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1. Scaling up Private Investment in Low-Carbon Energy Systems through Regional Cooperation: Market-Based Trade Policy Measures

Author:
Kaliappa Kalirajan, Huong Thi Thu Tran, and Yochang Liu
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study aims to analyse the possibility and challenges of encouraging private sector investment in low-carbon energy systems in Asia, particularly across the Regional Comprehensive Economic Partnership (RCEP) member countries, and to suggest an effective policy framework that governments could apply to improve the development and dissemination of low-carbon energy goods and technologies. The research questions examined in this study are: What type of policy measures affect trade in low-carbon energy systems transition, particularly the renewable energy transition? How can investment signals and incentives be reframed to scale up private finance in renewable energy through regional cooperation? The objective is to investigate and provide several market-based feasible trade policy and investment policy tools for both national and regional markets that governments could adopt to accelerate the speed of private financing of the low-carbon energy industry, particularly the renewable energy industry.
Topic:
Energy Policy, Markets, Trade, and Renewable Energy
Political Geography:
South Asia, East Asia, Asia, and Southeast Asia

2. Building the Banking Sector’s Capacity for Green Infrastructure Investments for a Low-Carbon Economy

Author:
Takashi Hongo and Venkatachalam Anbumozhi
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The construction of green infrastructure, using advanced technology and retiring inefficient technology, is essential for the low-carbon transition. Various green infrastructure programs are being implemented, and banks play an important role in facilitating these programs. Many lessons have been learned in improving finance for green infrastructure: (i) measurement, reporting, and verification is a useful tool for identifying green infrastructure investment; but just reduction is not enough for Green Infrastructure and three requirements – carbon dioxide emission reductions, improving energy access, and contributions to sustainable economic growth – connected with the Sustainable Development Goals are necessary; (ii) banks can contribute to realising a positive cycle of cost reduction and diffusion of advanced technology for reducing costs by scaling up markets; and (iii) carbon pricing is essential for removing carbon externalities and making green infrastructure commercially viable. Banks are recommended to have long-term strategies, improve their capacity for scenario analysis, have more dialogue with industry, and develop innovative finance such as carbon markets. Governments are recommended to adopt carbon pricing to encourage finance for green infrastructure.
Topic:
Climate Change, Energy Policy, Environment, Infrastructure, Green Technology, Renewable Energy, and Banking
Political Geography:
Global Focus

3. Unlocking the Potential of Private Financing for Low-carbon Energy Transition: Ideas and Solutions from ASEAN Markets

Author:
Venkatachalam Anbumozhi
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Under the Paris Agreement in 2015, the opportunities for the ASEAN Member States (AMS) to maximise low-carbon energy sources to achieve the Nationally Determined Contributions (NDC) target in reducing carbon emission levels have expanded. In order to move towards a low-carbon energy transition, private sector actors must work together with governments to implement strategies to invest in the low-carbon economy. However, major barriers such as insufficient enabling policy environment, availability of technologies and access to funding somehow impede the implementation. It is believed that unlocking the potentials of private sector would accelerate the transition of low-carbon energy. This paper, based on a market survey, which aimed to identify barriers and risks that private sectors face in accelerating the low-carbon investments. The survey respondents are divided into two categories, Lenders and Borrowers. Analysing 110 total respondents helped to identify the perceived and actual barriers as well as risks underlying to the access to financing and generated potential solution for policymakers to overcome these barriers. The survey results indicate that the main obstacles faced by private sectors are incoherent policies that created a high-risk environment for investment, a lack of access to de-risking mechanisms, and insufficient capacity to communicate the opportunities amongst financial institutions and project developers. To bare these risks, this paper suggests four interdependent solutions – establishment of a low-carbon transition fund, government warranty programme, broadening of de-risking mechanisms, and capacity building programme to accelerate the low-carbon energy transition across ASEAN.
Topic:
Energy Policy, Finance, Renewable Energy, and Private Sector
Political Geography:
Asia and Southeast Asia

4. Energy Reality and Emissions in ASEAN: Energy Modelling Scenarios and Policy Implications

Author:
Han Phoumin, Fukunari Kimura, and Jun Arima
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The Association of Southeast Asian Nations (ASEAN) faces tremendous challenges regarding the future energy landscape and how the energy transition will embrace a new architecture – including sound policies and technologies to ensure energy access together with affordability, energy security, and energy sustainability. Given the high share of fossil fuels in ASEAN’s current energy mix (oil, coal, and natural gas comprise almost 80%), the clean use of fossil fuels through the deployment of clean technologies is indispensable for decarbonising ASEAN’s emissions. The future energy landscape of ASEAN will rely on today’s actions, policies, and investments to change the fossil fuel-based energy system towards a cleaner energy system, but any decisions and energy policy measures to be rolled out during the energy transition need to be weighed against potentially higher energy costs, affordability issues, and energy security risks. This paper employs energy modelling scenarios to seek plausible policy options for ASEAN to achieve more emissions reductions as well as energy savings, and to assess the extent to which the composition of the energy mix will be changed under various energy policy scenarios. The results imply policy recommendations for accelerating the share of renewables, adopting clean technologies and the clean use of fossil fuels, and investing in climate-resilient energy quality infrastructure.
Topic:
Energy Policy, Science and Technology, Green Technology, Renewable Energy, and Fossil Fuels
Political Geography:
ASEAN

5. Potential Renewable Hydrogen from Curtailed Electricity for ASEAN’s Clean Energy: Policy Implications

Author:
Han Phoumin, Jun Arima, and Fukunari Kimura
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The power generation mix of the Association of Southeast Asian Nations (ASEAN) is dominated by fossil fuels, which accounted for almost 80% in 2017 and are expected to account for 82% in 2050 if the region does not transition to cleaner energy systems. Solar and wind power is the most abundant energy resource but contributes negligibly to the power mix. Scalable electricity production from wind and solar energy faces tremendous challenges due to system integration practices in ASEAN. Investors in solar or wind farms face high risks from electricity curtailment if surplus electricity is not used. Technologies for battery storage (lithium-ion batteries) have been developed to handle surplus electricity production from wind and solar energy but they remain costly. Hydrogen produced from electrolysis using surplus electricity, however, has numerous advantages that complement battery storage, as hydrogen can be stored as liquid gas, which is suitable for many uses and easy to transport. Employing the policy scenario analysis of the energy outlook modelling results, this paper examines the potential scalability of renewable hydrogen production from curtailed electricity in scenarios of high share of variable renewable energy in the power generation mix. The study intensively reviewed potential cost reduction of hydrogen production around the world and its implications for changing the energy landscape. The study found many social and environmental benefits as hydrogen can help increase the share of renewables in decarbonising emissions in ASEAN.
Topic:
Energy Policy, Science and Technology, Renewable Energy, and Fossil Fuels
Political Geography:
ASEAN