"Looking for the Radical:" Clean Energy Game-Changers in Asia

Jennifer Morgan delivered the following speech on June 24, 2011 at the closing plenary of the 6th Annual Asian Clean Energy Forum in Manila, Philippines. Asian Development Bank (ADB) President Haruhiko Kuroda really set the bar for our Forum this year when he opened the meeting with a call for Asian nations to “take radical steps” to increase energy efficiency and invest in renewable energy.

We couldn’t agree more!

Asia is particularly vulnerable to climate change, and for some countries in this region, how the world responds to the climate crisis is an issue of survival. At current emissions rates we are racing towards critical tipping points from which there is no return – ocean acidification and warmer oceans are bleaching corals and impacting fisheries dramatically; in addition the stability of glaciers that provide millions of Asians with water supplies is at risk; once predictable weather patterns such as the annual monsoon cycle, are no longer predictable.

It is therefore essential that Asia is moving towards a clean energy economy, faster than many other regions in the world. This week, we’ve learned that countries are already making this shift. However, we all know that it is not yet at the scale or speed necessary to avoid the very dangerous impacts.

Indeed we all know at a deep level that Asia’s choices will have a great impact on the future of the planet.

This week’s Forum has brought to life many of the solutions that are underway in the region and provided inspiring examples of innovation and change. Specifically, here are a four take home messages I heard:

1. The level of sophistication in domestic discussions is impressive, whether it be how to develop a domestic carbon market or implement a national feed in tariff. Yes of course there is more to do, but the region is clearly in the midst of grappling with how to respond to this challenge, each country choosing the path that works best for its citizens. Promoting lesson learning between countries is vital. We also learned that without these kinds of enabling conditions in place, all the new available climate technology finance will find no projects.

2. We know conclusively that clean energy is not just about installing solar panels but that governance conditions will fundamentally determine whether clean energy succeeds or fails. As Asian countries scale up clean energy investments and markets mature, the governance challenges similarly increase in scale and complexity. There are important lessons being learned about managing financial and social impacts.

3. In tackling the challenge of energy access, we heard that the role of small and medium enterprises (SMEs) and working with them to build their capacity to deliver access is essential and that current mechanisms are not suitable to support those small scale enterprises. More decentralized solutions, such as current investments in venture capital (VC) on a decentralized level are needed - investing not only in clean energy but enabling last mile access.

4. Mainstreaming energy efficiency investment is still a challenging task for Asia and the rest of the world. It requires strong and deep political and social commitment as well as innovative business and financing mechanisms. We learned that countries need to treat energy efficiency as a resource just like other energy resources, in energy and electricity planning and strategies.

I am still looking, however, for the radical, which is a strong and provocative word to use.

WRI never shies from a challenge, so we wanted to leave you with three radical ideas that we think could be game changers in Asia, and globally, if the ADB moved in this direction.

1. First, the International Energy Agency finds that if the world wants to have a medium probability of staying below 2 degrees C, 75% of the capacity to be built in developing countries between now and 2035 needs to be renewable. It also finds that two-thirds of the CO2 reductions will need to result from energy efficiency. So, in ADB terms, instead of a $2 billion, i.e. 20%, clean energy target, why not a 75% renewable energy and energy efficiency target? This would certainly position the Bank to be a major channel and administrator of climate finance in the coming years and drive investment into the region bringing multiple benefits with it.

2. Second, we have learned this week that there are a number of countries in the region that would like to have more ambitious feed-in tariffs (FITs) but are facing significant financing barriers. The ADB has been providing important technical and capacity support but perhaps this is the moment to go further. Why not have the ADB provide the additional finance needed to offer the FIT to more or larger projects and allow countries to increase the share of renewables? By piloting this mechanism in a few Asian countries, the ADB would drive a new innovative financing model, serving as an example for other countries and regions around the world.

3. Finally, we know that success in clean energy must be anchored on systems of good governance guided by transparency, participation and accountability. We are on the road to scaling up renewable energy investments, and markets are rapidly maturing. Why not ensure that we make a similar quantum leap in developing good governance frameworks for building social and political support? This can be done by developing transparent processes for deciding how to allocate the costs of renewable energy until the prices come down, and by developing partnerships to share the benefits of renewable energy investments with communities who own land and water resources. If this becomes the norm rather than the exception we will have succeeded in effecting transformative change.

These are just a few ideas that we at WRI think could make a big difference:

• driving investments in clean energy;
• piloting an innovative financing mechanism in a world where proof of concept is desperately needed; and
• paying strong attention to the underlying governance factors that are essential for success.

We look forward to working with you on these and other ideas as we each strive to make radical change in the region.