivity, curb local pollution and enhance energy security. Unlocking the full potential of energy efficiency requires not only more advanced technologies, but well-coordinated policies to address the many market failures and barriers to entry of energy efficient technologies.
The third area is energy connectivity, principally the interconnection of power grids and gas pipelines across borders. This approach offers multiple benefits: widening access to energy, boosting trade and providing market access for low carbon energy. Advances in renewable energy technology are opening opportunities for large-scale solar and wind power projects, in addition to traditional hydropower. Technology advancements in power transmission can reduce the costs of long-distance electricity transmission, enhancing the prospects of cross-border power trading. In addition to linking distant supply and demand centres, power grid enhancements and integration can raise the contribution of renewables. Given their variable output, renewables benefit from connection to larger, multi-country grids to achieve high penetrations and avoid reduction in output owing to oversupply or transmission bottlenecks. The trading of gas via cross-border pipelines can generate exports for supplier countries, while diversifying the energy mix, improving local air quality and supporting decarbonisation efforts in destination countries.2
The CASA-1000 powerline is an example of this approach, which will bring surplus hydroelectricity from the Kyrgyz Republic and Tajikistan to Afghanistan and Pakistan. The ASEAN power grid provides an integrated model of connectivity, sharing electricity through 11 cross-border interconnectors,3 leading to diversified supplies, lower costs and better market access for low carbon electricity.
Finally, finance for low carbon energy is critical to catalyze energy transition. Without finance, R&D does not move out of the laboratory, and new power plants, transmission links and energy efficiency opportunities are not realized. Many of the building blocks of a low carbon energy system, such as wind and solar plants or long distance powerlines are highly capital-intensive involving complex financing transactions.4 Here, innovation to scale up finance and lower the cost of capital is called for, as globally some $6 trillion will be needed for renewables investment by 2035, more than half of this in the Asia-Pacific. Engaging institutional investors; developing Public Private Sector Partnerships; implementing carbon pricing, while providing long term and stable policy frameworks for investment are some of the measures governments can take to widen the fiscal space. Alternative sources of finance such as green bonds, impact investing, micro-credit and crowdfunding, are becoming mainstream. Reforming fossil fuel subsidies, currently estimated at $244 billion in Asia and the Pacific,5 will be important both to level the playing field and create the redirect revenue for low carbon energy investment.
In conclusion, given the challenges of the transition to low carbon energy, it is highly encouraging to see this gathering of diverse stakeholders here engage in dialogue, share ideas and develop solutions. I wish you every success in your deliberations.
I thank you.
1IEA 2015, Capturing the Multiple Benefits of Energy Efficiency, http://www.iea.org/publications/freepublications/publication/Captur_the_MultiplBenef_ofEnergyEficiency.pdf
2In particular if fugitive emissions from gas infrastructure are well managed.
4Renewable energy plant (excluding biomass) has zero fuel costs unlike fossil fuel power which fuel supply costs over their lifetime. The net result is that the cost of energy from renewables is impacted to a greater extent by the cost of capital than fossil energy.
5International Energy Agency, Fossil Fuel Subsidy Database http://www.worldenergyoutlook.org/resources/energysubsidies/fossilfuelsubsidydatabase/