to set up an energy management system (EMS) in the enterprise; to expand training pilots for energy managers; and to implement an energy conservation reporting system.The guidelines were published for conducting energy audits and developing energy conservationplans78 and for setting up an EMS79 in the enterprise.EE product standards and labelling: Since 2014, NDRC, the AQSIQ and the Certification andAccreditation Administration of China(CNCA) carry out and streamline the “One Hundred EnergyEfficiency Standard Promotion Programme”. As of September 2015, a total of 105 voluntary and70 mandatory EE standards have been published.China has adopted the first minimum energy performance standards in 1989 for products such asrefrigerators, room air conditioners, clothes washers, and televisions. Since then, China hasimplemented additional minimum energy performance standards for other major appliances,lighting, cooling and heating equipment. In 1998, China has established a voluntary EE labellingprogramme. In 2005, the government has introduced the China Energy Label (CEL), a mandatoryenergy information label, adapted from the EU categorical energy label. The China Energy LabelCenter, founded in May 2006 under the control of NDRC, AQSIQ and CNCA, is in charge of allissues related to CEL certification.The CEL categorizes appliances into five tiers (or three tiers, depending on the type of appliance),with Tier 1 being most efficient and Tier 5 (or Tier 3) being the least efficient. Tier 5 (or Tier 3) isalso the minimum energy efficiency required for products to enter the Chinese market80. Thecatalogue of EE star product and the catalogues of recommended energy-saving electro-mechanical equipment were released in 2014.Figure 7: Samples of China Energy Label (Tier 5 and Tier 3)78 GB/T 17166: Technical Principle of Energy Audits in Enterprises79 GB/T 23331: Energy Management Systems80 Yang Yu (2013) Page 50 of 123
Forced retirement of low efficient equipment/enterprises: In 1999, the Chinese government firstbegan shutting down small low-efficient coal-fired power plants, although progress was slowbecause of the high electricity demand from 2002 to 2005. In 2006, the government renewedefforts and expanded the mandatory shut down to twelve other energy-intensive industries. Inorder to minimize the negative economic and social impacts of the forced closures, funding wasmade available to local authorities to support affected enterprises and workers. This policy wasgenerally effective, although local governments have frustrated the central government in someinstances by sheltering local factories from closure as they still contribute to local revenues andemployment. In total, 72,000 MW of coal-fired power generators, 122 million tonnes of ironproduction capacity, 70 million tonnes of steel production capacity and 330 million tonnes ofcement production capacity were retired during the 2006-2010 period. In 2011, the forced closureprogram was expanded to cover 19 industries.In June 2014, the central government announced the “Coal Power Energy Conservation andEmission Reduction Upgrade and Renovation Action Plan (2014-2020)”81, which will phase outinefficient coal-fired power plants. GOC requires that, by 2020, the average specific coalconsumption for existing coal-fired power plants must be lower than 310 gce/kWh afterretrofitting. For generating units larger than 600 MW, the average coal consumption rate shall bebelow 300 gce/kWh.Penalties for non-complance to EE&C regulations:GOC applies various types of penalties fornon-compliance with EE&C regulations. For example: Under the “Top 1,000 ECEP” (2006-2010), for enterprises that are evaluated and that fail to meet their EE obligations, a notice of criticism is issued; the approval of any energy-intensive project or additional industrial land use may be suspended; moreover, no favorable tax exemption policies will be applied. If a state-owned enterprise fails the evaluation, its leader cannot be given any type of awards, no matter how well the enterprise is doing in other aspects.82 Under the “Top 10,000 ECEP” (2011-2015), if an enterprise does not meet the annual energy- saving target, mandatory energy audits will be conducted, and adjustment/retrofitting measures are requested to be taken within a limited period of time defined by GOC. Since 2011, GOC has requested project developers to prepare and submit an EE Assessment Report for new large industrial project.83 If fraud is found in an EE Assessment Report, the approval shall be revoked with a requirement to submit a modified report. If fraud is found with government authorities or with the personnel-in-charge of the review of the report, they shall face disciplinary sanctions or criminal charges.Other EE Policy MeasuresSupport toR&D activities: The Ministry of Science and Technology (MOST) is in charge ofpromoting EE research and development (R&D) and demonstration. The R&D programs havebeen established, including the State Key Basic Research Program, the National Science andTechnology Support Program, and the High-Tech Development Project. During the 12th Five-YearPlan (2011-2015), GOC has provided more than 10 billion USD to hundreds of R&D projects in81http://www.iea-coal.org.uk/site/2010/projects-in-china?82WB (2010). Accelerating energy conservation in China’s provinces.83Projects that consume 1,000-3,000 tce/year of electricity, or 2-5 GW of electricity, or 500-1,000 tonnes/year of oil, or0.5-1 million m3/year of natural gas are considered as large industrial projects Page 51 of 123
EE, new energy, recycling, clean production, pollution control and climate change. The R&Dincentives are offered in the form of income tax deductions and reductions in CIT. The R&Denterprises working in the field of new energy and energy conservation technology are eligible forthese R&D incentives, including (i) reduced CIT of 15%, and (ii) VAT exemption/Zero-ratedtreatment for certain R&D services performed for foreign entities.Support to knowledge development and capacity building: The National Energy ConservationCenter (NECC)was established in 2009 to replace the Energy Conservation InformationDissemination Center. NECC is responsible for conducting EE&C policy studies, energyconservation assessments, EE technology dissemination as well as providing training, anddisseminating information. A number of information dissemination activities were conducted byNECC through meetings, media, exhibitions, and websites.GOC provides financial support for the organization of the yearly “Energy ConservationAwareness Week”, forthe promotion of the “Energy Conservation and Emission Reduction:Actions by All People” campaign through CCTV, and for the conduct of other awareness activitiesto enhance public consciousness about EE&C issues.GOC also provides financial support to theorganization of trainings on energy management for major energy-consuming enterprises,including energy auditing, energy planning, energy measurement and statistics.Support forESCO: China supports the use of ESCOs and third-party finance in EE&C.Accordingto a 2015 IEA84 study, there were 5,426registered ESCOs (compared to only 787 in 2010)providing EE&C services. These ESCOs employed 607,000 people. In 2014, the total revenue ofthese ESCOs reached 265 billion RMB (43.1 billion USD). The total investment of ESCOs was95.9 billion RMB (15.6 billion USD) in 2014, which helped to save about 30 Mtce of energy85.Three types of Energy Performance Contract (EPC)86 are mainly used in China: EPC with sharedenergy savings, EPC with guaranteed energy savings, and outsourcing contract.The key features ofthese EPC types are presented in Table 9.Table 9: Types of EPCs used by ESCOs in ChinaNo. Type of EPC Services provided by ESCOs and modes of repayment 1. EPC with shared Design and implemention of EE projects Estimation of minimum energy cost savings (by ESCO, usually energy savings conservative, agreed with the client, and included in the EPC) 2. EPC with guaranteed Providing of a major part of project financing energy savings Sharing of the energy cost savings on a pre-agreed sharing model over a fixed period (Usually, the sharing is based on a percentage share of the pre-agreed minimum energy cost savings. Any extra energy cost savings are taken by the client) ESCO may request the client to provide a repayment guarantee issued by a guarantee company Design and implementation of EE projects Providing of a minor part of project financing84 IEA (2016). Energy Efficiency Market Report 2016.85 Ying Chen (2015)86In China, ESCOs use EPCs to provide energy-saving services to their clients. Under an EPC, both ESCO and the clientinvest in the EE measures, according to a negotiated share of investment. Within the length of the Contract, ESCO andits client divide up the saved energy bill according to a negotiated share. Once the EPC expires, the client claims all ofthe saved energy bill if the EE measures still last. Page 52 of 123
3. Outsourcing contract Measurement, verification and providing guarantees that the actual energy savings over a fixed period will cover the repayments ESCO finances (100%) and installs energy-saving assets within the client’s facility, and operates the assets over an extended period for an agreed compensation Compensation is linked to the actuallyachieved energy savingsEPC with shared energy savings is the only type of contract which is eligible for receivingincentives from GOC, It is expected to be much more broadly widespread in the country. Assetscreated under this type of EPC project are owned by ESCOs and are transferred to the clientsat nocharge at contract termination.In case of EPCs with guaranteed energy savings, the EE project assets belong to the client, whoprovide most of the project financing. ESCOs incur financial penalties if the guaranteed energysavings are not generated.Under an outsourcing contract, ESCOs own the energy-saving assets and transfer them to theclient at the end of the contract. One common example of this contract type is the installation ofon-site “build-own-transfer” power generating equipment using waste heat from the manufacturingprocess. ESCO constructs and operates the power generating equipment, purchases the processenergy resource (i.e., waste heat or by-product gases) for a small fee or at no charge, and sells thegenerated electricity to the client at a rate below the tariff of purchasing electricity from the grid.In order to promote ESCOs, the central and provincial government agencies provide them withvarious types of support, including financial subsidies, tax incentives, and capacity building.In addition to the green credits, loan guarantees and low-interest loans provided by the financinginstitutions, GOC provides ESCOs with financial subsidies on their EPCs. In June 2010, NDRCand the Ministry of Finance (MOF) jointly issued the “Management Methods of EnergyPerformance Contracting Fiscal Reward Fund” to provide incentives to ESCOs. The eligibilitycriteria for ESCOs to receive financial incentives for their EE projects are:(i) EPC with shared savings is applied,(ii) the annual energy savings generated by the EE project is between 100 tce and 10,000 tce,(iii) at least 70% of the total EE project investment is from ESCO, and(iv) ESCO is registered with NDRC and MOF, has a registered capital of more than 5 million RMB, and has its main business scope focused on energy conservation services.According to the regulations of the Fiscal Reward Fund, the standard rate of subsidies at thecentral level is 240 RMB/tce saved, and at the provincial level, it is not less than 60 RMB/tcesaved87.NDRC and MOF jointly announce the qualified ESCOs. The list of qualified ESCOs isupdated on a regular basis. These financial subsidies are rolled out under the jurisdiction of EPCand they should be taxable for CIT purposes.According to Circular 11088, jointly issued in 2010 by MOF and the General TaxationAdministration, ESCOs qualify for VAT and CIT exemption/reduction if they satisfy the followingrequirements: (i) ESCOs use the standardized EPC template with the technical requirements set87 KPMG (2013)88 Circular 110, issued in 2010 on “Notice regarding issues related to Value-Added Tax (VAT), Business Tax and CITpolicies for promoting the development of the energy conservation service industry” Page 53 of 123
