ASTAE

Energy Scenarios: From the Present to the Next Decade

Thailand Infrastructure DialogueBangkok, Aug 28, 2006

ASTAE World Bank Global Review of Energy Policies

At its Annual Meeting in Singapore, in September 2006, the Bank will present the

‘Clean Energy and Development Investment Framework’

• It is a serious response to today’s cascade of severe energy challenges.

• Current development scenarios have failed due to rapid price increases of fossil fuels. Net oil-importing countries have lost around 3.5 % of GDP.

• Businesses – and the economy – suffer from higher prices, and heavier costs for energy

• Households – and society – suffer from reduced benefits of energy• The evidence of climate change is requiring additional drastic steps in the

energy, transport, and industrial sectors to adjust to change and reduce further climate change by reducing greenhouse gases from energy use and production.

ASTAE RE+EE 48% growth

ASTAE Magnitude of Energy Needs

Total annual investment in renewable capacity:2004: US$ 30 billion2005: US$ 38 billion

2005: Annual investment levels (excluding large hydro):

China: US$ 7 billionGermany: US$ 7 billionUSA: US$ 3.5 billionSpain: US$ 2 billionJapan: US$ 2 billion

Demand in 2006 is 4,300 million tons of oil equivalent.Demand will rise 60% by 2030.

Required annual investment in NICs and developing countries between 2005 and 2030 = US$ 300 billion of which 73% for electricity.

Public sector cannot meet needs. Policy changes are required to facilitate private sector investment

ASTAE …Different investment characteristics

• Low(er) carbon• Incorporate security and climate change risks: diversify technologies

-> clean coal, oil and gas fueled, hydro and wind turbine, solarPV and solar heat, etc.

• Diversify operations due to less firm energy capacity (droughts -> empty reservoirs, no wind, high cost for gas and oil)

• Challenge and opportunity: diversified ownership: public, private, communities, etc.

• Diversified maintenance and operation standards, need for different regulations.

• Changing Financing Terms and Conditions:– Longer terms and different risk patterns:

• Lend against Power Purchase Agreements• Reinsurance against security and weather conditions

ASTAE

Diversified Technologies

Diversified Ownership

ASTAE What other countries are doing

• USA: 22 states have renewable portfolio standards (RPS) targets

• Germany: Feed-in laws greatly stimulated capacity in wind (total installed capacity 18GW)

• Spain: wind capacity of 10GW meets 6% electricity demand now and 12% in 2010

• China: Renewable Energy Law, including feed-in tariffs for biomass but not wind. Aims 15% of electricity from RE in 2015

• Japan: 830,000 grid-connected solar rooftop programs• Brazil: 2005: 15 billion liters of ethanol (equalled by USA)• Netherlands: 50%+ consumers buy Green Energy

Certificates

ASTAE

Bangladesh India Pakistan China

Percent with generators

72% 71%

42%

27%

3.3%

5.4%

2%

0

20

40

60

80

Mean losses due topower outages (percent)

With generators

Losses from outages

0

2

4

69%

Total Factor Productivity of Micro, Small, Medium and Large Enterprises can differ

between countries by more than 60% due to Energy and Infrastructure factors

Energy Impact on Competitiveness

ASTAEEAP energy trends 2005-2010

• Fastest growth in energy demand of any region in world

• Coal will account for nearly half of primary energy environmental impacts

• Oil imports to rise security concerns

• Gas low; renewables low – aggressive promotion needed

• Power generation dominated by coal (~50 -75%); oil (~10%); gas (~10%); rest renewables + nuclear

• Biomass to remain significant

EAP in 2010: Coal dominant, oil & gas risingPrimary energy consumption (IEA 2004)

0

500

1,000

1,500

2,000

2,500

EA

P 2

00

2

Ch

ina

20

02

EA

P 2

01

0(B

AU

)

US

A+

Ca

na

da

20

02

EU

20

02

Jap

an

+K

ore

a2

00

2

Mill

ion

tons

oil

equi

vale

nt (

Mto

e)

Biomass

Otherrenew ablesHydro

Nuclear

Gas

Oil

Coal

EAP to account for 30% of global energy demand growth 2002-20(IEA 2004)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2002 2010 2020

Prim

ary

ener

gy (

Milli

on to

ns o

il eq

uiv)

USA+Canada EU Developing East AsiaSouth America South Asia Japan+KoreaRest of the World

ASTAEDevelopment challenges

Future: Plenty of room for growthIn transport, vehicle ownership is still low

-

50

100

150

200

Chi

na

Vie

tnam

Indo

nesi

a

Phi

lippi

nes

Mon

golia

Cam

bodi

a

Tha

iland

Sou

thK

orea

Mal

aysi

a

Pas

seng

er c

ars/

1000

per

sons

, 20

02

EAP Average

= 10

Japan 492

Environmental cost: High fossil fuel use is leading to increasing Greenhouse Gas emissions

