Energy Efficiency Policies in China, India, Indonesia, Thailand and Vietnam by Agence Française de Développement

Agence Française de Développement

Working Paper November 2013

133

Energy Efficiency Policies in China, India, Indonesia, Thailand and Vietnam Loïc Chappoz (loic.chappoz@gmail.com) and Bernard Laponche (bernard.laponche@fr.oleane.com), Global Chance Contacts: Nils Devernois (devernoisn@afd.fr), AFD Fabio Grazi (grazif@afd.fr), AFD

Research Department

Agence Française de Développement Strategy Directorate Research Department

5 rue Roland Barthes 75012 Paris - France www.afd.fr

Disclaimer The analyses and conclusions formulated in this document are those of the authors. They do not necessarily reflect the position of Agence Française de Développement or its partner institutions.

Publications Director: Anne PAUGAM Editorial Director: Alain HENRY ISSN: 1958-539X Copyright: 4th quarter 2013

Layout: Marcelle LARNICOL

Loïc Chappoz Loïc Chappoz is a pilot who has flown for Air France since 2003 and currently works as an expert pilot for Air France’s fuel

efficiency plan. In 2006, concerned by the lack of energy efficiency in civil aviation, he founded an independent association, composed of aviation professionals, which aims to save fuel by optimizing the use of existing infrastructure. In 2011, he

obtained a Master’s degree in International Relations, with majors in climate change and energy policies, from Sciences Po. Since 2011, he has contributed regularly to Les Cahiers de Global Chance. He is a member of Global Chance and the European Council for an Energy Efficient Economy (ECEEE).

Bernard Laponche Bernard Laponche is an independent consultant and an expert in energy and energy efficiency policies. An engineer from the

École Polytechnique, State Doctor of Science (nuclear reactor physics), and Doctor of Energy Economics, he worked at the

French Atomic Energy Commission (CEA) during the 1960s, and then worked in the development of energy efficiency and

renewables’ policies. He was Director of Planning and then Director General of the Agence Française de la Maîtrise de l'Énergie (AFME, which has since become ADEME) from 1982 to 1987, then co-founder and director of “International

Consulting on Energy” (ICE), a consultancy firm, from 1988 to 1998, and technical advisor on energy and nuclear safety to Dominique Voynet, Minister for Land Planning and Environment. B. Laponche is co-author of “Energy Efficiency for a

Sustainable World” (ICE – 1997), author of « Maîtriser la consommation d’énergie » (Le Pommier, 2004), and co-author with

Benjamin Dessus of « En finir avec le nucléaire » (Seuil, 2011). He is a member of the non-governmental organizations ECEEE, ATEE, Global Chance and Energie Partagée (Shared Energy).

Global Chance Global Chance is a non-profit organization gathering scientists and experts who share the strong belief that a better balanced development of the world can and must arise from growing awareness of the threats weighing on our global environment.

In the face of these threats, Global Chance puts its members’ competencies together to serve a pluralist and contradictory

public expertise, so as to identify and promote new and positive collective answers in various fields – scientific and technical, economic and financial, political and regulatory, social and cultural. It also aims for such answers to be inspired by solidarity between the North and the South, humanism and democracy.

The organization, presently chaired by Benjamin Dessus, has regularly published its views in Les Cahiers de Global Chance

since 1992 (two issues per year), but it is also participating in the public forum through its members’ publications and their individual involvement in various debates. www.global-chance.org.

Foreword To proceed along the present path in the development of energy systems would lead to growing insecurity of supply and an

unacceptable increase in greenhouse gas emissions. Both climate change (and other environmental hazards) and security of energy supply would rapidly become formidable obstacles to peace and development if energy consumption follows such an

nonviable path. Energy security and environmental constraints converge to offer mankind both a challenge and an opportunity:

inventing a new model compatible with sustainable development in order to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Energy efficiency is the crucial first step towards this necessary energy transition, because it presents the largest potential, is applicable to all sectors of activity in all countries, and is a prerequisite to slow the fossil fuel resource depletion rate and ensure a rational and significant increase in the share of renewable energy sources in total energy requirements.

An energy efficiency strategy is not a slight adjustment to an energy supply policy but a new concept of economic policy that

takes into account the costs of environmental degradation, growing energy insecurity and the medium and long-term trend of rising energy costs. Industrialized countries can and must reduce their total energy consumption. While most developing

countries will have no choice but to increase their energy consumption in order to achieve economic development, they can

reach this objective with a much lower energy consumption growth rate than industrialized countries in the past by applying energy efficiency strategies

This study describes energy efficiency policies in China, India, Indonesia, Thailand and Vietnam. The report is organized into

six chapters. The first chapter gives definitions and data comparing the five studied countries to each other and to world

regions such as OECD or ASEAN. The five following chapters each focus on one country and is divided into three parts. The

first part describes how final energy is consumed: how have the main drivers of final energy consumption such as economic

growth and population evolved? What are the types of final energy used and in which sector? The second part focuses on the

legal framework of energy efficiency and describes the main laws and decrees aiming to improve energy efficiency. The third part gives examples of selected measures.

Unless specified otherwise, all the data used in this document come from the ENERDATA database (www.enerdata.fr).

Table of Contents Summary / Résumé

Principal comparative data

1.2.

Economy

China

2.2.

Energy efficiency and conservation framework

1.1.

1.3.

2.1.

2.3.

Population

Final energy consumption

Key energy data

Selected measures and instruments Acronyms

References

India

3.2.

Energy efficiency and conservation framework

3.1.

3.3.

3.4.

Key energy data

Selected measures and instruments

Savings induced by the main Indian EE&C policies Acronyms

References

Indonesia

4.2.

Energy efficiency and conservation framework

4.1.

4.3.

Key energy data

Selected measures and instruments Acronyms

References

Thailand

5.2.

Energy efficiency and conservation framework

5.1.

5.3.

Key energy data

108

References

117

Acronyms

Vietnam

6.2.

Energy efficiency and conservation framework

6.3.

Selected measures and instruments

6.1.

115

119

Key energy data

120

Selected measures and instruments

133

Acronyms

References

128

137

139

Summary Most papers dealing with energy efficiency policies focus on the policies and measures implemented in OECD countries and

this may lead one to think that only the “rich” countries are developing efforts in this field. International experience shows that emerging countries and even poor developing countries understand that energy efficiency is a prerequisite for their economic and environmentally friendly development.

Among these countries, China, India, Indonesia, Thailand and Vietnam have implemented particularly interesting policies,

some of which were launched several decades ago. Moreover, Agence Française de développement (AFD) has active cooperation programs in these five countries.

This study describes the current situation and recent trends in final energy demand in these countries, as well as the policies and measures they are implementing in the field of end-use energy efficiency.

Résumé La plupart des rapports traitant des politiques d’efficacité énergétique se concentrent sur les mesures mises en place et les

pays de l’OCDE, et ceci pourrait laisser penser que seuls les pays « riches » font des efforts en la matière. L’expérience

internationale montre au contraire que les pays émergents, tout comme les pays en développement les plus pauvres, ont compris que l’efficacité énergétique est un prérequis à leur développement économique et à un développement respectueux de l’environnement.

Parmi ces pays, la Chine, l’Inde, l’Indonésie, la Thaïlande et le Vietnam ont développé des politiques particulièrement intéressantes, certaines d’entre elles ont été lancées il y a plusieurs décennies. Ces cinq pays font aussi partie de ceux où l’Agence Française de Développement (AFD) a des programmes de coopération actifs.

Ce rapport décrit la demande actuelle en énergie finale dans les pays étudiés, ainsi que ses tendances récentes. Il détaille

aussi les politiques et mesures qui y sont mises en place en matière d’efficacité énergétique au niveau de la demande finale.

1. Principal comparative data

This chapter aims to contextualize each of the five countries

which will be examined in the following chapters of this

•

paper, in their respective regions, in the world, and relative

2011) is comparable to the populations of China or India.

this section compares the studied countries to:

Second, the OECD is composed of more advanced

economies. Comparing the five studied countries to

Member countries of the Association of Southeast

these economies will put into perspective the economic

Asian Nations (ASEAN) in order to assess the

and energy performances of China, India, Indonesia,

performance of Indonesia, Thailand and Vietnam

(which are ASEAN members) relative to their

Development (OECD) countries (aggregated) for two

reasons. First, the total OECD population (1.2 billion in

to more economically advanced countries. When relevant,

•

The Organization for Economic Co-operation and

Thailand and Vietnam.

neighbors. The other ASEAN members are Brunei

•

Myanmar (Burma), Philippines and Singapore.

The following section offers the significant data only. For

2011.

country specific chapters.

Darussalam,

Cambodia,

Lao

PDR,

Malaysia,

ASEAN had a total population of nearly 600 million in

World averages.

analysis and discussion of these data, please refer to the

1.1. Population Figure 1. Population in millions in 2011 China India

Indonesia Thailand

Vietnam

OECD

242

Source: Authors’ calculations; Enerdata data.

Comparing populations of countries of different sizes like

China (over 1.3 billion people) and Thailand (70 million

people) on one figure is difficult. Instead, of using raw

1187

1345

1244

population data, this document utilizes a population index, computed by the authors, for population comparisons.

1. Principal comparative data

Figure 2. Population growth (index, 100 = 1990) 140 135 130 125 120 115 110 105

Indonesia

Source: Authors’ calculations; Enerdata data.

Thailand

OECD

2011

2010

2009

2008

2007

ASEAN

2006

2005

2004

Vietnam

2003

2002

2001

2000

1999

1998

1997

1996

1995

India

1994

1993

1992

China

1991

1990

100

World

Two groups are clearly visible in Figure 2:

•

India, Indonesia and Vietnam whose populations

increased by more than 30% since 1990, close, in

•

percentage, to the increases in population in the ASEAN

China and Thailand whose populations varied in a

manner more similar to the total population of the OECD

countries and increased only half as fast as the world

region. Population in these countries increased more

population.

rapidly than the world population.

Table 1. Increase in population, by country, region, and world 1990-2011 and 2000-2011, in percentage China

India

Indonesia

Thailand

Vietnam

ASEAN

OECD

World

From 1990 to 2011

18.5

39.7

31.5

21.9

33.1

34.8

16.8

31.2

From 2000 to 2011

6.5

16.8

13.6

10.2

13.2

14.6

7.9

13.8

Source: Authors’ calculations; Enerdata data.

1. Principal comparative data

1.2. Economy Figure 3. Gross domestic product per capita in US dollars at purchasing power parity1 9000

8000

6000

5000

4000

3000

2000

1000

China

India

Indonesia

Vietnam

Thailand

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

USD at PPP per capita

7000

ASEAN

Source: authors’ calculations; Enerdata data.

Figure 4. Domestic product per capita in 2009 in US dollars at purchasing power parity China India

6863 3310 4085

Indonesia Thailand Vietnam ASEAN

7918 3009 4964

Source: Authors’ calculations; Enerdata data.

In 2009, the GDP per capita was USD 32,878 (at purchasing power parity, PPP) for OECD countries and USD 10,662 (at PPP) for the world.

1 Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDPs in industrialized countries and raise per capita GDPs in developing countries.

1. Principal comparative data

1.3. Final energy consumption Final energy consumption is the energy consumed by

natural gas, uranium, biomass, hydro, wind, solar,

agriculture). Final energy consumption excludes energy

(natural gas, coal, wood, solar heat...) or transformed

end users (industry, transports, households and services,

geothermal energy) that are either directly consumed

used by the energy sector, including for transformation and

through the energy sector industries into electricity (power

deliveries. It also excludes fuel transformed in the electrical

plants), oil products (refineries), or heat (boilers and district

power stations of industrial auto-producers. Final energy

heating).

consumption includes the non-energy uses2 of energy

Final consumption of energy per capita is the ratio of the

products (chemicals). At the end user level, final energy becomes usable energy (e.g. light).

total final consumption of energy of a country (or a group of

countries) to the population of this country (or group of

Final energy is obtained from primary energy, which is the

countries).

energy embodied in natural resources (e.g. coal, crude oil,

Figure 5. Final consumption of energy per capita in 2010 (kgoe per capita) China India

1215 408

Indonesia

638

Thailand Vietnam ASEAN

1159 672 666 1289

World Source: Authors’ calculations; Enerdata data.

In 2010, the final consumption of energy per capita was 3,011 kgoe for OECD countries.

Final energy intensity is the ratio of final energy use

expressed in tons of oil equivalent used to generate

USD 1,000 (GDP at constant prices of 2005 and at

purchasing power parity).

to GDP. In this report, final energy intensity is

2 Non-energy use covers those fuels that are used as raw materials in the different sectors and are not consumed as a fuel or transformed into another fuel.

1. Principal comparative data

Figure 6. Final energy intensity in 2010 (toe/USD 1,000 2005 PPP) China

0.178

0.123

India

Indonesia

0.164

0.151

Thailand Vietnam

0.234

0.139

ASEAN OECD

0.100

World

0.131

Source: Authors’ calculations; Enerdata data.

Electricity intensity is the ratio of the total final consumption

expressed in kWh per dollar of GPD (GDP at constant prices

of electricity to GDP. In this report, final electricity intensity is

of 2005 and at purchasing power parity).

Figure 7. Electricity intensity in 2010 (kWh/USD 2005 PPP) 0.378

China 0.189

India

Indonesia

0.158

Thailand

0.282

Vietnam

0.350

0.207

ASEAN OECD

0.252

World

0.264

Source: Authors’ calculations; Enerdata data.

Figure 8. Total final energy consumption by source in 2010 100%

90%

80%

Biomass

70%

Heat

60%

Electricity

50%

Gas

40%

Coal

30%

Oil

20%

Source: Authors’ calculations; Enerdata data.

OECD

ASEAN

Vietnam

Thailand

Indonesia

India

China

10%

1. Principal comparative data

Biomass is defined as energy resources derived from

energy. They also include algae, sewage and other organic

other living-cell material that can be burned to produce heat

chemical processes.

organic matter. These include wood, agricultural waste and

substances that may be used to make energy through

Figure 9. Total final energy consumption by sector in 2010 100%

90%

80%

Non-energy uses

70%

Agriculture

60%

Services

50%

Residential

40%

Transport

30%

Industry

20%

10% OECD

ASEAN

Vietnam

Thailand

Indonesia

India

China

Source: Authors’ calculations; Enerdata data.

Final energy intensity of a sector is the ratio of final energy

used in the sector to the total value added of the sector. It is

expressed here in tons of oil equivalent per USD 1,000 (at constant prices of 2005 and at purchasing power parity).

Figure 10. Final energy intensity by sector in 2010 0.6 0.5 0.4

Industry

Services

0.3

Agriculture

0.2

ASEAN

Vietnam

Thailand

Indonesia

India

China

0.1

Source: Authors’ calculations; Enerdata data.

China

China is both the most populated and one of the fastest growing countries in the world. With 20% of world total

final energy consumption in 2011, the country is the

biggest final energy consumer. Relying heavily on fossil

fuels – primarily on coal – China is also the first

Map 1. Map of China

greenhouse gas emitter in the world. Energy efficiency

and conservation are therefore not only crucial for the

country’s

development,

but

also

for

the

world

considering energy resources scarcity and climate

change.

Source: Central Intelligence Agency (CIA), The World Factbook. https://www.cia.gov/library/publications/the-world-factbook/.

The first level of administrative divisions of the People’s

and policies presented in this chapter relate exclusively to

twenty three Provinces, five Autonomous Regions, four

into account the Republic of China (Taiwan).

Republic of China is the provincial level which comprises

Municipalities and two Special Administrative Regions. Data

the People's Republic of China and therefore do not take

Table 2. China key figures Population

1,343 million (July 2012 est.)

Climate

Extremely diverse; tropical in south to subarctic in north

Area

Total : 9.6 million km²

Source: CIA, The World Factbook.

(World Rank: 1)

(World Rank: 4)3

3 Several methods are used for computing countries' land area. Depending on the method, China can rank as the second, third or fourth largest country in the world.

2. China

2.1. Key energy data 2.1.1

Economy and population

The share of industry in the GDP was comparable in 2011

(44%) and 1990 (45%), but as the country has developed,

China’s GDP increased nearly eightfold between 1990 and

the service sector has accounted for a larger share of GDP,

20114 with an average growth of 11.2%. Since 1991, the

increasing from 27% in 1990 to 37% in 2011, while the

growth rate has never gone below 7.6% and was above

share of agriculture decreased from 21% to 7% over the

14% in 1992, 1993 and 2007.

same period.

Figure 11. Value added by sector 2000000

1800000

M USD 2005

1600000

1400000

1200000

1000000 800000

60000

400000

Industry Source: Authors’ calculations; Enerdata data.

China’s population increased by 18% from 1990 to 2011. The average population growth rate was 0.84% over this

period. China is more comparable to developed countries

than developing countries in terms of population growth: over the same period, OECD countries’ population

increased by 17% with average annual rate of 0.74%, while

ASEAN country members’ population increased by 35% with an average annual rate of 1.47%.

The combination of rapid economic growth and a slow

Services

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2010

200000

Agriculture

2.1.2. Final energy consumption

Growing on average by 4.7% per year, total final energy consumption multiplied 2.5 times between 1990

(704 Mtoe) and 2011 (1,804 Mtoe). After a slow increase

between 1990 and 1995 (848 Mtoe), total final energy

consumption decreased to 803 M toe in 2000. Since

2001, total final consumption has increased rapidly, more than doubling between 2002 and 2011 with an average growth rate of 8.8%.

population increase resulted in the GDP per capita

increasing nearly tenfold in 20 years, from USD 795

(at purchasing power parity) in 1990, to USD 7,599 in 2010.

As a point of reference, in 2009, the average GDP

per capita was USD 10,662 for the world and 6,161 for Asia (at purchasing power parity).

4 GDP in constant 2005 USD and at purchasing power parity. Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDP in industrialized countries and raise per capita GDP in developing countries.

2. China

Final energy consumption per capita increased by 18%

average final consumption per capita (1,301 kgoe

between 1990 (621 kgoe) and 1996, when it peaked at

in 2011).

712 kgoe per capita. It then slowly decreased to

635 kgoe per capita in 2001, only 2% more than

Despite rapid growth since 2002, final energy consumption

increased rapidly to 1,341 kgoe per capita in 2011, with

decades.

in 1990. From 2002 on, final consumption per capita

increased much slower than GDP over the last two

an average growth rate of 8.2%, exceeding the world’s

Figure 12. Total final energy consumption and final consumption of energy per capita 2000

Total final energy consumption

1400 1300

1800

1200 kgoe per capita

1600 Mtoe

Final consumption of energy per capita

1400 1200

1100 1000

1000

900 800

800

700

600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

600

Source: Authors’ calculations; Enerdata data.

Figure 13. Comparison of total final energy consumption, GPD and population (index, 1990=100) 800 700 600 500 400 300 200

2010

2009

2008

2007

2006

Final energy consumption

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

GDP

Population

2011

100

Source: Authors’ calculations; Enerdata data.

2. China

Final energy consumption by source The rapid rise of total final energy demand since 2002

Over the last two decades total final consumption of energy

consumption of coal, oil and, to a lesser extent, power.

consumption of biomass has remained constant since

has mainly been fueled by an increase in the

Final consumption of oil and electricity also increased

rapidly between 1990 and 2001, whereas final consumption of coal increased until 1995 and then

decreased until 2001.

and final consumption of coal have evolved similarly. Final

1990. It varied by less than 2% around an average annual

consumption of 203 Mtoe. However, such small variations

could imply that the data regarding final consumption of biomass are not completely reliable.

Figure 14. Final consumption of energy by source Final consumption of energy by source

Final consumption of energy by source in 2011 (Total 1805 Mtoe)

800

700

Mtoe

600

11 %

500

22 %

400

300

200

100

40 %

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

19 %

Oil

Coal

Gas

Heat

Electricity

Biomass

Oil

Gas

Electricity

Coal

Heat

Biomass

Source: Authors’ calculations; Enerdata data.

The share of fossil fuels in total final energy

consumption in the final energy mix increased again

gas together accounted for 63.8% of final consumption

increased steadily from 5.9% in 1990 to 18.5% in 2011,

the share of fossil fuels in total final energy

to 11.4% in 1990.

consumption has varied little since 1990. Coal, oil and

in 1990. After a low point at 59.5% in 2001 and 2002,

and reached 65.9% in 2011. The share of electricity while the share of biomass decreased from 28.4%

2. China

Figure 15. Change in final energy mix from 1990 to 2010 100% 80% 60% 40% 20%

Oil

Electricity

Coal

Heat

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Gas

Biomass

Source: Authors’ calculations; Enerdata data.

Final energy consumption by sector

agriculture increased by 40% from 27 to 37 Mtoe. But given

final energy consumption has been driven mainly by the

share of the residential sector and agriculture fell from

A comparison of Figures 12 and 16 clearly shows that

industry sector since 2002. Final consumption in the

industry sector increased moderately between 1990

(271 Mtoe, 38.5% of total final energy consumption)

the soaring energy consumption in the industry sector, the

42.5% and 3.8% in 1990 to 21.3% and 2.1% in 2011, respectively.

and 1996 (388 Mtoe, 44.8% of total final consumption)

Final energy demand increased more rapidly in transport

consumption). After 2001, final energy demand in the

fivefold in transport, from 38 Mtoe in 1990 to 188 Mtoe in

before deceasing to 323 Mtoe in 2001 (39.8% of final

industry sector increased at a rapid pace of 11.9 % per

year, reaching 928 Mtoe in 2011 (51.4% of total final

energy consumption).

Between 1990 and 2011, final energy consumption in the

residential sector increased by 28%, from 300 to 385 Mtoe. Over the same period, final energy consumption of

and the service sector. Final consumption increased nearly 2011. As a consequence, its share in the final consumption

nearly doubled over the same period from 5.4% to 10.4%. Final energy demand in the service sector grew even more

rapidly. It increased eightfold from 14 Mtoe in 1990 to

112 Mtoe in 2011, as its share grew from 2% to 6.2% of total final consumption.

2. China

Figure 16. Final energy consumption of energy by sector 1000

Final energy consumption of energy by sector in 2011 (Total 1,805 Mtoe)

Final energy consumption of energy by sector

800

400

21%

52%

Industry

2011

2010

2009

2008

2007

Residential

Transport

Services

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1990

1992

200

1991

Mtoe

600

Agriculture

11% Industry

Services

Transport

Agriculture

Residential

Non-energy uses

Source: Authors’ calculations; Enerdata data.

In 2008, heating was responsible for 47% of final energy

accounted for 6% of final energy consumption in residential

diversity of climates in China, this percentage is most likely

conditioning is barely used in the areas of severe cold,

consumption in residential buildings. Given the great far greater in the northern regions and close to zero in the

south where temperatures remain above 10°C during the winter (see 2.3.2). By the same token, air conditioning

buildings in 2008, but it is reasonable to conclude that air

where temperatures do not exceed 25°C in the summer, and widely used in areas with hot summers where, in the

hottest month, temperatures vary between 25°C and 30°C.

Figure 17. Breakdown of energy consumption in urban residential buildings in 2008 12% Heating

Air conditioning

16% 47%

Lighting

Electric appliances

Cooking

Hot water

9% 10%

Source: BEERC (2011) cited by Shui Bin and Li Jun, 2012.

To contextualize these numbers, the average 2008

French household dedicated 69% of its final energy

consumption to heating, 10% to water heating, 2% to

lighting, 13% to electric appliances, 6% to cooking and

less than 1% to air conditioning (authors’ calculation,

Enerdata – Odyssee data).

2. China 2.1.3. Final energy intensity

decreased little since 2002, but a zoom on the last decade

Since 1990, final energy intensity has decreased every

energy intensity decreased by 18.2% between 2004 and

shows that after a moderate increase in 2003 and 2004, final

year apart from 2003 and 2004 when when in the summer,

2011. This figure differs slightly from the official statistics,

0.2% and 3.8%, respectively. Between 1990 and 2001,

which describe a 19.1% improvement between 2005 and

final energy intensity decreased rapidly at an average

2010. This is most likely because data presented in this

annual rate of 8.1%.

section are in constant 2005 USD and at PPP, whereas data

from the National Bureau of Statistics of China are not

As shown in Figure 18, final energy intensity appears to have

corrected for inflation and purchasing power.

Figure 18. Final energy intensity 1990-2011 0.57 0.47 0.37 0.27

2011

2009

2008

2007

2006

2005

2008

2004

2003

2007

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

0.07

2010

0.17

1990

Toe/USD 1,000 2005 (PPP)

0.67

Source: Authors’ calculations; Enerdata data.

Figure 19. Final energy intensity 2000-2011

Toe/USD 1,000 2005 (PPP)

0.25

0.24

0.23

0.22

0.21

0.20

0.19

0.18

2011

2010

2009

2006

2005

2004

2003

2002

2001

2000

0.17

Source: Authors’ calculations; Enerdata data.

Overall, final energy intensity decreased by 68% from 0.563 tons of equivalent oil (toe)/USD 1,000 of GDP (PPP,

constant 2005 USD) in 1990, to 0.181 toe/USD 1,000 in 2011.

2. China

As a point of comparison, in 2010, while final energy

The industry sector played a key role in the decrease of final

0.139 toe/USD

in this sector then increased by 18% between 2002 and 2006.

intensity was 0.183 toe/USD 1,000 in China, it was

0.101 toe/USD

1,000

for

ASEAN

OECD

energy intensity between 1990 and 2002, but energy intensity

countries,

countries

0.087 toe/USD 1,000 for European Union countries.

and

Since 2006 and most likely due to the positive effects of the 11th Five-Year Plan on energy efficiency (see 2.2.1.), final

energy intensity of industry decreased again by 12%, reaching its 2001 level in 2011.

Figure 20. Final energy intensity by sector

Final energy intensity by sector 0.25

0.5 0.4 0.3

0.15

0.2

0.10

Services

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1990

Industry

2011

0.1 0

0.22

0.20

1991

Toe/USD 1,000 2005 (PPP)

0.6

Final energy intensity by sector in 2010 (toe/USD 1,000 2005 PPP)

Agriculture

0.05 0.00

0.04

0.03 Industry

Services

Agriculture

Note: Values for 2011 are estimates. Source: Authors’ calculations; Enerdata data.

2.1.4. Electricity demand Electricity consumption increased by a factor of 7.6 in

Electricity intensity decreased by 22% between 1990 and

The annual average rate of increase of electricity

constant 2005 USD) in 1999, it increased by 21% between

21 years, from 535 TWh in 1990 to 4,079 TWh in 2011. consumption was 8.1% between 1990 and 2000, and

12.8% between 2001 and 2011. Recent trends show no

clear sign that this pace should slow down in the near

1999. After a low point at 0.335 kWh/USD of GDP (PPP, 1999 and 2007. In 2011, electricity intensity was roughly at the same level as 1993 with 0.409 kWh/USD.

future.

2. China

Figure 21. Electricity intensity 0.44

kWh/USD 2005 (PPP)

0.42

0.40

0.38

0.36

0.34

0.32

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.30

Source: Authors’ calculations; Enerdata data.

Little electricity was used in the residential and service

The main driver of final electricity demand over the last two

sectors in 1990 (20 and 40 TWh, respectively). Electricity

decades was indeed the industry sector. Final electricity

consumption in these sectors increased twenty eight times

consumption in the industry sector accounted for 76% of total

and twelve times respectively between 1990 and 2011, but

final electricity consumption in 1990 with 344 TWh and

their share in final electricity consumption increased

increased 7.7 times since then to 2641 TWh in 2011 (68.5%

moderately due to a sky rocketing demand in the industry

of total final electricity consumption). Final electricity

sector: services accounted for 12.7% of final electricity

consumption in industry increased more rapidly between

consumption in 2011 versus 9% in 1990 and the residential

2000 and 2011 (13.2% per year on average) than between

sector constituted 14.8% of final electricity consumption

1990 and 1999 (6.5% per year on average).

in 2011 versus 4.5% in 1990.

Figure 22. Electricity final consumption by sector 3000 2500

TWh

2000 1500 1000

2011

2009

2008

Services

2007

2006

2005

2004

2003

Residential

2002

2001

2000

1999

1998

Transport

1997

1996

1995

1994

1993

Industry

1992

1991

1990

2010

500

Agriculture

Source: Authors’ calculations; Enerdata data.

2. China

Figure 23. Breakdown of electricity consumption in China in 2009 5.5% 1.2% 1.3% 2% 9.1%

31.5%

Washing machine, 0.3%

Electric water heater, 0.9% Variable speed AC, 0.8%

3.4%

Water chillers, 1.3%

45.4%

Computer monitors and, copymachines, 0.2%

Motors

Unitary AC

See details

Refrigerators

Others

Room AC

Self-ballasted lamps

High voltage sodium lamps

Note: AC: Air conditioning. Source: CNIS 2011 White Paper, cited by Nina Zheng and Nan Zhou, 2011.

2.2. Energy efficiency and conservation framework 2.2.1. Energy efficiency and conservation objectives

The 11th Five-Year Plan (2006-2010) The 11th Five-Year Plan set very ambitious objectives with

regard to energy efficiency: between 2006 and 2010,

The goal of the 11 th Five-Year Plan has nearly been

achieved as the energy consumption per unit of GDP

energy intensity (defined in the plan as energy

was reduced by 19.1% between 2005 and 2010. As a

nationally. In order to achieve this target, Energy intensity

increase of final energy consumption was 7.8%, 5 while

consumption per unit of GDP) was to be reduced by 20% objectives were set by the central government for each

province, autonomous region and municipality. The

regional objectives and achievements are shown in

consequence, between 2005 and 2010, the average

the average growth rate of the Chinese economy was

11.2%.

Table 3.

