Michael Ochoada SINOCRUZ Senior Researcher Conference on APEC Green Energy Finance 18-19 August 2016, Taipei, Chinese Taipei High Renewable and Improved Efficiency Scenarios: Pathways to Achieving APEC Energy Goals Michael Ochoada SINOCRUZ Senior Researcher

High Renewable Scenario Improved Efficiency Scenario Presentation Outline Introduction High Renewable Scenario Improved Efficiency Scenario Impact of Alternative Scenario on CO2 Emissions Conclusion and Opportunities for Policy Actions

1. Introduction

APEC Energy Goals On 02 September 2014, the APEC Energy Ministers (EMM11) issued a Joint Statement which they agreed to aspire to the goal of “Doubling the Share of Renewables in the APEC Energy Mix, including in power generation by 2030 from 2010 levels. In 2007, the APEC Leaders agreed on an aspirational goal to reduce the energy intensity of the region by 25% in 2035, compared with 2005 levels. As such target was seen to be achieved early, the APEC Leaders in 2011 set a more ambitious goal of 45% reduction in energy intensity during the same time frame.

2. High Renewables Scenario

Policy Summary of Renewables for Power

Renewable Energy Share in Final Energy Demand Source: IEA (2015) and APERC analysis. The APEC renewable doubling goal is not met in BAU, but would be met in the High renewables scenario.

APEC Renewable Capacity Potential in 2013 APEC is endowed with renewables, of which only 31% is utilised． Solar and biomass potential to be developed in South-East Asia. Note: this map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory, Oceania (Australia, New Zealand and PNG), Other Americas (Canada, Chile, Mexico and Peru), Other north-east Asia (Hong Kong, Japan, Korea and Chinese Taipei), South-East Asia (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam). Source: APERC analysis

APEC Renewables Supply Cost Curve Biomass Source: IEA (2015) and APERC analysis. Access to technologies, renewable resource and land availability lead to lower LCOEs in China, Mexico and the United States Hydro, biomass and geothermal have low LCOE mainly due to long lifetime, thus sensitive to discount rate.

Renewables Share in Power Generation Source: IEA (2015) and APERC analysis. To meet the doubling RE goal, an average of 100 GW of new capacity should be added each year from 2013-2030.

Renewable Power in the High Renewables Scenario Major growth of solar in Asia, the United States and Oceania Note: this map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory, Oceania (Australia, New Zealand and PNG), Other Americas (Canada, Chile, Mexico and Peru), Other north-east Asia (Hong Kong, Japan, Korea and Chinese Taipei), South-East Asia (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam), BAU = Business-as-usual, HR = High Renewables Source: IEA statistics 2015 and APERC analysis

Policy Summary for Biofuels Economy Regulation Blend rate mandate Blend rate target Incentives, subsidies and taxation Bioethanol Biodiesel Australia √ √* E4/E5* B2* Brunei Darussalam - Canada up to E8.5^ up to B4^ E5 B2 Chile China E10^ 10 Mt (2020) 2 Mt (2020) Hong Kong Indonesia E3 B10 E20 (2025) B30 (2025) Japan 0.5 million Loe (2017) Korea B5 (2020) Malaysia B7 Mexico E2 New Zealand Papua New Guinea Peru E7.8 B5 The Philippines E10 E20 (2020) B20 (2025) Russia Singapore Chinese Taipei Thailand 4 billion L/yr 5 billion L/yr United States up to E15^ up to B10^ 136 billion L/yr (2022)^ Viet Nam -# E10 (2017) Note: √ = existing; - = not existing currently; * = applied in New South Wales and Queensland for bioethanol and in New South Wales for biodiesel; ^ = applied at federal level and in some local territories or states; # = biofuels traded with no mandated blend rate; Mt = million metric tonnes; Loe = litres of oil equivalent; L/yr = litres per year. Sources: APERC analysis and IEA statistics 2015.

APEC Biofuels in BAU and the High Renewables Scenario Biofuel supply growing 2.7%/yr could meet over 5% of transport demand. Enough bioethanol to meet the growing demand, and surplus of biodiesel. Sources: APERC analysis and IEA statistics 2015.