forth in the General EPC Technical Rules (issued in 2010), and (ii) shared-savings terms areincluded in the EPC. ESCO taking part in an EPC project enjoys the following tax incentives89: CIT exemption in the first three years and a tax reduction by half (an effective rate of 12.5% instead of 25%) for another three years, starting from the tax year in which the revenue from the project first arises; An ESCO that invests in special equipment for EE&C will obtain a credit against its tax payable that equals 10% of the investment amount in the year in which the investment is made. Where there is not sufficient tax payable to absorb the credit in the year, the excess credit may be carried forward up to five tax years; A qualified ESCO will be provisionally exempt from the Business Tax/VAT on revenues received from the EPC project; A qualified ESCO will be provisionally exempt from the VAT on the transfer to the energy user of goods related to the EPC project; When, at the end of the term of an EPC, the ESCO transfers to the energy user the assets that have materialized in the course of executing the EPC project, the ESCO can do so as if these assets had been fully depreciated or amortized for CIT purposes. In the same way, when the energy user receives the project assets from the ESCO, the energy user can do so as if these assets had been depreciated or amortized; When ESCO transfers the project assets to the energy user at the end of the term of EPC, ESCO will not have to declare any revenue from the contributions the energy user has made to the price of the assets; and An energy user in an EPC project can deduct reasonable expenses actually incurred in accordance with EPC as, and when, they are incurred for CIT purposes. There is no need to differentiate between service fees and asset prices in claiming such a deduction.GOC strongly supports capacity building and knowledge development for ESCOs. Established in2004, the China’s Energy Management Company Association (EMCA), plays a key role ininformation and awareness raising for both potential ESCO clients and companies willing to enterthe EE market.Government procurement of energy-saving products: In 2007, NDRC has promulgated acompulsory mechanism90 on government procurement of energy-saving products selected from thelist of certified/labelled EE products. This list of EE products is regularly updated.6.1.2 IndiaThe total final energy consumption (TFEC) of India was 527 Mtoe in 2013. It was more than twiceits 1990 level (245 Mtoe) with an annual average growth rate of 3.4% between 1990 and 2013.TheTFEC per capita has increased by around48% from 297 kgoe in 1990to 439 kgoe in 2013. Biomassis the main final source of energy used in India. It accounted for over 53% of the TFEC in 1990and its share was gradually reduced to 32.4% in 2013.89 KPMG (2013)90Circular on Establishing a Mandatory Government Procurement Scheme of Energy-Saving Products, issued by theGeneral Office of the State Council on 30 July 2007. Page 54 of 123
Non-energy uses, 5.5% Agriculture, Industry, 35.1% 4.6%Transport, 14.2% Buildings, 40.6% Figure 8: Share of TFEC by sector in India (2013)In 2013, the building sector (residential and services) accounted for 40.6% of TFEC. Industry wasthe second largest final energy consumer with 35.1%, while the share of transport (14.2%),agriculture (4.6%) and other non-energy uses (5.5%)91 were more modest.92On average, the industry’s final energy consumption grew by 4.4% per year between 1990 and2013.From the IEA report on the India Energy Outlook 2015, 49.2% of TFEC in the industrialsector came from coal, 17.3% from electricity, 16.2% from bioenergy, 10.3% from oil, and 7%from natural gas. Thus, there is great potential for EE&C improvement in industries, especially forreducing the use of fossil fuels (coal, oil, gas).India’s 11th Five-Year Plan has set several EE improvement and energy consumption reductionobjectives. On the section related to the power sector, including those of the industry sector, itstates, “Supply side and demand side efficiencies should be improved to effectively lower theprimary energy demand by 5-7% during the Eleventh Plan period”.EE Targets and PlanningIn 2001, the Indian Energy Conservation Act (2001 ECA) was issued, in which GOI created theBureau of Energy Efficiency (BEE), clarified the powers of the central government, Stategovernments and BEE regarding energy efficiency and conservation, established a State EnergyConservation Funds (SECF) in all States, set up an energy standard and labelling policy,introduced an “Energy Conservation Building Code” and instituted compulsory periodic energyaudits for power intensive industries. The 2001 ECA also requires that the BEE and the StateGovernment provide financial contributions to the fund. Based on the BEE Annual Report 2014-15, as of March 2015, 25 states have established SECFs, out of which 15 states have also providedfinancial contribution to the fund. GOI has approved a budget of 660 million INR for the SECFs91 Includes petrochemical feedstock and other non-energy uses (mainly lubricants and bitumen)92 IEA (2015). India Energy Outlook Page 55 of 123
for the 11th Five-Year Plan (2007-2012), and 500 million INR for the 12th Five-Year Plan (2012-2017).In terms of energy consumption, the 11th Five-Year Plan (2007-2012) proposed setting 5% of theanticipated energy consumption level at the beginning of the 11th plan (2007) as a target forenergy savings to be achieved by 2012.It has set the longer time frame goal of increasing energyefficiency nationally by 20% by 2016-17. This is one of the “27 monitorable targets” that havebeen set at a national level. In terms of electricity saving, the 11thFive-Year Plan set a target tosave 10,000 MW during the 2007-2012 period. This target has been surpassed.93Energy efficiency is a central element of the 11th Five-Year Plan. It introduced Demand SideManagement (DSM), and created the Energy Conservation Information Center. Building on theobjectives of the 11th Five-Year Plan, the National Action Plan on Climate Change (NAPCC) of2008 also focused on devising efficient and cost-effective strategies for end use DSM.The National Mission on Enhanced Energy Efficiency (NMEEE) of 2009 targeted the followingfor 2014-15: Save 23 Mtoe or more annually; Avoid the addition of 19,000 MW of electricity generation capacity (which represents 8.6% of 2011 India’s total installed electricity capacity, and approximately the increase in capacity between 2010 and 2011); Prevent the emission of 98 million tonnes of CO2 per year.The NMEEE also defined the Specific Energy Consumption (SEC) reduction targets by 2015 forthe 478 designated consumers (DCs) covered by the Perform Achieve Trade (PAT) scheme.Table 10: EE targets for key industries in IndiaSector No. of identified Annual energy Share of Apportioned energy DCs consumption consumption reduction for PAT Power (thermal) 144 (Mtoe) (%) cycle (Mtoe) Iron & Steel 67 104.56 63.38 3.211 Cement 85 25.32 15.35 1.486 Aluminum 10 15.01 9.10 0.815 Fertilizer 29 7.71 4.67 0.456 Paper & Pulp 31 8.20 4.97 0.476 Textile 90 2.09 1.27 0.119 Chlor Alkali 22 1.20 0.73 0.066 Total 0.88 0.53 0.054Source: Chakavarti, 2012 478 164.97 100.00 6.686The 12th Five-Year Plan (2012-2017) issued last December 2012 has identified several focus areasrelated to EE development and application. They are as follows: The Technology Improvement inIron and Steel Industry, the Technology Improvement in Cement Industry, the Energy EfficiencyProgrammes in the Industry, Vehicle Fuel Efficiency Programme, Improving the Efficiency ofFreight Transport and Lighting, Labeling and Super-Efficient Equipment.93Bhaskar Sarma (2014) Page 56 of 123
Financial Incentives for EE ProjectsSoft loans:There are several financing schemes providing soft loans for EE projects in India. Mostof them are funded by international development and financial organization (JICA, WB, KfW,AFD, UNIDO, etc.), andimplemented by local banks/institutions in partnership with internationalfinancial and development organizations. Local banks, such as the Industrial Credit and InvestmentCorporation of India (ICICI) Bank, Canara Bank, Bank of Baroda, etc. have also been providingspecific lines of credit for EE projects. Some of the key financing schemes are described below. SIDBI-JICAEnergy Saving Line, Phase 1, 2 and 3 (2008-2019):In 2008, SIDBI has entered into a partnership with the Japan International Cooperation Agency(JICA) to offer special financing for EE projects in India. The program has been implementing in three phases: Phase 1 (2008-10), Phase 2 (2011-14)andPhase 3 (Apr 2014 - Mar 2019). The total budget of the program is 90 billion JPY (30 billion JPY for each phase).The objective of the program is to offer medium and long-term soft loan for micro, small and medium enterprises (MSMEs) implementing energy-saving projects across different industrial sector. The maximum period of the loan repayment is 7 years. However, longer repayment period can be considered. The minimum financing amount is 1 million INRper project with a minimum contribution from MSME is 25% for existing units or 33% for new units. During Phase 1 of the program, a fixed interest rate of 9.5-10% p.a or a floating interest rate of 9.75- 10.5% p.a was applied. During Phase 2 and Phase 3, the interest rate is between 0.75% to 1% below the normal lending rate as per credit rating94.SIDBI’s financing scheme for energy- saving projects is one of the most successful programs in India. In Phase 1, the scheme financed more than 2,700 energy efficient projects95. In Phase 2,more than 3,000 MSMEs have been granted soft loans96. SIDBI-KfW Energy Efficiency Credit Line (2009-2014):In 2009, SIDBI received a credit of 50million EUR from KfW Development Bank for financing the EE projects. The financing scheme was operational from 2009 to 2014 and focused on providing loans for implementing EE projects in MSMEs. During this period, the loans were disbursed tomore than 224 MSMEs. The loan is generally not less than 1 million INR (13,000 EUR) per project with a minimum contribution from MSME is 25% of project cost. The loan repayment period is normally not more than 7 years. The interest rate is between 0.75% to 1% below the normal lending rate as per credit rating97. SIDBI-WB/GEF Financing Scheme (2010-2016):SIDBI, alongwith Bureau of Energy Efficiency (BEE) is also implementing a WB/GEF project with a total grant amount of 11.3 million USD. The project focuses on financing the EE projects at MSMEs in five targeted MSME clusters (Faridabad, Pune, Kolhapur, Ankleshwar & Tirunelveli). More than 1,100 walk-through energy audits and 650 detailed energy audits have been conducted. More than 600 Investment Grade Detailed Project Reports (IGDPRs) have been prepared and implementation of Energy Efficiency Measures is going on in more than 500 MSME units98.94http://www.sidbi.com/sites/default/files/Brochure_Industrial.pdf95http://www.sidbi.com/sites/default/files/JICA%20Phase-II%20Scheme_Brochure.pdf96http://sameeeksha.org/pdf/presentation/Energy_Efficiency_Financing_in_MSMEs.pdf97http://sidbi.in/sites/default/files/products/KfW%20Financing%20Energy%20Efficiency%20Projects%20in%20MSMEs%20and%20Cluster.pdf98http://knowledgeplatform.in/wp-content/uploads/2016/01/Small-Ind.-Dev.-Bank-of-India_1st-Prize.pdf Page 57 of 123