5 Source: Authors’ calculations; Enerdata data.

2. China

Table 3. Energy intensity reduction goals for Chinese provinces and municipalities under the 12th Five-Year Plan (2011-2015)6 Provinces and municipalities

Guangdong Tianjin

11th Five-Year Plan energy intensity reduction achievements and targets (in brackets) as a percentage of 2006 energy intensity

18 (16) 18 (20)

Shanghai Jiangsu

18 (20) 18 (20)

Zhejiang Beijing

18 (20) 17 (20)

Hebei Liaoning

17 (20) 17 (20)

Sichuan Shanxi

16 (20) 16 (25)

Shandong Fujian

17 (22) 16 (16)

Jilin Anhui

16 (30) 16 (20)

Jiangxi Henan

16 (20) 16 (20)

Hubei Hunan

16 (20) 16 (20)

Yunnan Inner Mongolia

15 (17) 15 (25)

Guizhou Gansu

15 (20) 15 (20)

Xinjiang Tibet

10 (20) 10 (12)

Chongqing Shaanxi

16 (20) 16 (20)

Heilongjiang Guangxi

16 (20) 15 (15)

Ningxia Hainan

15 (20) 10 (12)

Qinghai

10 (17)

Source: 12th Five-Year Plan.

The 12th Five-Year Plan (2011-2015) The plan sets new binding targets for energy efficiency and conservation:

•

Reducing energy intensity by 16% in 2015 compared to

2010, by decreasing the energy consumption to 0.869 tons

of standard coal (based on prices in 2005) per RMB7 10,000 (about USD 1,600) of GDP. This will represent a 32%

decrease from the 2005 level of 1.276 tons per RMB 10,000

•

Saving 670 million tons of standard coal in the 12th Five-

Year plan period.

The 12th Five-Year Plan adopts a top-down approach, as

did the previous Five-Year Plan, and specific goals are set for each province and municipality.

6 There are four municipalities in China: Beijing, Chongking, Shanghai, Tianjin. They are at

the same level as the Provinces in the administrative division of the People’s Republic of China. 7 The Renminbi, also called Yuan (CNY), is the official currency of the People’s Republic of China. RMB 1 = USD 0.159885 (October 21, 2012).

2. China

Table 4. Energy intensity reduction goals for Chinese provinces and municipalities under the 12th Five-Year Plan (2011-2015) 10% reduction

15% reduction

16% reduction

17% reduction

18% reduction

Qinghai

Guangxi

Chongqing

Hebei

Jiangsu

Xinjiang

Inner Mongolia

Heilongjiang

Hainan Tibet

Gansu

Anhui

Guizhou

Fujian

Ningxia

Henan

Yunnan

Beijing

Liaoning

Shandong

Hubei

Guangdong Shanghai Tianjin

Zhejiang

Hunan

Jiangxi Jilin

Shaanxi Shanxi

Sichuan

Source: Emmanuel Guerin and Xin Wang, 2012.

China also announced in early 2011 that it would cap its total primary energy consumption at 4 billion tce8 (2.8 billion

toe) by 2015. This cap is equivalent to an annual average

growth of energy consumption of about 4.5% from

3.2 billion tce (2.2 billion toe) in 2010.

2.2.2. Energy efficiency and conservation legal framework

Table 5. Main laws and decrees on energy efficiency and conservation in China Date

Legislative text and objective

1995

Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution

1995

Electric Power Law of the People's Republic of China

1997 1997

2002 2004

While this law is mainly about “clean energy”, Article 19 pertains to energy efficiency as it states that “Enterprises shall give priority to the adoption of clean production techniques that are instrumental to high efficient use of energy and to reducing the discharge of pollutants so as to decrease the generation of atmospheric pollutants”. Article 10 reads: “In the plans for electric power development should be embodied the principles of making rational use of energy resources”. Law of the People's Republic of China on Conserving Energy This law was revised in 2008. See 2.2.3.

Construction Law of the People's Republic of China

Article 4 reads: “The State […] encourages saving of energy and environmental protection and advocates the adoption of advanced technology, advanced equipment, advanced processes, new building materials and modern managerial methods”. Law of the People's Republic of China on the Promotion of Clean Production See 2.2.4.

Medium and Long-Term Plan for Energy Conservation See 2.2.5.

8 Ton of coal equivalent. 1 ton of coal equivalent = 0.7 ton of oil equivalent (toe).

2. China

Date

Legislative text and objective

2006

11th Five-Year Plan

2007

State Council Work Plan for Energy Conservation

2008

Revision of the Law of the People's Republic of China on Conserving Energy

2008

Energy conservation regulations for State-funded institutions

See 2.2.3.

2008

Energy conservation regulations for civil buildings

2011

12th Five-Year Plan

2012

The Circular of the State Council* on the Printing and Distribution of the 12th Five-Year Plan for Energy Saving and Emission Reduction

See 2.2.1 and 2.2.7.

*: The State Council is the central government of the People's Republic of China.

2.2.3. Energy Conservation Law The 1997 Energy Conservation Law

The People's Republic of China's Energy Conservation Law was enacted in 1997. The objective of the law was to

“promote energy conservation by all sectors of society, increase efficiency in the use of energy and its economic

benefits derived from energy conservation and the

measures taken for energy conservation”. Key energy-

using units are also required to provide training in energy conservation to employees operating energy consuming machines. Non-trained employees are prohibited from operating these machines.

results, protect the environment, ensure national economic

Since the enactment of the ECL, authorities can no longer

everyday life”. The law calls for the implementation of

the standards of rational use of energy and energy

and social development, and meet the people's needs in

economically rational measures to reduce energy waste

and losses “at every stage from production through to consumption of energy”.

The Energy Conservation Law (ECL) defines obligations for “key energy-using units”. A key energy-using unit is an

entity with an annual energy consumption between 5,000

and 10,000 tons of standard coal (tce) that has been

approve the construction of projects which fail to conform to

conservation design. It is also prohibited to construct new

industrial projects that utilize outdated and highly energy

consuming techniques. With regard to existing factories which consume an excessive amount of energy, the ECL

calls for the enforcement of quotas, limiting the amount of energy consumed per unit produced.

The law also addresses the efficiency of the energy

designated by the authorities, or any entity consuming

consuming goods. Article 14 introduces national standards

law, these units are required to appoint an energy manager

government has been tasked with eliminating outdated and

annually more than the equivalent of 10,000 tce. Under the

and set up an energy management system comprised of

“consumption statistics and energy utilization analysis”.

These big energy consumers have to report to the State on

their energy uses. The reports must include “information on

for energy conservation and energy labeling and the central high

energy-consuming

products

and

equipment.

Additionally, central authorities can prohibit the production and sale of products considered inefficient.

energy consumption, energy efficiency, analysis of the

2. China

The ECL also lays the foundations for energy conservation

The 2008 law also provided clearer guidelines on energy

constructing

development enterprises have to provide buyers with

regulations in buildings. Article 37 reads “In designing and buildings,

energy-conserving

building

structures, materials, appliances and products shall be

employed […] in order to improve thermal and insulating

performance and reduce energy consumption for heating, cooling and lighting purposes”.

Finally, the ECL also prohibits the distribution of energy

(such as electricity, natural gas or coal) free of charge or for a fixed price that does not vary with consumption. The

amount of energy consumed by each energy consumer,

conservation in buildings. For example, real estate

information on the energy conservation measures that have

been implemented in the building, and public buildings using air-conditioners for heating and cooling have to

implement a system for indoor temperature control. The

revised ECL also allows provinces, autonomous regions and municipalities to formulate local standards, stricter than national standards, for energy conservation in the construction sector.

including energy companies’ employees, must be metered

A new section on transportation was introduced in the

regulation.

encourage the use of non-motorized vehicles and public

and the consumer has to pay for it in accordance with State

revision. The main objectives of this section are to

transportation, promote the development and production of efficient vehicles (cars, motorcycles, railway locomotives,

The 2008 revision The Energy Conservation Law was revised on April 1, 2008.

ships…), for example by issuing standards of maximum fuel consumption and strengthening controls on the fuel

This newer version is much more comprehensive and the

consumption of commercial vehicles and ships.

authorities is far greater. In the 1997 law, energy

The 2008 ECL provides more information on energy

strategy”. In the 2008 law, it became “a basic policy of

product certification”. Manufacturers and distributors can,

importance given to energy conservation by the Chinese conservation was described as “a long-term concept of China” and the State was charged with implementing “an energy

strategy

promoting

conservation

and

development concurrently while giving top priority to

labeling and standards and introduces “energy-consuming

on a voluntary basis, have their products certified and display an energy efficient label on the packaging.

conservation”.

Financing of energy conservation is also addressed in the

The 2008 ECL gave more details on energy conservation in

through tax breaks to encourage production, import and

industry. It encourages industries to use combined heat and

power generation, as well as residual heat and pressure

utilization, promotes the use of energy-saving equipment (such as motors, boilers, furnace, fans and pumps) and generates a list of major energy consuming industries.9

revised bill. Incentives to implement the bill are given

use of energy efficient products, and preferential loans for energy saving projects.

Finally, the law promotes the development of ESCOs10 to

perform energy audits and encourages data collection and the dissemination of knowledge and information.

9 Electric power, steel, non-ferrous metal, building materials, oil refinery, chemical and coal industries. 10 The 2008 ECL refers to ESCOs as “energy conservation service agencies”.

2. China 2.2.4. Law of the People’s Republic of China on

the Promotion of Clean Production

Accounting for 44% of GDP in 2011, industry is the main

sector of the Chinese economy. A “clean production” is

transportation (road transportation, rail transportation, aviation) and buildings. The Plan sets objectives for energy intensity for 2010 (2.25 tce per RMB 10,000 of GDP) and

2020 (1.54 tce per RMB 10,000 of GDP). These goals are not very ambitious compared to the 12th Five-Year Plan

therefore essential to energy efficiency in China. The Law

objective of 0.869 tce per RMB 10,000 of GDP. Energy

Clean Production (PCP) was approved by the Standing

some industries in the Medium and Long-Term Plan for

of the People's Republic of China on the Promotion of Committee of the National People's Congress (NPC) of the

People's Republic of China on September 29, 2002.

Several of its articles refer to energy efficiency and

conservation. The law widened the scope of the energy labeling system introduced in 1997 by the Energy

consumption reduction objectives are also described for Energy Conservation (NDRC, 2004).

In order to reach its goals, the plan initiated ten key projects as describe in Zhou et al. (2010):

Conservation Law to include water conservation, waste

•

“Renovation of coal-fired industrial boilers using […]

energy efficiency in buildings by urging construction

•

District level combined heat and power projects (saving

decoration materials, […] fixtures and equipment resulting

•

Waste heat and pressure utilization (1.35 Mtce/year

companies such as restaurants and hotels to implement

•

Oil conservation and substitution saving 38 million tons

technologies and equipment.

•

Motor system energy efficiency saving 20 terawatt-

energy conservation in public procurement. Article 16 reads

• •

Energy systems optimization;

products conducive to energy and water conservation”.

•

Energy-efficient lighting saving 29 TWh (3.56 Mtce/year

2.2.5. The Medium and Long-Term Plan for

•

Government procurement of energy efficiency products;

•

Monitoring and evaluation systems”.

reuse and recycling. The PCP law indirectly promotes projects to adopt “design options, construction and

in energy and water conservation” and by pushing service energy

conservation

measures

and

use

efficient

But the main addition in the 2002 law is the introduction of “Governments at all levels shall give priority to purchasing

Energy Conservation

The Medium and Long-Term Plan for Energy Conservation was released in November 2004 by the NDRC. The Plan

addresses energy conservation in key industries,11

50 million tons of coal equivalent [35 million toe]; 35 Mtce/year [24.5 Mtoe/year]);

[0.95 Mtoe/year]);

of oil (54.3 Mtce/year [38 Mtoe/year]);

hours (TWh) (2.46 Mtce/year [1.7 Mtoe/year]);

Energy efficiency and conservation in buildings saving 100 Mtce/year [70 Mtoe/year]; [2.5 Mtoe/year]);

and

The ten key projects were integrated into the 11th Five-Year

Plan.

11 Electric power industry, nonferrous metals industry, oil and petrochemical industry, chemical industry, building material industry and coal industry.

2. China 2.2.6.

General

Work

Plan

for

Energy

Conservation and Pollutant Discharge Reduction

After making the observation that the country was not on

2.2.7. The 12th Five-Year Plan Energy efficiency is a key element of the 12th Five-Year Plan,

which was approved by the National People’s Congress of the

Five-Year Plan’s goals on

Chinese Government in March 2011. The Circular of the State

China State Council issued the General Work Plan For

Plan for Energy Saving and Emission Reduction was released

the path to achieve the

11th

energy efficiency and pollutant discharge reduction, the

Council on the Printing and Distribution of the 12th Five-Year

Energy Conservation and Pollutant Discharge Reduction

on August 8, 2012 by the Chinese authorities. According to the

to speed up the progress and make the 11th Five-Year

“transform the mode of economic development, establish an

existing regulations and accelerated the implementation

strengthen the capacity of sustainable development” (China

in September 2007. The plan listed about forty measures Plan reachable. These measures mainly strengthened

of existing policies and projects such as the ten key

projects listed in 2.2.5.

Chinese news website China Briefing, the plan aims to

energy-saving and environmentally-friendly society, and

Briefing, August 24, 2012).

Box 1. The main elements of the circular regarding energy efficiency Adjusting and optimizing the industry structure:

• • • • •

Curbing the excessive growth of high-energy consumption and high-emission industries; Accelerating the elimination of backward capacity; Promoting the upgrade of traditional industries; Adjusting the structure of energy consumption;

Promoting the development of the service industry and emerging strategic industries.

Improving the level of energy efficiency:

• • • • • •

Strengthening industrial energy saving;

Advancing energy-saving in the construction industry;

Advancing energy-saving and emission reduction in the transportation industry; Promoting agricultural and rural energy saving; Promoting commercial and civil energy saving;

Strengthening the energy saving of public institutions.

Source: China Briefing.

Even though the 12th Five-Year Plan’s binding targets, in

10,000 program, modeled after the Top 1,000 program.

seem less ambitious than those of the 11th Five-Year Plan,

meet energy consumption standards and could be

regard with energy efficiency and conservation (see 2.2.1.)

Under this program, 10,000 companies will be required to

they might be harder to achieve. In the industry sector, the

penalized with higher electricity prices if they fail. However,

authorities will have to focus on numerous, diffuse sources

program than in the previous version will increase the

Top 1,000 Program had good results but the Chinese

of energy consumption to achieve the same kind of results in the

12th

plan. This is the goal of the new Top

the inclusion of ten times the number of plants in this auditing and enforcing costs dramatically.

2. China

The 12th Five-Year Plan also addresses transport.

According to the 2008 Energy Conservation Law, the

and light rail coverage will be improved. The broader goal

conservation is “responsible for the supervision and

35,000 km of high speed rail are to be built, while subway

behind these measures is to connect every city of 500,000

people or more (Seligsohn and Hsu, 2011). Another goal of

department of the State Council12 in charge of energy administration of the country’s energy conservation work”. In practice, the National Development and Reform

the plan is to reach 500,000 electric vehicles by 2012

Commission (NDRC), created by the 2003 institutional

According to estimates, 670 million tce (470 million toe)

However, several high-level groups have also been set up.

(China Securities Journal, August 24, 2012).

Constructing an Energy Saving Society was created in

(Bellevrat, 2011).

could be saved in the course of the 12th Five-Year Plan

2.2.8. Current institutional structure of energy

efficiency and conservation

In China, energy policies, including energy efficiency and

conservation policies, follow a very centralized top-down

approach. But the lack of documentation in English and,

to some extent, the lack of transparency, make it difficult

reform, designs the policies regarding energy efficiency. The

Ministry-level

Joint

Conference

System

for

2005 and the National Leading Group to Address Climate

Change and Energy Conservation and Pollutant Discharge

Reduction, headed by Premier Wen Jiabao, was created

in 2007. This added some confusion to the division of responsibilities between the different official bodies in

regard to energy efficiency policies development and implementation (APERC, 2009).

to clearly describe the institutional structure of energy efficiency.

Box 2. The National Development and Reform Commission The National Development and Reform Commission (NDRC) [...] is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy.

The NDRC’s functions are to study and formulate policies for economic and social development, maintain the balance of economic development, and guide the restructuring of China’s economic system. The NDRC has 28 functional departments, bureaus, and offices with an authorized staff of 890 civil servants.

Source: APERC, 2009.

Looking more closely at the implementation of the 11th Five-

the actions of the NDRC and the other ministries working on

Year Plan gives a better grasp of how energy efficiency

the implementation of the 11th Five-Year Plan, i.e. the Ministry

was put in charge by the State Council of writing and

Rural Development (MOHURD, formerly the Ministry of

policies are drafted and implemented in China. The NDRC

implementing the regulations necessary to attain the 11th FiveYear Plan targets regarding energy efficiency. In 2008, the National Energy Commission (NEC) was set up to coordinate

of Communications (MOC), the Ministry of Housing and Urban

Construction), the Ministry of Finance (MOF), and the Ministry of Science and Technology (MOST) (APERC, 2009).

12 The State Council is the central government of China.

2. China

Diagram 1. Organization of China’s energy administration State Council

National Energy Commission Ministries

NDRC

MOHURD MOST

(Secretariat)

NEA

MOF

General Administration

MOUR

Development and Planning

MOR

Policy and Legislation

Energy Conservation and Scientific Equipment

Organizations directly under the State Council SAOWS SAOT

MOEP

Special organization directly under the State Council

MOWR

Administrations and bureaus under the Ministries

MOC

SOASA SERC

MOA

Power

MOT

Coal

MHT

Oil and Natural Gas

New and Renewable Energy International Cooperation

Source: ChunChun Ni, 2009.

Within the NDRC, the Department of Environment and Resource Conservation (DERC) is responsible for

implementing

the

Energy

Conservation

Law

and

Administration Commission of the State Council (SASAC), the Ministry of Industry and Information

Technology (MIIT), and the State Environmental

formulating energy conservation policies on a national

Protection Administration (SEPA).

standard and labeling policies.

The provinces’ and municipalities’ governments also play

Finally, other agencies have a role in energy efficiency

level. The DERC is also the body supervising energy

and conservation. According to APERC (2009), these

agencies include the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the

Certification Centre for Energy Conservation Product

(CCECP), the State-owned Assets Supervision and

and important role in the implementation of policies

Plan, the burden of achieving progress in energy

conservation was passed onto the local authorities through

the energy intensity reduction target set for each province and municipality by the State Council.

2. China

2.3. Selected measures and instruments 2.3.1. Top 1,000 Energy-Consuming Enterprises Program

The Top 1,000 Energy-Consuming Enterprises Program (Top-1,000 Program) was one of the key measures put in

formulate an energy conservation plan, adopt energy

conservation incentives, and invest in energy efficiency improvement options” (Price et al., 2008).

place in order to reach the 11th Five-Year Plan energy

Through this program, Chinese authorities pushed the

the National Bureau of Statistics (NBS). This program

produced and reach “either international advanced level or

efficiency goal. It was launched in April 2006 by NDRC and

required 1,000 large-scale companies from nine energyconsuming industries to improve their energy efficiency and

1,000 firms to reduce their energy consumption per unit national leading level” (Price et al., 2011).

meet the target set for each of them by the NDRC. In 2004,

2.3.2. Energy efficiency in buildings

33% of national energy consumption and 47% of the

Given the size of the country, China’s different regions are

the 1,000 enterprises included in the program accounted for

industry sector consumption. The savings target was set at 100 Mtce (70 Mtoe), about 15% of total energy savings

characterized by a great diversity of climates. The 1993

Codes for Building Thermal Design of Civil Buildings

required under the 11th Five-Year Plan. In order to achieve

defined five climate zones: Severe Cold, Cold, Hot Summer

“establish an energy conservation organization, formulate

and Temperate. In order to take the differences in climate

their assigned target, the enterprises were expected to

energy efficiency goals, establish an energy utilization

reporting system, conduct energy audits, conduct training,

Cold Winter (HSCW), Hot Summer Warm Winter (HSWW)

into account, the regulations and standards are different for the five zones.

Map 2. China’s climate zones Climate zones Severe cold Cold

HSCW

Coldest

Monthly mean

≤ - 10°C

-10 / 10°C 0 / 10°C

Hottest

≤ 25°C

18 / 28°C 25 / 30°C

HSWW

> 10°C

25 / 29°C

Temperate

0 / 13°C

18 / 25°C

Source: Shui Bin et al., 2012.

2. China

With only 1% of new buildings each year in Europe, retrofitting the existing building stock is the main challenge

standing in the way of high-energy efficiency in the building

sector. In contrast, in China, the total area of buildings

increased by 75% between 2000 (27.8 billion m²) and 2000 (48.6 m²).

The rate at which new areas are built has also been

increasing since 2010 and it is projected that 20 to 25 billion

additional m² could be built by 2020 (Shui Bin et al., 2012).

Energy efficiency policies in new buildings are therefore as important as policies targeting existing buildings.

are not covered by the current standards. Lighting

efficiency is not directly regulated by building standards,

but is covered by other regulations for public and

commercial buildings. Issued in 2007, the Code for

Acceptance of Energy Efficient Building Construction

requires that construction projects comply with energy

efficiency requirements. This code makes energy

efficiency as important as safety-related building codes

such as fire-proofing codes. The Code for Acceptance of

Energy Efficient Building Construction encompasses

walls, curtain walls, doors and windows, roofing, flooring,

HVAC, power distribution, lighting, monitoring and quality control (Shui Bin et al., 2012).

Building standards and codes The Energy Conservation Design Standards for Civil

Buildings (Heating of Residential Buildings) was issued in

1986. Since then, several standards and codes have been established and revised.

The current design standards encompass the envelope

and heating, ventilation and air conditioning (HVAC).

Electrical power use and hot water and water pumping

In order to take into account the differences in climate, the

regulations and standards are different for the five zones. The Cold and Severe Cold regions are defined as the

Heating Zone, that is to say that heating equipment is

mandatory in the buildings of these zones. The current regulation system requires energy saving ranging from 50

to 65% compared to a typical building of the 1980s (Shui Bin et al., 2012).

Table 6. Energy-saving targets for new buildings Building energy codes Targeted subjects

Energy-saving targets

Baseline

Heating zone (2010)

Residential building

HSCW zone (2010)

District heating

Heating and air conditioning

65%

50%

Data sources

Building energy use data surveyed in 1980 and 1981

Building envelope

Typical building envelope in the 1980s

Equipment

Typical equipment used in the 1980s

HSWW (zone 2003) Heating and air conditioning 50%

Public building (2005) Heating, air conditioning and lighting 50%

Calculated building energy use based on assumptions

Source: Shui Bin et al., 2012.

2. China

The Ministry of Housing and Urban-Rural Development

in an effort to promote energy efficiency retrofitting of

building energy codes and in this capacity released the

made efforts to speed up the retrofitting of residential

(MOHURD) is in charge of verifying the implementation of Notice on the Strict Implementation of Energy Efficiency

Design Standards for New Residential Buildings, which

makes compliance with building energy codes mandatory. In

2008, the Regulations on Energy Conservation in Civil

existing buildings. During the 11th Five-Year Plan, China

buildings. As a result, 183 million m² were retrofitted,

exceeding the expected 150 million m² by 15% (Shui Bin et al., 2012).

Buildings specified: “if the construction company fails to

Heating in the cold northern regions of the country is

codes, the company is required to correct its wrongdoing and

consumption in urban buildings. Consequently, low

comply with mandatory provisions of the building energy

pay [a] penalty of between 2% and 4% of the contract cost”

responsible for more than 40% of total energy

priced or even free heating is one of the main hurdles to

(Shui Bin et al., 2012).

energy retrofitting in these areas. The Heat Metering

Retrofitting of existing buildings

encourage energy conservation by passing the cost of

Reform attempted to boost energy retrofitting and

Since the 1990s, the Chinese authorities have

heating onto the final consumer.

implemented numerous policies and technical standards Box 3. The heat reform “Over the years the government has subsidized the cost of residential heating in northern cities and towns, with heat expenses calculated by heating area rather than actual heat consumption. Such a heat supply system did

not encourage building energy efficiency and a considerable amount of heat was wasted in northern heating

areas.

The aim of heat reform in China is to reduce the amount of energy wasted by end users through the reform of the heating pricing system and by establishing market mechanisms, to increase heat suppliers’ efforts to improve the

energy efficiency of their heat supply networks, to share the retrofit costs of energy efficiency renovation, and also to promote retrofit.

At the beginning of the 1990s, the State required public utilities to change the mechanisms by which they

operated. As a consequence, various cities carried out pilot reforms of their heat supply systems. On July 21, 2003, the MOC and other ministries and commissions jointly published and distributed their Opinions on the

Guide for the Pilot Work of Heat Reform in Cities and Towns (2003), proposing the requirement of a “steady

introduction of a system of consumption-based billing that would promote energy efficiency in the heat supply

and consumption”.

“By the end of 2010, 80 cities […] in northern heating areas had established consumption-based pricing and billing systems, representing a total of 317 million m² of building space.”

Source: Shui Bin et al., (2012).

2. China 2.3.3. Phasing out of incandescent light bulbs

but they had a limited impact as they were inconsistently

In November 2011, China’s government announced a plan

market only the most inefficient models (Nan Zhou et al.,

aimed at the elimination of incandescent light bulbs.

Imports and sales of incandescent bulbs of 100W or more

implemented throughout the country and took out of the 2010).

were banned on October 1, 2012. Bulbs of 60W or more will

As of March 2012, 44 energy efficiency standards were in

banned on October 1, 2016. According to Xie Zhenhua,

appliances,14 lighting, industrial equipment, commercial

be banned on October 1, 2014, while bulbs of 15W will be

effect in China, covering six categories of goods: household

NDRC deputy director, 1.4 billion incandescent bulbs are to

equipment, vehicles and information technology (IT).

reuters.com, china.org.cn and chinascopefinancial.com).

The standards are set by the CNIS, which is responsible for

2.3.4.

labeling in China. CNIS works under the authority of

be replaced. This could save 48 TWh per year (Sources: Energy

labeling

performance

standards

and

the development of MEPS and the management of energy ASQIQ.

China is currently implementing mandatory minimum

Energy information labeling

labeling and voluntary energy efficiency labeling.

The mandatory China Energy Label was introduced by the

Mandatory minimum energy performance standards

only in 2005 when the implementation rules were enacted

energy efficiency standards, mandatory energy information

The minimum energy performance standards (MEPS)

specify a minimum efficiency requirement for each type of product and thus limit the energy consumption of the

appliances and equipment. The first energy standards were

promulgated in 1989 by the General Administration of

1997 Law on Energy Conservation, but was implemented

jointly by the NDRC and the AQSIQ (Xialu Zhou, 2011). The

information displayed on the label are the name of the

producer, the product model, the level of energy efficiency, the energy consumption and the China energy efficiency standards referenced (Chunchun Ni, 2009).

ASQIQ of China and became mandatory in 1990. They

The efficiency of the product is rated from one to five. The

refrigerators, washing machines or electric rice cookers,13

five are the least efficient.

covered nine of the most common appliances such as

products rated one are the most efficient and those rated

13 The other appliances covered by the first standards were air conditioners, electric irons,

televisions, radios and electric fans. 14 Refrigerators, room air conditioners, washing machines, TVs, electric fans, electric cookers, electric water heaters, gas water heaters, frequency conversion, nduction cookers, flat TVs, microwave ovens.

2. China

Picture 1. Mandatory China Energy Label

Source: APEC, 2012.

By the end of 2010, the China Energy Label Management

A 2012 study of energy labeling and standards compliance

1,667 manufacturers. During the first five years of

for energy labeling rates varies greatly between provinces

Center

had

registered

86,831

products

from

implementation, the labeling program induced cumulative

savings of more than 150 TWh of electricity (Xialu Zhou,

in China between 2007 and 2009 showed that compliance and appliances types.

2011). As of May 2012, 25 categories of products were required to be labeled.

Table 7. 2009 Energy efficiency labeling compliance results by region Room air conditioners

Self-ballasted fluorescent lamps Electric storage water heaters

Small and medium 3-phase asynchronous motors Household induction cook-tops Household refrigerators

Variable speed air-conditioners LCD computer monitors

NA: Non available. Source: Nina Zheng, 2012.

Jiangsu

100% (7/7)

100% (16/16) 100% (5/5)

Sichuan

Shandong

Shangai

25% (30/119) 58% (15/26)

60% (6/10) 100% (7/7) 100% (7/7)

NA NA NA

2. China

As of 2012, the CECP had defined criteria for thirteen

Voluntary energy efficiency labeling

household appliances, eight lighting devices, four

Voluntary energy efficiency labeling was introduced by the 1997

commercial appliances, nine industrial appliances, four

Energy Conservation Law and implemented in 1999.

office and electronic appliances and six transport

Manufacturers and importers can register their efficient products

vehicles. 4,459 manufacturers and 206,412 models

with the China Certification Center for Energy Conservation

were registered by September 2011. Over the first six

Products (CECP). If the products meet the minimum efficiency

years of implementation, total energy savings were

norms defined by the CECP, the Energy Efficiency Logo can be

estimated at over 230 billion kWh.

displayed on the packaging or on an individual product.

Picture 2. Energy efficiency logo

Source: Chunchun NI, 2009.

2.3.5. Fuel economy standards

been defined based on the weight of the car and every

Fuel economy standards have been enforced since 2005 in

vehicle sold in the country now has to meet the fuel

China and according to the 11th Five-Year Plan, average

automobile

fuel

economy

was

decrease

economy standards (Zhou, 2010).

from

9.5 liters/100km to a 6.7 to 8.2 liters/km range by 2010.

Chinese standards are certainly less stringent than

The current standards cover passenger cars, sport utility

European standards, but they are more stringent than U.S.

vehicles (SUVs) and multi-purpose vans (MPVs) but

standards.

commercial vehicles are excluded. Sixteen classes have

Figure 24. Comparison of fuel economy standards 50

Japan

45 40

China

California

Notes: Dotted lines denote proposed standards. MPG = Miles par gallon. Source: Zhou, 2010.

