Confronting Asia's Energy Challenge

Over the past decade the Asia-Pacific region has made incredible progress towards achieving universal or near universal energy access for vast numbers of people. China, Thailand, Viet Nam, Malaysia, and Bhutan are but a few examples.

Yet despite this progress, about 700 million people in the region still have no access to electricity, many of them living in rural areas. Around 1.9 billion, nearly half of Asia's population, have no access to modern cooking fuels and facilities, relying instead on wood, coal, charcoal, or kerosene.

Current trends show that without fundamental policy, regulatory and financing changes, even in a generation from now -- in 2030 -- about 350 million people in the region will have no electricity access and 1.6 billion will have no clean cooking facilities.

Asia can do better, not only in terms of expanding access, but also in ensuring that energy is progressively cleaner and greener. It is essential that it does.

With Asia's energy demand projected to almost double by 2030, and with fossil fuels likely to be the primary source for meeting the region's increasing demand, Asia will be responsible nearly half of the world's carbon dioxide emissions by 2030.

As a region that is particularly vulnerable to climate change, the consequences of this trend will have disastrous impact on many Asian countries, including increased floods, typhoons and other extreme weather events, and growing mass migration.

Asia needs energy, but given growing climate risks there is also an urgent need to embrace more innovative ways of providing all the region's people with access while at the same time reducing Asia's greenhouse gas emissions.

Renewable energy and energy efficiency can make key contributions to maximizing energy access and transforming energy systems because many of the answers to increased rural access lie in increasing efficiency and in providing off-grid distributed renewable solutions.

To provide universal energy access, Asia needs vast amounts of finance and investment: the International Energy Agency estimates that $12 billion a year are needed in the region until 2030. This will require a combination of public sector financing and the right incentives to drive a major scale-up in private sector investment in energy access.

Similarly, incredible amounts of finance for clean energy investments are also needed over the next 20-40 years -- between $7 and $9 trillion to 2030. Again, while public sector resources will provide some of this financing, innovative new business models that incentivize the private sector to invest are essential.

While the scale of finance needed for maximizing access for all and providing clean energy investment is vast, finance alone -- without the right governance structures and enabling legal and regulatory frameworks -- will likely not deliver the actual investments and infrastructure to satisfy demand.

The public sector and the private sector need the right policy and regulatory frameworks to secure public funding and to incentivize private sector investment for sustainable access. Strong public sector institutions are also required to manage the financial resources necessary and ensure that these are invested as intended.

There are some developments on these fronts. The Asian Development Bank (ADB) and other development partners have commissioned work on power sector reform in the Philippines, Samoa, Tonga, Pakistan and Sri Lanka to name a few. ADB has also supported studies on enhancing effective energy regulation in Southeast Asia and the Pacific, which includes analysis on the effectiveness of policy and regulations for the poor.

Other interesting work has focused on the efficient utilization of biomass for bioenergy in the Greater Mekong Sub-region, including the installation of biogas systems in rural households. This was developed with an investment of $4.6 million, allowing the supply of 500 bio-digesters, 75,000 improved cookstoves, as well as training for farmers, service providers and government officials on the assistance scheme.

In the Philippines, the ADB is working with a micro-finance institution to deploy solar lanterns and support local entrepreneurship. Small entrepreneurs can sign up as micro-retailers to rent out solar lanterns to local households at minimal cost, instead of needing capital to purchase solar lanterns on a wholesale basis. The fees generated then finance a common fund for the operation and maintenance of the lanterns.

2012 is the International Year of Sustainable Energy Access for All and progress to date clearly demonstrates that universal energy access and a clean energy for Asia can be realized in our lifetime. It just requires that Asian nations -- and their people -- firmly commit to the right governance, policy and regulatory regimes to provide sustainable energy access for all.

Stephen P. Groff is Vice President for East Asia, Southeast Asia and the Pacific at the ADB in Manila and serves on the advisory council of the Global Footprint Network. This week the ADB hosts the 7th Asia Clean Energy Forum.