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p. 23 of 57 BACK | NEXT I. The Changing Environment II. Driving Forces of Change III. Options and Opportunities Adoption of Proven Policy Alternatives Development Investment Opportunities New Urban-Industrial Investment Opportunities Development and Deployment of New Technologies Advances in Energy Use and Supply Strengthening the Societal Drivers of Improved Environmental Performance IV. Toward Policy Integration V. Call to Action

Asian Environment Outlook 2001 : III. Options and Opportunities

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Advances in Energy Use and Supply

Energy choices are fundamental to the environmental impacts of technology development. There are opportunities for managing both energy demand and energy supply. With regard to energy demand, environmentally friendly technologies available today can save about twice as much electricity as was feasible 5 years ago at only a third of the real cost. This rate of progress has been consistent for the past 15 to 20 years. Many continuing improvements in energy efficiency are due to ever-better technologies for wringing more output from each unit of energy and resources. Process innovations in manufacturing help cut time, materials, and costs and achieve better results using simpler and cheaper inputs. In practically every industry, improvements in energy efficiency are possible through the greater use of resource-efficient materials, techniques, and equipment.

Major advances in reducing environmental impact of energy supply can be achieved through shifts in fuel mix. One of the primary ways in which industrialized nations have increased output per unit of energy input is by switching to higher quality energy fuels, such as from wood, coal, and oil to gas, hydroelectric power, and nuclear power. Currently, approximately 80 percent of commercial energy use in the Asia and Pacific region is supplied by oil and coal.

Significant opportunities exist to increase the use of renewable sources of energy supply in the Asia and Pacific region (see Box 3-4). Photovoltaic systems are economically and environmentally efficient way of providing electric power to areas not connected to electricity grids, especially in rural areas. Indonesia has launched a major initiative in solar energy use for homes with the goal of providing affordable clean solar energy to 35 million rural households. There are also opportunities for increased supply of wind and geothermal energy.

Biofuels are and will continue to be an important source of energy in DMCs, especially in rural communities. It is essential, therefore, that the management of more efficient biomass energy systems receives high priority in energy, forestry, and rural development planning. Particular attention will be needed to ensure that net energy gains result from technologies based on renewable energy sources as well as attention to social and environmental implications. The energy business is poised to become a service industry that operates with flexibility in a decentralized milieu and responds to the diverse service needs of households and enterprises. It will be characterized by competition and entrepreneurial risk-taking. It will need governments to set up legal and regulatory environments where it can flourish. The governments must also ensure (i) that these environments have transparency and accountability built in to enhance true competition and (ii) access to the information required to make sound business decisions. The changes in energy use and supply are being enhanced by regulatory moves to (i) restructure electric power sectors, (ii) internalize at least some of the environmental costs of power generation, and (iii) introduce competition in energy supply. Competition springs from a wide variety of technological developments, such as renewable energy sources, fuel cells and micro-turbines, cogeneration, industrial and commercial self-generation and marketing, remote monitoring and control systems, and a large range of conventional generation techniques.

Encouraging participation of SMEs (public, private, and nonprofit) in the energy service business will facilitate new technological adaptations such as integration of telecommunications and electrical systems. Also likely is the creation of “virtual” utilities that provide household and institutional electricity on a fee-for-service basis but through dispersed provision of locally tailored power (for example, PV or hybrid PV) and demand-matching appliances (such as highly efficient direct-current lighting and electronics). Areas connected to a grid system should become more reliable and dramatically reduce technical and non-technical losses. A wide range of energy service companies and public-private partnerships may develop on a customized basis, with the state providing information access, creative financial (and sometimes social) intermediation, and an enabling policy environment (see Box 3-5).

Over the medium-term, technological changes offer perhaps the best prospect for driving down the energy and materials intensity of economic activity and of achieving the societal goals of poverty reduction and reduction in environmental degradation in the Asia and Pacific region. Economic globalization has a substantial role to play in this regard. Most capital equipment and machinery invested in the Asia and Pacific region will continue to be sourced internationally. Thus, effective international technology development and transfer techniques that can overcome market failure in information and in the transfer of knowledge will enhance rapid technological change.

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