2016

2014

2012

2010

2008

2006

US 2004

Australia Canada

2002

MPG - Converted to CAFE Test Cycle

2. China 2.3.6. Demand side management

enough to power 10 million Chinese average households or

On January 1, 2011, Demand Side Management

the new regulations, “demand side measures should be

Implementation Measures came into effect. These new

DSM regulations require power grid companies to help

factories, businesses and households to reduce their

consumption by investing in energy efficiency. The utility companies are required to achieve energy savings

equivalent to at least 0.3% in sales volume and 0.3% in

maximum load compared with the previous year. 0.3% of

China’s electricity consumption equals to 11 billion kWh,

1 million U.S. average households for a year. According to

considered and given priority in meeting demand growth”. This new mechanism will provide an additional, long-term

source of funding for energy efficiency and conservation. Power grid companies can pass the cost of DSM measures onto the final consumer through electricity prices. Third

party verification of the saving is encouraged but, for the moment, not mandatory (Source: Finamore, 2010).

2. China

Acronyms AQSIQ:

State Administration of Quality, Supervision, Inspection and Quarantine

APEC:

Asia Pacific Economic Cooperation

APERC:

Asia Pacific Energy Research Centre

ASEAN:

Association of South-East Asian Nations

Celsius

CCECP:

Certification Centre for Energy Conservation Product

CIA:

Central Intelligence Agency

CNIS:

China National Institute of Standardization

CSTC:

China Shipbuilding Trading Company

DERC:

Department of Environment and Resource Conservation

DSM:

Demand Side Management

ECL:

Energy Conservation Law

ESCO:

Energy Service Company

GAQSIQ:

General Administration of Quality Supervision, Inspection and Quarantine

GDP:

Gross Domestic Product

HSCW:

Hot Summer Cold Winter

HSWW:

Hot Summer Warm Winter

HVAC:

Heating, Ventilation and Air Conditioning

IEEJ:

Institute of Energy Economics, Japan

IT:

Information Technology

kgoe:

Kilo of Oil Equivalent

2. China

kWh:

Kilowatt Hour

MIIT:

Ministry of Industry and Information Technology

MOA:

Ministry of Agriculture

MOC:

Ministry of Communication

MOEP:

Ministry of Environmental Protection

MOF:

Ministry of Finance

MOHURD:

Ministry of Housing and Urban-Rural Development

MOLR:

Ministry of Land and Resources

MOR:

Ministry of Railways

MOST:

Ministry of Science and Technology

MOT:

Ministry of Transportation

MOWR:

Ministry of Water Resources

MPV:

Multi-Purpose Vans

Mtce:

Mega Tons of Coal Equivalent

Mtoe:

Mega Tons of Oil Equivalent

NBS:

National Bureau of Statistics

NDRC:

National Development and Reform Commission

NEA:

National Energy Administration

NEC:

National Energy Commission

NPC:

National People‘s Congress

OECD:

Organisation for Economic Co-operation and Development

PCP:

Promotion of Clean Production

2. China

PPP:

Purchasing Power Parity

RMB:

Renminbi

SASAC:

State-owned Assets Supervision and Administration Commission of the State Council

SAOT:

State Administration of Taxation

SAOWS:

State Administration of Work Safety

SEPA:

State Environmental Protection Administration

SERC:

State Electricity Regulatory Commission

SETC:

State Economic and Trade Commission

SUV:

Sport Utility Vehicles

SOASA:

State-owned Assets Supervision and Administration

tce:

Ton of Coal Equivalent

toe:

Ton of Oil Equivalent

USD:

United States Dollar

TWh:

Terawatt Hour

UNEP:

United Nations Environment Program

2. China

References Articles and publications AFD (2010) “Implementing Large-Scale Energy Efficiency Programs in Existing Buildings in China, Conference in Wuhan (China) May 2009”, Conférences & Séminaires n° 1, Paris.

APEC, Energy Working Group (2012), Survey of Market Compliance Mechanisms for Energy Efficiency Programs in APEC economies.

APERC (2009), Understanding Energy in China, Geographies of Energy Efficiency. BELLEVRAT, E. (2011), Climate Policies in China and India: Planning, Implementation and Linkages with International

Negotiations, IDDRI.

FINAMORE, B. (2010), Taking Action to Meet its Climate Pledge - China Enacts National Energy Efficiency DSM Regulations to Dramatically Scale Up Investments in Energy Efficiency (Blog post), Natural Resources Defense Council (NRDC).

FINAMORE, B. (2011), The Next Five Years of Clean Energy and Climate Protection in China (Blog post), Natural Resources

Defense Council (NRDC).

GUERIN, E. and X. WANG (2012), Mitigation Targets and Actions in China up to 2020: Progress towards the 2020 Carbon

Intensity Target, Allocation of Provincial Targets, Design of Carbon Market Pilots, and Links with Broader Socioeconomic Objectives, IDDRI.

LAPONCHE, B., J. LOPEZ, M. RAOUST, A. NOVEL, N. DEVERNOIS (2011), "Energy Efficiency Retrofitting of Buildings – Challenges

and Method" , Focales n° 8, AFD, Paris.

LEWIS, J. (2011), Energy and Climate Goals of China’s 12th Five-Year Plan, Pew Center on Global Climate Change. NDRC (2004), China Medium and Long-Term Energy Conservation Plan. NI, C., E.O. LAWRENCE (2009), China Energy Primer, Berkeley National Laboratory, Novembre. POST CARBON PATHWAYS (2012), China’s 12th Five-Year Plan and White Paper on China’s Policies and Actions for Addressing

Climate Change, http://www.postcarbonpathways.net.au/transition-strategies/chinese-government-12th-five-year-plan-andclimate-change-white-paper/.

PRICE, L. (Lawrence Berkeley National Laboratory), X. WANG

(Beijing University), J. YUN (China Energy Conservation

Association) (2008), China's Top-1000 Energy- Consuming Enterprises Program: Reducing Energy Consumption of the 1000 Largest Industrial Enterprises in China.

2. China

PRICE, L. (2011), Energy Policy, Volume 39, Issue 4, April 2011, Pages 2165-2178, Assessment of China’s Energy-Saving and Emission-Reduction, Accomplishments and Opportunities During the 11th Five-Year Plan.

SHUI, B. AND J. LI (2012), Building Energy Efficiency Policies in China Status Report, ACEEE and GBPN. SELIGSOHN, D. and A. HSU , (2011), How does China’s 12th Five-Year Plan Address Energy and the Environment?,

ChinaFAQs.org.

ZHENG, N., N. ZHOU , C. FINO-CHEN and D. FRIDLEY (2012), Evaluation of Local Enforcement of Energy Efficiency Standards

and Labeling Program in China, China Energy Group, Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, 2012.

ZHOU, X., H. KUDO and S. TANAKA (2011), Current Status of Energy Conservation in China – The Case Study for Energy

Efficiency Standard and Labeling of Appliances and Equipment, IEEJ.

ZHOU, N., M.D. LEVINE and L. PRICE (2010), “Overview of Current Energy Efficiency Policies in China”, Energy Policy,

Volume 38: Issue 8. August.

Presentations

JIANHONG, C., (2012), Current Situation and Challenges in S&L Development in China, China National Institute of Standardization, February.

ZHENG, N. and N. ZHOU (2011), Assessing the Potential for Energy Savings with China’s ES&L program, China Energy Group,

Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory.

Websites

China Securities Journal (2012), 24 August 2012: China Releases 12th Five-Year Plan for Energy Saving and Emission Reduction,

http://www.china-briefing.com/news/2012/08/24/china-releases-12th-five-year-plan-for-energy-saving-and-emissionreduction.html

Chinascopefinancial.com CIA, The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/ Ministry of Environmental Protection, The People’s Republic of China Policies and Regulations: http ://english.mep.gov.cn/Policies_Regulations/ Reuters.com The Central People’s Government of the People’s Republic of China: http://english.gov.cn © AFD Working Paper n° 133 • Energy Efficiency Policies in China, India, Indonesia, Thailand and Vietnam • November 2013

India

India is facing several serious challenges with regards to

average and is bound to increase as India's economy will

by more than half since 1990, the combination of rapid

linked to energy consumption: locally with pollution

energy. First, even though energy intensity has decreased

keep growing. Third, India is facing environmental issues

economic and demographic growth has resulted in a

impacting population health, and globally due to rapidly

system under great stress. Second, as GDP per capita is

capita have increased by 63% over the last decade).16

the population does not benefit from satisfactory access to

hinder India’s development in the long run (India imported

soaring final energy demand, putting the Indian energy only a third of the world average and a significant share of energy (for example, over a third of the Indian population does not have access to electricity),15 development

increasing greenhouse gas emissions (CO2 emissions per

Finally, the increasing dependency on energy imports could USD 113 billion worth of energy products in 2011).17

remains a priority in order to improve the living conditions of

Energy efficiency and conservation is therefore crucial to

consumption per capita is also about a third of world

development.

hundreds of millions of Indian people. Final energy

lessen the environmental and financial costs of India’s

Map 3. Map of India

Source: Wikipedia. 15 Source: World Bank.

16 Source: Authors’ calculations; Enerdata data. 17 Source: Enerdata.

3. Inde

Table 8. India key figures Population

1,205 million (July 2012 est.)

Climate

Varies from tropical monsoon in south to temperate in north

Area

(World Rank: 2)

3.3 million km²

(World Rank: 7)

Source: CIA, The World Factbook.

3.1. Key energy data

3.1.1. Economy and population

in the country’s GDP has decreased over the last two

Economic growth, measured by the growth rate of GDP

decades, the industry sector and agriculture have also

at purchasing power parity, has been continuous since

grown rapidly. The value added of the industry sector

between 1990 and 2011 was 6.6%, and 7.6% during the

second biggest sector of India’s economy in 2005. Over

1990. On average, the growth rate during the period

has increased four times since 1990 and became the

last decade.18 The sector that has developed the most

the same period of time, added value of agriculture has

rapidly has by far been the service sector. The value

been multiplied by three.

added of this sector increased over fivefold from 1990 to

2011 and the share of services in India’s GDP rose from

In 2011, industry and agriculture accounted for 25% and

37% in 1990 to 46% in 2011. But even though their share

21% of GDP respectively.

Figure 25. Value added by sector 700000

600000

USD M 2005

500000 400000 300000

Agriculture

2011

2009

2008

2007

2006

2005

Services

2004

2003

2002

2001

2000

1999

1998

1997

1996

Industry

1995

1994

1993

1992

1991

1990

100000

2010

200000

Source: Authors’ calculations; Enerdata data.

Between 1990 and 2011, India’s population increased by

in 2000 and USD 3,582 in 2010. As a reference, in 2009,

consequence, GDP per capita (at purchasing power parity)

for the world with USD 10,662 and nearly twice as high in

40%, with an average yearly increase of 1.6%. As a

increased dramatically from USD 898 in 1990 to USD 1,568

the average GDP per capita was about three times higher Asia with USD 6,161 (compared to USD 3,310 in India).

18 GDP in constant 2005 USD and at purchasing power parity. Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDP in industrialized countries and raise per capita GDP in developing countries.

3. India 3.1.2. Final energy consumption

consumption per capita (1,301 kgoe in 2011). The increase

Total final energy consumption was 503 Mtoe in 2011. It

contributing factor as important as population growth (+40%

in final consumption per capita has consequently been a

doubled from its 1990 level (250 Mtoe) with an annual

between 1990 and 2011) to the increase in total final energy

average growth rate of 3.4% between 1990 and 2011.

consumption.

Final consumption per capita has increased by 43% since

Over the last twenty years, total final consumption has

kgoe in 2011, about a third of world average final energy

about half as fast as GDP.

1990. It was 297 kgoe in 1990, 316 kgoe in 2000 and 424

increased more than twice as fast as population, but

Figure 26. Total final energy consumption and final consumption of energy per capita 550

Total final energy consumption

430 410

500

390 kgoe per capita

450 400 Mtoe

Final energy consumption per capita

350 300

370 350 330 310 290

250

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

200

Source: Authors' calculations; Enerdata data.

Figure 27. Comparison of total final energy consumption, GDP and population (index, 1990=100) 400 350 300 250 200

GDP

Final energy consumption

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

100

2010

150

Population

Source: Authors’ calculations; Enerdata data.

3. India

Final energy consumption by source

Figure 28. Final energy consumption by source Final energy consumption by source

Final energy consumption by source in 2011 (total: 503 Mtoe)

200

34%

Moe

150

28%

100

Oil

Coal

Gas

Heat

Electricity

Biomass

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

19%

1990

0% 14%

Oil

Gas

Electricity

Coal

Heat

Biomass

Source: Authors' calculations; Enerdata data.

Biomass is the main final source of energy used in India.

The share of electricity in final demand increased from 9.2%

1990 and its share was gradually reduced to 34% in 2011.

rapidly enough until 2005 (5.3% per year on average). It has

It accounted for over 53% of total final energy demand in

Oil consumption has grown rapidly over the last twenty years with an average annual rate of 4.9%. Its share in final

in 1990 to 14.2% in 2011. Electricity consumption increased

skyrocketed since then with an average growth rate of 11.6% between 2006 and 2011, reaching 16.2% in 2011.

energy demand grew from 21% in 1990 to 28% in 2011.

Additionally, even if heat continues to account for a

2003, but has been multiplied by 2.4 since then. Since

0.1% in 2011), heat demand has been increasing rapidly,

Final demand of coal remained more or less constant until

2004, fossil fuels (oil, gas and coal) have accounted for most of final energy consumption in India.

negligible share of final energy demand in India (less than

on average 21% per year since 1990, due to the use of solar water heaters in residential buildings.

3. India

Figure 29. Change in final energy mix from 1990 to 2010 100% 80% 60% 40% 20%

Oil

2011

2010

2009

2008

Coal

Gas

Electricity

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Biomass

Source: Authors’ calculations; Enerdata data.

Final energy consumption by sector

final energy consumer with 28%, while the share of

In 1990, the residential sector accounted for 49% of final

transport (11%), services (4%) and agriculture (2%) were

energy demand. Industry was already the second biggest

more modest.

Figure 30. Final energy consumption by sector Final energy consumption by sector

200

Final energy consumption by sector in 2011 (total 503 Mtoe is 1,805 Mtoe )

Mtoe

150

34%

28%

100

0% 19%

Services

Transport

Agriculture

Residential

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

2010

14%

Oil

Gas

Electricity

Coal

Heat

Biomass

Source: Authors’ calculations; Enerdata data.

3. India

Final demand of the two main Indian sectors has evolved

3.1.3. Final energy intensity

grown steadily since 1990 (+1.7% per year on average) and

In 2010, final energy intensity was 0.125 toe/USD 1,000

years, with growth rates of 2.3% in 2009, 2.6% in 2010 and

PPP).19 As a comparison, final energy intensity was

differently. Final consumption of the residential sector has

(at constant 2005 prices and at purchasing power party,

has been growing more and more rapidly over the last few 3% in 2011.

0.139 toe/USD 1,000 for ASEAN countries, 0.101 toe/USD

Industry final energy demand grew 2% per year on average

European Union countries.

1,000 for OECD countries and 0.087 toe/USD 1,000 for

between 1990 and 2003, but soared between 2004 and 2011 (+7.3% per year on average).

Between 1991 and 2007, final energy intensity steadily

Transport final energy demand has followed a similar

(-0.1%). On average, final energy intensity decreased by

decreased, with the exception of 1997 (+0.1%) and 2002

3.8% per year between 1991 and 2007, but efficiency gains

pattern as industry with a slow increase between 1990 and

have significantly slowed down since 2007.

2005 (+2% per year on average) and sharper growth since 2006 (+9.7% per year).

Figure 31. Final energy intensity

Toe/USD 1,000 2005 (PPP)

0.25 0.23 0.21 0.19 0.17 0.15 0.13

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2010

0.11

Source: Authors’ calculations; Enerdata data.

This plateau seems to be the result of increasing final energy intensity in industry: after a low point in 2007, in 2011 it was back to its 2005 level.

19 Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDPs in industrialized countries and raise per capita GDPs in developing countries.

3. India

Figure 32. Final energy intensity by sector

Final energy intensity by sector

Final energy intensity by sector in 2010 (toe/USD 1,000 2005 PPP)

0.30

0.25

0.18

0.20

0.14

0.15

0.12

0.10

0.10 0.08

0.05

2011

2010

2009

2008

Agriculture

Services

Industry

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

0.06

1990

0.00

0.16

1991

Toe/USD 1,000 2005 (PPP)

0.35

0.04 0.02 0.00

Industry

0.01

0.02

Services

Agriculture

Note: Values for 2011 are estimates.

Source: Authors’ calculations; Enerdata data.

3.1.4. Electricity demand Power demand has increased fourfold since 1990 and has

been multiplied by 2.4 over the last decade. This has resulted

in chronic power shortage and massive power outages, such

as the one that affected 600 million Indian people on July 31,

2012. The deficit between installed capacity and actual

demand was about 10% between 2002 and 2007.

Figure 33. Peak power deficit (left) and generated power deficit in India (right) 120000

800000

700000

100000

600000

500000

60000

Million kWh

80000

40000 20000 0

400000

300000

200000

100000

FY2002

FY2003

FY2004

FY2005

Actual capacity

FY2006

FY2007

Deficit

FY2002

FY2003

Availability

FY2004 FY2005

FY2006

FY2007

Deficit

Source: Kutani et al., 2009.

3. India

Beyond the rise in power demand, electricity seems to

sharper in 2009. In 2011, Indian electricity intensity had

point in 1994 at 0.22 kWh/USD, (PPP, constant 2005

(0.21 kWh/USD). If the trend is confirmed, electricity

be used less and less efficiently. Indeed, after a high

reached

dollars), electricity intensity decreased at a good pace

the

same

level

1998

and

1992

intensity could reach 0.27 kWh/USD in 2012: a value

between 1994 and 2005 (0.17 kWh/USD), the year in

32% greater than the 1994 high point.

which it started increasing again. The increase became

Figure 34. Electricity intensity 0.23

kWh/USD 2005 (PPP)

0.22 0.21 0.20 0.19 0.18 0.17

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2011

0.16

Source: Authors’ calculations; Enerdata data.

A rapidly increasing power demand in industry appears to be the main driver of electricity intensity in India.

Figure 35. Electricity final consumption by sector 400

350

300

TWh

250

200

150

100

Industry

Services

Transport

Agriculture

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2011

Residential

Source: Authors’ calculations; Enerdata data.

3. India

3.2. Energy efficiency and conservation framework 3.2.1. Energy efficiency and conservation

The first chapter also sets the longer time frame goal of

According to India’s 11th Five-Year Plan, several energy

This is one of the “27 monitorable20 targets” that have been

objectives

increasing energy efficiency, nationally, by 20% by 2016-17.

efficiency improvements and energy consumption reduction

set on a national level.

Plan, dedicated to the power sector (Volume III, Chapter 10,

In terms of energy consumption, the 11th Five-Year Plan

objectives have been set. The section of the

11th

Five-Year

Energy), states that, “Supply side and demand side

proposes setting 5% of the anticipated energy consumption

energy demand by 5%-7% during the Eleventh Plan

energy savings to be achieved by 2012.

efficiencies should be improved to effectively lower primary period”, (i.e. 2007-2012).

level at the beginning of the 11th plan (2007) as a target for

3.2.2. Energy efficiency and conservation legal framework

Table 9. Main laws and decrees on energy efficiency and conservation in India Date

2001

Energy Conservation Act

2003

India Electricity Act

2005

2007-2012 2008 2010

Legislative text and objective

For more details, see 3.2.3. The Electricity Act focuses mainly on power production. Nevertheless, it calls for the creation of a committee, in each district, tasked with promoting energy efficiency and its conservation, among other responsibilities. National Electricity Policy

The Electricity Act of 2003 called for the establishment of the National Electric Policy (NEP). The NEP focuses mainly on electricity generation, transmission and distribution, but chapter 5.9 addresses energy conservation through demand side management and load management. The Policy’s key points regarding energy efficiency are a reduction in “the difference between electrical power demand during peak periods and off-peak periods” by utilizing peak and off-peak tariffs, the enlargement of Energy Service Companies’ role and the establishment of a national campaign to increase awareness about energy conservation. Eleventh Five-Year Plan

See 3.2.4. The 12th Five-Year Plan was still under construction in October 2012. National Action Plan on Climate Change See 3.2.5.

Amendment to the Energy Conservation Act See 3.2.3.

3.2.3. Energy Conservation Act In 2001 the Indian Energy Conservation Act (ECA)

was issued. The Act became effective on March 1,

2002. Through this act, the central government of

India took six critical steps towards a more energy

efficient economy. The Act:

• • •

Created the Bureau of Energy Efficiency;

Clarified the powers of the central government, State

governments and the BEE regarding energy efficiency and conservation;

Established an Energy Conservation Fund;

20 The word “monitorable” is used several times in India’s 11th Five-Year Plan. One can assume from the context that it refers to something that can be quantified and monitored.

3. India

• • •

Set up an energy standard and labeling policy;

renewable sources of energy”. The Plan also contains clear

Instituted compulsory periodic energy audits for power

instruments for achieving these targets are listed in the

Introduced an “Energy Conservation Building Code”; intensive industries.21

The ECA also compiled a list of energy intensive industries and other establishments specified as designated

consumers.22 This list can be amended by the central government.

targets regarding energy efficiency (see 3.2.1). Several Plan. These instruments include:

•

Demand side management (DSM), which is presented

•

The creation of an Energy Conservation Information

The ECA was amended in 2010. The key feature of this

Center within the BEE to “collate energy use data and

analyse energy consumption trends and monitor energy

amendment was the creation of an energy savings

certificate scheme. Under this scheme, the central

as a key element to eliminate power shortages;

conservation achievements in the country”;

government can issue energy savings certificates to the

•

prescribed norms and standards, and the designated

The rational pricing of electricity has clearly not been

purchase theses certificates to comply with the prescribed

has remained constant both for industry and households.

designated consumers who use less energy than the consumers who exceed their allocated consumption can norms and standards (see PAT scheme, 3.3.4).

This amendment also modified the Energy Conservation

Building Code to include commercial buildings with a connected load of 100 kW or contract demand of 120 kVA.

3.2.4. The Eleventh Five-Year Plan (2007-2012)

Rational pricing of energy, especially for electricity.

implemented. Since 2007, the price of electricity in rupees Including inflation and variations in exchange rates,

electricity prices dropped sharply between 2007 and 2011: -31% (authors’ calculation from Enerdata data).

The 11th Plan also addresses governance issues. At the

national level, the BEE is to be strengthened and empowered

to provide direction to the energy conservation programs in the States. At State level, State designated agencies (SDAs) in

Energy efficiency is a central element of the 11th Five-Year

various States and Union Territories will also be strengthened.

“The Plan emphasizes the need for energy conservation,

Finally, the 11th Five-Year Plan includes sectoral measures,

Plan. The second page of the foreword of the Plan reads: increasing energy efficiency, and the development of

some of which are listed in Box 4.

21 According to the Energy Conservation Act, energy audit means “the verification, monitoring

and analysis of use of energy, including submission [to Indian authorities] of a technical report containing recommendations for improving energy efficiency with cost benefit analysis and an action plan to reduce energy consumption”. 22 15 Energy Intensive Industries are listed in the 2001 ECA: Aluminum; fertilizers; iron and

steel; cement; pulp and paper; chlor alkali; sugar; textile; chemicals; railways; port trusts; transport sector (industries and services); petrochemicals, gas crackers, naphtha crackers and petroleum refineries; thermal power plants, hydroelectric power plants, electricity transmissions companies and distributions companies; commercial buildings or establishments.

3. India

Box 4. Selected examples of sectoral measures as described in India’s 11th Five-Year Plan “Energy intensive industries: BEE will develop 15 industry-specific energy efficiency manuals/guides.23 The manuals

will cover specific energy consumption norms as required to be established under the EC Act, energy efficient processes and technologies, best practices, case studies, etc. Follow up activities will be undertaken in the States by SDAs (State Designated Agencies) and manuals will be disseminated to all the concerned units in the industries.

Small and Medium Enterprises (SMEs): SDAs in consultation with BEE will initiate diagnostic studies in 25 SME clusters

in the country, including four to five priority clusters in the [North Easter Region], and develop cluster-specific energyefficiency manuals/ booklets and other documents to enhance energy conservation in SMEs.

Commercial buildings and establishments: BEE will prepare specific energy-efficiency manuals for buildings covering

specific energy consumption norms, energy-efficient technologies, best practices, etc. As a follow up, SDAs will initiate

energy audits and their implementation in 10 government buildings in each State and one or two buildings at UT (Union

Territories) level. BEE will also assist SDAs in the establishment and promulgation of Energy Conservation Building Codes (ECBC) in the States, and facilitate SDAs to adapt ECBC.

Street lighting and municipal water pumping: To promote energy efficiency in municipal areas in various States, SDAs

in association with State utilities, will initiate pilot energy conservation projects in selected municipal water pumping systems and street lighting to provide a basis for designing State-level programmes.

Agriculture sector: In the Eleventh Plan, SDAs will disseminate information on successful projects implemented in some

States, launch awareness campaigns in all regional languages in print and electronic media, and initiate the development of State-level programmes along with utilities.

Transport sector: SDAs, with the assistance of the relevant institutions/agencies, will conduct diagnostic studies to

establish the status of energy consumption and conservation in the sector. BEE will also set up labeling and/or norms for

specific fuel consumption for a few automobile and transport categories (services/public transport). Road transportation

consumes about one-third of the total consumption of the petroleum products in India. There is a need to reduce this consumption by shifting goods and passenger traffic from roads to rail, improving the road infrastructure, streamlining traffic signals, mandating fuel efficiency levels in transport vehicles, and developing hybrid electric vehicles (EVs).”

Source: 11th Five-Year Plan.

At the time of the research and writing of the report, the

12th Five-Year Plan had not been released. Nevertheless, preliminary documents gave strong hints that energy

efficiency and conservation will be a central element of this new five-year plan.

23 For the following sectors: Aluminum, fertilizers, iron and steel, cement, pulp and paper, chore alkali, sugar, textiles, chemicals, railways, port trusts, transport (industries and services), petrochemical and petroleum refineries, thermal power plants and hydroelectric power plants, electricity transmission companies and distribution companies.

3. India 3.2.5. The 2008 National Action Plan on Climate

Change

Climate change mitigation and energy conservation are closely

linked. It is therefore not surprising to note that “devising efficient and cost-effective strategies for end use Demand Side Management” ranks second among the five principles of the

National Action Plan on Climate Change (NAPCC).

Building on the objectives and policies described in the 11th

Five-Year Plan and the Energy Conservation Act of 2001,

capturing future energy savings;

•

Development of fiscal instruments to promote energy efficiency.

In some ways, the NAPCC builds a bridge between the 11th

and the 12th Five-Year Plans as “Each mission will be tasked

with developing specific objectives spanning the remaining

years of the 11th Plan and the 12th Plan period 2012-13 to 2016-17”.

the NAPCC calls for the implementation of the following

The Plan also outlined eight missions, the second of which

•

A market-based mechanism to enhance the cost

The National Mission on Enhanced Energy Efficiency

energy-intensive large industries and facilities, through

Minister of India. The goals for 2014-15 of the NMEEE are

measures in order to enhance energy efficiency:

effectiveness of improvements in energy efficiency in

the certification of energy savings that could be traded.

This scheme, called Perform Achieve and Trade (PAT), was established by the amendment of the Energy Conservation Act in 2010;

•

Acceleration of the shift to energy efficient appliances in

designated sectors by making such products more affordable;

•

Creation of mechanisms that would help finance

demand side management programs in all sectors by

Table 10. National target of energy saving among all sectors Sector

Power (thermal) Iron & steel Cement

Aluminium Fertilizer

Paper & pulp Textile

Chlor alkali Total

Source: Chakarvarti, 2012.

is Enhanced Energy Efficiency.24

(NMEEE) was approved on August 24, 2009 by the Prime to (source: BEE):

• •

Save 23 million toe or more annually;

Avoid the addition of 19,000 MW of electricity generation capacity (which represents 8.6% of 2011 India’s total

installed electricity capacity,25 and approximately the

•

increase in capacity between 2010 and 2011)26;

Prevent the emission of 98 million tons of CO2 per year.

The NMEEE also defined Specific Energy Consumption

(SEC) reduction targets for the 478 designated consumers (DCs) covered by the PAT scheme.

Apportioned energy reduction for PAT cycle-1 (mtoe)

Number of identified DCs

Annual energy consumption (million toe)

Share of consumption (%)

25.32

15.35

1.486

4.67

0.456

144

10 29 31 90 22

478

104.56

15.01

7.71 8.20 2.09 1.20 0.88

164.97

24 The eight missions are: Solar energy for power & heat, Enhanced energy efficiency, Sustainable habitat, Water resources, Sustaining Himalayan ecosystems, A Green India, Sustainable Agriculture and Knowledge on Climate Change.

63.38

9.10 4.97 1.27

3.211

0.815 0.478 0.119

0.73

0.066

100.00

6.686

0.53

0.054

25 Installed electricity capacity in 2011: 220,228 MW, source: Enerdata.

26 Installed electricity capacity in 2010: 201,478 MW, source: Enerdata.

3. India 3.2.6. Current institutional structure of energy

efficiency and conservation

The current institutional structure of energy efficiency and

conservation is, for the most part, defined by the 2001

Established by the Energy Conservation Act of 2001, the

BEE was initiated on Mach 1st 2002 to implement the

energy conservation policies defined in the Act under the authority of the Ministry of Power.

Energy Conservation Act (ECA).