0

1

2

3

4

5

6

7

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002B

illio

ns o

f ton

s of

CO

2 fro

m fo

ssil

fuel

con

sum

ptio

n

China

Indonesia, Vietnam& Philippines

S. Korea, Thailand,Malaysia

USA

Global and domestic environmental impacts•1/3 of land in China is affected by acid rain

People affected by climate change events over a 14 year period (1990-2004)• China 1.8 billion

• Thailand 34 million

ASTAEDevelopment challenges

EAP has not exploited most of its hydropower potential

• Investment needs dwarf public resources

• Energy efficiency is low

• Unexploited hydropower potential

EAP medium-term needs in power (excl. China)

0

1,000

2,000

3,000

4,000

5,000

6,000

Tim

orLe

ste

Mon

golia

Cam

bodi

a

Lao

PD

R

PN

G

Phi

lippi

nes

Vie

tnam

Indo

nesi

a

US

$ m

illio

n p

er y

ear

Low Efficiency: Energy consumed per unit of GDP is still high in major EAP countries

(Energy consumed to produce 1,000 dollars of GDP in 2003)

0.0

0.5

1.0

Source: World Bank WDI Online, BP Statistical Review of World Energy 2004

ASTAE Renewables least cost energy solution?

• Netherlands last week stopped applications for subsidies

• Fiji aims to have Electricity supply 100% from renewables by 2012 in least cost scenario.

• Shipping and Transport Companies in Pacific switching to Coconut Oil.

• Renewables profitable investments …..

ASTAE Practical Examples

ASTAE

• Long-term finance even at the micro-level, in Papua New Guinea now lets teachers reduce their energy costs by switching to renewables

Practical Examples

ASTAE

TIME

COST

This project transforms the initial high investment cost (US$250 – US$1,000)

into less than….the current monthly cost of kerosene and torch batteries used for lighting, resulting in…….

S A V I NG S

ASTAE Clean Energy Financing Vehicle

The Clean Energy Financing Vehicle (CEFV) will

provide a mechanism to transfer high efficiency technology blend grants and carbon finance to buy down the costs of new

technologies and mitigate technology risks.

The Vehicle will provide include:

• Power rehabilitation financing, with repayment provided from increased efficiency and capacity, plus carbon emissions reductions.

• Project development fund, to increase “Bankable” projects with private sector participation

• Venture capital funds for technology adoption

ASTAE Carbon Finance Business

• Relatively new business; launched in 2000

• Two Carbon Finance business lines: IBRD Carbon Finance and IFC Carbon Finance.

• About $1.4 billion in funds under management since 2000

• Leverage public and private investments for projects that generate greenhouse gas emission reductions

ASTAE

World Bank Carbon Finance Products

Total funds under management: ~ $1.7billion

Italian Carbon Fund. $100 million (open to Italian participation). Italian Multi-shareholder. Multipurpose.

Netherlands Clean Development Facility. $222 million.

Netherlands Ministry of Environment. CDM energy projects.

BioCarbon Fund. $63.5 million (open).

Multi-shareholder. JI and CDM LULUCF projects.

Community Development Carbon Fund. $128.6 million (closed).

Multi-shareholder. Small-scale CDM energy projects.

Prototype Carbon Fund. $180 million (closed).

Multi-shareholder. Multi-purpose.

Netherlands ECF

Netherlands European Carbon Facility. $40 million with IFC.

Netherlands Ministry of Economic Affairs. JI projects.

Spanish CF

Spanish Carbon Fund. $280 million (open to Spanish participation). Spanish Multi-shareholder. Multipurpose.

Danish CFDanish Carbon Fund. $75 million (open to Danish participation). Danish Multi-shareholder. Multipurpose.

ASTAE

78% in East Asiasome Thai projects submitted for financing from

other funds

ASTAE Declining Supply fromExisting Hydro (Wailoa) in Fiji

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1997 1998 1999 2000 2001 2002 2003 2004 2005

Per

cen

t S

har

e

Wailoa VLIS Diesel

ASTAE 2006 Supply & Demand

FEA - Fiji installed Capacity Firm VariableHydro 72Hydro 6.6Wind 10Biomass 5Diesel to be run on coconut oil 88Total 160 21.6

When the wind blows, or when it rains, and the Variable hydro and wind can generate, FEA needs to close the valves from the reservoir to save water for peak demand.

While we have the technologies, we need to develop the experience to operate systems with multiple energy sources with variable availability.

ASTAE Overview of Bank presentations

• Peter Meier, economic analysis of RE benefits• Jan Hamrin, how to promote renewables• Dr. Masami Kojima, one possible technology: the

challenges and promises of biomass and biofuel

• Ashok Sarkar EE in Global Context• Vincent David, EE in Canada, Ireland and EU

• Takeshi Sekiyama, EEE in Japan.

• Mr. Chandrasekhar, Entrepreneur• Mr. Guido Delgado, Banker and Energy expert

ASTAE

Thank You !

Antonie de WildeCoordinator

Asia Alternative and Sustainable Energy (ASTAE)East Asia and Pacific Region

Contact: adewilde@worldbank.org