APEC Biofuels in the High Renewables Scenario APEC bioethanol supply potential and demand APEC biodiesel supply potential and demand Bioethanol surplus in the US could offset shortfalls in South-East Asia and China. Excessive biodiesel supply, especially in South-East Asia, export opportunity. Sources: APERC analysis and IEA statistics 2015.

3. Improved Efficiency Scenario

Improved Efficiency Scenario APEC’s target can be met by 2032 under the Improved Efficiency Scenario APEC Energy Intensity target Overall results 45% reduction target 2037 2032 13% savings 921 Mtoe Total savings of 921 Mtoe equivalent to the combined current demand of Russia, Japan and Korea.

China and the US account for 64% of the savings Energy savings in the IES by regional grouping, 2015-40 China has the largest saving potential: it delivers 43% of total APEC savings. The US follows with 21% Note: Oceania (Australia, New Zealand and PNG), Other Americas (Canada, Chile, Mexico and Peru), Other north-east Asia (Hong Kong, Japan, Korea and Chinese Taipei), South-East Asia (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam).

Buildings provides 30% of the savings Buildings sector energy savings by sub-sector, 2013-40 13% savings 279 Mtoe Unlike industry and transport, buildings energy demand does not peak in the IES, although growth is very small at end of the period Sources: APERC analysis and IEA (2015a

Efficiency potential in many appliances Residential energy savings by end-use, 2015-40 Space and water heating and lighting have the largest potential in the residential subsector Note: Space heating includes building improvements as well as appliances.

Industry saves 372 Mtoe or 16% Industry final energy demand in the BAU and IES, 2013-40 Business as Usual Improved Efficiency 16% Strong energy demand GDP growth decoupling in industry, where 79% output growth is fuelled by only 10% energy demand growth Note: Excludes non-energy use. Sources: APERC analysis and IEA (2015a)

Largest savings potential in other less intensive industry Energy savings in the IES by sector and by regional grouping, 2013-40 The majority of growth and savings in the Industry sectors come from the less energy intensive sub-sectors. Note: The three most energy-intensive sub-sectors in the APEC region are iron and steel, chemical and petrochemicals, and non-metallic minerals

Transport provides 29% of the savings Road transport energy savings, 2015-40 Transport energy demand peaks in 2025 at 1 695 Mtoe.

4. Impact of Alternative Scenarios on CO2 Emissions

Total CO2 Emissions in APERC Scenarios APEC energy related emissions can peak by 2020 if both energy efficiency and higher shares of renewables are pursued

APEC INDCs Energy related CO2 emissions APEC economies need to raise INDC ambitions, as well as energy targets if the global climate goal is to be achieved

5. Conclusion and Opportunities for Policy Actions

Conclusion and Opportunities for Policy Action Realization of the APEC RE Doubling Goal is achievable in the High Renewable Scenario, but necessitates the following strategies and support policy/measures: Formulation of comprehensive renewable energy policy and APEC-wide renewables development plan including a roadmap on renewable technology development. Improvement of business environment for renewables development as “doing business” in some APEC economies are still cumbersome. Providing R&D support for current and next generation technologies. Strengthening and improving the economy’s electricity system to facilitate greater VRE integration. Enhancing biofuels trade among APEC member economies. Accelerating development and standardization of advanced biofuels. Promoting flex-fuel vehicles.

Conclusion and Opportunities for Policy Action Energy Efficiency Formulation of a comprehensive policy on energy efficiency to cover all sectors. Labeling on appliances, as the common approach, should be a mandatory policy rather than information and voluntary based. Adoption of “Best Available Technology” and best practices in new industrial developments and establish mechanism to support retrofitting. Promotion and adoption of alternative and more efficient vehicles, and R&D on battery technology. Climate Change Although the combined scenario shows energy-related emissions to peak and start to fall, such is still above the level needed to limit global temperature increase to 2°C. Individual economies should monitor and re-evaluates their INDCs, strengthening commitments to accelerate decarbonization of the energy sector.

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