According to the Energy Conservation Act, the BEE is both

Responsibility for energy policy, and therefore energy

governments with their goals of improving energy efficiency

efficiency programs, is shared between the central

government and the states. At the central level, the Ministry

of Power (MOP) is responsible for implementing the ECA.

a counseling body that helps the central and State

and conservation, and the body in charge of implementing

some aspects of the central and State policies. Its primary objective is to reduce the energy intensity of India’s

However in reality, the Bureau of Energy Efficiency (BEE)

economy, with a focus on self-regulation and market

policies on behalf of the Ministry of Power.

cooperation with the private sector, non-governmental

defines and implements energy efficiency and conservation

States also have an important role in the implementation of

principles. In light of this focus, the BEE works in organizations and research institutes.

national policies and the development of local energy

In practice, the BEE has three main roles. The first one is a

arm of the BEE – to which they report on their energy

efficiency standards. The second one is certification and

policies. State Designated Agencies (SDAs) act as the local

efficiency and conservation policies and projects – within

the States. SDAs, however, have limited human, technical

and financial resources. This hinders the State from adapting national policies to the local context, for example by adapting the building code to local climates.

In parallel, the Petroleum Conservation Research

Association (PCRA) is focusing on “conservation of

hydrocarbons” and “efficient energy utilization” (PCRA,

regulatory role with, for example, the definition of energy control. The BEE monitors energy use in high energyconsumption units and certifies and accredits energy

auditors and energy managers. The third one is the

dissemination of knowledge and information. The bureau

trains specialist and personnel in the technique to conserve energy and use it efficiently, prepares educational

curriculum on efficient use of energy and its conservation and promotes research and development.

2012). Established in 1978, the PCRA is a government

The main programs of the BEE are:

Natural Gas. Its energy efficiency and conservation

•

The energy efficiency standards and labeling program;

transport and domestic sectors, sponsoring awards such as

•

The Energy Conservation Building Codes;

Award, implementing driver training programs and creating

•

The Bachat Lamp Yojna program which aims at

agency under the purview of the Ministry of Petroleum &

activities include promoting energy audits for industry, the Best Energy Auditor Award and the Best ESCO27

education campaigns on oil conservation on a national and State level through press, television and radio.

The Bureau of Energy Efficiency The Bureau of Energy Efficiency (BEE) is the first Indian

agency dedicated to energy efficiency and conservation.

replacing incandescent bulbs by CFLs;

•

The Agricultural Demand Side Management and

•

The strengthening of State Designated Agencies

Municipal Demand side Management programs; (SDAs).

27 Energy service company.

Source: Kutani et al., 2009.

Power and Energy, Energy Policy and Rural Energy Division

Planning Commission

Other organizations

CCO

Mining Companies - CIL - NLC

Ministry of Coal

Diagram 2. Organization of the energy sector

Research and Training - CPRI - NPTI

Energy Conservation - BEE

Regulatory Organizations - CERC - ATE

Power Trading - PTC

Power Finance - PFC - REC

T&D Company - POWERGRID

Generation Companies - NTPC - NHPC

Central Electricity Authority

Ministry of Power

Government of India

Regulatory Organization - PNGR

Financial Institution - OIDB

Advisory Organizations - CHT - DGH - OISD - PCRA - PPAC

Engineering Company - EIL

Integrated Oil Companies - IOCL - HPCL - BPCL

Marketing Companies - GAIL - IGL - MGL

Refineries - CPCL - BRPL - NRL - MRPL

E&P Companies - ONGC - OIL - OVL

Ministry of Petroleum and Natural Gas

Supervisory Organizations - Nine Regional Offices

R&D, testing, certifying institutions - SEC - C-WET - SSS-NIRE - AHEC

Financial Institution - IREDA

Ministry of New and Renewable Energy

Regulatory Organization - AERB

Financial Institution - BRNS

Generation Companies - NTPC - NHPC

Input Providers - HWB - NFC - IREL - UCIL

Generation Companies - NTCIL - BHAVINI

Research Institutes - BARC - IGCAR - RRCAT - VECC - AMD

Atomic Energy Commission

Department of Atomic Energy

3. India

The impact of BEE’s work seems limited not only by a lack

sharply over the next five years as the 12th Five-Year Plan

of resources, but also by a lack of decision-making power

proposed outlay indicates a budget of over INR 36 billion

primary mandate is the development of electricity

BEE budget will be allocated to the Super Efficient

and independence vis-à-vis the Ministry of Power whose

generation (Charnoz and Swain, 2012). The BEE employs only a limited number of experts (Kutani et al., 2009) and

the total budget of the bureau for 2012-2103 is INR 2 billion (about EUR 29 million).28 But this budget should increase

(about EUR 519 million). For 2012-2013, nearly half of the

Equipment Programme (INR 500 million, about EUR 7.2

million) and the SDA strengthening program (INR 450 million, about EUR 6.5 million).

Table 11. 12th Five-Year Plan outlay and revised budget estimate for 2012-2013.

Bureau of energy efficiency 12th Plan outlay and revised budget estimate for 2012-2013

SI. N° 01

Standards & Labeling

Bachat Lamp Yojana

02 04 05 06 07 08 09 10

12th Plan - Proposed outlay

Scheme

BEE schemes

65.00

6.00

SDA Strengthening Programme

140.00

Agriculture & Municipal DSM

438.00

Energy Efficiency in Small and Medium Enterprises (SMEs)

455.00

Contribution to SECF

Capacity Building of DISCOMS HRD Programme

20.00 15.00

2.00

45.00

6.50 8.60

70.00

20.00

200.00

5.00

300.00

Energy Efficient Research Centre for Energy Consuming Sectors

288.00

15.00 10.30

Total

2,145.00

147.40

Super Efficient Equipment Programme (SEEP)

1,470.00

50.00

Total

1,477.91

52.60

Ongoing schemes 11

BE 2012-2013

183.00

Energy Conservation Building Codes & Existing Buildings

(in Cr. only)

BEE-GEF-WB MSME Project Total BEE

MOP schemes

7.91

2.60

3,622.91

200.00

100.00

20.00

Energy Conservation Awareness, Awards & Painting Competition Scheme

National Mission on Enhanced Energy Efficiency

3,767.00

180.00

Grand Total

7,489.91

400.00

Ongoing schemes

Total MOP

Note: Cr. = Crone. 1Cr. = INR 10 million = EUR 144,254.

3,867.00

200.00

Source: BEE.

28 INR 1 = EUR 0.0144254 (conversion rate on October 28, 2012).

3. India

3.3. Selected measures and instruments 3.3.1. Building

have a connected load of 100 kW or a “contract demand” of 120 kVA or greater (ECBC User Guide, 2011).

Building Code The National Building Code (NBC) of India was put into

effect in 1970. While it was amended in 1983, 1987 and 1997, it still does not include any energy efficiency requirements.

The Energy Conservation Act introduced the Energy

Conservation

Building

Code

(ECBC),

which

was

established in 2007. The ECBC sets minimum energy

standards for building envelopes, HVAC (heating,

ventilation and air conditioning), water heating, lighting

As of now, the ECBC is only applied in commercial buildings on a voluntary basis.

Building energy certification In India, two building energy-rating systems currently coexist:

the

Green

Rating

for

Integrated

Habitat

Assessment (GRIHA), and the Leadership in Energy and Environment Design India (LEED India).

GRIHA was designed for buildings of 2,500 m2 or more, but

(interior and exterior) and electrical power and motors.

a simplified version of the rating scheme, called Small

applicable to all new buildings and building complexes that

smaller buildings.

Since the 2010 amendment of the ECA, the ECBC is

Versatile Affordable GRIHA was recently developed for

Box 5. The GRIHA rating scheme (Energy Next, 2011) “GRIHA (Green Rating for Integrated Habitat Assessment) is the National Rating System of India launched in 2008. It has

been conceived by the Energy and Resources Institute (TERI) and developed in collaboration with the Ministry of New and Renewable Energy (MNRE), Government of India.

It is a green building “design evaluation system”, and is suitable for all kinds of buildings in different climatic zones of the

country. The basic idea behind the implementation is to reduce up to 30% of energy consumption, with limited waste generation due to recycling, less consumption of water […].

There is a set of 34 criteria formulated by GRIHA to rate a green building. A minimum amount of renewable energy is

mandated for a building to be rated under the GRIHA scheme. GRIHA follows a star-rating system wherein the buildings are rated from 1 star to 5 […].

CPWD29 adopted GRIHA as the Green Building Standard in 2009, and the Government of India in 2010 made GRIHA 3 star mandatory for government buildings.”

Source: Energy Next, 2011.

29 Central Public Works Department, Ministry of Urban Development, Government of India.

3. India

The LEED India rating system was developed by the Indian

Green Building Council (IGCB), an organization set up by

the Confederation of Indian Industries. This system is

3.3.3.

Energy

performance

labeling program

standards

and

based on the American LEED system, designed by the U.S.

The 2001 Energy Conservation Act called for the

certification: certified, silver, gold, and platinum for the most

energy efficiency labeling program. The program was

Green Building Council. The LEED has four levels of efficient buildings.

According to the IGCB website, 1,756 buildings have been

registered and 276 have been certified, amounting to 1.24 billion sq. ft. (about 115 million m²).

3.3.2. Phasing out of incandescent light bulbs:

implementation of energy performance standards and an launched in 2006 by the BEE. The goal is “to provide the

consumer [with the information to make] an informed choice

about the energy saving and thereby the cost saving potential

of the relevant marketed product” (BEE).

The program was at first a voluntary scheme covering eleven products.31 Washing machines have since been added to the

the Bachat Lamp Yojana Program

program. Labeling is now mandatory for four appliances (air

In India, the high price of CFL (INR30 80 to INR 100 per

transformers), but remains voluntary for the other appliances.

CFL, about EUR 1.35 to EUR 1.45) is a major barrier to the elimination

incandescent

bulbs,

which

cost

approximately INR 15 (EUR 0.22) per bulb. The Bachat Lamp Yojana (BLY) Program aims at closing the price gap

by generating carbon emission reduction certificates

(CERs) under the Clean Development Mechanism (CDM)

of the Kyoto Protocol. The financial resources generated by the sale of the CERs on the international carbon market are then used to subsidize CFLs.

The scheme was officially launched by the BEE on

February 29, 2009 and initially covered only 60W and 100W incandescent bulbs. The objective is the replacement of

“about 400 million incandescent bulbs in use in the country, leading to a possible reduction of 4,000 MW of electricity demand” (BEE).

As of April 2012, only about 26 million CFLs had been

distributed under the BLY scheme. As reported by the

NGO Down to Earth in February 2012, the BLY “has

failed to take off in most States, let alone deliver”. The

conditioners, tube lights, frost-free refrigerators and distribution The information is provided to the consumer through a label

displaying one to five stars (the more stars, the more efficient

the product). The daily or annual power consumption of the appliance is also indicated.

The following appliances and equipment should, in the future, be covered by the program (Teri, 2012):

• • • •

Home appliances: electronic ballast, computer monitors,

computers, set-top boxes, mixers and table fans;

Other appliances: inverters and batteries, voltage

stabilizers, uninterrupted power supply (UPS), external power supplies, battery chargers and mobile chargers;

Industrial equipment: industrial fans & blowers, diesel

generating sets, boilers, compressors and diesel pump sets;

Refrigerator & air conditioning systems: adaptive

defrost, commercial freezers, visi coolers,32 chocolate

coolers, chest coolers, heat pumps, multi-split systems and multi-door refrigerators.

main reason for this relative failure seems to be the

According to the BEE, the labeling program saved

a CER was sold for EUR 12. Three years later, the price

amounted to 4,350 million kWh, the equivalent of avoided

crash of the international carbon trading market. In 2009, fell to around EUR 3.

30 Indian rupee. INR 1 = EUR 0.0144254 = USD 0.0186748 (October 28, 2012).

1.4 million GWh in 2007-2008. For 2009-2010, the savings capacity generation of 2,180 MW.

31 Frost-free refrigerators, tubular fluorescent lamps, room air conditioners, direct cool

refrigerators, distribution transformers, induction motors, agricultural pumps, ceiling fans, LPG stoves, electric geysers and color televisions.

32 A visi cooler is a refrigerator with a glass door.

3. India

Picture 3. Example of energy performance label

Source: BEE.

3.3.4. Industry: the Perform, Achieve and Trade

3.3.5. Agriculture Demand Side Management

The PAT scheme is an energy saving certificate trading

Several Demand Side Management (DSM) programs are

an amendment of the Energy Conservation Act in 2010. It was

BEE in agriculture presents a high potential for electricity

(PAT) Scheme

system. This market based mechanism was made possible by officially launched on July 4, 2012 by the Ministry of Power.

(Ag DSM)

implemented in India. The program implemented by the savings.

PAT covers 478 industrial units, in eight sectors defined as

Electricity pricing is most often based on State policy in

Act. For each unit, a target is defined, specifying by what

much lower for the agriculture sector than for any other

energy intensive industries under the Energy Conservation

percentage energy intensity must be reduced in a 3-year

period. If the unit achieves more savings than the target, it is

allocated Energy Saving Certificates by the central

India. Due to these policies, the retail price of electricity is

sector of the Indian economy, with subsidies for electricity

used in agriculture reaching 80% to 90% in most States (11th Five-Year Plan, 2007). In some States, such as Punjab

government. One ESCert is issued for one MWh (about

and Tamil Nadu, electricity is free for agricultural uses

and Kappor, 2011). The PAT scheme enables companies to

little incentive to conserve energy and pumps used for

0.1 Toe) of energy saved over the set target (Bhattacharya

trade Energy Saving Certificates (ESCerts) in order to attain

their targets: if a unit fails to meet its target, it can buy

(Kutani et al., 2009). As a consequence, farmers have very irrigation are for the most part inefficient.

ESCerts from over-performing units.

According to the BEE, replacing 20 million pumps with more

The first targets must be achieved by the end of the first cycle

per year in electricity, and allow the government to reduce

attributed to the scheme are approximately 6.6 million toe by the

the upgrade of these pumps with efficient BEE star labeled

(from 2012-2013 to 2014-2015). The projected energy saving

end of 2014-15. Currently, the 478 units covered by the scheme

consume about 165 million toe annually (source: Ministry of

Power press release). For detailed targets, see Table 10.

efficient models could save as much as EUR 2.6 billion33

energy subsidies by the same amount. In order to trigger pumps, the BEE set up an Agricultural Demand Side

Management (Ag DSM) program based on public-private

33 INR 180 billion.

3. India

partnerships (PPP). The objective is to “create [an] appropriate framework for market based interventions in

which each Indian State must constitute aN SECF. As of

January 2012, 22 States out of 28 had constituted an

the agricultural pumping sector” (BEE website).

SECF. In order to accelerate the implementation of the

A pilot project was started in 2009 in the Solapur district of

Bureau of Energy Efficiency" was started. Under this

Maharashtra aiming to retrofit 2,600 pumps. As of

September 2012, 1,453 pumps had been upgraded. After the first 1,400 pumps were installed, electricity consumption

dropped by 25% and the annual anticipated saving

funds, a scheme called "Contribution to SECF by the

scheme, the BEE will help fund the SECFs of States

that have constituted an energy conservation fund and

defined the rules and regulations for its operation. INR 700 million (about EUR 10 million) will be distributed by

amounted to 4,850 MWh, the equivalent of the average

the BEE for the last three financial years of the

The BEE has prepared five more projects in different

Nevertheless, even if SECFs exist in most States, funding

being considered.

political and technical burden therefore relies almost

annual electricity consumption of nearly 9,000 people.

States and the preparation of five additional projects is

3.3.6. Financing energy efficiency: The State Energy Conservation Funds

The State Energy Conservation Funds (SECFs) were

11 th Five-Year Plan. 34

from the central government remains sparse. The financial,

exclusively on the States and most SECFs exist on paper

but do not have the budget to implement energy efficiency programs. The Kerala State Energy Conservation Fund (KSECF) seems to be an exception.

mandated by the 2001 Energy Conservation Act under

Table 12. Schemes implemented by the Kerala State Energy Conservation Fund (KSECF) and budget allocation Scheme

Target markets

Energy Audits Subsidy Scheme

Industrial, Commercial and Public

Energy Efficiency Appliance Financing Scheme

Residential

Interest Buy-Down Scheme

Energy Efficiency Grant Scheme

Performance Contracting Scheme Partial Credit Guarantee Scheme Management and Administration Contingency Fund Total budget

Industrial and Commercial Public (incl. Municipal) Public (incl. Municipal)

Industrial and Commercial -

34 600 69 200 43 300 28 800 28 800 43 300 21 600 14 400

288 400

Source: USAID Asia, 2009.

3.4

Budget (euros)

Savings induced by the main Indian EE&C policies

According to the Working Group on Power for the 12th Five-

Year Plan, the different energy efficiency and conservation

programs of the BEE and the MoP will result in an avoided power capacity of 11,000 MW35 (Ministry of Power, 2012).

This amounts to 6.7% of 2007 installed capacity and 5% of 2012 installed capacity.36

The BBE provides more details on the power savings generated by some of the programs for 2009-2010.

34 2009-2010, 2010-2011 and 2011-2012.

35 7,415 MW thanks to verified savings until December 2010, 250 MW thanks to unverified

savings for the fourth quarter of 2010-2011 and 3,409 MW from projected savings for the last year of the 11th Five-Year Plan (2011-2012). 36 Installed electricity capacity in India: 165,875 MW in 2007 and 220,228 MW in 2011. Source: Enerdata.

3. India

Table 13. Verified energy saving for 2009-2010

Standard and Labeling program

Program

National Energy Conservation Award Program Energy Conservation Building Code

Energy Conservation initiatives in various States Total

Electricity saving (in million kWh) 4 351 2 451

1 874 8 697

Source: BEE, Schemes for promoting EE in India during the 11th Plan.

Acronyms

3. India

APEC:

Asia Pacific Economic Cooperation

BAU:

Business As Usual

BEE:

Bureau of Energy Efficiency

BLY:

Bachat Lamp Yojana

CDM:

Clean Development Mechanism

CER :

Carbon Emission Reduction certificate

CFL:

Compact Fluorescent Lamp

CIA:

Central Intelligence Agency

CPWD:

Central Public Works Department

DC:

Designated Consumer

DSM:

Demand Side Management

ECA:

Indian Energy Conservation Act

ECBC:

Energy Conservation Building Code

ESCerts:

Energy Saving Certificates

ESCO:

Energy Service Company

Fiscal Year

GEF:

Global Environment Facility

GDP:

Gross Domestic Product

GRIHA:

Green Rating for Integrated Habitat Assessment

HVAC:

Heating, Ventilation and Air Conditioning

IGCB:

Indian Green Building Council

KSECF:

Kerala State Energy Conservation Fund

kVA:

kilo Volt Ampere

3. India kWh:

kilo Watt hour

LEED:

Leadership in Energy and Environmental Design

MOP:

Ministry of Power

Mtoe:

Mega ton of oil equivalent

MSME:

Ministry of Micro, Small and Medium Entreprises

MW:

Mega Watt

MWh:

Mega Watt hour

NAPCC:

National Action Plan on Climate Change

NBC:

National Building Code

NEP:

National Electric Policy

NMEEE:

National Mission on Enhanced Energy Efficiency

PAT:

Perform Achieve and Trade

PCRA

Petroleum Conservation Research Association

PPP:

Purchasing Power Parity

SDA:

State Designated Agencies

SEC:

Specific Energy Consumption

SECF:

State Energy Conservation Fund

SEEP:

Super Efficient Equipment Programme

toe:

ton of oil equivalent

UPS:

Uninterrupted Power Supply

USAID:

United States Agency for International Development

Watt

WB:

World Bank

3. India

References Publications BEE, Schemes for Promoting EE in India during the XI Plan. BHATTACHARYA, T. and R. KAPOOR (2011), Energy Saving Instrument – ESCerts in India. CHARNOZ, C. and A. SWAIN (2012), “High Returns, Low Attention, Slow Implementation: The Policy Paradoxes of India’s Clean Energy Development”, Working Paper n° 125, AFD, Paris.

D’MONTE, D. (2011), Small Green Hope in India’s Burgeoning Construction Industry. ENERGY NEXT (2011), Green Buildings are Energy-efficient, March. GLOBAL CHANCE and RITIMO (2012), « L’efficacité énergétique à travers le monde – Sur le chemin de la transition énergétique »,

Cahier Global Chance n° 32, October.

MINISTRY of POWER, Government of India (2012), Report of the Working Group on Power for Twelfth Plan (2012-17), January. PALIWAL, A., Down to Earth (2012), Losing Light. USAID Asia (2009), Kerala State Energy Conservation Fund Financing Schemes, Final Report. USAID India and BEE (2011), Energy Conservation Building Code User Guide.

Laws and Decrees

Energy Conservation Act, 2001. Electricity Act, 2003. National Electricity Policy, 2005. Planning Commission, Government of India, 2008, Eleventh Five-Year Plan 2007-2012, Volumes I, II and III.

3. India

Presentations CHAKARVARTI, K.K. (2012), Perform Achieve and Trade (PAT) - Methodology - Baseline Normalization, Energy Performance Indicators, Targets and M&V, Bureau of Energy Efficiency (India), July.

GARNAIK, S.P., BEE, National Mission for Enhanced Energy Efficiency (year unknown). KUTANI I., T. YAGI and M. MOTOKURA (2009), India’s Energy Situation and Trends in New/Renewable Energy and Energy Conservation Policies, Strategy and Industry Research Unit, IEEJ, September.

SETHI, G., TERI, February 2012, Energy Efficiency S&L Policy in India – Current Situation and Challenges. SHINDE, S.K., Power Minister, Address at Economic Editor’s Conference, 26 October 2010, New Delhi. SONI, V. (2009), Energy Efficiency Standard & Labeling Policy of India, Bureau of Energy Efficiency (India), February.

Indonesia

In the early 1990s, Indonesia economy made tremendous

Numerous energy efficiency and conservation policies and

country was severely hit by the Asian financial crisis in 1997

but little reliable information could be found on the actual

progress both in terms of GDP and energy efficiency. The

and, by 1999, its economy was no more energy efficient than nine years earlier. After its recovery, Indonesia

returned to a path of improving energy efficiency.

measures have been implemented since the early 1980s, status of the programs, and, sometimes, on the programs themselves.

Map 4. Map of Indonesia

Source: CIA, The World Factbook.

Table 14. Indonesia key figures Population

248 million (July 2012 est.)

(World Rank: 4)

Area

Total : 1.9 million km²

(World Rank: 15)

Climate

Tropical; hot, humid; more moderate in highlands

Source: CIA, The World Factbook.

4. Indonesia

4.1. Key energy data 4.1.1. Economy and population Indonesia’s GDP37 increased rapidly from 1990 until 1996

As Indonesia’s population increased by 31% between 1990

was, however, one of the most affected by the Asian

capita (at purchasing power parity, PPP) increased rapidly

with an average annual growth rate of 8%. The country

and 2011 with an average growth rate of 1.3%, GDP per

financial crisis, which began in 1997. As a result of the

from USD 1,450 in 1990 to USD 2,325 in 2000 and USD

crisis, Indonesia entered into a severe recession: GDP

4,325 in 2010. As a point of reference, in 2009, the average

decreased by more than 13% in 1998 and stagnated in

GDP per capita (at purchasing power parity) was USD

1999 with a growth rate of 0.8%. From 2000, Indonesia’s

10,662 for the world, USD 6,161 for Asia and USD 4,085 for

growth rate varied between 3.6% in 2001 and 6.5% in 2011

Indonesia.

with an average of 5.3%. It has yet to reach the pre-crisis level.

Figure 36. Value added by sector 2000000

1800000

Million USD 2005

1600000

1400000

1200000

1000000 800000

60000

400000

200000

Services

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

2010

Agriculture

Source: Authors’ calculations; Enerdata data.

4.1.2. Final energy consumption Growing on average by 3.3% per year, total final energy

consumption doubled between 1990 (79 Mtoe) and 2011

(158 Mtoe). Final consumption per capita increased by

52% from 431 kgoe in 1990 to 653 kgoe in 2011, about

half of the world’s average final consumption per capita

(1,301 kgoe in 2011).

37 GDP in constant 2005 USD and at purchasing power parity. Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDP in industrialized countries and raise per capita GDP in developing countries.

4. Indonesia

Figure 37. Total final energy consumption and final consumption of energy per capita

Final energy consumption per capita

700 650

140

600

kgoe per capita

160

120 100

550 500

450

400 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mtoe

180

Total final energy consumption

Source: Authors’ calculations; Enerdata data.

On average, GDP grew faster than energy consumption,

Since 2001, GDP growth rate has been increasing

but gains in energy efficiency made between 1990 and

1.8 times faster than final energy demand.

1997 were obliterated by the Asian financial crisis.

Figure 38. Comparison of total final energy consumption, GDP and population (index, 1990=100) 300 250 200

Population

2011

2009

2008

2007

2006

2005

Final energy consumption

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

GDP

1994

1993

1992

1991

1990

100

2010

150

Source: Authors’ calculations; Enerdata data.

4. Indonesia

Final energy consumption by source

Figure 39. Final energy consumption by source Final energy consumption by source

Final energy consumption by source in 2011 (total: 158 Mtoe)

70 60

33%

Mtoe

40%

40 30 20 10

Coal

2011

2010

2009

2008

Electricity

Gas

Oil

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Biomass

11%

Oil

Gas

Electricity

Coal

Biomass

Source: Authors’ calculations; Enerdata data.

Today, Indonesia is more dependent on fossil fuel than it

for 59%. Final electricity consumption grew over fivefold

for 35% of final energy consumption, while biomass was the

consumption) to 144 TWh in 2011 (12.4 Mtoe, 7.8% of final

was two decades ago. In 1990, oil, gas and coal accounted

from 28.3 TWh in 1990 (2.4 Mtoe, 3.1% of final energy

main final energy source with 42% of total consumption.

energy consumption).

These roles were reversed by 2011: biomass represented

33% of final consumption, while fossil energies accounted

Figure 40. Change in final energy mix from 1990 to 2010 100% 80% 60% 40%

Oil

Coal

Gas

Electricity

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2010

20%

Biomass

Source: Authors’ calculations; Enerdata data.

4. Indonesia

Final energy consumption by sector

residential sector with 29% of final demand in 2011.

The service, transport and agriculture sectors, with average

completely different picture of final energy consumption by

However, a closer look at the second decade gives a

annual growth rates of 7.6%, 6.6% and 6.5% respectively,

sector.

were the sectors where final consumption growth was the

most vigorous over the last two decades. Industry grew

On average since 2001, final demand in industry has been

more slowly, 4.5% annually over this period.

growing at a faster pace than demand in other sectors.

However, since 2008, energy consumption in the transport

Nevertheless, even with sustained growth, services

sector has increased even more rapidly with demand

accounted for 3% of final energy demand, while industry

growing by 7.6%, 18%, 12.5% and 12.2% for the last four

retained its rank as the second biggest consumer after the

years.

Figure 41. Final energy consumption by sector

Final energy consumption by sector

Final energy consumption by sector in 2011 (total 158 Mtoe)

33%

Mtoe

40%

40 30 20 10

Services

Transport

Agriculture

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

Industry

2011

1990

Residential

11%

Oil

Gas

Electricity

Coal

Biomass

Source: Authors’ calculations; Enerdata data.

4.1.3. Final energy intensity

The variability of the final energy intensity curve confirms the

After the economic recovery, energy intensity decreased

energy intensity decreased by 20% with an average rate of

average annual rate of 3.8%. Energy intensity increased in

observations made in Figure 38. Between 1990 and 1996,

3.2% per year. During the 1997 economic crisis, GDP dropped sharply while final energy demand increased by 4%

in 1997, decreased only slightly in 1998 and rose 10% in

1999. As a result, in 1999, final energy intensity returned to

its 1990 level as show in Figure 42.

sharply, dropping 20% between 2002 and 2008 at an

2008 and has decreased only slightly since 2009, not because of a slowdown of the economy, but because final

energy demand has increased rapidly: 7% in 2009, 6% in 2010 and 4% in 2011.

4. Indonesia

Figure 42. Final energy intensity 0.22

Toe/USD 1,000 2005 (PPP)

0.21 0.20 0.19 0.18 0.17 0.16

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.15

Source: Authors’ calculations; Enerdata data.

The industry sector seems to have played a role in the

efficiency since 2002 should therefore be credited to other

but energy intensity in this sector varied since then

energy intensity in this sector decreased by 75% between

decrease of final energy intensity between 1990 and 1996,

sectors. The services sector certainly played a key role:

erratically and in 2011, the Indonesian industry sector was

2002 and 2011, while its share in the country’s GDP

no more efficient than in 1993. Progress in final energy

increased form 38% to 46%.

Figure 43. Final energy intensity by sector Final energy intensity by sector

Toe/USD 1,000 2005 (PPP)

0.18

0.14

0.16

0.13

0.12

0.14

0.12

0.10

0.08

0.06

0.04

Services

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

2011

0.02

0.00

Final energy intensity by sector in 2010 (toe/USD 1,000 2005 PPP)

Agriculture

0.02 0.00

0.01 Industry

Services

0.02

Agriculture

Note: 2011 values are estimates.

Source: Authors’ calculations; Enerdata data.

4. Indonesia 4.1.4. Electricity demand Electricity consumption increased over fivefold from

Electricity intensity followed a different path. It increased by

growth rate of 8.7%. Power demand decreased by 3% in

between 1997 and 2000 with a 34% increase in three years.

28.3 TWh in 1990 to 144.3 TWh in 2010, with an average

90% between 1990 and 2001 and grew particularly rapidly

2011, but it is too early to determine whether this first

It stabilized after 2001, increasing only by 8.6% between

decrease in twenty years demonstrates the beginning of the

2001 and 2010. Electricity intensity dropped 8% in 2011,

stabilization of electricity consumption in Indonesia.

most likely following the trend of electricity consumption.

Figure 44. Electricity intensity 0.16

kWh/USD 2005 (PPP)

0.14 0.12 0.10 0.08

The final consumption of electricity by sector (see

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Source: Authors’ calculations; Enerdata data.