SIDBI-AFD Financing Scheme (2010-2014):In 2010, SIDBI received a fund of 50 million EUR from French development agency (AFD) to finance EE projects. The fund was fully utilized to provide financial assistance to around 1,200 MSMEs. IREDA Energy Efficiency Financing Scheme:The Indian Renewable Energy Development Agency Ltd. (IREDA) receives financial and technical support from the KfW, AFD, Nordic Investment Bank (NIB), European Investment Bank (EIB), JICA, WB, ADB, and other international financial institutions, agencies and investors. From 2006 to 2010, IREDA’s total funding grew by 70% from approximately 391 to 665 million USD. In addition to EE&C projects, IREDA also promotes and finances the delivery of EE services, implementation of DSM and the development of ESCOs. Loan conditions are preferential compared to commercial loans. Credit lines offered through IREDA for energy efficiency and conservation projects must be a minimum of 5 million INR and offers an interest rate between 12.25% and 13%. Registration fee is charged between 10,000 to 60,000 INR depending on the loan amount. A front end fee of 0.5% to 1.25% of the loans amount is also charged99. IDBI Energy Efficiency Financing Scheme:For more than six years (1994-2000), ADB carried out one of the earliest projects on EE financing in India. The project was called the Industrial Energy Efficiency Project. The Industrial Development Bank of India (IDBI) has received more than 150 million USD from ADB to promote efficient and environmentally sustainable industrialization through loan awarding and technical assistance100. UNIDO Project on Promoting EE & RE in Selected MSME Clusters (2011-2016): The project, implemented by UNIDO, GEF, SIDBI and BEE, aims at developing a market environment for the introduction of energy-efficient technologies and the enhanced use of resource-efficienct technologies in process applications in energy-intensive SMEs. With a total budget of 6.1 million USD, the project is providing various financial support to the EE projects in five SME groups: ceramic production, hand tool production, foundries, brass production and dairy production. Energy Saving Loan Scheme for SMEs (ongoing): The scheme is introduced and managed by Canara Bank. It provides soft loan to support the acquisition and/or adoption of equipment and/or measures related to energy saving. It does not include ESCO projects. The scheme covers up to 90% of project costs of up to 1 million INR. The maximum loan is 10 million INR per project with an interest rate of 1% less than the applicable rate. Collateral free is applied for a loan amount of up to 5 million INR. For a loan amount of over 5 million INR, collateral is required as determined by the bank. Scheme for Fanancing Energy Efficieny Project (ongoing): The scheme is introduced and managed by the Bank of Baroda. It provides loans to SMEs for acquisition of equipment, services and adopting measures for enhancement of EE&C. The scheme provides up to 75% of the total project cost, subject to maximum amountof 10 million INR (minimum amount of loan is 0.5 million INR). The applicable interest rate is base rate plus 4.0% p.a. Maximum repayment time is 5 years, including moratorium, if any.99http://iepd.iipnetwork.org/policy/financing-schemes-ireda100 IISD (2015b) Page 58 of 123
There were also the programs for EE financing managed by GOI through national government-sponsored agencies or local financial institutions101. Technology Upgradation Fund Scheme (TUFS) is a government subsidy scheme that supports the adoption of EE projects in small and medium enterprises (SME). It focuses on the textile and jute industries. The scheme was first launched in 1999, last revised in March 2013, and prolonged until March 2017. TUFS provides concessional loan for a period of 7 years, including 2 years of implementation/moratorium period.Investment grants: The Technology and Quality Upgradation Support to MSMEs (TEQUP) is agovernment subsidy scheme. It was operational since 2006. TEQUP provides both capital subsidyand concessional loan to the EE technology development projects in SME clusters. A capitalsubsidy of 25% total project cost or a maximum amount of 1 million INR is provided to theprojects which introduce the well-established and improved EE technologies.Loan guarantee credit: The Credit Guarantee Trust Fund for Micro and Small Enterprises(CGTMSE), implemented by GOI through SIDBI, provides funds for guarantees to lendinginstitutions. These lending institutions then provide collateral-free loans to MSMEs. The fund wasin force since 2000. The usual guarantee granted to the lending institutions is 75-80% of thesanctioned loan amount. The existing and new MSMEs can borrow the loan guarantee at aninterest rate of maximum 3% above the prime lending rate of the member lending institution.Fiscal Incentives for EE ProjectsGOI is providing fiscal incentives for EE projects in the form of accelerated depreciation. Theproject developers are eligible for up to 100% CIT deduction for the recovery of depreciatedproperty in the first year of the project on specified equipment. They are also exempt from importand excise taxes on energy efficiency technology. Some state governments provide tax exemptionsfor power generation projects.Mandatory Measures on Energy Performance and ManagementEE obligations:The PAT (Perform, Achieve, Trade) scheme is an energy saving certificate tradingsystem. This market-based mechanism was made possible by an amendment of the 2001 EnergyConservation Act (2001 ECA) in 2010 and launched in 2012 by the Ministry of Power. The 2001ECA has assigned energy intensive industries and other large consumers in nine sectors, includingeight industrial sectors102, as designated consumers (DCs). These DCs must comply with normsand standards of energy consumption as prescribed by GOI.PAT covers 478 DCs in eight industrial sectors defined as energy intensive industries under the2001ECA. For each DC, an energy-saving target is defined, specifying by what percentage energyintensity must be reduced in a 3-year period. The PAT scheme established EE targets for eachindustrial DC. They are based on the DC’s baseline and target specific energy consumption (SEC),with the average energy saving of 4.1% to be achieved by the end of the PAT Cycle I (2012-2015).As shown in Table 10103, the 478 industrial DCs covered by the scheme consumed about 165 Mtoeannually. The projected energy savings attributed to the scheme were approximately 6.7 Mtoe by101Sanjoy Sanyal and Frederik Eisinger (2016)102 Thermal Power Plants, Iron & Steel, Cement, Aluminum, Fertilizer, Pulp & Paper, Textile, and Chlor-Alkali103AFD (2013) Page 59 of 123
the end of 2015, out of which more than 80% came from three industries: thermal power plants,iron & steel, and cement. The PAT scheme mechanism is shown in Figure 9.104 Figure 9: PAT Scheme MechanismIf the DC achieves more savings than targeted, it is allocated Energy Saving Certificates (ESCert)by GOI. One ESCert is issued for each toe of energy saved over the set target. The PAT schemeenables companies to trade ESCerts in order to attain their own targets: if a unit fails to meet itstargets, it can buy ESCerts from over-performing units. The implications of PAT scheme on DCsare shown in Figure 10. Figure 10: Implications of PAT Scheme on DCsAccording to an assessment conducted by BEE, the energy saving achieved during PAT Cycle Iwas 8.67 Mtoe from 427 assessed DCs. PAT Cycle II (2016-2019) is ongoing. It includes 621 DCsfrom eight industrial sectors, the thermal power plants, the railway sector and DISCOs. The totalenergy consumption of these DCs in the baseline FY 2014-15 was 227 Mtoe. The energy-savingtarget was set at 8.869 Mtoe by the end of PAT Cycle II.105104 TATA Strategic Management Group (2014). Energy Efficiency in India: PAT Scheme-The Way Ahead105 BEE (2016a) Page 60 of 123
Mandatory energy management, audit and reporting: As stated in the 2001 ECA (amended in2010), the DCs with an annual energy use over 30 ktoe for fertilizer, iron and steel, cement andpulp & paper, over 12 ktoe for chloralkali, over 7.5 ktoe for aluminum, and over 3 ktoe for textileare subject to ECA regulations. The total number of DCs in industrial sectors amounts to about700. It is mandatory for all the DCs to have energy audits carried out by an accredited energyauditor, to designate or appoint an energy manager and to report annually on energy consumptionand other energy performance data.BEE provides support to these DCs in implementing energy management systems in the form oftechnical support and through training and accreditation of energy auditors and energy managers.Energy audits are subsidized by the government.To become a certified energy manager, candidates should score at least 50% in three papers:general aspects of energy management and energy audit, EE in thermal utilities, and EE inelectrical utilities. Candidates who score at least 50% on the fourth paper (energy performanceassessment for equipment and utility systems) are certified energy auditors and can function ascertified energy managers. Study guides covering each of the examinations are available toregistered candidates.106From May 2004 to September 2015, BEE had 16 national certificationexaminations for energy auditors and energy managers. A total of 12,682 energy professionalshave been certified during these examinations as Energy Managers, out of which 8,809 were alsoqualified as Energy Auditors.EE product standards and labeling: In line with the 2001 ECA,BEE launched the energyperformance standards and labelling program in 2006 (BEE Star Labelling Program). Theprogram’s goal was “to provide the consumer informed choice about the energy saving andthereby the cost saving potential of the relevant marketed product”. For the design and formulationof the labelling program, BEE worked through technical committees of experts and stakeholders,comprising of representatives from government organizations, regulatory bodies, industrial sector,industry associations, consumer organizations, academia, NGOs, R&D institutions, and testinglaboratories.In January 2016, the “Guidelines for Permittee-Standards and Labelling Program of BEE” werepublished.107 Five appliances were covered under the mandatory S&L scheme, and sixteenappliances were included in the voluntary scheme. Currently, the BEE Star Labelling Programcovers seven equipment and appliances under mandatory labelling scheme, such as: frost free refrigerators, tubular fluorescent lamps, room air conditioners, distribution transformers, direct cool refrigerators, electric geysers, and color TVs.Thirteen equipment and appliances are under voluntary labelling scheme, such as: induction motors,106 UNEP (2016)107 BEE (2016b) Page 61 of 123
agricultural pump sets, ceiling fans, domestic LPG stoves, washing machines, computers (laptops/notebooks), ballasts (electronic/magnetic), office equipment (printers, copiers, scanners, etc.), diesel engine driven monoset pumps for agricultural purposes, solid state inverters, diesel generators, variable capacity air conditioners, and LED lamps.In order to obtain BEE Star Label, the applicants are required to deposit feesat various stages,including refundable security deposit, non-refundable application fee (2,000 INR per model or asdecided by BEE), and labelling fee. Figure 11: Sample of BEE Star LabelThe BEE Star Label provides details such as the unique identification number of the manufacturer,star rating (from 1 to 5 stars), energy performance values, and other important details of theproduct including the BEE logo. The “Guidelines for Permittee” have also set a Monitoring,Verification and Enforcement (MV&E) framework to assess the non-compliance of all participantsof the Program. It is targeted towards appliance and equipment manufacturers, importers, tradersand retailers.Penalties for non-compliance to EE&C regulations: A financial penalty can be imposed on adesignated consumer in case it does not implement an energy management system as required byBEE. Under the 2001 Energy Conservation Act (amended in 2010), the designated consumer who Page 62 of 123
