Executive Education Programs

The developing economies of the Asia and the Pacific region have an important role to play in responding to the global challenges of energy and climate change. At the most general level, any development initiative should be sustainable over the long-term; and based on an understanding of its global implications, particularly with respect to energy and climate change. But what are more specific actions that developing economies of the region can take to address the challenges of energy and climate change? Very broadly, the hope of keeping the atmospheric concentration of carbon dioxide at least within current levels (430 ppm) critically hinges on two key factors: (i) energy efficiency, promoted by national governments; and (ii) new policies that put a price on carbon – whether it is in the form of a tax on emissions or in a cap-and-trade system as provided under the Kyoto protocol. Before considering more specific options for the Asia and the Pacific countries, it is useful to put the basic issue in context.

Rising world energy consumption has important implications for the global environment and energy security. Sir Nicholas Stern and others have provided a comprehensive analysis of the challenges of climate change.1 By 2030, a larger share of the increase in greenhouse gas (GHG) emissions will come from non-OECD countries; and Asian economies will be a significant source of this increase. As these economies continue their rapid economic growth, the region’s demand for energy will also rise for both industrial and domestic use.

Coal – now accounting for 41% of power production in the region – is expected to remain not only the largest but also the fastest growing energy source in the near future. More generally, approximately 2.4 billion poor people in the world, mostly in rural areas, continue to rely on traditional biomass fuels. An additional 1.6 billion people do not have access to electricity -- and 1 billion of them live in Asia. These numbers are not expected to change much by 2030. Therefore providing access to energy for the poor is a major challenge facing the region. Access to energy services is a vital prerequisite for poverty reduction, and essential for the productivity and health of the poor. For example, indoor air pollution is the fourth leading cause of premature deaths in developing countries. Furthermore, there is a strong correlation between per capita electricity consumption and the human development index (HDI) across countries. For example, the HDI-per capita electricity consumption curve rises sharply at lower electricity consumption levels but quickly tapers off above the 4,000 kWh per capita - corresponding to about 0.9 HDI. To put this in context, in 2003 average per capita electricity consumption was only 470 kWh per year in the ten poorest countries -- Bangladesh, Bhutan, Cambodia, India, Lao PDR, Mongolia, Myanmar, Nepal, Pakistan, and Viet Nam. Therefore even modest increases in per capita electricity consumption for these countries can yield significant HDI bonuses.

Asian economies need to make large investments in energy conservation, energy efficiency, alternative energy sources, clean technology, and energy for the poor. In this, there are a number of specific actions that the region’s governments could implement starting today.