2010

0.06

service sectors. Residential demand has exceeded

Figure 45) shows that power demand increased more

demand in industry since 2006.

rapidly in the residential sector than in the industry and

Figure 45. Electricity final consumption by sector 70 60

TWh

40 30 20

Residential

2011

2009

2008

2007

2006

2005

Services

2004

2003

2002

2001

2000

1999

Industry

1998

1997

1996

1995

1994

1993

1992

1991

1990

2010

Source: Authors’ calculations; Enerdata data.

Electricity consumption data was not available for the transport and residential sectors. © AFD Working Paper n° 133 • Energy Efficiency Policies in China, India, Indonesia, Thailand and Vietnam • November 2013

4. Indonesia

4.1.5. Final energy demand forecast

than the 745 Mtoe (5,103 MBOE) demand under the

Indonesia has developed several scenarios to predict

Figure 46).

business as usual (BAU) scenario (Blueprint BAU in

energy demand until 2025. According to the 2010 report, Indonesia’s Technology Needs Assessment on Climate

The 2008 Blueprint for Electricity Conservation of the Ministry

Change Mitigation (Anggadiredja and Winanti, 2010),

of Energy and Mineral Resources (MEMR) forecasts an

energy conservation measures - which corresponds to the

electricity consumption of 414 GWh in 2025 under a BAU

RIKEN EC Scenario in Figure 46 could result in a primary

scenario. Energy conservation policies could reduce this

energy demand of 475 Mtoe (3,252 MBOE),38 36% lower

demand to 233 GWh, 43% lower compared to BAU.

Figure 46. Prediction of primary energy consumption in Indonesia 5500

5000

4500

4000

▲1 851 MBOE, EC: 36.3%

3500

3000

2500

2000

1500

1000

RIKEN EC Scenario (MBOE)

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2011

2012

2009

2008

2007

2006

2005

2004

2003

2002

2010

500

Blueprint BAU (MBOE)

Note: BOE: Barrel of oil equivalent. 1 toe = 6.841 toe. Source: Angadiredja and Winanti, 2010.

Figure 47 presents the projection of oil, coal and gas

efficient scenario, as it is 3.9 times lower in 2025 than under

modified to make the comparison between the different

9% higher and gas demand is 6% lower than under the

demand in the industry sector until 2025. Units have been

sources easier. Oil demand is the most affected under the

BAU. Under the efficient scenario, in 2025, coal demand is BAU scenario.

38 BOE: Barrel of oil equivalent. 1 toe = 6.841 BOE.

4. Indonesia

Figure 47. Projection of energy demand of Indonesian industry sector for the BAU and the energy efficient scenario 14 12 10 8 6 4 2 0

Oil BAU 2005

Oil efficient

Coal efficient

Coal BAU

2010

2015

Gas BAU 2020

Gas efficient 2025

Note: To allow comparison between different sources of energy, different units have been used for each source: oil is displayed in billion liters, coal in tens of million tons and gas in hundreds billion cubic feet. Source: Angadiredja and Winanti, 2010.

4.2

Energy eficiency and conservation framework

4.2.1. Energy efficiency and conservation objectives

Indonesia's EE&C objectives are outlined by two main texts:

•

The 2005 National Energy Conservation Plan, called

long-term goals.

RIKEN, which states that the energy intensity of the

No sectoral goals have been set, but energy saving

average until 2025;

RIKEN: 15% to 30% energy consumption for industries,

entire economy shall decrease by 1% per year on

•

No intermediate steps have been defined to achieve these

The 2006 National Energy Policy under which Indonesia shall achieve a primary energy elasticity39 of less

potentials have been identified for different sectors in

25% electricity saving for commercial buildings and 10% to 30% for the residential sector.

than 1 in 2025.

39 Defined here as “the rate of change of total primary energy supply, over the rate of change of GDP” (APEC, 2011).

4. Indonesia 4.2.2. Energy efficiency and conservation legal framework

Table 15. Main laws and decrees on energy efficiency and conservation in Indonesia Date

1982

1985 1991

1993 1994 1995 2004 2005 2005

2005

2006

2007

Presidential Instruction N° 9/1982 on Energy Conservation

Legislative text and objective

This law contains instructions for energy conservation in government departments, agencies and State-owned enterprise office buildings as well as official vehicles (APEC, 2011). Electricity Act

Presidential Decree N° 43/1991 on Energy Conservation

This Presidential Decree calls for inter-ministerial coordination of policies and programs on energy conservation. The Decree addresses policy on investment, funding of energy conservation programs and pricing of energy in relation to achieving energy conservation goals. The contents of this regulation appeared in Government Regulation N° 70/2009 (APEC, 2009). Ministry of Energy and Mineral Resources (MEMR) Decision N° 30.K/48/MPE/1993

Operational guidance for the implementation of energy efficiency policies, such as energy managers, the energy conservation program, energy audits (JICA and Electric Power Development Company, 2009). Directorate General of Energy and Electricity Utilization (DGEEU)40 Decision N° 15-12/48/600.1/1994

Technical guidance for energy auditing, implementation of energy management and conservation techniques (JICA and Electric Power Development Company, 2009). Ministerial Regulation N° 100.K/48/M.PE/1995: National Energy Conservation Master Plan (RIKEN) This plan was revised in 2005. See 4.2.4.

Ministerial Decree N° 0002/2004 Regarding Development Policy on Renewable Energy and Energy Conservation

This decree, also called “The Green Energy Policy”, presents an economy-wide policy aiming at securing the country’s energy supply, increasing the use of renewable energy and ensuring a more efficient use of energy. Ministerial Regulation N° 0031/2005

This regulation defines and regulates energy efficiency and conservation in government offices, commercial buildings, industry, transportation and households (JICA and Electric Power Development Company, 2009). Presidential Instruction N° 10/2005

This text instructs the central and regional governments to: - Implement energy efficiency measures in the institutions; - Inform the population about energy efficiency and conservation; - Monitor the implementation of energy efficiency and conservation measures and report progress to the president (JICA and Electric Power Development Company, 2009). Revision of RIKEN

The National Master Plan of Energy Efficiency (RIKEN) was revised in 2005. The main objective of the 2005 Plan is to decrease energy intensity by at least 1% per year until 2025. Presidential Regulation N° 5/2006 regarding the National Energy Policy

The Presidential Decree on National Energy Policy aims to ensure the energy supply security of Indonesia. For this purpose, the decree sets a target for the primary energy mix in 2025.41 Regarding energy demand, the decree calls for energy conservation with a reduction of energy elasticity to below 1 and a reduction of energy subsidies, especially oil subsidies, so that energy prices begin to reflect the actual cost of energy sources (Angadiredja and Winanti, 2010). Law N° 30/2007 regarding Energy (The Energy Law) See 4.2.4.

40 The Directorate General of Energy and Electricity Utilization (DGEEU) is part of the Ministry of Energy and Mineral Resources.. 41 The targeted primary energy mix should include: 20% or less oil, 30% or more natural gas, 33% or more coal, 5% or more biofuel, 5% or more geothermal and 5% or more of other energies and renewables (this includes nuclear energy according to the law) (JICA 2009).

4. Indonesia

Date

Legislative text and objective

2008

Blueprint for National Energy Management 2008

2008

Presidential Instruction N° 2/2008 Regarding Conservation of Energy and Water

2008

2009 2011 2011

According to APEC (2011), the “Blueprint for National Energy Management 2008 (Blueprint Pengelolann Energi Nasional- Blueprint PEN) revises the National Energy Policy laid out in Presidential Regulation N° 5/2006. Blueprint PEN elaborates on the energy policy, including on energy conservation”. Nevertheless, no reliable information could be found on this blueprint in English or French.42 This text is a revised version of Presidential Decree N° 10/2005 on Energy Efficiency. It requires government agencies to report energy and water use twice a year (APEC, 2009) and to increase efficiency for energy and water consumption (Palaloi, 2012). Presidential Regulation N° 28/2008 about National Industrial Policy

The primary objective of this regulation is to strengthen the competitiveness of the manufacturing industry in order to induce economic growth. Energy efficiency is one of the means identified to achieve this goal and the regulation pushes enterprises to implement energy efficiency and conservation actions and promotes the idea of energy managers (Angadiredja and Winanti, 2010). Governmental Regulation N° 70/2009 on Energy Conservation See 4.2.5.

MEMR Regulation N° 06/2011 on Energy Efficiency Rating for CFLs This regulation enforced mandatory energy labeling for CFLs.

Presidential Instruction N° 13/2011 on Energy and Water Conservation This instruction replaced the Presidential Instruction N° 2/2008.

4.2.3. National Energy Conservation Master

Plan: RIKEN

The Rencana Induksi Konservasi Energi (RIKEN) is the

cornerstone of energy efficiency policies in Indonesia. The first version of the National Energy Conservation Master Plan was implemented in 1995 by the Ministry of Energy and Mineral Resources (Decree N° 100.K/48/M.PE/1995). After the initial

implementation it was continuously revised (JICA, 2009) and in

2005 this continuous revision resulted in a new version of the Plan being published: RIKEN 2005. According to Governmental

Regulation N° 70/2009 Regarding Energy Conservation,

RIKEN should be updated at least every five years.

RIKEN targets all sectors of the Indonesian economy. It

defines

long-term,

economy-wide

energy

efficiency

objectives and gives energy saving potential for each sector. The Master Plan emphasizes the use of four instruments:

information dissemination, regulation, incentives and market

transformation.

Diagram 3. EE&C policy instruments and purpose in RIKEN 2005

RIKKEN 2005 Vision, Mission, Objective and Target

Incentive - Fiscal incentive - Subsidy re-allocation - Reward Source: JICA, 2009.

Information - Campaign - Education and training - Model

Regulation - Labelling - Standardization

Market transformation - Partnership - Initiative - Procurement

42 Documents referring to a Blueprint for Energy Management (for 2005-2025 or 2006-2025)

mentioned different dates for its publishing (2006 in UNEP, 2011 and 2008 in APEC, 2011). However, no reliable information was found in English or French.

4. Indonesia

The plan forces energy users that consume more than

(compared to 12,000 toe in RIKEN) to appoint an energy

energy manager, plan and implement an energy

energy conservation program. The regulation also calls for

12,000 toe per year or more than 6,000 kVA to appoint an conservation program, conduct periodical energy audits

and report periodically on the implementation of energy conservation activities (JICA, 2009).

manager, conduct an energy audit and implement an

mandatory enforcement of energy labeling. But the most ambitious elements of the regulation are the incentive and disincentive measures. As a matter of fact, the regulation

empowers the government to go as far as to fine non-

4.2.4. The Energy Law

compliant energy users or to reduce their energy supply.

Energy conservation is one of the objectives of the Law 30/2007 on Energy issued in 2007 by the central

On the incentive side, the government will grant fiscal

incentives and tax exemptions to energy-saving

government. In this law, energy conservation is defined as

appliances and equipment importers. It will also confer

preserve domestic energy resources and to improve

(UNEP, 2011).

Under this law:

efficiency and conservation

“a systematic, planned and integrated effort intended to efficiency in their utilization”.

•

The

entire

conservation:

society “the

4.2.6. Current institutional structure of energy

responsible

government,

for

the

energy

regional

governments, business entities and the community”;

•

The government and regional governments shall give

incentives to producers of energy saving equipment and to energy consumers who conserve energy;

•

special low interest rates to investors in energy efficiency

Energy consumers who do not conserve energy “shall be given disicentives” by central and regional

governments.

The law also stipulates that “A National Energy Council

shall be established within 6 months after the enactment of the Law” and that “actual regulations shall be issued within a year after the enactment of the Law”.

4.2.5. Governmental Regulation N° 70/2009 on Energy Conservation

The Regulation on Energy Conservation builds on RIKEN

Governance In Indonesia, the Ministry of Energy and Mineral

Resources (MEMR) has jurisdiction over the planning,

implementation and regulation of policies related to

energy efficiency and conservation. According to JICA

(2009), “the Ministry has sole authority to regulate and

promote rational use of energy in commercial buildings

and the electric power sector in Indonesia”. Until

recently, the Directorate General of Electricity and

Energy Utilization (DGEEU) was responsible for energy

efficiency and conservation within the MEMR. In 2010,

the Directorate of New Renewable Energy and Energy

Conservation, which was until then working under the

DGEEU, was raised to the level of Directorate General

and became officially responsible for energy efficiency

and conservation activities. The Sub-Directorate of

Energy Conservation, which develops and implements

energy conservation programs, has about 12 staff members (APEC, 2011).

and sets up ambitious measures to reduce energy demand.

The MEMR is also working jointly with the Ministry of

annually if necessary. It requires energy users who

(JICA and Electric Power Development Company, 2009).

It first calls for a review of RIKEN every five years or

consume more than 6,000 toe of final energy per year

Industry and Trade to further energy efficiency in industry

4. Indonesia

Education and information

State-owned Companies

The Education and Training Agency for Energy and

Perusahaan Listrik Negara (PLN, State Electricity Company

the authority of the MEMR, provides training for MEMR

monopoly on electricity distribution. This monopoly was

agency, including the Education and Training Center for

introduce competition in electricity distribution, but the law

Mineral Resources (ETAEMR), which functions under

officials. Four training centers are operating under this Electricity & New Renewable Energy (ETCERE), which

provides training on “efficient use of energy” and “electric

power

use”

(JICA and

Development Company, 2009).

Electric

Power

The MEMR also set up the Energy Efficiency and

Conservation Clearing House Indonesia (EECCHI), a

in English) is a government-owned company with a

threatened in 2002 by the Electricity Law which aimed to was cancelled in 2004 by the Constitutional Court.

The price of electricity is regulated by the central

government in Indonesia. As a result, the production

cost of electricity is roughly twice its selling price. Promoting demand reduction would therefore reduce

the chronic deficit of PLN, but the company dedicates

service facility which “aims to promote and enhance energy

little resources to demand side management programs

(EECCHI’s website, 2012).

2009). Two PLN programs promoting the replacement

conservation

and

energy

efficiency

Indonesia”

According to its website,43 EECCHI “systematically collects

and processes information about energy efficiency and conservation in Indonesia. EECCHI also provides

(JICA and Electric Power Development Company, of incandescent light bulbs by CFLs have nevertheless been successful (see 4.3.3.).

Energy Management Indonesia (EMI) is officially a

information services in the field of energy efficiency and

public energy service company (ESCO). It was

transportation sector. EECCHI plays an active role in

Bank. Its purpose is “promoting [energy efficiency and

conservation in the household, industrial, commercial and raising public awareness of the implementation of energy conservation and energy efficiency through various

outreach programs, training, workshops, conferences and seminars”.

established in 1987 with assistance from the World

conservation] through various activities such as database and human resources development, public information

and

energy

auditing

for

industrial

establishments” (JICA and Electric Power Development Company, 2009). In reality it seems that EMI’s current

activity is nearly exclusively limited to energy auditing.

43 http ://www.energyefficiencyindonesia.info.

4. Indonesia

4.3

Selected measures and instruments

Table 16. Summary of governmental energy conservation activities in Indonesia Public Awareness • Socialization measures coordinated by relevant stakeholders • Public advertisemetns in newspapers and electronic media • National awards and competition on EE&C • Distribution of brochures, leaflets

Education and Training • Utilizing the Center for Training and Education, Ministry of Energy and Mineral Resources • Participation in training abroad (Japan, Korea, China, etc.)

Energy

Conservation Program

DSM Activities • Terang Program; accelerate the spread of compact fluorescent lamps (CFLs) • Public Street Lighting Program • Peduli Program; rebate system for CFLs in households

Standardization • National Standard Indonesia (SNI) on EE&C in buildings; building envelopes, air conditioning systems, energy audit procedures, lighting systems • Preparation for energy manager accreditation mechanism • Recognition of energy management competence for industry and building management Energy Efficiency Labeling • Clear understanding of energy efficiency level for electrical appliances • Assignment of LSPRO (Product Certification Institution) and Equipment Testing Laboratory • Testing procedure of high efficiency lamps is being formulated

Partnership Program • Partnership between the government and private enterprises, such as free of charge energy audit and energy conservation monitoring

Source: JICA and Electric Power Development Company, 2009.

4.3.1. Energy manager system

4.3.2. Energy efficiency in buildings

RIKEN 2005 requires any energy user in the commercial or

Building code

tons or more in crude oil equivalent or with “a power

Even though Indonesia has not set up any building code

energy manager system. To comply with the energy

National Standards (SNI) have been developed to improve

industrial sector with annual energy consumption of 12,000

receiving capacity” of 6,000 kVA or more to comply with the

manager system means “assigning an energy manager,

creating and implementing energy conservation programs,

conducting audits periodically and reporting the outcome of

the implementation of the energy conservation program periodically” (JICA, 2009).

The Regulation on Energy Conservation lowered to

6,000 toe the threshold above which companies have to

pertaining to energy efficiency, numerous Indonesian energy efficiency in buildings.

These standards, which cover the building envelope,

ventilation and air conditioning, lighting and building energy auditing, do not seem to be mandatory for now. They can be applied on a voluntary basis for commercial and

residential buildings (APEC, 2011).

implement such a system (see 4.2.5).

4. Indonesia

As early as 2000, the Directorate General of New

several countries such as the United States, Canada or

issued several SNIs regarding:

new buildings and in 2011 for existing buildings. A number

Renewable Energy and Energy Conservation (DJEBTKE)

•

Energy Audit Procedures in Buildings (SNI 03-6196-

•

Energy Conservation for Lighting System in Buildings

• •

2000);

(SNI 03-6197-2000);

of points are credited to a building according to its

performance on six topics (land use, energy efficiency, water conservation, materials, air quality and environmental

management) and one of the four certification levels is awarded based on these topics:45 bronze, silver, gold or

Energy Conservation for Building Envelopes in

platinum.

Energy Conservation for Air Ventilation Systems in

4.3.3. Phasing out of incandescent light bulbs

Buildings (SNI 03-6389-2000);

Buildings (SNI 03-6390-2000).

According to the APEC Energy Working Group (2011), the

2000 standards “are not appropriate to recent building

technology”, but updated standards are currently being drafted.

In parallel, the Ministry of Public Works has established several standards:

•

India, GREENSHIP commenced certification in 2010 for

Technical Design Procedures for Energy Conservation

in Buildings (SK SNI T-14-1993-03 established in 1993

As of October 2012, no information could be found on a

comprehensive program to phase out incandescent light bulbs. Nevertheless, the Indonesian authorities seem to

have acknowledged the great energy saving potential of

replacing incandescent bulbs. According to a 2010 report,

“the use of CFL[s] to replace incandescent lamp[s] can cut the electricity demand by up to 200 MW in the Java-Bali

region” (Angadiredja and Winanti, 2010). Several programs have therefore been developed to accelerate the distribution of CFLs in Indonesian homes.

and revised in 2002 as SNI 03-6759-2002);

In 2002, the state-owned electricity company PLN offered a

Conditioning Systems in Buildings (SNI 03-6572-2001);

capacity less than 900VA. The aim of the program, called

•

Technical Design Procedures for Ventilation and Air

•

Technical Design Procedures for Natural Daylight in Buildings (SNI 03-6575-2001).

50% rebate on 8W CFLs to its customers with a connection DSM46 Terang and set up in cooperation with the MEMR,

was to limit peak load by eliminating incandescent light bulbs.47 A second program, called DSM Peduli, was

Finally, in 2010 the Minister of Energy and Mineral Resources

created by PLN and the MEMR using the same model. In

buildings:

households

issued two regulations that impacted on energy efficiency in

•

Regulation N° 13/2010 on Standard of Competency for

•

Regulation N° 14/2010 on Standard of Competency for

Energy Managers in Industries; Energy Managers in Buildings.

this program, PLN offered a direct subsidy to low income that

purchased

least

three

CFLs

(Angadiredja and Winanti, 2010). These two replacement programs had an important impact on the Indonesian CFL

market. CFL imports into Indonesia increased from

23 million units in 2002 to 36 million in 2003 and 48 million in 2004 (World Bank, 2006).

Building certification The Green Building Council of Indonesia, established in

2009, launched a building certification system called

GREENSHIP with the support of the World Green Building Council. Based on the LEED44 rating system used in

44 Leadership in Energy and Environmental Design.

45 Points are given according to the performance of the buildings on each topic. A certification

of bronze, silver, gold or platinum is then awarded based on the total number of points given to the building. 46 Demand Side Management. 47 Lighting is one of the main drivers of peak electricity demand at night in the residential sector.

4. Indonesia

A 2006 World Bank study estimates that the potential

types (CFLs, air conditioners, TVs, refrigerators, and

and 21 million units for Florescent Tube Lamps (FTLs). In

types (air conditioners, refrigerators, rice cookers,

market in Indonesia is as big as 107 million units for CFLs

motors), as well as an endorsement label for nine product

addition, the annual replacement market is estimated at

electronic ballasts, motors, TVs, electronic irons, washing

40 million for CFLs and 8 million for FTLs (Angadiredja and

machines and fans) (APEC, 2012).

Winanti, 2010). The efficiency of CFLs sold on the

Indonesian market is therefore of crucial importance, and

The efficiency of bulbs is indicated with a star rating system,

step taken by the government to reduce electricity demand

Regulation N° 06/2011.

depending on a Lumen per Watt ratio defined by MEMR

the implementation of energy labeling was an important first in lighting.

Use of comparative labels for CFLs is voluntary at the

4.3.4. Energy Performance Standards and

moment, but labeling was to become mandatory for CFLs at

Labeling Program

the end of 2012 when monitoring and verification of the

enforcement of labeling starts. According to Regulation

Energy labeling was implemented in 2011, eight years after

N° 06/2011, CFLs without labels will be banned from the

the decree regarding the Procedure of Energy Efficiency

Indonesian market and imported CFLs that do not display the

Labeling on Electricity Users in Indonesia48 had been

comparative label will be re-exported or destroyed.

signed in 2003.

Comparative labeling will be gradually introduced for nine

In May 2012, Indonesia introduced a comparative label for

other categories of product. At first, labeling of these items

CFLs only. MEPS are under preparation for five product

will be implemented on a voluntary basis.

Picture 4. Indonesian comparative label

Source: APEC, 2012.

Table 17. Energy efficiency rating for CFLs Capacity power (Watt)



Lumen/Watt



5-9

45 - 49

> 49 - 52

16 - 25

47 - 53

> 53 - 56

10 - 15 ≥ 26

Source: Palaloi, 2012.

46 - 51 48 - 55

> 51 - 54 > 55 - 58





> 54 - 57

> 57

> 52 - 55 > 56 - 59 > 58 - 61

> 55 > 59 > 61

48 DGEEU Decree N° 238-124/47/600.5/2003.

4. Indonesia

Table 18. Proposed timetable for labeling of appliances Products

2011

CFLs

Year

2012

2013

2014

2015

Refrigerators & Air Conditioners Electric Ballasts, Fans & TVs

Rice Cookers & Electric Motors

Electric Irons & Washing Machines

Source: APEC, 2012.

4.3.5. Energy subsidies

prices49 of some final energy sources have increased since

Fossil fuels and electricity are heavily subsidized in

2004, but these are fossil fuels for which market prices rose

major hurdle to an efficient use of energy. Several laws and

decreased slightly and electricity prices dropped sharply

Indonesia and these subsidies have been identified as a

globally. However, light fuel oil prices for households

regulations, such as the Presidential Regulation N° 5/2006

between 2004 and 2010: -26% in industry and -31% for

regarding National Energy Policy, have called for a drastic

households (source: Enerdata).

reduction of energy subsidies, with mixed results. The

Figure 48. Prices Taxes included of selected sources of energy at constant 2005 prices 800

700

2005 USD/toe

600

500

400

300

200

100

Diesel

Gasoline

Heavy fuel oil

Electricity in industry

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

Electricity for households

Source: Authors’ calculations; Enerdata data.

49 At constant prices.

4. Indonesia

Acronyms APEC:

Asia Pacific Economic Cooperation

BAU:

Business As Usual

CFL:

Compact Fluorescent Lamp

CIA:

Central Intelligence Agency

DGEEU:

Directorate General of Energy and Electricity Utilization

DJEBTKE:

Directorate General of Renewable of Energy and Energy Conservation

DSM:

Demand Side Management

EECCHI:

Energy Efficiency and Conservation Clearing House Indonesia

EMI:

Energy Management Indonesia

ESCO:

Energy Service Company

ETAEMR:

Education and Training Agency for Energy and Mineral Resources

ETCERE:

Education and Training Center for Electricity & New Renewable Energy

FTL:

Fluorescent Tube Lamp

GDP:

Gross Domestic Product

JICA:

Japan International Cooperation Agency

kVA:

kilovolt-ampere

ktoe:

kilo ton of oil equivalent

LEED:

Leadership in Energy and Environmental Design

MBOE:

Mega Barrel of Oil Equivalent

MEMR:

Ministry of Energy and Mineral Resources

MEPS:

Minimum Energy Performance Standard

4. Indonesia

Mtoe:

Mega ton of oil equivalent

PLN:

Perusahaan Listrik Negara, State Electricity Company

RIKEN:

Rencana Induksi Konservasi Energi, National Energy Conservation Master Plan

SNI:

Standar Nasional Indonesia, Indonesia National Standard

TPES:

Total Primary Energy Supply

TWh:

Tera Watt hour

4. Indonesia

References Publications ANGGADIREDJA, J.T. and W.S. WINANTI (2010), Indonesia’s Technology Needs Assessment on Climate Change Mitigation – Synthesis Report, Ministry of Environment and Ministry of Research and Technology, Republic of Indonesia..

APEC (2012), Survey of Market Compliance Mechanisms for Energy Efficiency Programs in APEC Economies. APEC (2011), Compendium of Energy Efficiency Policies of APEC Economies. APEC Energy Working Group (2011), APEC Cooperative Energy Efficiency Design for Sustainability, Final Report for CEEDS Phase 2: Building Energy Codes and Labeling. LITES ASIA (2012), Country Profile: Indonesia. UNEP (2011), Sustainable Building Policies on Energy Efficiency. WORLD BANK (2006), Assistance to the Government of Indonesia’s Demand-Side Management Program, Washington, D.C.

Laws and Decrees

National Energy Policy N° 5-2006 Law of the Republic of Indonesia N° 30 year 2007 on Energy

Presentations

HILMAWAN, E and S. MUSTAFA (2009), Energy Efficiency Standard and Labeling Policy in Indonesia. JICA and ELECTRIC POWER DEVELOPMENT COMPANY (2009), The Study on Energy Conservation and Efficiency Improvement in

the Republic of Indonesia, JICA.

PALALOI, S. (2012), Current Situation and Challenges in Energy Efficiency S&L Policy Development in Indonesia, Energy Technology Center, Agency for the Assessment and Application of Technology. SOULISTIYANTO, T. (2011), Preliminary Steps for Building to be Energy Efficient. WINARNO, D. (2011), The Clean Energy Policy in Indonesia, Action Plan of “Utilization of Biomass for Power Plant”, Indonesian Renewable Energy Society.

Thailand

The number of laws and policies to reduce energy

consumption and improve energy efficiency implemented

Map 5. Map of Thailand

by Thai authorities appears modest compared to other countries in the region. However, these policies established a rather comprehensive framework as early as 1992 through

the

Energy

Conservation

Promotion

Act.

The 20-Year Energy Efficiency Development Plan built on

this Act. It is a detailed and comprehensive master plan, which is on par with the policies of most European countries.

Table 19. Thailand key figures

Source: CIA, The World Factbook.

Population

67 million (July 2012 est.)

(World Rank: 20)

Area

Total: 513,120 km²

(World Rank: 51)

Climate

Tropical; rainy, warm, cloudy southwest monsoon (mid-May to September); dry, cool northeast monsoon (November to mid-March); southern isthmus always hot and humid

Source: CIA, The World Factbook.

5. Thailand

5.1. Key energy data 5.1.1. Economy and population

2.3% in 2009, but bounced back in 2010 with a growth rate of 7.8%. However, the Thai economy stagnated in 2011.

Thailand’s GDP50 has increased 2.4 times since 1990, reaching USD 344 billion in 2011, but the country was

The industry and service sectors have been the main drivers

origins there. Thai GDP grew rapidly from 1990 until 1995

industry sector tripled between 1990 and 2011, while the

severely hit by the 1997 Asian financial crisis which had its

of the country's economic growth. The value added of the

with an average annual growth rate of 9%. The economy

value added of the service sector doubled over the same

slowed down in 1996, growing only by 5.9%, before

period. The growth of these two sectors has followed the

entering a severe recession. GDP fell 1.4% in 1997 and

same trends as GDP. The service sector seemed, however,

over 10% in 1998. Between 1999 and 2007, the Thai

less affected by the last financial crisis than the industry

economy recovered rapidly and grew steadily at an average

sector. The value added has grown comparatively slower in

annual rate of 5%. Thailand was hit less severely than in

the agriculture sector than in the industry and service

1997 by the financial crisis of 2008. GDP decreased by

sectors, increasing by 42% between 1990 and 2011.

Figure 49. Value added by sector 90000

80000

USD M 2005

70000

60000

50000

40000

30000

20000

10000

Agriculture

2011

2009

2008

2007

2006

2005

2004

Services

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

2010

Source: Authors’ calculations; Enerdata data.

As Thailand’s population increased by 22% between

of reference, in 2009, the average GDP per capita for the

GDP per capita at purchasing power parity (PPP) tripled

for Thailand it was USD 7,918.

1990 and 2011 with an average growth rate of 0.97%, from USD 2,841 in 1990 to USD 8,554 in 2010. As points

world was USD 10,662, for Asia it was USD 6,161 and

50 GDP in constant 2005 USD and at purchasing power parity. Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDP in industrialized countries and raise per capita GDP in developing countries.