fails to comply with the mandatory energy management, audit and reporting shall be liable to apenalty of maximum of 10,000 INR for each failure and, in the case of remediation, an additionalpenalty of 1,000 INR for day. Under the PAT scheme, designated consumer who fails to meet thedefined target of energy savings will be penalized. The penalty will be calculated based on theremaining savings to be achieved to meet target (in toe) multiplied by the actual price of every toe.Other EE Policy MeasuresSupport toR&D activities:Supported by GOI, the Technology Innovation Fund provides EElending using commercial banks. The Ministry of Science and Technology (MOST) has offered300 million INR (4.85 million USD) in the form of soft loans to MSMEs willing to deployupscaling, demonstration and commercialization of innovative-based projects, including EE. Theproject started in 2011 and remains active. It provides up to 80% of a project’s fundingrequirements, with promoters contributing a minimum 20%. The appointed entity for managing,analyzing and disbursing the loans is SIDBI.Supportto knowledge development and capacity building: BEE provides support for EEknowledge development and capacity building through various programs such as Human ResourceDevelopment (HRD), Capacity Building Program for DISCOs, Capacity Strengthening of StateDesignated Agencies.The HRD Program provides funds for the theory-cum-practice-oriented training and for energyaudit instrument support. Under the Capacity Building Program for DISCOs, about 500 mastertrainers on demand side management (DSM) and EE from the officials of DISCOs are trained.These master trainers then conduct the capacity building for about 5,000 DISCOs officials. BEEalso provides financial assistance to the State Designated Agencies to strengthen their institutionalcapacities and capabilities. It is broadly divided into four components namely: Demonstration projects to showcase the effectiveness of the EE technologies, Institutionalization of policy enforcement authorities at the state level, Manpower development to smoothly coordinate, regulate and enforce EE policies/programs in the States, and Dissemination of knowledge to various stakeholders through workshops, training programs, awareness campaigns, etc.A Knowledge Exchange Platform108 was jointly established by BEE and the Institute for IndustrialProductivity to promote and share best practices and energy efficient technologies with the largescale industries. The Platform mandates include: to facilitate exchange of knowledge and information within a particular industry sector to help the lagging industrial units improve the efficiency of their operations and narrow down the specific energy consumption (SEC) in the sector (by encouraging peer-to-peer learning), to facilitate exchange of energy management best practices across sectors in common areas, where there is high possibility of replication, to facilitate sharing of information/knowledge on upcoming approaches to energy management and to new and innovative technological choices for promoting EE available at the international level,108 http://knowledgeplatform.in/ Page 63 of 123
to create a vibrant platform for industries and BEE interface not only for smoother implementation of PAT but also for policy discussion to support sustained actions on industrial energy management.Support forlocal equipment manufacturers: Several banks such as SIDBI and KfW (through theInnovation Finance Programme, 2013-2016) are providing financial support (concessional loans,capital subsidy) to local EE equipment manufacturers. The financial assistance in form of soft loanis generally not less than 1 million INR per project. The venture capital funds managed by variouscompanies such as the Venture East Fund Advisors (India) Ltd., Blume Venture Advisors Pvt.Ltd., and INFUSE Ventures are also supporting the local EE equipment manufacturers.Support forESCO:The public Energy Efficiency Service Limited (EESL) has established in 2009by GOI to assist the growth and development of the existing ESCO sector in India109. EESLfunctions as a “Super ESCO” and implements EE projects. ESCO organizations, most of themSMEs, provide services through EESL, thereby facing fewer risks. EESL is managing the PartialRisk Guarantee Fund (PRGF) and the Venture Capital Fund for Energy Efficiency (VCFEE). TheVCFEE increases the availability of risk capital to the ESCOs and other companies who invest inthe supply of EE goods and services. This instrument targets several sectors, including industry.Several financial institutions and local banks (IREDA, YES Bank, etc.) are providing financialsupport to ESCOs, especially full-serivce ESCOs.As of 2012, there were 114 accredited ESCOs in India. There are different types of ESCOsproviding services to EE projects as presented in Table 11.110Table 11: Types of ESCOs operating in IndiaNo. Type of ESCO Services provided and repayments1. Full service ESCOs Design, finance and implementation of EE projectswith shared energy Measurement and verification of the actual energy savingssavings Sharing of the actual energy savings on a pre-agreed sharing model over a fixed period2. ESCOs with Design and implementation of EE projectsguaranteed energy Measurement, verification and providing guarantees that the actualsavings energy savings over a fixed period will cover the repayments3. ESCOs with Design and implementation of EE projectsequipment supplier Measurement and verification of the actual energy savingscredit or equipment Payments linked to performance (i.e., actual energy savings)leasing4. Technical consultancy Conduct of energy audits, design of EE projects, and advisory servicesservices (Performance- during project implementationbased) Consultancy fees linked to performance Bonus on energy audit and advisory services in case of excess savings and penalty in case of savings shortfall5. Technical consultancy Conduct of energy audits, design of EE projects, and advisory servicesservices (Fee-based) during project implementation Consultancy fees are paid as pre-agreed No bonus or penalty for actual savings performance109http://www.asiaesco.org/pdf/presentation/2-2.pdf110http://indien.ahk.de/fileadmin/ahk_indien/Bilder/2013_Upcoming_events/energy_efficiency/Presentations_26Nov2013/08Honeywell_Agarwal_ESCO_Market_in_India.pdf Page 64 of 123
National Energy Conservation Awards:This Award program aims at promoting the adoption ofEE and clean technologies in industrial and other sectors. It has been in place since 1991, and hasplayed an important role in India’s EE policy package in the absence of mandatory measures. Theprogram has grown significantly since its inception. As of 2014, around 1,010 participants from 39industrial and commercial sectors were included in the Award program.111 Award winners areinvited to a public ceremony to honour their energy conservation achievements on NationalEnergy Conservation Day. Winners also featured in the awards ceremony booklet.6.1.3 PhilippinesGiven its large population and rapidly growing economy, the country's energy needs are growingrapidly. The TFEC of the Philippines in 2013 was around 25.9 Mtoe. As shown in Figure 12, thetransport sector had the largest share to the TFEC at 33.9% (8.8 Mtoe), followed by the industrialsector with 26.4% (6.8 Mtoe) and the residential sector at 25.8% (6.7 Mtoe). Petroleum productsdominated the country’s TFEC in 2013, accounting for a large share of 56.0%, while biomass andelectricity contributed 23.5% and 20.5%, respectively.112From DOE data, the Philippinesconsumed 75,266 GWh of electricity in 2013. Of this figure, the residential sector consumed 27%,while commercial establishments consumed 24% and the industrial sector used 28%.In the industrial sector, coal contributed 30.9%, followed by electricity with 27.9%, petroleumproducts (diesel, fuel oil, LPG, kerosene) with 22.2%, biomass with 17.6%, and other fuels(natural gas, etc.) with 1.5%.113 Commercial, Non-energy 10.9% uses, 1.7% Agriculture, Industry, 26.4% Fishery &Forestry, 1.3%Transport, 33.9% Residential, 25.8% Figure 12: Share of TFEC by sector in the Philippines (2013)The fastest growth in energy demand is in the transport sector at a rate of 3.5% per year. It isplanned to account for 38% of the final energy demand by 2035. The sector’s energy demand willreach 18.8 Mtoe in 2035, increasing from 8.0 Mtoe in 2011. Oil products will remain the main fuelfor the transport sector, accounting for 96% in 2035, with the remainder taken up by natural gas.111 https://beeindia.gov.in/content/ec-awards-painting-competition112ERIA (2016)113 Philippine Energy Plan 2012-2030 Page 65 of 123
Energy consumption in the industry sector will grow at about 3% per year from 2010 to 2035,under the business-as-usual (BAU) scenario. The food, tobacco and non-metallic mineralssubsectors are responsible for most of the energy consumption in the industry sector. The energydemand of the industry sector is largely met by coal.EE Targets and PlanningDOE’s Act of 1992 is still the main policy that ensures a continuous, adequate, reliable andeconomic supply of energy. The mandate of the department is indeed to provide adequate, reliableand affordable energy to industries to enable them to provide continuous employment and low costof goods and services and to enable the ordinary citizen to achieve a decent lifestyle.In 2014, DOE formulated a new comprehensive energy roadmap, the Philippine Energy EfficiencyRoadmap 2014-30, to provide guidance for an economy-wide and sectoral improvement. Thevision, objectives and targets of the roadmap is to guide the Philippines in building an energy-efficient nation, and in making energy efficiency and conservation a way of life for all Filipinos.Energy efficiency will advance economic development and help ensure energy security, protectionof the environment, optimal energy pricing, and sustainable energy systems.The objectives of the roadmap are EE as a resource to bolster the energy security supply of theeconomy, promote energy-efficient, cutting-edge technologies, increase public awareness onEE&C measures and promote the best practices, cushion the impact of oil price volatility on theeconomy and curb the generation of greenhouse gases emissions to help mitigate climate change.The EE targets are set in a context of strong economic and energy demand growth during theperiod. Demand has been forecasted to increase by 78% between 2014 and 2030, a 3.5% averageannual rate. In this context, the action plan states a 24% energy saving by 2030, compared to theBAU scenario. This is the result of a targeted 3% per year improvement in per-GDP energyintensity.Targets are based on an assessment of an achievable potential, grounded in internationalexperience and knowledge of existing levels of efficiency in the economy. The targets are stated interms of percentage of improvements in energy intensity.The Philippines’ energy efficiency targetsare shown in Table 12.Table 12: Philippines energy efficiency targets (2014-2030) Sector Implied annual % savings Annual energy saved by 2030 (ktoe) (total savings by 2030) 4,861 3,088Transport 1.9% (25%) 1,432 1,206Industry 1.3% (15%) 78 10,665Residential Buildings 1.2% (20%)Commercial Buildings 1.9% (25%)Agriculture 0.8% (10%)Total 1.6% (24%)Source: Energy Utilization Management Bureau, DOEThe National Energy Efficiency and Conservation Program (NEECP) is a two-pronged programthat focuses on power conservation, demand management, fuel efficiency, and fuel conservation.Through the NEECP, the goal is to make EE&C a way of life for every Filipino. Page 66 of 123