5. Thailand 5.1.2. Final energy consumption Growing on average by 5.3% per year, final energy demand

2.3 times between 1990 and 2011. Final consumption per

(82 Mtoe). Population growth over this period was modest,

1,174 kgoe in 2011, close to the world’s average final

was multiplied by 2.9 between 1990 (29 Mtoe) and 2011

capita was 602 kgoe in 1990, 815 kgoe in 2000 and

thus final energy consumption per capita increased

consumption per capita (1,301 kgoe in 2011).

Figure 50. Total final energy consumption and final energy consumption per capita

Total final energy consumption

1,100

1,000 kgoe per capita

Mtoe

Final energy consumption per capita

1,200

60 50

900 800 700 600

500

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

400

Source: Authors’ calculations; Enerdata data.

More importantly, final energy consumption grew faster than GDP, indicating that the Thai economy has become less energy efficient over the last two decades.

Figure 51. Comparison of total final energy consumption, GDP and population (index, 1990=100) 300 250 200

Population

2011

2009

2008

2007

2006

2005

Final energy consumption

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

GDP

Source: Authors’ calculations; Enerdata data.

1993

1992

1991

1990

100

2010

150

5. Thailand

Final energy consumption by source

much lower rate than before 2004: 3.3% on average per year

between 2005 and 2011.

Since 1990, Thailand has relied more and more on fossil

fuels. Oil, coal and gas together accounted for 56% of total

An aggravating factor has been the rise in final

final consumption in 1990 and 66% in 2011. This increasing

consumption of gas. It has increased by more than

rapid increase in oil consumption. Since 1990, oil has been

growth rate of 18% per year. Its share in final

dependency on fossil energies is mostly accounted for by a

twenty-five times in two decades, with an average

by far the main source of final energy in the country and its

consumption increased from 0.8% in 1990 to 7.5% in

final consumption has increased 2.8 times. After a slight

2011. Over the same period of time, coal final

decrease in 2004, final consumption of oil has increased at a

consumption increased sevenfold.

Figure 52. Final energy consumption by source Final energy consumption by source

Final energy consumption by source in 2011 (total: 82 Mtoe)

45 40

18%

35 Mtoe

30 25

50%

15 10 5

16%

Coal

Gas

Heat

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Oil

Electricity

Biomass

2011

7% Industry

Coal

Gas

Biomass

Electricity

Source: Authors’ calculations; Enerdata data.

Electricity consumption was multiplied by nearly four

Biomass was the source for which final consumption

(12.8 Mtoe) in 2011, but its share in the final mix

biomass increased by 60% from 1990 (9.1 Mtoe) to 2011

from 38 TWh (3.3 Mtoe) in 1990 to 149 TWh

increased by only four points, from 11.6% in 1990 to

15.7% in 2011.

progressed at the slowest pace. Final consumption of (14.7 Mtoe). As a consequence of this slow increase in

consumption, the share of biomass in the final energy mix decreased from 32% in 1990 to 18% in 2011.

5. Thailand

Figure 53. Change in final energy mix from 1990 to 2010 100% 80% 60% 40%

Oil

Gas

Electricity

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1990

1991

20%

Coal

Biomass

Source: Authors’ calculations; Enerdata data.

Final energy consumption by sector

Final energy demand has clearly been clearly driven by the

In the same time span, final energy consumptions in the

industry sector and, to a lesser extent, the transport sector.

agricultural sector and the service sector were multiplied

Final consumption in industry tripled from 8.2 Mtoe in 1990

by 2 and 5 respectively, but given the low energy

to 24.8 Mtoe in 2011, while final consumption in the

consumption in these sectors in 1990 (1.8 Mtoe and

the same period. In Figure 54, the effects of the 1997 Asian

remained modest in 2011 with 5% for agriculture and 7% for

transport sector doubled from 9.1 Mtoe to 20.8 Mtoe over

1.1 Mtoe respectively), their share in final consumption

financial crisis on the final energy consumption of these two

the service sector.

sectors are clearly visible.

Figure 54. Final energy consumption by sector Final energy consumption by sector

Final energy consumption by sector in 2011 (total: 82 Mtoe)

Mtoe

20%

30%

5 0

Services Source: Authors’ calculations; Enerdata data.

Transport

Agriculture

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

25%

2011

13%

Residential

Industry

Services

Transport

Agriculture

Residential

Non-energy uses

5. Thailand

Final energy consumption in the residential sector has

consumption in this sector increased by 40% from 7.8 Mtoe in

annual average rate of increase of 1.7%. In two decades, final

consumption halved from 28% in 1990 to 13% in 2011.

increased slowly in comparison to the other sectors with an

1990 to 11 Mtoe in 2011 and its share in total final energy

5.1.3. Final energy intensity Overall, final energy intensity increased by 21% between

In agriculture, energy intensity decreased by 28% from

and 1994 (-0.88% per year on average), final energy intensity

years from 1995 to 1999. Energy used per unit of GDP in

1990 and 2011. After moderately improving between 1990

1990 to its lowest point in 1995, before doubling in only four

increased rapidly between 1994 and 2004 with an average

this sector has stabilized since 1999.

growth rate of 2.7%. The situation started to improve in the

following few years with final energy intensity dropping by

The service sector is the least energy consuming per unit

6.5% between 2004 and 2007, falling back to its late 1998

of GDP of the three sectors for which data were

level. But since 2007, final energy intensity has started to

available.

increase again with an average growth rate of 1.7%.

The

energy

intensity

this

sector

nevertheless increased 2.4 times from 1990 to 2011, at

an average rate of 4.6% per year.

Energy used per unit of GDP in the industry sector increased by 15% between 1990 and 1996, before decreasing slowly back to its 1990 level.

Figure 55. Final energy intensity

Toe/USD 1,000 2005 (PPP)

0.17 0.16 0.15 0.14 0.13 0.12

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2011

0.11

Source: Authors’ calculations; Enerdata data.

5. Thailand

Figure 56. Final energy consumption by sector Final energy intensity by sector 0.14

kWh/USD 2005 (PPP)

0.16

Final energy intensity by sector in 2010 (toe/USD 1,000 2005 PPP) 0.12

0.12

0.14

0.12

0.10

0.08

0.06

0.04

0.02

0.04 2011

2010

2009

2008

0.03

0.02 0.00

Agriculture

Services

Industry

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.00

Industry

Agriculture

Services

Note: 2011 values are estimates.

Source: Authors’ calculations; Enerdata data.

5.1.4. Electricity demand From 1990 to 2011, electricity consumption multiplied by

During this period, electricity intensity increased by 64%.

(12.8 Mtoe) in 2011, but its share in the final mix increased

year on average), the progression slowed down and since

nearly four from 38 TWh (3.3 Mtoe) in 1990 to 149 TWh

After a rapid increase between 1990 and 1998 (+5.1% per

by only four percentage points, from 11.6% in 1990 to

2003, has nearly stagnated, increasing by 0.5% per year on

15.7% in 2011.

average between 2003 and 2011.

Figure 57. Electricity intensity

Toe/USD 1,000 2005 (PPP)

0.29 0.27 0.25 0.23 0.21 0.19

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.15

2011

0.17

Source: Authors’ calculations; Enerdata data.

5. Thailand

The rise in electricity consumption has been rather

residential sector (from 8.1 TWh to 32.8 TWh). Even

the Thai economy. From 1990 to 2011, power

agriculture it remained comparatively low with 0.3 TWh

homogeneous in the electricity consuming sectors of

though

consumption was multiplied by 3.6 in the industry

electricity

consumption

has

tripled,

in 2011. Electricity consumption in transport is very low

sector (from 17.9 TWh to 64.2 TWh), 4.2 in the service

in Thailand (0.07 TWh in 2011) and is therefore not

sector (from 12.2 TWh to 51.4 TWh) and 4.1 in the

visible in Figure 58.

Figure 58. Electricity final consumption by sector 70 60

TWh

50 40 30 20 10

Transport

Services

Residential

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

2010

Agriculture

Source: Authors’ calculations; Enerdata data.

In 2011, 43% of final electricity was consumed in the

industry sector, 35% in the service sector, 22% in the

residential sector, 0.2% in the agriculture sector and 0.05% in the transport sector.

The use of electricity is very different for residential and

commercial buildings. In 2010, 15% of electricity was

used for lighting and 19% for air conditioning in

residential buildings, while in commercial buildings air

conditioning accounted for 50% to 65% of electricity

consumption and lighting for 15% to 20% (Vongsoasup, 2012).

5.1.5. Final energy demand forecast According to the 20-Year Energy Efficiency Development

Plan 2011-2030 (EEDP, see 5.2.4.), “In the next 20 years,

if there are no energy conservation or energy efficiency

improvement measures or no significant reform of the

industrial structure and transportation system, energy

demand under the business as usual (BAU) scenario will

increase from 71,000 ktoe/year at present, to 151,000 ktoe,

or about 2.1 times the present amount, accounting for an

annual average growth rate of 3.9%, under the assumption

that GDP will grow at an annual average rate of 4.2%”. Final

energy consumption in the industrial and service sectors

would increase more rapidly than in the other sectors of the

economy (Ministry of Energy, 2011).

5. Thailand

Figure 59. Final energy demand forecast under the business as usual scenario of the EEDP 160,000

Actual data

Forecast

151,000 4%

140,000

Others Residential

Final energy consumption (ktoe)

120,000

Services

100,000

71,000

80,000 60,000 40,000 31,000 20,000

10%

31%

Transport

15%

35%

6% 23%

5% 37%

41%

1995

2000

2005

2010

Energy demand

1990-2010

2010-2030

4.5%

4.2%

0.9%

0.3%

GDP Population

4.4%

3.9%

Industry

36%

29%

Annual average growth rate

14%

2015

2020

2025

2030

Source: 20-Year Energy Efficiency Development Plan (EEDP 2011-2030).

5.2 Energy efficiency and conservation framework 5.2.1. Energy efficiency and conservation goals In an effort to promote energy efficiency, the Asia-Pacific Economic Cooperation (APEC) members adopted the

Thailand’s final energy consumption by 2030 compared to a business as usual (BAU) scenario. As the total final

energy consumption forecast in the BAU scenario is

Sydney APEC Leaders' Declaration on Climate Change,

151,000 ktoe in 2030, the EEDP specifies that “the final

2007. This declaration expressed an “aspirational goal” in

ktoe (under the assumption that the annual economic

Energy Security and Clean Development in September

regard to energy efficiency: to reduce energy intensity by 25% by 2030 (with base year 2005).

As a member of APEC, Thailand has adopted this objective for energy efficiency improvement.51 This target was

enshrined in May 2011 in the 20-Year Energy Efficiency

Development Plan (EEDP 2011-2030). Under this plan,

energy consumption in that year must not exceed 121,000 growth rate will be 4.2% on average)”.

The Plan mainly focuses on the industry and transport sectors. Among the 30,000 ktoe savings, 13,400 ktoe were

supposed to take place in the transport sector, 11,300 ktoe in the industry sector, 2,300 ktoe in large commercial buildings and 3,000 ktoe in small commercial and

energy intensity should be reduced from 16.1 ktoe/ THB52

residential buildings.

billion53 (0.371 toe/ USD 1,000)54 in 2030. This

The objectives of the original EEDP are summarized in

billion (0.494 toe/ USD 1,000) in 2005 to 12.1 ktoe/ THB corresponds to a reduction of about 20% (or 30,000 ktoe) of

Figure 60.

53 At 1988 constant value. 51 Other countries studied in this report are APEC members, but Thailand is the only one that explicitly adopted APEC’s energy efficiency objective as its national objective. 52 Thai baht. THB 1 = USD 0.0326020 = EUR 0.0255006, November 2012.

54 For several reasons, the values of energy intensity presented here differ greatly from those

presented in part 1.3. First, it is unclear if the EEDP presents primary energy intensity or final energy intensity. Moreover, the EEDP used GDP at constant 1998 prices, whereas the calculation of part 1.3 used GDP at constant 2005 prices and at purchasing power parity. Hence, the absolute values must be handled with care.

5. Thailand

Figure 60. Thailand EEDP original conservation target for 2030

Final energy consumptin (ktoe)

160,000 140,000 120,000

ktoe

El2005 = 16.2 ktoe/THB billion

-25%

151,000

30,000 (20% BAU)

BAU Case

El2030 = 12.1

121,000

100,000 With EE Plan

80,000

71,000

60,000 40,000 Source: Ministry of Energy, 2011.

2010

2030

In 2011, the same year Thailand released its 20-year plan,

It is important to note that even though the reduction

reduce energy intensity of the APEC region by 45% or more by

revised EEDP target is to reach 11.7 ktoe/ THB billion in

APEC countries agreed upon a more ambitious target: to

objective is more ambitious in terms of energy intensity (the

2035 compared to 2005 (APEC, 2011b). Responding to this

2030 while the original EEDP aimed at achieving 12.1 ktoe/

new APEC objective, Thailand updated its national energy

THB billion in 2030), the corresponding total final energy

efficiency target and now aims to reduce energy intensity by

consumption is greater for the revised plan (124,525 ktoe)

25% by 2030, compared to 2010, which corresponds to a total

than for the original plan (121,000 ktoe). No information

final energy consumption reduction of about 23% (or 38,200

explaining this difference could be found, but it is likely that

ktoe) compared to the BAU scenario (APEC, 2011a). In order

the higher final consumption for 2030 in the revised EEDP

to reach 38,200 ktoe of savings, sectoral energy consumption

simply reflects an increase in the forecast economic growth

reduction targets were also revised: 16,100 ktoe savings in the

between 2010 and 2030.

industry sector, 15,100 ktoe in the transport sector, 3,600 ktoe

in large commercial buildings and 3,400 ktoe in small commercial and residential buildings.

Figure 61. Revised Thailand energy conservation target in 2030 ktoe 162,715

180,000

Final energy consumption (ktoe)

160,000

140,000

120,000

100,000

80,000

60,000

38,200 (23% of BAU)

BAU

EI (2010) 15.6 ktoe/ THB billion

71,000

Reduce by 25%

EEDP

124,515

EI (2030) 11.7 ktoe/ THB billion

40,000

20,000 0

2010

Source: Rakkwamsuk and Sajjakulnukit, 2012.

* GDP 2030 at constant 1998 prices = THB 10,650 billion

2030

100

5. Thailand 5.2.2. Energy efficiency and conservation legal framework

Table 20. Main laws and decrees on energy efficiency and conservation in Thailand 1992 1995 1997 2007 2011

Date

Energy Conservation Promotion Act

Legislative text and objective

See 5.2.3.

Royal Decree on Designated Buildings, B.E. 2538 (1995)

Royal Decree on Designated Factories, B.E. 2540 (1997) Revised Energy Conservation Promotion Act

Became effective in September 2008. See 5.2.3.

20-Year Energy Efficiency Development Plan (EEDP 2011-2030) See 5.2.4.

5.2.3. Energy Conservation Promotion Act The Energy Conservation Promotion Act (ECON Act) was

passed in 1992 and revised in 2007. Given the fact that one

of the measures described in the EEDP is the enforcement of the Energy Conservation Act, one can assume that the Act was not really enforced until 2011.

The 1992 Act focused on energy conservation in factories and buildings, as well as “energy conservation in

machinery, equipment and promotion of energy-efficient materials”. The Act also addressed energy conservation

financing through the Fund for Promotion of Energy

Conservation (see 5.3.1.) and defined penalties and sanctions in case of non-compliance.

Energy conservation in buildings and factories The ECON Act introduced the notion of designated

factories and buildings.

Designated buildings were defined in 1995 in the Royal

Decree on Designated Buildings as buildings where “any

energy distributor is allowed to install a electricity metering

device, or to install one or more transformers whose

combined capacity is 1,000 kilowatts or 1,175 kilovolt-

amperes and up” or that consume annually “a total volume

of energy of 20 million mega Joules or more of electrical

Designated factories are factories that, like designated

buildings, are “approved for a distributor to use an electricity meter or to install one or many transformers with a total installed capacity of no less than 10,000 kilowatts or 11,750

kilovolts-ampere (KVA)” or, unlike designated buildings,

consume annually the “equivalent to electrical energy of not less than 200 million mega Joules”. This definition was

published in the Royal Decree on Designated Factories

of 1997, five years after the enactment of the Energy Conservation Promotion Act.

Under the ECON Act, the owners of designated factories and buildings were required to:

• • • •

Audit

and

analyze

factory/building;

energy

utilization

the

Appoint an energy manager;

Submit information on energy production, consumption, and conservation to the Energy Development and Promotion Department;

Set energy conservation targets for the factory/building

and define an energy conservation plan to achieve these targets.

The owners could choose from a set of measures to conserve energy in their facilities (see Table 21).

energy equivalent”.

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5. Thailand

Table 21. Energy conservation measures for factories and buildings defined by the ECON Act Factories

Buildings

Enhance fuel combustion efficiency

Reduce heat from sun glare into buildings

Prevent energy loss

Reuse energy left from consumption

Switch to use other kinds of energy

Make lighting in the building more efficient

Improve electrical energy consumption by adjusting the power factor, reducing maximum electrical energy demand at the peak time of use of the system, using electrical utilities appropriately or by other measures

Use machines, equipment and material that conserve energy in the building

Use highly efficient machines or equipment

Install control systems

Enhance the efficiency of air-conditioning and maintain an appropriate temperature within buildings Use good quality construction materials that conserve energy

Source: UNEP and Frankfurt School of Finance and Management, 2012.

Energy conservation in machinery and equipment and promotion of energy-efficient materials

The Energy Conservation Promotion Act did not introduce

any concrete measures, but enabled the Thai authorities to “designate machinery or equipment as having high

efficiency” and to “determine which materials, by types, qualities, and standards, are materials used for energy

with the 1992 Act, the price of power bought by the facility would increase until the owner of the facility notified the

Thai authorities that the factory or building complied with

the law. The money collected under this measure would

then be used to feed the Energy Conservation Promotion Fund (see 5.3.1).

conservation”. This section of the Act can be seen as a

The Act also defined various fines, ranging from THB

standards and energy labeling.

for owners of designated factories failing to comply with the

basis for establishing minimum energy performance

The 1992 law also rendered producers and distributors of high-efficiency machinery, equipment or materials eligible

for tax exemptions as well as funding through the Energy Conservation Promotion Fund.

Surcharges and sanctions While it seems that the Energy Conservation Promotion Act

was only partially enforced, the measures described above

were designed to be binding measures, and the 1992 Act

defined two mechanisms to ensure that the owners of designated factories and buildings would take the

50,000 to THB 200,000 (about EUR 1,300 to EUR 5,100)

1992 Act. Owners reporting false information could be

punished with imprisonment (up to three months) and “any

person who fails to send contributions to the Fund, or sends less than the full amount of contributions to the Fund” could

be sentenced to jail for a period of time ranging from three

months to two years and/or a fine up to THB 10 million (about EUR 255,000).

The 2007 revision of the Energy Conservation Promotion Act

came into effect in September 2008. The key measure of this

necessary steps to conserve energy.

revision was the introduction of energy efficiency standards

The first tool was surcharges for the use of electricity. If the

manufacturers and distributors to display the level of energy

owner of a designated factory or building failed to comply

for machinery and equipment. The revised law also forced

efficiency on their machinery and equipment.

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5. Thailand

The 2007 revision strengthened the authority of the Ministry

was 36,450 ktoe in 2030: 16,250 ktoe in transportation,

the

buildings and the residential sector. The initial objective of

of Energy, in particular by transferring the responsibility of Energy

Conservation

Fund

(called

Energy

Conservation Promotion Fund in the first version of the Act) from the Ministry of Finance to the Ministry of Energy.

Thai authorities plan to further modify the Energy Conservation

Promotion Act to introduce several measures for public

buildings and private buildings, such as energy management

standards and a new building code that will make a distinction

between different types of commercial buildings (hotels, office

buildings, hospitals…) (Mohanty, 2012). 5.2.4.

The

20-Year

Energy

Development Plan (2011-2030)

Efficiency

13,790 ktoe in industry and 6,410 ktoe in commercial

the EEDP, to reduce energy consumption by 30, 000 ktoe by 2030 compared to a BAU scenario, was therefore 18%

lower than the total assessed potential. After its revision, the new objective of the EEDP was to reduce final energy

consumption by 38,200 ktoe in 2030. This new objective is 5% higher than the assessed potential. It is unclear if Thai

authorities have identified new energy saving potentials, which will allow the revised target to be reached.

The current, post revision, long-term objective of the

20-Year Plan is to reduce energy intensity to 11.7 ktoe/THB billion in 2030. This corresponds to a reduction in total final

energy demand of 23% compared to a BAU scenario

(see 5.2.1). In order to attain this long-term target, the

Energy saving potential and objectives The energy saving objectives in the 20-Year Energy

Efficiency Development Plan (EEDP) were derived from an

assessment of the energy saving potential in each sector. The technical potential for energy consumption reduction

implementation of the EEDP has been divided into three

phases: short-term (2011-2015), medium-term (2016-2020) and long-term (2021-2030). Specific actions will be

implemented in each phase and intermediate targets have been identified for the first phase (2011-2015).

Table 22. Annual final energy saving targets for 2011 through 2015 Economic sector Industry Commercial & residential buildings Large commercial buildings

Small commercial & residential buildings

Transportation

Source: Ministry of Energy, 2011.

Energy Electricity (GWh)

2011

2012

299

580

915

Heat (ktoe)

Total (ktoe) Electricity (GWh) Heat (ktoe)

2014

2015

1,175

1,506

3,597

731

1,100

1,482

734

1,424

2,140

2,884

3,697

142

214

289

370

Total (ktoe)

2013

2,670

377

1,777

Annual target

872

4,612 1,899

Electricity (GWh)

637

1,237

1,859

2,505

3,212

Total (ktoe)

106

207

311

419

538

Heat (ktoe)

443

861

1,293

1,743

2,235

1,000

1,942

2,913

3,932

5,041

Heat (ktoe)

Electricity (GWh) Total (ktoe)

Total

443

102 -

861

153

1,293

206 -

1,743

264

2,235

103

5. Thailand

Implementation of the EEDP

and implementation tasks to a wide spectrum of public,

The implementation of the EDDP is based on six

“strategies”, five “strategic approaches” and 16 “measures”. The six strategies are the principles on which the EEDP

private and regional agencies/organizations;

•

Strategy 5: Maximize the use of [energy efficiency]

•

Strategy 6: Increase reliance on indigenous technical

was built:

professionals and Energy Service Companies (ESCO); know-how

and

innovation”.

Sajjakulnukit, 2012).

(Rakkwamsuk

and

•

“Strategy 1: Apply a combination of mandatory and

The five strategic approaches are more concrete

•

Strategy 2: Introduce measures that will bring about a

16 measures.

•

Strategy 3: Recognize the important role of private

•

incentive measures;

wide impact in terms of awareness-raising and behavior

implementation axes. Each axis regroups two to four of the

change;

For each of the 16 measures, the EEDP also specifies a

sector in the promotion and implementation of energy

EEDP (short-term, medium-term and long-term). These

efficiency measures;

Strategy 4: Decentralize energy efficiency promotion

“work plan” with different steps for the three phases of the work plans are called “cross-sector work plans”.

Table 23. The five strategic approaches and the 16 measures of the EEDP Strategic approach

Mandatory requirements via rules, regulations and standards

Measures

Enforcement of the ECPA (energy management system through energy consumtion reporting and verification imposed on designated buildings and factories). Mandatory energy efficiency labeling for equipment, appliances, vehicles and buildings. Enforcement of Minimum Energy Performance Standards (MEPS).

Determination of Energy Efficiency Resources Standards (EERS) for large energy businesses. Energy conservation

promotion and support

Public awareness and

Voluntary agreement between the public and commercial/industrial sectors.

Encouragement of voluntary energy efficiency labeling for highly energy efficient equipment/appliances, buildings and vehicles. Subsidies for energy savings in large businesses and peak load reduction. Support to energy service companies (ESCOs).

Dissemination of knowledge in regard to energy efficiency (education, awareness-raising, eco-driving).

behavorial change

Increase cooperation between local administration and businesses to plan and implement low carbon and energy efficient activities.

Promotion of technology development

Promotion of research and development to improve energy efficiency and reduce technological costs, particularly for equipment/appliances with large markets which are manufactured in Thailand.

and innovation

Human resources and institutional

capability development

Reflect actual cost of energy in energy prices and use tax measures to promote energy conservation.

Promotion of energy efficiency technologies which have been technically proven but have not been commercialized on the domestic market. Support for the development of professionals in the energy conservation field.

Support for the development of agencies and organizations responsible for the planning, supervision and promotion of the implementation of energy conservation measures.

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5. Thailand

Table 24. Example of cross-sector work plan Measure/work plan

Implementation in each phase

2011-2015

1. Strategic approach: mandatory requirements via rules, regulations and standards

1.1. Measure: Enforcement of the Energy Conservation Promotion Act (ENCON Act)

▲

- Enforce the ENCON Act, as amended up to B.E. 2550 (2007)

- Amend the 2007 ENCON Act (e.g. expansion of the scope to cover small-scale buildings/factories and business facilities other than buildings/factories)

▼

1.2. Measure: Mandatory labeling

- Enforce energy efficiency labeling for equipment/appliances

2016-2020

2021-2030

▲

- Develop standard testing laboratories

▼

- Enforce MEPS for equipment/appliances

▼

▲

▼

▲

1.3. Measure: Enforcement of the Minimum Energy Performance Standards (MEPS)

1.4. Measure: Enforcement of the Energy Efficiency Resource Standards (EERS) for large energy business - Enforce EERS for the electricity supply industry

- Enforce EERS for the natural gas and oil industry

▼

Preparation/study (if necessary)

▲

Start operation/expansion

Source: Ministry of Energy, 2011.

▲

▼

Evaluation/review (on a continuous basis)

For each measure, sector-specific work plans have also been designed for all the sectors relevant to the measure.

Table 25. Example of work plan for the transportation sector Measure/work plan

Implementation in each phase

2011-2015

1. Strategic approach: mandatory requirements via rules, regulations and standards 1.1. Measure: Mandatory energy efficiency labeling for vehicles - Enforce energy efficiency labeling for new vehicles

▼

- Enforce the minimum fuel economy standard for vehicles

▼

1.2. Measure: Enforcement of the Minimum Energy Performance Standards (MEPS) for vehicles

▼

Preparation/Study (if necessary)

Start operation/expansion

Source: Ministry of Energy, 2011.

The implementation of each measure is described in more

detail for the first five years of the plan (2011-2015).

▲

2016-2020

▲

2021-2030

▲ ▲

Evaluation/review (on a continuous basis)

Table 26 gives an example for the measure 1.1. in the transportation sector (see Table 25).

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5. Thailand

Table 26. Example of implementation work plan for the transportation sector Transportation sector

Measure: Mandatory energy efficiency labeling for vehicles

Work plan: Enforce energy efficiency labeling of vehicles Objective

Major activities

Oblige vehicle manufacturers and distributors to label vehicle energy efficiency in order to provide information to consumers to allow them to opt to buy vehicles with higher energy efficiency. - Appoint a working group, comprising public agencies, the private sector and qualified academics, to jointly specify the details and format of the vehicle energy efficiency information to be applied. - Develop an inventory of vehicle types and set up a vehicle energy efficiency database. - Determine standard criteria for vehicle energy efficiency testing and carry out the testing in compliance with the stipulated items under the criteria. - Enforce mandatory energy efficiency labeling – to be implemented by the Ministry of Energy or via the Office of the Consumer Protection Board (OCPB). - Benchmark vehicle energy efficiency and publicize the information pertaining to vehicle energy efficiency labels via the automobile-related media mechanism or NGOs.

Source: Ministry of Energy, 2011.

THB 29,500 million (about EUR 750 million) have been

9,500 million respectively, i.e. about EUR 282 and

allocated by Thai authorities for the implementation of

242 million). THB 5,000 million (EUR 128 million ) have

the EEDP during its first period. This corresponds to an

been allocated to small commercial buildings and the

average of THB 5,900 million (EUR 150 million) per

residential sector and THB 4,000 million (EUR

year. Two thirds of these funds have been allocated to

102 million) to large commercial buildings.

the industry and transport sectors (THB 11,000 and

Figure 62. EEDP budget allocation by economic sector 5-year budget: THB 29,500 M (average THB 5,900 M/yr) 17% 32%

14%

37%

Transportation - THB 9,500 Industry - THB 11,000

Large commercial building - THB 4,000 Small commercial & residential buildings - THB 5,000 Source: Ministry of Energy, 2011.

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5. Thailand

Expected results For each sector, the EEDP outlines the expected saving in ktoe, CO2 and THB in five and twenty years.

Table 27. Expected benefits from the EEDP implementation by economic sector Economic sector Transportation Industry

Commercial & residential buildings Large Commercial Building

Small commercial & residential buildings Total

Source: Ministry of Energy, 2011.

Annual average energy saving (ktoe) in 5 years 1,300

in 20 years

1,120

6,400

Annual average avoided CO2 emission (million tons) in 5 years

in 20 years

5,500

Annual average value of energy savings (million THB)

in 5 years

in 20 years

17,900

87,000

28,700

141,000

220

1,100

3,800

20,000

2,960

14,500

55,700

272,000

320

1,500

5,300

24,000

The annual energy savings expected in five years (2,960

“recommend[s] national strategies for energy conservation”

and 17.8% respectively of 2011 total final energy

effectiveness of national energy policy and energy

ktoe) and in twenty years (14,500 ktoe) are equal to 3.6%

and

“supervise[s],

monitor[s]

and

evaluate[s]

the

consumption. But the most striking expected benefit is that

management plans” (EPPO website,55 2012).

years (THB 55,700 million, about EUR 1.4 billion) is equal

DEDE is responsible for energy efficiency promotion and

the annual average monetary value of energy saving in five

to nearly ten times the annual funds invested each year

in order to implement the EEDP (THB 5,900 million, about

energy conservation regulation. For example, DEDE is in charge

implementing

the

measures

regarding

EUR 151 million).

designated factories and buildings under the Energy

5.2.5. Current institutional structure of energy

of the Thai standards and labeling programs. DEDE sets

efficiency and conservation

Since the Energy Conservation Promotion Act was

amended in 2007, the Ministry of Energy is responsible for

energy efficiency and conservation. Under the Ministry of

Industry, the Energy Policy and Planning Office (EPPO),

the Department of Alternative Energy Development and

Conservation Promotion Act. DEDE is also the cornerstone

the minimum energy performance standards (MEPS),

defines the specifications for energy comparative labeling

and organizes the network of laboratories that conduct the tests regarding MEPS and labeling. DEDE is also in charge

of the implementation of comparative labeling for nonelectric products.

Efficiency (DEDE) and the Electricity Generating Authority

EGAT is a State-owned power producer and distributor.

different energy efficiency and conservation programs.

well as most of the electricity production sites of the country.

of Thailand (EGAT) are in charge of the implementation of EPPO is in charge of the formulation and administration of energy policies. Among other missions, this office

EGAT manages the Thai electricity transmission network as EGAT has the responsibility of the implementation of the

energy comparative label for electric products and works jointly with DEDE on this program.

55 http://www.eppo.go.th/admin/link_about-E.html

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5. Thailand

5.3 Selected measures and instruments 5.3.1. Thailand’s Energy Conservation Fund

The Energy Efficiency Revolving Fund

The Energy Conservation Fund was established in 1992 by

The Energy Efficiency Revolving Fund (EERF) was created

by the 2007 revision of this Act. The main objective of the

renewable energy projects.

designated factories and buildings (see 5.2.3) through soft

DEDE, through the EERF, lends funds to eleven

energy conservation and renewable energies by financing

in turn provide loans to eligible borrowers willing to invest in

the Energy Conservation Promotion Act and was modified

fund is to finance energy efficiency investments in the

loans and grants, but the fund is also used to promote

research and development, demonstration projects,

capacity building and policy studies.

The fund has annual revenue of about THB 2 billion to THB 5 billion (about EUR 51 to 128 million) (Mohanty, 2012). In

accordance with the 1992 Energy Conservation Promotion

Act, the Fund was initially capitalized by relocating money from the Oil Fund.56 Since its creation, the Energy

Conservation Fund has also drawn continuous, additional

revenue from a levy on gasoline, diesel, fuel oil and

kerosene. Depending on the type of fuel, the levy varies

in 2003 by DEDE to finance energy efficiency and

participating banks at very low interest rates (0.5%), which

energy efficiency projects at a rate of 4% or less. The clients

repay the loan to the banks over a period of time no greater

than seven years. Finally, the banks pay back to DEDE, reconstituting the capital of the EERF, which will be used to finance more projects.

Diagram 4. Working Process of the Energy Efficiency Revolving Fund

from THB 0.04 to 0.25 per liter (EUR 0.001 to 0.006 per

DEDE lends to banks (IR:* 0.5%)

liter). Thailand therefore directly taxes energy consumption to fund energy conservation.

The Energy Conservation Fund disperses money primarily

Banks pay back to DEDE

through two subsidiary funds: the Energy Efficiency

Revolving Fund and the ESCO Fund.

Clients return payments to the banks

Banks lend to clients for EE projets (IR: 4% max)

EE** projects implemented

*IR: Interest rate. **EE: Energy efficiency

Source: Adapted from UNEP and Frankfurt School of Finance and Management, 2012.

56 When established in 1979, the Oil Fund’s objective was to maintain domestic retail prices

of oil products at or below a set ceiling, by subsidizing domestic oil producers and importers, and mitigate the effects on the Thai economy in the eventuality of rising oil prices. In 1991, regulations to control retail prices of Gasoline, Kerosene, Diesel and Fuel oil were abrogated and only liquid petroleum gas remained subsidized. The Oil Fund drew its revenue from the Oil Fund Tax levied on importers and domestic producers (Economic and Social Commission for Asia and the Pacific, United Nations).

108

5. Thailand

The eligible borrowers are buildings, factories, energy

•

2003, only projects associated with designated factories

•

service companies (ESCOs) and project developers. In

and buildings could be funded by the EERF (see Table 21), School of Finance and Management, 2012).

The loans can cover up to the total cost of the project with

a loan cap of THB 50 million (about EUR 1.3 million). No

minimum amount is defined. The borrowed funds can be

works,

piping,

necessary

components

Associated costs necessary – removal of existing

equipment, transportation, taxes, VAT”.57 (UNEP and Frankfurt School of Finance and Management, 2012).

but since 2004, projects in all commercial and industrial

facilities can seek EERF funding (UNEP and Frankfurt

Civil

specifically and necessary for the project;

The initial capital of THB 2 billion (about EUR 51 million)

originated from the Energy Conservation Fund budget. The capital of the EERF has increased several times since its creation. As the participating banks have started

to finance energy efficiency projects with their own

used for:

funds, no further capital increase of the EERF will be

• •

and Management, 2012).

Equipment and installation costs;

Consulting costs – design, control, supervision,

made after 2013 (UNEP and Frankfurt School of Finance

guarantee fees;

Table 28. Key parameters of the EERF Foundation

January 2003

Objective

Mobilise commercial investments to improve EE lending market opportunities

Loan channel

11 commercial banks

Agency

Financing mechanism Eligible borrowers Eligible projects

Department of Alternative Energy Development and Efficiency (DEDE)

EERF provides low-interest loans to banks, which then finance EE project through loans with favourable interest rates Buildings, factories, energy service companies (ESCOs) and project developers Energy conservation or energy saving projects

Loan period

Maximum 7 years

Interest rate

Maximum 4% p.a., on a negotiable basis

Loan size

Projects financed (February 2012)

Up to 100% of project costs but not more than THB 50 million (approx. USD 1.4 million) per project 294

Source: UNEP and Frankfurt School of Finance and Management, 2012.

Since 2003, over EUR 400,000 have been invested in

2011) and oil savings of 243 million liter per year (about

projects, resulting in electricity savings of 1.17 TWh per

The value of these savings amounts to about EUR

nearly 300 energy efficiency and renewable energy

year (about 0.8% of Thai final electricity consumption in

20,000 toe and 0.5% of Thai final oil consumption in 2011). 138 million per year.

57 Value added tax.

109

5. Thailand

Table 29. Impact of the EERF since 2003 Implementation period

EERF project - Status fact sheet (by end of February 2012) 2033 - 2011

Number of projects

294

Loan from RF

BHT 7,231.94 million

Electricity savings

1,170.66 million KWh/year

Total energy savings

BHT 5,423.48 million

GHG emission reduction

0.98 million T CO2 eq

Total investment

BHT 15,959.05 million

Loan from commercial banks

BHT 8,727.10 million

Oil savings

234.35 million liters/year

Reduction of oil imports

320.38 ktoe/year

Source: UNEP and Frankfurt School of Finance and Management, 2012.

The ESCO Fund

Founded in 2008, with an initial budget of THB 500 million

(about EUR 12.8 million) provided by the Energy Conservation Fund, the ESCO Fund has five objectives:

• •

To stimulate more than THB 1,250 million worth of

investments in renewable energy and energy efficiency;

To encourage more than 10 ktoe annual energy savings or energy savings worth THB 250 million per year;

•

To promote and support private investments through

•

To assist entrepreneurs in minimizing their energy costs

•

To provide financing to energy efficiency and renewable

Energy Service Companies (ESCOs);

and achieving revenues from carbon credit;

energy

businesses

(Energy

Foundation’s website, 2012).

for

Environment

Box 6. The ESCO Fund (CCAP, 2012) “The ESCO fund provides capital and technical assistance for clean energy, renewable energy, energy efficiency and

building retrofit projects. It was organized into two phases (2008-2010 and 2011-2012), each funded by an ENCON58 grant

at a value of USD 16.3 million. The project is sponsored by the Department of Alternative Energy Development and

Efficiency and the fund is managed by the government-appointed, non-profit Energy Conservation Foundation of Thailand and Energy for Environment Foundation. Projects are monitored during development, construction and operation.

The primary targets are: small and medium enterprises, including the energy-intensive service and industrial sectors;

energy service companies as co-investors, project developers, or technical partners; and domestic and international

investors in energy efficiency and renewable energy sectors. The secondary targets are financial institutions providing project loans and credit guarantee agencies.

Source: CCAP, 2012.

58 Energy Conservation Promotion.

110

5. Thailand

Fifteen projects were financed during the first phase (October

promote CFLs, such as energy labeling, subsidies for CFLs

and eight energy efficiency projects. The total investment of

result of this program, the price of CFLs was reduced by

2008-September 2010), seven renewable energy projects

the eight energy efficiency projects amounted to THB 27.2

million (about EUR 694,000), of which 91% (THB 24.8 million

or EUR 633,000) originated from the ESCO fund. During the

first phase, energy efficiency projects accounted for less than

0.1% of the total investment and the total energy saving for

energy efficiency projects reached THB 6.4 million per year

(over EUR 163,000 per year).

The second phase started in October 2010. It was initially

and the distribution of free energy efficient light bulbs. As a

20% between 2006 and 2012 and sales of CFLs, certified

under the energy efficiency label, increased from 3 million in 2006 to 7.7 million in 2010 (lites.asia, 2012).

5.3.3. Energy Performance Standards and

Labeling Program

Energy performance standards

scheduled to end in September 2012, but was extended until

There are two types of energy performance standards in

been approved for this phase, six for renewable energy and

and high energy performance standards (HEPS).

March 2013. As of September 2012, thirty-eight projects had

thirty-two for energy efficiency. The distribution between

renewable energy projects and energy efficiency projects is

more balanced in this phase than the previous phase: with

THB 125 million (EUR 3.6 million), 43% of funds in the

Thailand: minimum energy performance standards (MEPS) The objective of the MEPS is to eliminate inefficient products.

Both mandatory and voluntary MEPS exist in Thailand. The

standards are defined by DEDE, but enforced by the Thai

second phase were allocated to energy efficiency projects.

Industrial Standards Institute (TSIS). As of March 2012, there

According to CCAP (2012), “The ESCO Fund will continue to

fluorescent lamps, CFLs, three-phase motors and LPG stoves

operate as the finance delivery mechanism under the

government’s […] 20-Year Energy Efficiency Development Plan”. 5.3.2. Phasing out of incandescent light bulbs Rather than adopting a regulatory approach, Thailand has been gradually replacing incandescent light bulbs with compact

fluorescent

lamps

(CFLs)

through

the

were MEPS in Thailand for refrigerators, air conditioners, (Vongsoasup, 2012).

High Energy Performance Standards aim to promote the

use of very efficient products. They are voluntary only under

Section 23 of the Energy Conservation Promotion Act. HEPS are defined by DEDE, but DEDE and EGAT are both

responsible for the implementation of the labeling program. Eight HEPS have been implemented so far for air

Incandescent Lamps Phase Out Program conducted by the

conditioners, refrigerators, electric fans, chillers, glazing,

between 2007 and 2010. Several measures were used to

(Vongsoasup, 2012).

Electricity Generating Authority of Thailand (EGAT)

electric water heaters, rice cookers and electric kettles

Picture 5. Thai MEPS voluntary certification mark (left) and mandatory certification mark (right)

Source: Vongsoasup, 2012.

111

5. Thailand

Comparative labels

The comparative label for electric products gives the

Two types of energy efficiency comparative labels exist in

greater the number is, the more efficient the product is. The

Thailand, for electric and non-electric products. Both of them are voluntary.

efficiency of the appliance on a scale of one to five. The

label also displays the energy consumption of the product in kWh per year and its efficiency in BTU59 per hour and

per Watt.

Picture 6. Labeling for electric products

Source: Vongsoasup, 2012.

As of September 2012, 14 different types of appliance were

labeled: Liquefied Petroleum Gas (LPG) stoves, variable-

2009, 10,175 GWh of electricity were saved thanks to the

gasoline engines and diesel engines are currently being

included in the program for electric products. Between 1993 and electrical products labeling program (Snagsawang, 2010).

A comparative label for non-electric products was also

established by DEDE and currently, four products can be

Table 30. Products labeled and year of implementation Refrigerator

Product

Year

1994

speed drives,60 glazing and insulators. Labeling for

drafted (Vongsoasup, 2012). In 2010, energy savings

generated by the labeling of these four products were estimated to be 23 ktoe per year (Sagsawang, 2010).

Electronic ballast

Product

Year

2007

Air conditioner

1995

Double-oscillating fan

2008

Electromagnetic ballast

1998

Standby power for televisions

2010

CFL

1996

Electric fan

2001

Lighting fixtures

2003

Automatic rice cooker Source: Vongsoasup, 2012.

2003

T5 fluorescent lamps

2009

Standby power for computer monitors

2010

Lighting fixtures for T5 fluorescent lamps

2011

Electric kettles

2011

59 British Thermal Unit. The BTU is a unit of energy. 1 BTU is approximately 1,055 Joules.

60 Variable-speed drives (VSD) are used to control the speed of electric motors. The use of VSD adapts the speed of the motor to the actual work load and prevents the motor from running full speed when it is not necessary.

112

5. Thailand

Picture 7. Labeling for non-electric Products

Source: Vongsoasup, 2012.

The number of electric goods labeled increased rapidly during the last decade from about four million in 2001 to over 23 million in 2010.

Figure 63. Number of labels issued for electric products per year since 1995 Lamp T5

25,000,000

Electric kettle

22,500,000

Standby (Monitor) Standby (TV)

20,000,000

Ballast T5

17,500,000

Thin tube T5

15,000,000

Oscillating fan

12,500,000

Lamp

10,000,000

Rice cooker CFL

7,500,000

Fan

5,000,000

Brown n rice 5

2,500,000

Ballast

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

2011 (Aug)

Air conditioner Refrigerator

Source: Vongsoasup, 2012.

Far fewer labels have been issued for non-electric

In order to raise awareness of energy labeling, the Ministry

products have been approved for labeling (1.8 million

energy standards and labels in schools and through

products. Since 2007, about 3.6 million non-electric

insulators, 1.2 million LPG stoves, 100,000 variable-speed drives and 500,000 glazing).

of Energy has conducted several campaigns to promote the advertisement.

113

5. Thailand

Picture 8. Example of a promotional campaign for energy comparative label

Source: Vongsoasup, 2012.

According to DEDE, energy standards and labeling

by about 240 MW in 2010 i.e. 0.6% of Thai total installed electricity production capacity.61

programs have had an impact on the peak electricity demand. In 2010, these programs reduced peak demand

Table 64. Peak electricity demand reduction resulting from energy standards and labeling 250 MW 225

200

175

150

125

100

75 50

CFL

Ballast

Fan

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Refrigerator

Rice cooker

2011 (Aug)

Air conditioner

1998

1997

1996

1995

Source: Vongsoasup, 2012. 61 Thai total installed electricity production capacity in 2010: 40,773 MW (source: Enerdata).

114

5. Thailand

Acronyms APEC:

Asia Pacific Economic Cooperation

BAU:

Business As Usual

BTU:

British Thermal Unit

CCAP:

Center for Clean Air Policy

CFL:

Compact Fluorescent Lamp

CIA:

Central Intelligence Agency

CO2:

Carbon Dioxide

DEDE:

Department of Alternative Energy Development and Efficiency

ECON Act:

Energy Conservation Promotion Act

EDDP:

20-Year Energy Efficiency Development Plan 2011-2030

EE:

Energy efficiency

EERF:

Energy Efficiency Revolving Fund

E for E:

Energy for Environment Foundation

EGAT:

Electricity Generation Authority of Thailand

ESCO:

Energy Service Company

EPPO:

Energy Policy and Planning Office

GDP:

Gross Domestic Product

HEPS:

High Energy Performance Standards

IR:

Interest Rate

kgoe:

kilogram of oil equivalent

ktoe:

kilo ton of oil equivalent

115

5. Thailand

KVA:

kilovolts-ampere

LPG:

Liquefied Petroleum Gas

MEPS:

Minimum Energy Performance Standards

Mtoe:

Mega ton of oil equivalent

MW:

Mega Watt

OCPB:

Office of the Consumer Protection Board

toe:

ton of oil equivalent

TSIS:

Thai Industrial Standards Institute

TWh:

Tera Watt hour

VAT:

Value Added Tax

VSD:

Variable-Speed Drives

116

5. Thailand

References Publications APEC (2011a), Compendium of Energy Efficiency Policies of APEC Economies Thailand. APEC (2011b), The Honolulu Declaration – Toward a Seamless Regional Economy. APEC (2010), Peer Review on Energy Efficiency in Thailand. CCAP (2012), Revolving and Esco Funds for Energy Efficiency and Renewable Energy Finance – Thailand, Center for Clean Air Policy.

LITES.ASIA (2012), Country Profile: Thailand. MINISTRY OF ENERGY (2011), 20-Year Energy Efficiency Development Plan (2011-2030). UNEP and FRANKFURT SCHOOL OF FINANCE AND MANAGEMENT (2012), Case Study: The Thai Energy Efficiency Revolving Fund. WAIDE, P. (2010), Phase Out of Incandescent Lamps Implications for International Supply and Demand for Regulatory Compliant Lamps, International Energy Agency.

Presentations

ASAWUTMANGKUL, A. (2009), Energy Efficiency Standard and Labeling Policy in Thailand, Bureau of Energy Efficiency Promotion, Department of Alternative Energy Development and Efficiency. ENERGY

FOR

ENVIRONMENT FOUNDATION [E for E] (2012), Investment Promotion in Energy Efficiency and Renewable Energy

Projects under ESCO Fund.

MOHANTY, B. (2012), Policy and Regulation for Energy Demand Management: Experience from East-Asian Countries, 5th Capacity Building Programme for Officers of the Electricity Regulatory Commissions in India, Bangkok.

PHUMARAPHAND, N. (2012), Verification and Compliance Monitoring of EGAT’s Labeling Program, Demand Side Management and Planning Division, Electricity Generation Authority of Thailand (EGAT).

RAKKWAMSUK, P. and B. SAJJAKULNUKIT (2012), Thailand’s 20-Year Energy Efficiency Development Plan.

117

5. Thailand

SAGSAWANG, V. (2010), Energy Efficiency Standards and Labeling Measures in Thailand: Air Conditioner, Department of Alternative Energy Development and Efficiency.

VONGSOASUP, S. (2012), Energy Efficiency S&L: Current Situation and Policy Development in Thailand, Department of

Alternative Energy Development and Efficiency, Ministry of Energy, Thailand.

Websites

Energy Policy and Planning Office (EPPO): www.eppo.go.th Energy for Environment Foundation (E for E): http://www.efe.or.th

118

Vietnam

Among the five countries studied in this report, Vietnam is the one with the lowest GDP per capita and, at the same

Map 6. Map of Vietnam

time, the one with the highest consumption of energy per unit of GDP. Nevertheless, improvements in energy

efficiency have been steady since 1990 and the

implementation of several key policies (such as the 2010

Law on Energy Efficiency and Conservation, the phasing out

incandescent

light

bulbs

the

effective

establishment of an energy standard and labeling program) seems promising and could allow the country to catch up with its neighbors.

Source: CIA, The World Factbook.

Table 31. Vietnam key figures Population

91.5 million (July 2012 est.)

Climate

Tropical in south; monsoonal in north with hot, rainy season (May to September) and warm, dry season (October to March)

Area

331 210 km2

(World Rank: 13)

(World Rank: 66)

Source: CIA, The World Factbook.

119

6. Vietnam

6.1. Key energy data 6.1.1. Economy and population

In 1993, the industry and service sectors accounted for

Vietnam has seen continuous GDP62 growth since 1990.

2011, these sectors each accounted for 33% of GDP.

21% and 34% of Vietnamese GDP respectively, whereas in

On average, the growth rate between 1990 and 2011 was

Agriculture’s share of GDP decreased from 22% in 1993 to

7.3%, with only one year, 1999, in which the growth rate fell

12% in 2011.

below 5% to 4.8%. Vietnam outperformed its neighbors: the

average growth rate for ASEAN countries during this period

Between 1990 and 2011, Vietnam’s population increased

was 5.3%.

by 33%, with an average annual increase of 1.4%, a fifth of the average economic growth rate over the same period. As

Even though the value added of agriculture nearly doubled

a consequence, GDP per capita (at purchasing power

from 1993 to 2011, Vietnam’s growth has mainly been

parity) increased dramatically from USD 654 in 1990 to

driven by the service and industry sectors. Since 1993,

USD 1,416 in 2000 and USD 3,205 in 2011. As a point of

value added increased over fivefold in the industry sector

comparison, in 2009, GDP per capita was USD 10,662 for

and over threefold in the service sector.

the world, USD 6,161 in Asia and USD 3,009 in Vietnam (at purchasing power parity).

Figure 65. Value added by sector 30000

USD million 2005

25000 20000 15000 10000 5000

Services

2011

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

Industry

2010

0 Agriculture

Note: No valued added data was available before 1993. Source: Authors’ calculations; Enerdata data.

6.1.2. Final energy consumption Total final energy consumption increased by 2.6 times from

22.5 Mtoe in 1990 to 58.4 Mtoe in 2010. Growing on

average by 4.9% per year, final energy consumption grew

slower than GDP but 3.5 faster than population. Final

consumption per capita was 341 kgoe in 1990. It nearly

doubled in twenty years and reached 672 kgoe in 2010, slightly more than half of the world’s average final consumption per capita (1,289 kgoe in 2010).

62 GDP in constant 2005 USD and at purchasing power parity. Purchasing power parities (PPP) are rates of currency conversion that eliminate the differences in price levels between countries. PPP allow comparisons between countries with different standards of living. PPP estimates tend to lower per capita GDP in industrialized countries and raise per capita GDP in developing countries.

120

6. Vietnam

Figure 66. Total final energy consumption and final energy consumption per capita 60

Total final energy consumption

700

650

600 kgoe per capita

45 Mtoe

Final energy consumption per capita

40 35 30

550 500 450 400

350

20 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

300

Source: Authors’ calculations; Enerdata data.

Even though it has increased rapidly since 1990, the

to very strong economic growth, and it has only grown

rise in final energy consumption has mostly been due

half as fast as GDP.

Figure 67. Comparison of total final energy consumption, GPD and population (index, 1990=100) 450 400 350 300 250 200 150

Final energy consumption

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

GDP

2010

100

Population

Source: Authors’ calculations; Enerdata data.

121

6. Vietnam

Final energy demand by source

demand for oil, coal and electricity has grown more rapidly.

Accounting for over 80% of total final energy consumption

of final energy demand and fossil energies are now the

Consequently, biomass accounted for a decreasing share

in the early 1990’s, biomass was, by far, the main final

largest source of final energy used in Vietnam (45% in

energy source used in Vietnam. While the demand for

2010, vs. 42% for biomass).

biomass kept increasing over the last two decades,

Figure 68. Final energy consumption by source

Final energy consumption by source

Final energy consumption by source in 2011 (total: 58 Mtoe)

Mtoe

20 15

29% 42%

2009

2008

2007

2006

2005

2004

2003

2002

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

2001

Biomass

Heat

Coal

15%

Electricity

Gas

Oil

2010

11%

1990

Oil

Coal

Gas

Biomass

Electricity

Source: authors’ calculations; Enerdata data.

While electricity demand was extremely low in 1990

Gas was hardly used as a final energy source until 2004.

since, reaching 87.4 TWh (7.5 Mtoe) and 13% of total final

factor of 3.5, but its share of final energy consumption

(6.2 TWh or 0.5 Mtoe), it has increased over fourteen fold

Final consumption of gas has since then increased by a

energy consumption in 2010.

remains low: only 1% in 2010 (0.7 Mtoe).

Figure 69. Change in energy mix from 1990 to 2010 100%

80%

Biomass

60%

Electricity

Gas

40%

Coal

20%

Source: Authors’ calculations; Enerdata data.

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Oil

122

6. Vietnam

Final energy demand by sector

Between 1990 and 2010, final energy demand in industry

In 1990, the residential sector accounted for 84% of final

rates of 12% and 11%, respectively. During this period, final

and transport grew rapidly with average annual growth

energy demand. Industry and transport were responsible

energy demand in the residential sector increased more

for 8% and 6%, respectively, of final energy consumption.

moderately (2.3% per year on average). Consequently, the

The tertiary sector and agriculture each constituted only

share of industry and transport in final demand grew

1 to 2% of final energy demand.

significantly to 24% and 18%, respectively, in 2010. With

51% of final energy demand, the residential sector remains the first final energy consumer in 2010.

Figure 70. Final energy consumption by sector 30

Final energy consumption by sector in 2010 (total 58 Mtoe)

Final energy consumption by sector

Mtoe

24%

20 15 10

51%

18%

Services

Transport

Agriculture

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Industry

Residential

Source: Authors’ calculations; Enerdata data.

6.1.3. Final energy intensity Apart from 2004, when it increased by 4.3%, final energy intensity has been steadily decreasing over the last two decades in Vietnam.

The energy intensity decrease has nevertheless slowed

down since 2000: final energy intensity decreased by 29%

from 1990 to 2000 (-3.3% per year on average) and by only

13% between 2000 and 2010 (-1.3% per year on average).

Final energy intensity seems to have reached a floor since

2010

Industry

Services

Residential

Non-energy uses

Transport

Agriculture

2006, with an historical low point in 2008. This corresponds

to the beginning of the Vietnam National Energy Efficiency Program, which started in 2006 (see 6.2.3), but it seems too early to note the effects of the plan.

In 2010, final energy intensity was 0.234 toe/USD 1,000

(at constant 2005 prices and at purchasing power parity, PPP). As a comparison, final energy intensity was

0.139 toe/USD 1,000 for ASEAN countries.

123

6. Vietnam

Final energy intensity has remained relatively low for services

As could be expected, final energy intensity is far greater

data is available for these sectors): it increased from 0.063

It increased from 0.461 toe/USD 1,000 in 1993 to

and agriculture since 1993 (the first year for which value added

in industry than the service and agriculture sectors.

toe/USD 1,000 in 1993 to 0.076 toe/USD 1,000 in 2010 for

0.591 toe/USD 1,000 in 2010 (+28%).

services (+18%) and decreased from 0.73 toe/USD 1,000 to

0.069 toe/USD 1,000 over the same period for agriculture (-6%).

Figure 71. Final energy intensity 0.40

0.38

Toe/USD 1,000 2005 (PPP)

0.36

0.34

0.32

0.30

0.28

0.26

0.24

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.20

2010

0.22

Source: Authors’ calculations; Enerdata data.

Figure 72. Final energy intensity by sector

Final energy intensity by sector 0.20

0.20

0.18

0.16

0.12

0.14

0.10

0.12

0.08

0.06

0.04

0.06

0.02

Services

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

Industry

2010

0.04

1990

0.00

0.18

0.16

0.14

1991

Toe/USD 1,000 2005 (PPP)

0.18

Final energy intensity by sector in 2010 (toe/USD 1,000 2005 PPP)

Agriculture

0.02 0.00

Industry

0.02

Services

Agriculture

Source: Authors’ calculations; Enerdata data.

124

6. Vietnam 6.1.4. Electricity demand

can be noted in Figure 74. Electricity final consumption

increased over fourteen fold between 1990 and 2010 and its

After remaining nearly constant from 1990 to 1993,

sharp increase was mainly driven by the fast-growing

electricity intensity has soared. It increased by a factor

consumption in industry and the residential sector: final

of 3.3 from 1993 through 2010 with an average yearly

electricity consumption of industry has increased sixteen fold

growth rate of 7.3%.The rapid increase in electricity intensity

in twenty years, while it has multiplied by fourteen in the

is consistent with the rapid growth of electricity demand that

residential sector.

Figure 73. Electricity intensity

kWh/USD 2005 (PPP)

0.38 0.33 0.28 0.23 0.18

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.08

2010

0.13

Source: Authors’ calculations; Enerdata data.

Figure 74. Electricity final consumption by sector 50 40

TWh

30 20 10

Agriculture

Services

Industry

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Transport

2010

Residential

Source: Authors’ calculations; Enerdata data.

125

6. Vietnam

Figure 75 shows a breakdown of electricity consumption in

2012). Refrigerators and lighting were responsible for half

lighting accounted for a third of

out incandescent light bulbs and the implementation of

the residential sector in 2007. It is interesting to note that

of household electricity consumption. Therefore, phasing

household electricity

consumption. The relatively small share of the refrigerator

performance standard and labeling programs are critical

in electricity consumption (16%) can seem surprising, but is

measures for the reduction of electricity demand in the

most likely due to the fact that in 2007, little more than one

residential sector.

out of four households owned a refrigerator (Lai Duc Tuan,

Figure 75. Structure of electricity consumption in the residential sector in 2007 16%

Refrigerators Lighting Fans Air conditioner Other

36%

34%

7% 7% Source: Lai Duc Tuan, 2012.

6.1.5. Final demand forecast

In order to implement the Vietnam National Energy

According to data projecting population growth presented

Efficiency Program (VNEEP), several long-term energy

grow from 88 million in 2011 to 91 million in 2015, 96 million

Business As Usual (BAU), a reference scenario taking into

by Vietnam officials in 2012, Vietnam’s population should

in 2020 and 102 million in 2030 (Le Doan Phac, 2012). This

increase in population will undoubtedly have a significant impact on final energy demand as the country will almost certainly continue to develop.

demand scenarios have been defined: a scenario of

account the actions of the VNEEP, and a scenario of Super Energy Efficiency and Conservation (Super EEC) even

more ambitious than the VNEEP. The corresponding final

energy demand, excluding biomass, for 2015, 2020 and 2025 is given in Figure 76.