In line with this program, the Energy Efficiency and Conservation Division, under the DOE,implements a wide range of EE&C projects, programs, and activities involving variousstakeholders. The aim is to facilitate an economy-wide approach of ensuring that access to cost-effective and quality energy is provided to Filipinos. DOE pursues the aggressive implementationof existing EE&C programs by promoting awareness on efficient energy utilization in theeconomy and rationalizing energy consumption, particularly of petroleum and electricity.DOE Administrative Orders also ensures a continuous, adequate, reliable and economic supply ofenergy through EE&C via the institutionalization of the Government Energy ManagementProgramme (GEMP) and the adoption of austerity measures for government offices (both for fueland electricity), e.g., the use of energy efficient lighting systems in government facilities.The Philippine Energy Plan 2012-2030 has a target of 10% savings on the annual total energydemand by promoting EE&C measures as follows: Conducting information and education campaigns on benefits of efficient use of energy and best practices; Promoting the use of energy efficient appliances as well as introducing energy efficient technologies Providing technical and energy management advisory assistance. Establishing a recognition system for those who consciously apply the concepts, systems and technologies of EE&C.Financial Incentives for EE ProjectsSoft Loans: Financial loans for EE improvement programs are being provided by localcommercial banks, in cooperation with other foreign financial and lending institutions such as theWorld Bank-IFC, the Asian Development Bank (ADB), and local banks. However, interest loansremain at the prevailing commercial rate.Fiscal Incentives for EE ProjectsID&T exemption and reduction: According to the Department of Finance, tax incentives thatcover 100% of the import duty by the Bureau of Customs are given for energy-efficienttechnology, especially for capital equipment. Government banks, including other private bankswith loan windows for energy efficiency projects do not provide a special loan scheme.Under the new guidelines of the Board of Investment (BOI) regarding its 2014–2015 InvestmentPriority Plan (IPP), companies that apply for tax incentives on pioneering energy projects will begiven appropriate incentives. However, certain requirements must be met such as an endorsementfrom DOE attesting the technology adopted. As stated earlier, tax incentives that cover 100% ofthe import duty are given for energy-efficient technology, especially for capital equipment.Mandatory Measures on Energy Performance and ManagementMandatory energy consumption reporting: At present, there is no policy measures regulatingmandatory energy performance, energy audit and application of EMS in energy-consuming Page 67 of 123
establishments in the Philippines. However,as per a current regulation114, all industrial, commercialand transport establishments consuming more than 1 million liters of oil equivalent annually arerequested to submit Quarterly Energy Consumption Report (QECR)to DOE. The establishmentsconsuming more than 2 million liters of oil equivalent a year, apart from the QECR, are requestedto submit an Annual Energy Conservation Report (AECR). These reports should follow the formsprovided by the DOE, and be signed by Enercon115 Coordinator or Enercon Officer andcountersigned by a responsible official of the establishment.The AEC report presents the EE&C activities (including programs and investments) implementedby the establishment and the energy performance achieved over the year, and how thisperformance compares with the sectoral benchmark. A computized Database System is used tofacilitate storage, retrieval and analysis of these QECRs and AECRs that may become a basis forsetting up EE targets. Monitoring visits are aslo conducted by Enercon Officers to verify datareported by the establishments and to assist them in filling up the requested reports.EE product standards and labelling: Currently,MEPS and mandatory EE product labellingapplies only to selected home appliances such as window-type air conditioners, refrigerators, andcompact fluorescent lamp ballasts. Most of these are used in the household sector. DOE, throughits Fuels and Appliance Testing Laboratory, undertakes energy performance testing, certificationand labelling of these equipment and appliances. Figure 13: Samples of Philippine EE LabelOther EE Policy MeasuresSupport to knowledge development and capacity building: The Philippine DOE, under its EnergyManagement Training Program, has been conducting many short courses on EE&C and energymanagement for all energy-consuming sectors, such as commercial and industrial establishments.The information dissemination program includes distribution of technical publications, brochures,posters and stickers to promote EE&C awareness. Videotapes on energy management best114Memorandum Circular No. 93-03-05 of the Department of Energy115Energy Conservation Program (Enercon) of the Philippines Page 68 of 123
practices are aslo disseminated to showcase success stories in the implementation of EE&Cmeasures in the Philippines.The personnel of the DOE’s Energy Efficiency and Conservation Division (EECD)116are alsoprovided with local and overseas training. The areas of training and capacity development includeenergy audits, energy management, EE&C technologies, etc.Support for ESCO: In 2008, DOE issued a Department Circular,117 which enforces therequirement for an ESCO to apply for a certificate of accreditation with the DOE while engagingin any energy efficiency related performance contracting projects. The objectives of the Circularare the following: to promote and expand ESCO business as new emerging business industry; to classify ESCOs in the market according to their area of expertise and financial capability; to help inefficient companies avail of ESCO services with least to no-cost investment in energy efficiency project; to be able to create more jobs and stable ESCO business sector to help contribute to the country’s economic development and poverty alleviation program of the government; to promote and build-up the networks of the DOE accredited ESCOs in the local market as well as in the ASEAN region market; and to be able to accelerate implementation of energy efficiency projects and programs within the context of the government thrust on energy security, soaring energy prices and climate change mitigation.During 2008-2009, DOE, in collaboration with UNDP and local financial institutions (FIs), hasimplemented an ESCO demonstration project, and managed to successfully improve the EE of thelighting systems in two industrial firms.Under the four-year (2009-2013) Philippine EnergyEfficiency Project (PEEP) funded by ADB, DOE has committed to the creation of a Super ESCOwith the aim of providing technical and financial support to ESCOs operating in both public andprivate sectors. However, during its implementation, it became clear that new government policiesand more time were needed to create an enabling environment for the Super ESCO beyond thePEEP duration. In addition, the firm targeted to host and manage the Super ESCO, state-ownedPhilippine National Oil Company, did not show the ownership needed for the Super ESCO. So itscreation was abandoned.118From 2009 to 2015, the International Finance Corporation (IFC) has established partnership withlocal FIs under the Sustainable Energy Finance (SEF) program to continue supporting the ESCOmarket in the private sector.119With the support from DOE and international financing institutions, the ESCO market of thePhilippines has been developing. As of October 2016, twenty-four (24)companies were certified asESCOs under the DOE accredition system.120116The EECD was created under the DOE to take charge of the formulation of EE&C policies, plans and programs117 Department Circular–DC-2008-09-0004118 https://www.adb.org/sites/default/files/project-document/161212/42001-013-pcr.pdf119 http://www.dem-esb.dk/en/final-evaluation-of-the-philippines-sustainable-energy-finance-program/120 https://www.doe.gov.ph/list-doe-accredited-energy-service-companies-escos Page 69 of 123
Don Emilio Abello Energy Efficiency Award: All energy-establishments, who have submitted theQEC and AEC reports, are evaluated to determine the recipients of this Award. The Awards aregiven annually to outstanding companies that achieve substantial energy savings.6.1.4 ThailandThe total final energy consumption (TFEC) of Thailand was 77.9Mtoe in 2015. As shown inFigure 14, the largest consumer in Thailand was the transport sector with a final energyconsumption of 28.5 Mtoe, which is equivalent to 36.6% of the TFEC. The industrial sector is thesecond largest consumer with 28.0 ktoe of energy consumption, equivalent to 35.6% of the TFECof the country.Agriculture, Commercial, 5.0% 7.6% Industry, 35.9%Transport, 36.6% Residential, 14.9% Figure 14: Share of TFEC by sector in Thailand (2015)Final energy consumption in the industrial sector decreased 0.6% from the year of 2014. Themajor energy type consumed in this sector were alternative energy (AE), shared 23.5% of its finalenergy consumption, followed by electricity, petroleum products, coal & lignite, natural gas andtraditional renewable energy which shared 23.4%, 21.0%, 15.8%, 11.9% and 4.4% respectively121.In 2015, DEDE reported that around 3.0 Mtoe of energy consumption has been avoided from theimplementation of EE measures122. The energy intensity (EI) is reported at 8.22 ktoe/billion THB.This is around a 4% reduction, compared to the 2010 EI (base year).EE Targets and PlanningIn 2011, the 20-year Energy Efficiency Development Plan (the EEDP 2011) was announced with atarget to reduce the final energy consumption by 20% by 2030, compared to that of 2005. This isequivalent to a reduction of 30 Mtoe of total energy consumption(1.2 Mtoe/year in average), ofwhich 11.3 Mtoe savings are from the industrial sector. After 3 years of EEDP implementation, the121 DEDE (2016). Energy Efficiency Situation 2015122 DEDE (2016). Energy Efficiency Situation 2015 Page 70 of 123
annual energy savings were reported at 1.48 Mtoe, which was higher than the target of 1.2Mtoe/year set in the EEDP 2011.In 2015, GOT announced the new Energy Efficiency Development Plan for the 2015-2036 period(EEDP 2015) which is one of the plan under Thailand Integrated Energy Blueprint (TIEB). Itindicates the EE target for Thailand and set the framework for implementation.EEDP 2015 projected the baseline final energy consumption in 2035 to be 187,142 ktoe. ThailandEE target aims at reducing energy intensity of 30% in 2036 (compared to 2010). This is equivalentto reducing energy consumption of 56,142 ktoe. Therefore, the EEDP 2015 aims at the finalenergy consumption of Thailand to be 131,000 ktoe in 2036.Table 13 presents the sectoral EEtargets for all major sectors in Thailand.Table 13: Thailand energy efficiency targets (2015-2035) Sector Energy savings by 2035 (ktoe) % of energy savings Industry 14,515 28.1 Commercial + Government 4,819 9.3 Residential 2,153 4.2 Transport 30,213 58.4 51,700 100.0 Total (2015-2035) 4,442 Energy savings during 2011-2014 56,142 TotalSource: EEDP 2015It is estimated that total 2,366,871 million THB is required under the EEDP from 2015 to 2036.1,600,821 million THB will come from the government and its agencies, while 766,050 millionTHB will be from the private sector.Financial Incentives for EE ProjectsThe ongoing Energy Conservation Fund(ENCON Fund) is an important financial source fordevelopment of both RE and EE projects in Thailand. It was established under the 1992 ThailandEnergy Conservation Promotion Act (1992 ENCON Act).It supports all the EE&C relatedprograms and activities, such as EE improvement, R&D projects, human resources development,public education and campaigns. Under the ENCON Fund, there are three major EE financialprograms, namely tax incentives, the Energy Service Company Revolving Fund (ESCO Fund), andthe Energy Efficiency Revolving Fund (EERF). The ENCON Fund provides capital to these threeprograms.The ENCON Fund is builtfromlevies on all petroleum products (0.07 THB/liter for kerosene andfuel oil, and 0.25 THB/liter for gasoline, gasohol, diesel oil and biodiesel B5). In 2016, 8,297million THB (239 million USD) was allocated by the fund to support EE projects and policydevelopment.123Soft loans: EERF is a special financial tool to support the implementation of EE projects. TheFund was initiated by DEDE in 2003 and ended in May 2013. The fund aimed at supporting clients(including ESCOs) for investment in machinery and equipment in relation to EE (and RE) projects123 ENCON Fund website, www.enconfund.go.th Page 71 of 123
through providing low-interest loans to commercial banks, which then finance EE projects throughloans with favorable interest rates.The EERF was launched in January 2003 with 2 billion THB (approximately 58.8 million USD),which was originally from the ENCON Fund. The EERF engaged eleven public and commercialbanks as the participating banks (PBs) to develop and streamline procedures for appraising andfinancing EE projects. Initially, the EERF provided the PBs with zero interest credit line to jump-start projects. The interest rate subsequently reset at 0.5% to cover administrative costs of theEERF. Interest for on-lending to EE project developers (including ESCOs)was set at a maximumof 4% p.a., on a negotiable basis. The maximum loan period is 7 years.Although many of the project developers requested for higher amounts, the maximum of 50million THB (1.43 million USD) was lent to each EE project in order to distribute the money to asmany medium-sized projects as possible.By the end of February 2012, the Fund had allocated an aggregated amount of about 7.23billionTHB (202 million USD)to support 294 EE projects. The EERF has been successful infamiliarizing the local commercial banks with EE business activities. Since 2012, the EERF hasterminated its financing scheme. However, the commercial banks continue to offer loans for EEprojects through the market mechanism with some technical assistance provided by DEDE.124Investment subsidy:The ENCON Fund covers the cost of the energy audits as long as theenterprises can prove to have achieved a sound EE improvement. Direct subsidies at the rate of20% (for designated factories and buildings) or 30%(for SMEs) of the total investment cost areprovided for EE projects, if they replace the old existing by high efficient equipment and have apayback period of 7 years or less. The requested subsidy must exceed 50,000 THB with amaximum of 3 million THB. During the 2010-2013 period, around 230 million THB was allocatedfrom the ENCON Fund to support 1,462 EE projects, which resulted in a total final energyconsumption reduction of 27 ktoe per year.125Fiscal Incentives for EE ProjectsEnergy efficiency tax incentives have been established with the Revenue Department (RD) and theBoard of Investment (BOI).CIT exemption and reduction: The provided tax incentives include a 25% CIT credit for thepurchase of electrical appliances and other products labeled as meeting energy efficiency standardsunder the RD scheme.The equipment that can be granted with this incentive must be certified byDEDE.126 Start-ups in the sector of EE technology manufacturing can benefit from 100% CIT.ID&T exemption and reduction: Thai Customs, under the Ministry of Finance, have introducedthe import duty reduction for energy efficiency equipment in 2005. 50% import duty reduction forenergy efficiency equipment can be obtained for importing EE equipment that are typicallysubjected to 10% import duty or higher. An import duty exemption for 8 years is granted to startupEE technology manufacturers.124Frankfurt School-UNEP Collaboration Center for Climate & Sustainable Energy Finance (2012), Case Study: TheThai Energy Efficiency Revolving Fund125APEC (2016). Compendium of Energy Efficiency Policies of APEC Economies126 The Revenue Department, Thailand Page 72 of 123
Mandatory Measures on Energy Performance and ManagementMandatory energy management, audit and report: Thailand has introduced the EnergyConservation Promotion Act in 1992. This was amended in 2007. Under the requirements of thisact, all designated factories127 and designated buildings128 must submit the energy managementreport to DEDE every year, starting in 2010. The act mandates that controlled factories andcontrolled building must appoint person responsible for energy (PRE). A PRE is responsible forcoordinating with other relevant agencies and assisting factory/building owners to supervise,inspect, and improve efficiency in machinery and equipment. He/she also develop a plan withdetailed targets for energy conservation, accredit, and certify the work implemented as planned.In 2015, DEDE developed the electronic system (E-form) for energy management reportsubmission. This aims to provide efficient means of energy conservation data submission fromdesignated factories/buildings.EE standards and labelling: DEDE, in collaboration with the Thailand Industrial StandardInstitute, is implementing the minimum energy performance standards (MEPS) and certificationscheme to prevent the production and import of substandard energy equipment. The certificationscheme includes mandatory and voluntary options. Mandatory certification scheme is required fortwo types of appliances: air conditioners, refrigerators.The voluntary certification scheme covers sixteen other types of energy equipment: double-capped fluorescent lamps, single-capped fluorescent lamps, self-ballasted lamps, LPG cooking stoves, three-phase motors, fiberglass insulation, diesel engines, microwaves, rice cookers, electric ovens, motorcycles, electric kettles, irons, magnetic ballasts, electronic ballasts, water pumps.127“Designated factory” is defined as a factory with installed transformer(s) of 1,000 kW or 1,175 kVA or more, orconsumes energy of 20 million MJ or more.128 “Designated building” is defined as a building with installed transformer(s) of 1,000 kW or 1,175 kVA or more, orconsumes energy of 20 million MJ or more. Page 73 of 123
In addition, the Government of Thailand (GOT) introduced the EE labelling programs toencourage and promote the use of high-energy efficient products.Since 1993, EGAT, the national power generation, transmission and distribution utility, hasintroduced the \"Energy Saving Label no. 5\", on a voluntary basis, to promote using of highefficiency energy appliance. The label no. 5 is given to electrical appliances with best rating interm of energy efficiency. This program is conducted through a close collaboration with severalelectricity appliance manufacturers. Currently, 23 appliances can be certified to have the label.This program has been developed overtime. The energy efficiency test of the label no. 5airconditioner inverter has now been improved to Seasonal Energy Efficiency Ratio (SEER).In 2015, DEDE established another EE labelling program for non-electrical appliances on avoluntary basis. Currently, there are eight products that have been labeled, including low-pressureLPG cooking stoves, high-pressure LPG cooking stoves, glazing panes, three-phase motors,variable speed drives, fiberglass insulation, small diesel engines, and small gasoline engines.EGAT’s energy saving label (left) for electrical equipment/appliances and DEDE’s energy savinglabel (right) for non-electrical equipment/appliances are shown in Figure 15. Figure 15: Samples of EGAT and DEDE Energy Saving LabelPenalties for non-compliance with EE&C regulations: The ENCON Act defined the penalties forentities that fail to comply with its requirements, such as inadequate reporting on energyconsumption, inaccurate or manipulated data, failure to appoint energy managers, etc. Thepenalties include imprisonment of up to 3 months, and various levels of financial penalties from5,000 to 150,000 THB.Other EE Policy MeasuresSupport to R&D activities:GOT, via the ENCON Fund, supports R&D activitiesby allocatingmore than 100 million THB (approximately 3 million USD) each year for R&D on EE&Ctechnologies. This fund can be accessed by academic institutions, public sector researchinstitutions, and non-profit private organizations.R&D activities conducted under this financialsupport scheme must demonstrate their practical application. Page 74 of 123
Support to knowledge development and capacity building:DEDE conducts awareness-raisingcampaigns through energy display centers, public relation initiatives, and national energy awards.The Bureau of Energy Human Resource Development (BEHRD) was established in1965,originally as the Electrician Training Centre. It serves as the DEDE organizational arm to train,develop and transfer the knowledge and skills on energy management to personnel from varioussectors. Currently, the BEHRD organizes several trainings for specific industrial sectors inplanning, monitoring, and implementing energy management systems. The ENCON Fund providesfinancial support for capacity building of energy auditors, energy managers, EE consultants, etc.The ENCON Fund also provides financial support for awareness raising activities. Examples ofthese activities include production of a series of television shows on energy saving methods andtheir benefits, dissemination of EE information through various types of media, energy camps forstudents, plays and cultural shows on EE&C themes, etc.The student-focused capacity building measures include (i) the development of curriculum andteaching materials that integrate EE and environmental subjects into the education system, (ii)short-term projects/activities (e.g., school recycling banks, EE&C competitions) to increasestudents’ knowledge and understanding of EE&C, and to stimulate improvement in their energysaving behaviors and sharing of their EE&C experiences and knowledge with their peers, (iii)organization of short technical visits abroad for students, (iv) provision of undergraduate and post-graduate scholarships (both local and abroad), (v) provision of funds to encourage students inpublic and private universities to seriously consider research on energy management systems andEE&C technologies.Support for ESCO:DEDE, in collaboration with local facilitators (such as the Institute ofIndustrial Energy, the Thai ESCO Association and BOI) and international partners (GIZ, AFD,etc.) has been supporting the development of the ESCO market in Thailand. It consisted in severalmeasures such as financial support, tax incentives, training and capacity building, and networking.The ongoing ESCO Fund is the main financial source for EE projects implemented by ESCOs. TheESCO Fund was established in 2008 by DEDE. It had an initial capital of 500 million THB fromthe ENCON Fund. Currently, the ESCO Fund is in its 4thphase (April 2015 - March 2017). It ismanaged by the Energy for Environment (E for E) Foundation and the Energy ConservationFoundation of Thailand (ECFT). In FY 2014-2015129, 500 million THB (14.4 million USD) wereprovided to the E for E Foundation (300 million THB) and the ECFT (200 million THB) tosupport EE and RE projects, including those implemented by ESCOs. There are six supportingprograms under the ESCO Fund. They are listed in Table 14.Table 14: Financial incentives for promoting of ESCO investments in EE sector in Thailand Program Objective Size of investment and interest PeriodEquity Investments in EE projects 10-50% of total investment cost Up to 7investment Limited to 50 million THB per project years Not as a majority shareholderEquipment Long-term leasing service in Return: annual dividend in the 5 yearsleasing purchasing equipment for EE projects proportion of investment Loan support for up to 100% equipment leasing cost Limited to 25 million THB per project129In Thailand, a fiscal year (FY) starts on October 1 of the previous calendar year and ends on September30 Page 75 of 123