126

6. Vietnam

Figure 76. Final energy demand forecast

160

140

Mtoe

120

100

BAU

22.6

51.4 118.2

8.6

8.7

8.6

22.6

44.0

6.9

5.8

6.3

Reference 22.6

Super EEC

40 20 0

2005 2015 2025 15/05 25/15 25/05 Mtoe Mtoe Mtoe % % %

2005 BAU

2010

2015

2020

Reference

46.7

90.7 77.4

7.5

6.9

7.2

2025 Super EEC

Source: VNEEP, quoted by APEC Peer Review, 2009.

The reference scenario also forecasts final energy demand by source and by sector. The scenario differentiates

between commercial and non-commercial energies. Non-

can also encompass individual solar and wind energy or micro-hydro facilities.

commercial energies are described as "the energy forms

However, it should be noted that non-commercial energy

Energy Portal).63 This term generally refers to biomass, but

greatly from data found in Enerdata databases.

which are not subject to a commercial exchange” (Europe’s

figures displayed in Figure 77 for 2005 and 2010 differ

Figure 77. Final energy demand outlook by source 50

Mtoe

40 30 20 10 0

2005 Gas

Source: VNEEP, quoted by APEC Peer Review, 2009.

2010 Electricity

2015 Coal

2020 Non-commercial energy

2025 Oil

63 Europe’s Energy Portal: http://www.energy.eu.

127

6. Vietnam

Figure 78. Final energy demand outlook by sector 60 50

Mtoe

40 30 20 10 0

2015

2010

2005

Residential

Services

Agriculture

2020 Transport

2025 Industry

Source: VNEEP, quoted by APEC Peer Review, 2009.

Finally, per capita annual electricity consumption

corresponds to an electricity consumption of 130 TWh

Review, 2009).

should increase to 1,430 kWh in 2015 and 2,880 kWh 2025.

Based

projected

population,

this

in 2015 and about 285 TWh in 2025 (APEC Peer

6.2. Energy efficiency and conservation framework 6.2.1. Energy efficiency and conservation objectives

Vietnam’s national energy efficiency objectives are stated in

the Vietnam National Energy Efficiency Program (VNEEP).

Two phases are defined in the VNEEP. The objective of each phase is a reduction of the national energy

consumption when compared to a business as usual scenario (BAU):

•

Phase 1, 2006-2010: reduction of 3 to 5% of national

energy consumption in 2010 compared to the BAU scenario;

•

Phase 2, 2011-2015: reduction of 5 to 8% of the national

energy consumption in 2015 compared to the BAU scenario.

The VNEEP does not specify if these targets apply to the

primary or final total energy consumption of the country. Vietnam has no sectoral or local goals regarding energy efficiency and conservation.

128

6. Vietnam 6.2.2. Energy efficiency and conservation legal framework

Table 32. Main laws and decrees on energy efficiency and conservation in Vietnam Date

Sept. 2003

July 2004

Legislative texts and objectives

Governmental Decree on Energy Conservation and Energy Efficiency (N° 102/2003/ND-CP, September 3, 2003)

This decree was the first legal document regarding energy efficiency and conservation in Vietnam. It defines “the roles and responsibilities for all actors in government and society with respect to energy efficiency, and calls for suppliers of energy-consuming equipment and facilities to declare the energy consumption of the equipment in the user instructions and on the labels of such equipment and facilities.” (ICE and RCEE, 2011) Ministry of Industry circular on Energy Efficiency and Conservation (Circular N° 01/2004/TT/BCN)

This circular provided details regarding the implementation of energy conservation for the industry sector. The 2010 Law on Energy Efficiency and Conservation replaced this circular (APEC, 2011).

Dec. 2004

Electricity Law

March 2005

Energy Efficient Commercial Building Code N° 40/2005/QD-BXD

April 2006

National Strategic Program on Energy Savings and Effective Use (Vietnam Energy Efficiency Program, VNEEP)

April 2006

Electricity Saving Program

Nov. 2006

Guideline for Energy Efficiency Standard and Labeling (Circular N° 08/2006/TT/BCN)

Nov. 2006

Nov. 2006 Circular N° 08/2006/TT-BCN on procedures for energy efficiency labeling

2007

Decision 1855/QD-TTg approving the National Energy Development Strategy of Vietnam up to 2020 with an outlook to 2050 (APEC Peer Review, 2009).

July 2007

Decision N° 110/2007/QD-TTg approving the planning on national electricity development in the 2006-2015 period, with a vision to 2025 taken into consideration.

September

2010

The Electricity Law was first enforced in July 2005. According to Article 1, this law covers “the electricity development planning and investment; electricity saving; electricity markets; rights and obligations of organizations and individuals conducting electricity activities and using electricity [...]”. The code aimed “for the reduction of energy losses and improvement of living conditions in buildings” (APEC, 2009, p. 20). For more details, see 6.3.1. The VNEEP came into force in 2006 after it was approved by the Prime Minister on April 14 2006 for the period 2005-2012. For more details on the VNEEP, see 6.2.3.

This program covers a period of time from 2006 through 2010.

Issued by the Ministry of Industry and Trade (MOIT), this circular was meant to further the implementation of energy efficiency standards and labeling for appliances.

The main purpose of this decision was to develop Vietnam's electricity production capacity. From an energy efficiency point of view, it aims at reducing electricity loss in transmission. Article 2.6.B also states that “organizations and individuals engaged in electricity-related activities shall implement the Prime Minister’s Decision N° 79/2006/QD-TTg dated April 14, 2006, approving the national target program on economical and efficient use of energy, and Directive N° 19/2005/CT-TTg dated September 2, 2005, on thrift practice in electricity use.”

Law on Energy Efficiency and Conservation See 6.2.4.

129

6. Vietnam 6.2.3. The Vietnam National Energy Efficiency

Program

In 2006, Vietnam’s Prime Minister approved the Vietnam

usual scenario by 3% to 5%. The objective for the second

phase is a reduction of 5% to 8% in 2015 compared to the BAU scenario.

National Energy Efficiency Program (VNEEP) for the period

The first phase aimed mainly to prepare for the actual

and conservation plan for Vietnam. It encompassed all

framework for the efficient use of energy in Vietnam. This

2005-2015. This was the first long-term energy efficiency sectors of Vietnam’s economy. The general objective of this

implementation of policies and measures by building a legal

goal has since been achieved: the Law on Energy

master plan was to reduce the need for investment in

Efficiency and Conservation was passed by the National

energy demand was to be facilitated by “coordinated efforts

also supposed to be started in the first phase (see Box 7).

energy supply by curbing energy demand. This decrease in

for improving energy efficiency, reducing energy losses and

implementing extensive measures for conservation of

energy” (APEC, 2009). A secondary objective of the

program was environmental protection with, for example,

Assembly on September 18, 2010. Different projects were

The second phase will focus on expanding the different components of the plan and harvesting the gains rendered possible by the work achieved during phase 1.

the curbing of emissions in transportation.

Finally, with the VNEEP, Vietnam intends to utilize the

6.2.4. Objectives and implementation

efficiency polices. For example, one of the intended actions

The strategy described in the VNEEP is organized in two

phases: 2005-2010 and 2011-2015. For each phase, energy

experience of other countries that have already set up energy

described in the official plan is the “promulgation of energy

tariffs in accordance with trends for energy price policies in

countries in the region and other countries in the world to

consumption goals are specified, as well as objectives for the

reach target for energy saving and effective energy use”.

the first phase, the energy consumption target was to reduce

The implementation of the VNEEP is undertaken through

definition and implementation of policies and measures. For

national energy consumption compared to a business as

eleven main projects organized into six components.

Box 7. The six components and eleven projects of the Vietnamese National Energy Efficiency Program (Sources: VNEEP, 2006 and APEC, 2009)

Component 1: State Management on Energy Efficiency and Conservation

Project 1: Complete the legislative framework on energy efficiency and conservation in industrial production, construction site management, domestic activities, and energy consuming equipment. Component 2: Education and Information Dissemination

Project 2: Public awareness enhancement on energy efficiency and conservation.

Project 3: Integrate energy efficiency and conservation into the national education system.

Project 4: Develop a pilot project called "Energy Efficiency and Conservation in Households". Component 3: High Energy Efficiency Equipment: Developing and popularizing high-efficiency and energy-saving appliances, and gradually removing the low-efficiency ones

Project 5: Develop standards and provide energy efficiency labels for selected products.

Project 6: Provide technical assistance to domestic producers for energy efficiency compliance.

130

6. Vietnam

Component 4: Energy Efficiency and Conservation in Industrial Enterprises

Project 7: Develop energy efficiency and conservation management models in enterprises.

Project 8: Provide support for industrial enterprises in improving, upgrading, and optimizing technology aiming at energy savings and efficiency.

Component 5: Energy Efficiency and Conservation in Buildings

Project 9: Improve capacities in terms of energy efficiency and conservation and integrate energy efficiency and conservation in building design and management.

Project 10: Develop pilot models and disseminate energy efficiency and conservation management activities in the use of buildings.

Component 6: Energy Efficiency and Conservation in Transportation

Project 11: Make optimal use of transportation facilities and equipment, minimize the amount of fuel consumed and reduce the discharge of exhaust gases into the environment.

Funding

•

The VNEEP is to be funded through three sources: State

budget, domestic and external donors and companies that invest in energy efficiency projects.

A peer review on energy efficiency in Vietnam conducted by experts of the Asia-Pacific Economic Cooperation in 2009

gave partial information on the financial resources allocated

by the government to achieve the goals set in the VNEEP. VND 30 billion (about EUR 1.1 million) were allocated in

2007 and VND 36 billion (about EUR 1.3 million) in 2008 by the government. In 2007, a third of the funds were used to

promote efficient lighting. With this third, the government supported two energy efficient lighting manufacturers. In

The Energy Efficiency and Conservation Office (EECO) was established in 2007 under the authority of the Ministry of Industry and Trade (MOIT) (see 6.2.5);

•

A National Steering Committee was established with

members including representatives of the Ministry of

Construction (MOC), the Ministry of Transport (MOT),

the Ministry of Education and Training, the Ministry of Culture and Information,65 the Ministry of Science and

Technology, the Ministry of Planning and Investment, the Ministry of Justice, the Ministry of Finance, and the Union of Vietnam Associations of Science and

Technology. The steering committee is led and hosted by the MOIT. (VNEEP, 2006)

2008, the government directed its efforts towards starting

Monitoring, reporting and verification

VNEEP master plan, allocating a third of the 2008 funds to

One of the duties of the EECO is the monitoring, reporting

air conditioners (APEC, 2009).

measures implemented within the VNEEP. However, this

the energy standards and labeling program defined in the

set up an energy efficiency laboratory for refrigerators and

Governance The MOIT is in charge of the coordination and implementation of the VNEEP. In order to facilitate

implementation, two new administrative bodies have been created by VNEEP:

and verification (MRV) of the efficiency of the policies and

activity seems rather limited for the moment and the lack of energy data collection appears to be one of the main

problems regarding MRV. Presently, energy data collection

is not officially in the scope of the General Statistics Office of Vietnam (Decision 54/2010/QD-TTg, 2010).

65 This ministry was renamed Ministry of Culture, Sports and Tourism in 2007.

131

6. Vietnam

Achievements Little information is available on the outcome of the first six years of implementation of the VNEEP. According to the

2009 APEC Peer Review, the first two years of

implementation focused mainly on education and capacity building and a detailed implementation plan was still to be

developed. Since then, the Law on Energy Saving and

Effective Use became effective on January 1, 2011 and

seems to provide implementation guidelines for the VNEEP. Numerous projects were implemented between 2006 and 2008:

•

A survey on energy consumption of over 500 companies was completed in 2008. This study led to the

identification of energy conservation potential in these

•

Energy saved in ktoe 881

2007

957

2008

510

2009

1,386

2010

1,167

Total for 2006-2010

4,901

Source: Hoang Luaong PHAM, 2011.

6.2.4.

Law

Conservation

Energy

Efficiency

and

The Law on Energy Efficiency and Conservation was

A demonstration project of a solar water heater and a

and came into effect on January 1, 2011. The full text of the

contest on energy efficiency in buildings were

Two programs to help lighting manufacturers to switch

from incandescent light bulbs to compact fluorescent light bulbs were also conducted;

•

2006

Year

enterprises;

organized;

•

Table 33. Achievements of the VNEEP during the 2006-2010 period

An energy efficiency and conservation center was

established in Hanoi;

After several delays, an energy labeling program was implemented for several products in late 2011.

Energy savings from 2006 to 2010 are summarized in

Table 33. The total savings at the end of this period

amounted to 4.9 Mtoe, about 8.4% of Vietnam’s total final energy consumption in 2010.66

passed by the Vietnamese congress in September 2010

law could not be found in English or French but, according to an article published on the MOIT’s website, this bill

seems to cover all aspects of energy consumption in

Vietnam. Dedicated chapters address energy efficiency and conservation for industrial production, public lighting and

construction, transportation, agriculture, services and

households, government funded offices, vehicles and

appliances. Chapter 8 defines obligations for “intensive

energy users”, i.e. industrial establishments, public facilities and transportation establishments. These obligations

include “conducting energy audit[s], annual energy

consumption planning, applying specific energy saving

measures, regularly reporting on energy usage to higher

authorities, and assigning energy management officers” (ICE and RCEE, 2010).

The law also encourages the implementation of energy performance labeling (see 6.3.3.).

66 Vietnam’s total final energy consumption in 2010: 59 Mtoe. Source: Enerdata.

132

6. Vietnam 6.2.5. Current institutional structure of energy

However, in most official documents and reports, the

efficiency and conservation

energy efficiency actions are credited to the MOIT.

The Energy Efficiency and Conservation Office (EECO)

the agency.

was initiated by the VNEEP. It was established on

Therefore, it is difficult to grasp the actual level of activity of

April 7, 2006 by the Ministerial Decision N° 919/QD-BCN.

Additional agencies, which report to the EECO and the

The EECO works under the authority of the Ministry of

implementing energy efficiency projects and programs.

MOIT

for

their

energy

efficiency

projects,

are

Industry and Trade (MOIT), and its task is “to formulate,

Such agencies include the Institute of Energy (IE),

policies and programs” (APEC, 2009).

Tiengiang, Ho Chi Minh City, Phu tho, Dongthap,

With a staff of 15 persons in 2009, the EECO has managed

Standards and Quality Centre (VSQC) and Electricity of

start the implementation of the VNEEP (APEC, 2009).

ministries (APEC, 2009).

develop and implement energy efficiency and conservation

to formulate action plans and detailed programs in order to

Energy Efficiency Centers in some big cities (Hanoi, Haiphong, Danang, among others), the Vietnam

Vietnam (EVN), as well as other agencies under different

6.3. Selected measures and instruments 6.3.1. Building Code

6.3.2. Phasing out of incandescent light bulbs

Building Code (N° 40/2005/QD-BXD) came into effect. The

implemented a policy aiming at eliminating incandescent

On January 1, 2005, the Energy Efficiency Commercial code covers residential, commercial and public buildings with a gross floor area of 300 m2 or more. The code applies

to building envelopes, indoor and outdoor lighting systems, air conditioning and ventilation, as well as other power-

The Vietnamese authorities have so far not explicitly

light bulbs. Nevertheless, since 2008, compact fluorescent

light bulbs (CFLs) and their electronic ballasts have to meet a mandatory minimum energy performance standard (see 6.3.3.).

Moreover,

according

the

decision

consuming67 and energy-managing equipment. Three

N° 51/2001, it will be prohibited to produce, import or

area:

2013. A more decisive step will be taken a year later as the

categories of building are defined according to gross floor

• • •

Small buildings: from 300 m2 up to 2,499 m2;

Medium-sized buildings: from 2,500 m2 up to 9,999 m2; Large buildings: over 10,000 m2.

The specifications of the code are different for each category (APEC, 2009).

However, according to the Online Code Environment and

distribute tungsten light bulbs over 60W after January 1, production and import of bulbs that do not meet the

minimum energy performance standards will become illegal (source: Lites Asia).

At the same time, the currently voluntary energy labeling

(see 6.3.3.) of CFLs, fluorescent tubes, and electronic and electromagnetic ballasts will become compulsory on

January 1, 2013 (Decision N° 51/2011).

Advocacy Network (OCEAN),68 “few in the industry know

This indirect phasing out of incandescent bulbs seems to be

to enforce it” (OCEAN’s website, 2012).

has increased dramatically since 2001 (see Table 34).

about the code and the Ministry of Construction does little 67 In the documents available in English and French on the Energy Efficiency Commercial Building Code, no more detail was given about the power consuming equipment covered by the code. It is reasonable to assume here that power consuming equipment designates builtin equipment such as lifts or water pumps, but does not encompass appliances.

successful. The number of CFLs purchased in the country

68 http://energycodesocean.org/code-information/vietnam-energy-efficiency-commercialcode-402005qd-bxd

133

6. Vietnam

Table 34. Domestic CFL market in Vietnam, 2001-2009 (in millions) Year

2001

CFLs

0.2

2003

2004

5.4

2005

7.0

2005

8.4

2009

11.0

30.0

Source: Lites Asia, 2011.

6.3.3.

Energy

labeling

performance

standards

and

The development of minimum energy efficiency standards and labeling is one of the objectives of the Vietnamese Energy Efficiency Program.

Energy standards and labeling are being implemented in four main steps in Vietnam:

Compliance with MEPS is mandatory whereas labeling is,

for the time being, implemented on a voluntary basis. Energy efficiency labeling should gradually become

mandatory in Vietnam.

MEPS and labeling specifications are supposed to be reviewed every three to five years by the MOIT.

Minimum energy performance standards

•

Defining minimum energy performance standards

• •

Approving testing facilities;

targeted priority energy using products.

•

Setting up programs to raise consumer awareness of

designing the labels;

MEPS for computer monitors, host computers and copiers

the standards and labels.

refrigerated

(MEPS);

Defining procedures for energy efficiency labeling and

MEPS have been gradually enforced since 2005 on

are under development and MEPS for commercial cabinets

are

development (source: CLAPS).

under

consideration

for

Table 35. Minimum energy performance standards in effect in Vietnam as of March 2012 Year 2005 2007 2008

2009

2010

Equipment

High efficiency three-phase asynchronous squirrel cage electric motors High efficiency lighting products Electric fans Refrigerators and refrigrerators freezers Air conditioners

Compact fluorescent lamps Electronic ballasts for fluorescent lamps

Storage water heaters Electromagnetic ballasts for fluorescent lamps Tubular fluorescent lamps High pressure sodium lamps Solar water heaters Rice cookers Distribution transformers Electric washing machines Boilers

Source: Lai Duc Tuan, 2012 and CLASP,69 2012.

69 Collaborative Labeling & Appliance Standards Program.

134

6. Vietnam

Energy efficiency labeling

of printing the energy label stickers. The authorization for

There are two types of energy efficiency labeling for

granted for a three-year period, after which the products

equipment in Vietnam: a confirmative (or endorsement) energy label (also called the “Viet Energy Star” as a

the firms to display an energy label on their product is have to be registered again.

reference to the American “Energy Star” label) and a

Goods covered by the Viet labeling system are classified

EECO is in charge of certifying products and managing

Appliances;

company must register them by submitting a file

Industrial equipment;

comparative energy label.

the labeling system. In order to label its products, a

including energy efficiency testing results to the MOIT.

Once the permission is granted (after an evaluation

period of 20 days or less), the company bears the cost

into five groups: 2.

Office and commercial equipment; Means of transport;

Specialized equipment (e.g. public lighting, air conditioners with a capacity greater than 28 kW).

Table 36. Forecast voluntary and mandatory enforcement of energy efficiency labeling Category

Goods

Voluntary

Mandatory

Residential

Air conditioners, refrigerators, rice cookers, water heating, fans

2010

2012

Residential

Microwaves, vacuum cleaners, odor cleaners, dryers

2012

2014

Office and commercial equipment Computers, printers, copiers, fax machines, monitors, commercial refrigerators

2012

2014

Industrial

2011

2013

Motors, industrial fans, boilers, 3-phase transformers

Source: Hoang Duong Thanh, 2009.

According to Hoang Duong Thanh (2009), voluntary

revealed that voluntary labeling had started for electric fans,

selected residential appliances. Similarly, labeling was

electric motors. Air conditioners, refrigerators and rice

labeling was supposed to be introduced in 2010 for

supposed to become mandatory for these appliances in

2012. However, an article published in September 2010 on

the MOIT’s website mentioned that voluntary labeling would

start on July 1, 2011 for lighting devices, air conditioners,

magnetic ballasts for CFLs, tubular fluorescent lamps and

cookers were to be labeled on a voluntary basis soon after, and the Prime Minister was about to issue a “roadmap to compulsory labeling” (Lai Duc Tuan, 2012).

refrigerators, washing machines, cookers, electric water

The Viet Energy Star label, hown in Picture 9, indicates to

January 1, 2013 for these items. Finally, a presentation

energy performance (HEP) as defined by the Ministry of

boilers and electric fans and would become mandatory from

given in March 2012 by a representative of the MOIT

the consumer that the product meets or exceeds a high Industry and Trade (MOIT).

135

6. Vietnam

Picture 9. Viet Energy Star Label

Source: Ministry of Industry and Trade, National Energy Efficiency Program, 2012.

The comparative energy label allows a consumer to

The label displays one to five stars corresponding to five

type and choose the most efficient appliances or

displayed, the more efficient the product is. In addition, the

compare the energy performances of products of the same equipment.

energy classes determined by the MOIT. The more stars amount of energy consumption is indicated in kWh per year on the label.

Picture 10. Vietnamese comparative energy labels

Source: Ministry of Industry and Trade, National Energy Efficiency Program, 2012.

In addition to energy-related information, the following

information must be present on the label (source:

MOIT, 2012):

• •

A certification code;

• • •

The manufacturer; The importer;

Other information possibly defined by the MOIT at the granting of the energy saving certificate.

The name or code of the product issued by the MOIT;

136

6. Vietnam

Acronyms APEC:

Asia Pacific Economic Cooperation

ASEAN:

Association of South-East Asian Nations

BAU:

Business as Usual

CFL:

Compact Fluorescent Light bulb

CIA:

Central Intelligence Agency

CLASP

Collaborative Labelling and Appliances Standards Program

EE&C:

Energy Efficiency and Conservation

EECO:

Energy Efficiency and Conservation Office

EVN:

Electricity of Vietnam

GDP:

Gross Domestic Product

HEP:

High Energy Performance

ICE:

International Conseil Energie

IEEJ:

Institute of Energy Economics, Japan

kgoe:

kilogram of oil equivalent

kW:

kilowatt

kWh:

kilowatt hour

MEPS:

Minimum Energy Performance Standards

MOC:

Ministry of Construction

MOIT:

Ministry of Industry and Trade

MOT:

Ministry of Transport

MRV:

Monitoring, Reporting and Verification

137

6. Vietnam

Mtoe:

Mega ton of oil equivalent

OCEAN:

Online Code Environment and Advocacy Network

RCEE:

Research Center for Energy and Environment

Super EEC:

Super Energy Efficiency and Conservation

toe:

Ton of oil equivalent

TWh:

Terawatt hour

USD:

United States Dollar

VNEEP:

Vietnam National Energy Efficiency Program

VSQC:

Vietnam Standards and Quality Centre

138

6. Vietnam

References Publications AFD (2012), Energy Efficiency in Vietnam, Background Papers, Hanoi. APEC (2009), PEER Review on Energy Efficiency in Vietnam, Energy Working Group. ICE and RCEE (2010), Background Paper on Energy Efficiency in Vietnam. LITES.ASIA (2012), Country Profile: Vietnam. PHAM, H.-L. (2011), Promoting Energy Efficiency. An Option for Development of Low Carbon Society in Vietnam, Hanoi

University of Sciences and Technology.

WORLD BANK (2012), Asian Sustainable and Alternative Energy Program, Vietnam, Expanding Opportunities for Energy

Efficiency.

Laws and Decrees

MOTI (2012), Circular on Labeling for Energy Used Facilities and Equipment. SOCIALIST REPUBLIC

VIETNAM (2006), Decision n° 79/2006/QĐ-TTg approving the National Strategic Program on Energy

Saving and Effective Use, this document is referred to as the VNEEP, the Prime Minister, Hanoi.

SOCIALIST REPUBLIC OF VIETNAM (2010), Decision n° 54/2010/QĐ-TTg specifying the function, duty, authority and organisational

structure of the General Statistics Office directly under the Ministry of Planning and Investment, the Prime Minister, Hanoi.

Presentations

HOANG DUONG THANH (2009), Vietnam Standard and Labeling Policy and Implementation, Ministry of Industry and Trade, Energy Efficiency Office, Hanoi.

HOANG LUAONG PHAM (2011), Promoting Energy Efficiency - An Option for Development of Low Carbon Society in Vietnam, University of Sciences and Technology, Hanoi.

LAI DUC TUAN (2012), Energy Efficiency Standards and Labeling in Vietnam, Ministry of Industry and Trade of Vietnam, Hanoi. LE DOAN PHAC (2012), March 2012, Programme for Nuclear Power Development in Vietnam, Vietnam Atomic Energy Agency (VAEA), Ministry of Science and Technology (MOST), Hanoi.

139

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N° 114

Contact : Bruno Vindel, AFD - mai 2011.

Analyse de la cohérence des politiques commerciales en Afrique de l’Ouest Jean-Pierre Rolland, Arlène Alpha, GRET

Contact : Jean-René Cuzon, AFD - juin 2011

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N° 115

L’accès à l’eau et à l’assainissement pour les populations en situation de crise : comment passer de l’urgence à la reconstruction et au développement ? Julie Patinet (Groupe URD) et Martina Rama (Académie de l’eau), sous la direction de François Grünewald (Groupe URD) Contact : Thierry Liscia, AFD - septembre 2011.

N° 116

Formation et emploi au Maroc : état des lieux et recommandations

N° 117

Student Loans: Liquidity Constraint and Higher Education in South Africa

Jean-Christophe Maurin et Thomas Mélonio, AFD - septembre 2011. Marc Gurgand, Adrien Lorenceau, Paris School of Economics Contact: Thomas Mélonio, AFD - September 2011.

N° 118

Quelles(s) classe(s) moyenne(s) en Afrique ? Une revue de littérature

N° 119

Les réformes de l’aide au développement en perspective de la nouvelle gestion publique

Dominique Darbon, IEP Bordeaux, Comi Toulabor, LAM Bordeaux

Contacts : Virginie Diaz et Thomas Mélonio, AFD - décembre 2011.

Development Aid Reforms in the Context of New Public Management Jean-David Naudet, AFD - février 2012.

N° 120

Fostering Low-Carbon Growth Initiatives in Thailand

N° 121

Interventionnisme public et handicaps de compétitivité : analyse du cas polynésien

Contact: Cécile Valadier, AFD - February 2012

Florent Venayre, Maître de conférences en sciences économiques, université de la Polynésie française et LAMETA, université de Montpellier

N° 122

Contacts : Cécile Valadier et Virginie Olive, AFD - mars 2012.

Accès à l’électricité en Afrique subsaharienne : retours d’expérience et approches innovantes

Anjali Shanker (IED) avec les contributions de Patrick Clément (Axenne), Daniel Tapin et Martin Buchsenschutz (Nodalis Conseil)

N° 123

Contact : Valérie Reboud, AFD - avril 2012.

Assessing Credit Guarantee Schemes for SME Finance in Africa: Evidence from Ghana, Kenya, South Africa and Tanzania

Angela Hansen, Ciku Kimeria, Bilha Ndirangu, Nadia Oshry and Jason Wendle, Dalberg Global Development Advisors Contact: Cécile Valadier, AFD - April 2012.

N° 124

Méthodologie PEFA et collectivités infranationales : quels enseignements pour l’AFD ?

N° 125

High Returns, Low Attention, Slow Implementation: The Policy Paradoxes of India’s Clean Energy Development

N° 126

In Pursuit of Energy Efficiency in India’s Agriculture: Fighting ‘Free Power’ or Working with it?

N° 127

L’empreinte écologique et l’utilisation des sols comme indicateur environnemental :

N° 128

Frédéric Audras et Jean-François Almanza, AFD - juillet 2012

Ashwini Swain, University of York, Olivier Charnoz, AFD - July 2012

Ashwini Swain, University of York, Olivier Charnoz, AFD - August 2012 quel intérêt pour les politiques publiques ?

Jeroen van den Bergh, Universitat Autònoma de Barcelona et Fabio Grazi, département de la Recherche, AFD, octobre 2012

China’s Coal Methane: Actors, Structures, Strategies and their Global Impacts Ke Chen, Research consultant, Olivier Charnoz, AFD - October 2012

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N° 129

Quel niveau de développement des départements et collectivités d’outre-mer ? Une approche par l’indice de développement humain Olivier Sudrie, cabinet DME

N° 130

Contact : Vincent Joguet, AFD - novembre 2012

Taille des villes, urbanisation et spécialisations économiques

Une analyse sur micro-données exhaustives des 10 000 localités maliennes

Claire Bernard, Sandrine Mesplé-Somps, Gilles Spielvogel, IRD, UMR DIAL,

N° 131

Contact : Réjane Hugounenq, AFD - novembre 2012

Approche comparée des évolutions économiques des Outre-mer français sur la période 1998-2010 Croissance économique stoppée par la crise de 2008

Claude Parain, INSEE, La Réunion, Sébastien Merceron, ISPF, Polynésie française

N° 132

Contacts : Virginie Olive et Françoise Rivière, économistes, AFD - mars 2013

Equilibre budgétaire et solvabilité des collectivités locales dans un environnement décentralisé Quelles leçons tirer des expériences nationales ?

Guy GILBERT, Professeur émerite ENS Cachan, CES-PSE, François VAILLANCOURT, Université de Montréal, Québec, Canada

N° 133

Contact : Réjane Hugounenq, AFD - avril 2013

Les politiques d’efficacité énergétique en Chine, Inde, Indonésie, Thaïlande et Vietnam Loïc Chappoz et Bernard Laponche, Global Chance Contact : Nils Devernois, AFD - avril 2013

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