ESCO Partner with (ESCOs) to raise Interest rate of 3.5% per annum Up to 7venture capital for investments in EE 6-month grace period yearscapital projects of the ESCO 10-30% of registered capital Limited to 50 million THB per project Not moreGHG Provide support in project Not as a majority shareholder than 5 years Return: annual dividend in theproject proposal development and proportion of investmentfacility coordination with relevant Depending on the project risk authorities Limited to 10 million THB per projectCredit Guarantee commercial bank Provide walk-through audit free of chargeguarantee for project loansfacilityTechnical Provide financial support forassistance technical assistance, e.g., energy audit, feasibility study.Source: Energy for Environment FoundationTax deductions up to 64,000 USD/year per company are also available for ESCOs that candemonstrate to have invested in EE improvement projects.The Federation of Thai Industry (FTI) has created an ESCO Information Center in 2013 underDEDE sponsorship and with the support of the Thai ESCO association with the objective offacilitating information exchange among ESCOs, and financing institutions and ESCO clients.This Center and its website130 provide the industries with an access to information concerning theEPC concept, data and information on ESCO experience, guidelines for ESCO business, etc.National and regional annual fairs dedicated to ESCOs are also organized together with seminarsallowing networking among the main stakeholders involved in the ESCO market.The ESCO market in Thailand is the largest in the ASEAN region. In 2015131, Thailand had 61registered ESCOs, of which 51 were Thai companies and 10 were foreign companies. Overall,Thai ESCOs cover the whole value chain of EE services and provide information and advice onEE investment opportunities. However, the number of single ESCOs who can perform all theseactivities is quite limited. Most ESCO projects have been implemented in the industrial sectorwhere important energy saving potentials are still untapped. The main type of contract is EPC withguaranteed savings. BOOT contracts are also used but are not very frequent. Financing does notseem to be a big problem for ESCOs in Thailand. The main barriers to ESCO market developmentin Thailand are (i) a lack of competence and technical expertise of ESCOs on implementation andmanagement of large-scale and complex ESCO projects, (ii) a lack of accepted standards andprotocols for energy savings measurement and verification, and (iii) a lack of experience in thestipulation of ESCO contracts in the public sector.132The Thailand Energy Awards started in 2000 as an annual activity organized by DEDE under theMOE. The Thailand Energy Awards aim at encouraging EE&C leadership in enterprises, praisingand applauding the companies and people of excellence in EE and RE activities. There are fourcategories for EE activities: (i) Industry and building EE improvements, (ii) EE innovations, (iii)130 http://www.thaiesco.org/2016/thai/index.aspx131 ESCO Annual Report 2015, Thai ESCO Association www.thaiesco.org132EU (2014). ESCO Market Report for Non-European Countries 2013 Page 76 of 123
Outstanding individuals and the team performance in EE in plants/buildings, and (iv) Support forenergy conservation (such as academia, NGOs, banks, etc.)Applicants for the awards are required to submit the application form to a Committee appointed byDEDE. The Committee evaluates the applications and conducts site visits before making decisionon the selected awardees. The winners of the awards will receive recognition from the PrimeMinister and MOE officials.6.1.5 VietnamBased on the report of the Asia-Pacific Economic Cooperation (APEC)133, the total final energyconsumption (TFEC) of Vietnam was 50.6 Mtoe in 2013, up 2.6% from 2012 and 36% higher than2005 level. As shown in Figure 16, the industry sector represented the largest share of TFEC with43%, followed by the residential sector with 31.0%, and transport with 22.0%. The final energyconsumption in the commercial and the agricultural sectors represented only 3.0% and 1.0%,respectively.In 2013, the industrial sector consumed coal (41%), electricity (24%), renewable energy, mainlynon-commercial biomass (17%), petroleum products (11%), and natural gas (7%). During 2005-2013, the industrial final energy demand growth was the second fastest with 6% per year inaverage, behind the transport sector. Agriculture, Commercial, 1.0% 3.0% Transport, Industry, 43.0% 22.0% Residential, 31.0% Figure 16: Share of TFEC by sector in Vietnam (2013)Vietnam’s TFEC is projected to increase to around 80 Mtoe by 2020 and 120 Mtoe by 2030.Industry remains the highest energy-consuming sector throughout the forecast period, with itsshare increased to 46% in 2030.According to the estimate of MOIT’s Energy Efficiency and Conservation Office (EECO)134, theenergy saving potential in key energy-intensive sectors of Vietnam was large for the period 2006-2015:133 APEC (2016)134 http://vneec.gov.vn/ Page 77 of 123
20-25% for steel industry, 10-40% for cement, 10-15% for buildings, 25-28% for transport, 20-30% for public lighting sector.The Institute of Energy (IE)135 provided further estimates of energy savings in some industries forthe period 2012-2025: 30.7% for steel, 4.1% for cement, 9.1% for paper and pulp, 3.8% for refinery, 9.8% for nitrogenous fertilizer production sector.Based on the EECO report, Phase 1 of the VNEEP (2006-2010) has achieved the following keyresults: Energy audits conducted for 243 enterprises and the EE measures implemented in 50 enterprises; EMS established in 250 designated enterprises; 350 energy managers and 60 energy auditors certified; EE labels granted to 147 products; Total energy saving estimated at 4.9 Mtoe, equivalent to 3.4% of total energy consumption (compared to BAU scenario); Electricity saving achieved 1.43% by 2011 compared to 2006 level.EE Targets and PlanningIn 2003, the first Decree on Energy Efficiency and Conservation136 was issued. In addition, in July2004, the Ministry of Industry (MOI) issues a circular137 providing the guidance forimplementation of EE&C in buildings and in the industry sector.In 2006, the Prime Minster of Vietnam approved and enforced the Vietnam National EnergyEfficiency Program (VNEEP) for the period 2006-2015138. The VNEEP was the first-ever long-term comprehensive program established under MOIT to institute measures for improving energyefficiency and conservation in all economic sectors of Vietnam. The Program was implemented intwo phases. Phase 1 (2006-2010) aimed to actively start up all components of the Program, andPhase 2 (2011-2015) aimed at intensive and large-scale implementation of the Program based onthe lessons learned from Phase 1.VNEEP set the overall national goals for energy efficiency and conservation for the 2006-2015period:135 Vietnam Low Carbon Options Assessment for Energy Sector Components (started in 2012 and still under way),http://ievn.com.vn/tin-tuc/Vietnam-Low-Carbon-Oprions-Assessment-5-1072.aspx136 Decree 102/2003/ND-CP (3/9/2003)137 Circular 1/2004/TT-BCN (2/7/2004)138 Decision 79/2006/QD-TTg (14/4/2006) Page 78 of 123
to save 3-5% of total energy consumption (compared to BAU scenario) in the 2006-2010 period and 5-8% of total energy consumption in the 2011-2015 period; to establish the models for energy management; to popularize the use of high-efficient equipment; to introduce the Energy Efficient Building Code; to promote energy efficiency in the transport sector.The specific targets of VNEEP by the end of 2015 were as follows: Energy audits conducted in 300 large enterprises and 12 power plants; Energy audits conducted in 300 SMEs and commercial buildings; Energy Management System (EMS) established in 1,024 designated enterprises; 2,500 energy managers and 200 energy auditors certified; 100% of new buildings complying with Energy Efficient Building Code; Energy savings of 1,750-2,800 ktoe139 achieved in 3 targeted sectors (industry, buildings and transport).In 2010, the Law on Economical and Efficient Use of Energy140 was issued, followed by thedetailed guidance on its implementation promulgated by GOV in 2011141. Under the Law, MOIT isassigned to be responsible for the state management of EE&C activities in Vietnam. The Law alsoindicated that VNEEP shall provide financial support to EE&C projects. MOIT is responsible forissuing the regulations and guidelines on the financial support mechanism.The National Power Development Plan for the 2011-2020 period with a vision to 2030 enforced in2011 has set an electricity savings target of 5-8% of total electricity consumption by 2015 and 8-10% by 2020, as compared to BAU scenario. The Plan envisaged the extensive use of high energyefficient equipment and advanced technical standards to achieve at least 10% savings in energy-intensive industries.The EE&C plans and measures for specific sectors such as construction142, agriculture143, andindustry144 were also enforced.Financial Incentives for EE ProjectsInvestment grants/subsidy: In 2007, a Circular145 was jointly issued by the Ministry of Finance(MOF) and MOIT to regulate the financial support from VNEEP for implementing EE&Cprojects. For implementation of energy management system in buildings and industrial enterprises,the financial support shall be 30% of the total investment cost, but not more than 70 million VND(3,500 USD)146 per project.For energy audit activities, 50% of the auditing cost with a maximumof 50 million VND (2,270 USD) shall be granted for each project. For EE product labelling, the139kiloton of oil equivalent (1ktoe = 41.868 TJ)140 Law 50/2010/QH12 (17/6/2010)141 Decree 21/2011/ND-CP (29/3/2011)142 Decision 377/QD-BXD (14/3/2008)143 Circular 19/2013/TT-BNNPTNT (15/3/2013)144 Circular 02/2014/TT-BCT (16/1/2014)145 Circular 142/2007/TTLT/BTC-BCT (30/11/2007)146 1 USD = 22,000 VND Page 79 of 123
grant will be 30% of the total cost with a maximum of 60 million VND (2,730 USD) perenterprise.Carbon market: In 2015, the Prime Minister of Vietnam approved the carbon market plan thatincludes setting up a pilot cap-and-trade scheme in Vietnam’s steel industry, as well as accreditedNationally Appropriate Mitigation Actions (NAMAs). Under the plan, Vietnam will build GHGemission databases, develop a Measuring, Reporting and Verification (MRV) system andundertake capacity-building among policy makers to help develop market-based policies to cutemissions. It plans to introduce NAMAs in the steel and waste sectors from 2018 that will generatecarbon credits, and launch an emissions trading scheme for the steel sector after 2020. The budgetfor implementation of the plan is 3.5 million USD, of which 3 million USD was a contributionfrom the World Bank.Fiscal Incentives for EE ProjectsCIT exemption and reduction: Since 2016, enterprises investing in the production of new EE&Cproducts enjoy a reduced corporate income tax (CIT) rate of 17% for 10 years from the first yearof revenue generation instead of the normal tax rate of 20%. In addition, these enterprises enjoyadditional tax incentives including CIT exemption for 2 years after the enterprises first makeprofits and 50% tax reduction for the next 4 years.ID&T exemption and reduction: The EE&C projects are exempted from import duties and taxeson imported goods that would become fixed assets of the project and goods used as raw materials,input or semi-finished products that are not available on the local market for the project operation.Mandatory Measures on Energy Performance and ManagementMandatory energy management, audit and reporting: In 2011, GOV issued a guidance147 onimplementation of the Law on Economical and Efficient Use of Energy. In accordance with thisguidance, designated energy users (including industrial facilities) are required to apply the EMSthat will be implemented as follows: to announce targets, policies, solutions/measures for EE improvement; to develop annual plan and five-year plan on EE&C; to nominate an energy manager to be in-charge of EMS implementation; to carry out regular check-ups, follow-ups on energy consumption of machinery and equipment of the whole production chain; to carry out energy audits to identify EE opportunities and measures; to organize periodic training and coaching courses on EE&C for employees; to have a reward and penalty system to promote the EE&C in the entity.In 2012, MOIT has promulgated a Circular148 to regulate the mandatory EE&C planning, reportingand energy audit in the key energy-consuming entities (KECE). KECEs refer to (i) industrial andagricultural production facilities and transport establishments which have an annual energyconsumption of 1,000 toe or above, and (ii) office and apartment buildings; educational, medical,entertainment, physical training and sport complexes; hotels; supermarkets; restaurants and shops147 Decree 21/2011/ND-CP (29/3/2011)148 Circular 09/2012/TT-BCT (20/4/2012) Page 80 of 123
which have an annual energy consumption of 500 toe or above. KECE shall register its EE&C planand submit the report on implementation results online through electronic portal of the NationalEnergy Database System (NEDS). Each KECE is provided with address and ID number to accessto NEDS.According to the current regulation149, energy managers and energy auditors have to obtainprofessional certificate from any of MOIT-recognized training centers.EE product standards and labelling: The guidance on the process and procedure for registration,evaluation, certification and labelling of EE products was promulgated in 2006 by the Ministry ofIndustry (MOI)150 and revised in 2012 by MOIT151. This applies to locally manufactured andimported EE products which fall under the mandatory energy-labelling list or under the voluntaryscheme. Local manufacturers or importers can request MOIT to proceed with the evaluation andcertification for labelling of their EE products, provided that they meet the energy performancestandards regulated by MOIT. The guidance also prescribes the relevant requirements for initialperformance check, for after-certification supervision, and for the process applicable to suspensionand revocation of the EE certificate. Such suspension or revocation will take place whenmanufacturers and/or the certified EE products cease to comply with the relevant requirements.MOIT’s Department of Science and Technology was assigned as the executive agency toimplement the EE certification and labelling program in Vietnam.A list of devices and equipment required EE labelling was issued in 2011152 and then revised in2013153 by the GOV. It includes: household appliances, including tubular fluorescent lamps (FLs), compact FLs, electromagnetic and electronic ballasts for FLs, air conditioners, refrigerators, washing machines, electric cookers, electric fans and television receivers, office and commercial equipment, including photocopiers, computer monitors, printers and commercial refrigeration cabinets, industrial equipment, including distribution power transformers and electric motors, means of transport, including passenger cars of 7 seats or less.There are two types of Vietnam Energy Label: Endorsement Label and Comparative Label (seeFigure 17). The Endorsement Label (left picture)is used for lighting products while ComparativeLabel (right picture) is used for household appliances and other equipment.149 Circular 39/2011/TT-BCT (28/10/2011)150 Circular 08/2006/TT-BCN (16/11/2006)151 Circular 07/2012/TT-BCT (4/4/2012)152 Decision 51/2011/QD-TTg (12/9/2011)153 Decision 03/2013/QD-TTg (14/1/2013) Page 81 of 123
Figure 17: Samples of Vietnam Energy LabelForced retirement of low efficient equipment: Several technical standards including minimumvalues of energy efficiency for various energy equipment were promulgated in 2013 by MOIT154.All the existing devices and equipment which do not meet these technical standards had to be beretired by 1 January 2015. Moreover, new investments in low efficient power generating units areprohibited since 10 February 2014155.Penalties for non-compliance to EE&C regulations: The penalties for administrative violationsin EE&C are regulated by two decrees156 promulgated by GOV. The penalties are applied forviolations in six areas of EE&C, including: energy audit, EE&C in industry, building, transport and agricultural activities, EE&C in the designated energy users, labelling, production, import, export and use of to-be-eliminated vehicles and equipment, and obstructing public servant in performing their EE&C inspection.The maximum fine for violations in EE&C activities is 100 million VND (4,550 USD) forindividuals and 200 million VND (9,100 USD) for organizations and companies.Other EE Policy MeasuresSupport toknowledge development and capacity building: VNEEP provides support to theKECEs and other companies in implementing energy management systems in the form oftechnical support and through training and accreditation of energy auditors. VNEEP also organizesa number of free-of-charge capacity building activities (seminars, workshops, trainings, etc.) forvarious EE-related local stakeholders such as equipment manufacturers and suppliers, serviceproviders (ESCOs), banking officers, consultants, etc.Support for ESCO:One of the objectives of VNEEP is the development of ESCOs. Support toESCO development has been provided by GOV with the collaboration and funding frominternational organizations. The two main initiatives were the Commercial Energy Efficiency Pilot(CEEP) program (2003-2010) funded by GEF, and the project for Promoting Energy Conservation154 Decision 1559/QD-BCT (14/3/2013)155 Decision 78/2013/QD-TTg (25/12/2013)156 Decree 73/2011/ND-CP (24/8/2011) and Decree 134/2013/ND-CP (17/10/2013) Page 82 of 123
in Small and Medium Enterprises (PECSME) (2006-2011) funded by UNDP. The CEEP programhelped formulate the policies and strategy for ESCO development while the PECSME projectsupported the establishment of SME Energy Service Providers (ESPs).Since 2011,VNEEP has focused on the development of ESPs. It provided technical assistance tothe emerging market of ESPs, to the development of best pratice guidelines for energyperformance contracts (EPCs), to the transformation of ESPs into ESCOs, and to the implementionof ESCO projects. The Vietnam Clean Production and Energy Efficiency (CPEE) project (2011-2016) is being implemented to achieve these objectives. This project is funded by the WB andGEF.By the end of 2012, 15 to 20 companies could act as ESCOs. These are generally small in size andweak in asset base. Most ESCOs in Vietnam remain rather weak in terms of finance andtechnology.Therefore, they cannot offer a full package of services, including EPC. It seems likethere is a need for a stronger support from GOV, including financial assistance, to further developthe ESCO market.6.2 Gender in EE Policies and Programmes in Asian Countries6.2.1 Gender in National Policies in AsiaInternational research and experience across the world establish firmly that gender equalitybetween men and women enhances and positively correlates with human and economicdevelopment. Gender equality and women’s participation are generally recognized as crucial forsustainable development in national development strategies in South and South-East Asiancountries. Gender inclusion, enhancement of women’s involvement and narrowing the gender gapare included as overall intentions and aims in national development policies. National laws andpolicies guarantee men and women equal rights, and the overall political, institutional and legalframeworks for gender equality and women’s development are in place.Gender exists as a crosscutting theme in the national policies of Asian countries, and most of thecountries have separate or joint ministries and gender focal points in different ministriesaddressing gender and women’s development issues. However, implementation of gender policiesis often weak due to lack of financial and human resources. The practical policy incentives andguidelines for gender mainstreaming and for reaching the goal of increased gender equality remainvague, and are left to be assessed in the sector policies and strategies by different ministries, whereconsequently gender issues appear to a varying extent or may be absent depending on eachindividual sector.Asian countries today have specific national policies and/or strategies for gender equality andwomen’s development. The practical implementation of gender mainstreaming is yet often weak,and gender is not an appearing policy issue for most sectors. Gender incentives are mostcommonly focused on improving women’s educational and economic status, health, and politicalempowerment. Gender mainstreaming as a strategy is accordingly implemented in the policies andstrategies of the education, health and labor sectors, but also in rural development including theagriculture and livestock development sectors. In order to enhance women’s political andgovernance power, gender quotas may have been made obligatory in different level governmentorganizations and representative bodies. However, in reality, women, as half the population,remaingrossly under-represented in most areas of society, both in the public and in the private sector. Page 83 of 123
Despite the established gender policies and frameworks for women’s rights and gender equalityacross the Asian countries, most of these countries demonstrate in real terms high inequalitybetween men and women. The Global Gender Gap Index measures the internal gender paritybetween men and women in each country and then presents the results across the world.157,158 Thisreveals that of the South and South-East Asian countries Nepal places as 110/145 countries, India108/145, Indonesia 92/145, China 91/145, Vietnam 83/145, Thailand 60/145, and the Philippines7/145.The considerably greater gender equality of the Philippines compared to all the other SA and SEAcountries is noteworthy, and demonstrates successful implementation measures of policyintentions. The country launched a 30-year strategic Plan for Gender-Responsive Development in1995, and gender equality principles were included in all development programs and legislativereforms. The Plan has been implemented through a Gender and Development MainstreamingStrategy with guidelines for preparation of agency specific agendas and use of a gender budget. Itis especially significant that the Philippines is one of the few countries in the world that hasadopted a Gender Budget (since 1995) that requires all government (including local government)units to use at least 5% of their total budgets for programs, projects and activities addressingwomen’s need and focusing on women’s rights. Moreover, the Framework Plan for Women in2001 channeled focus on three priority areas: (i) women’s economic empowerment, (ii) protectionand advancement of women’s rights, and (iii) promotion of gender responsive government.159Even if large differences exist both geographically and between different population groups in thePhilippines, many still living in poverty.160An important lesson that can be drawn from the genderequality development in the country, with relevance to any sector policy development (even EEpolicies),is that gender mainstreaming, in all legislative and development initiatives, should nottake place only at a general policy intention level, but through a clear strategy with requirements,guidelines and, importantly, ear-marked financial and human resources.6.2.2 Gender in EE-Related Policies in AsiaReliable and affordable access to energy is globally recognized as a fundamental driver ofdevelopment, a crucial prerequisite for poverty reduction, economic development, improved healthand education standard, and for women’s economic and social empowerment. Women traditionallybear a disproportionately great burden of household level energy production; therefore, energyinitiatives have a direct impact on their lives and livelihoods that will further benefit their entirehouseholds.The reviewed national energy sector policies and strategic documents with relevance for energysavings and energy efficiency in different Asian countries provide technical and financialprinciples and incentives for the EE sector. Gender or social issues related to energy needs andpriorities, access, supply and services are not recognized. Inclusion of women is found only atproject level in women-focused clean energy projects mostly at household level, and most all of157 World Economic Forum 2015158Gender parity is a numerical concept related to gender equality. Gender parity concerns relative equality in terms ofnumbers and proportions of women and men, girls and boys, and is often calculated as the ratio of female-to-male for agiven indicator (definition: http://eige.europa.eu/rdc/thesaurus/terms/1195).159 Lumampao, Lopez & Go, N.D160 According to the Philippine Statistics Authority, 21.6% of the population were living under the national poverty linein 2015 Page 84 of 123
the women-focused initiatives concentrate on providing clean cooking solutions and energy savinghousehold lighting with small income generation development as a potential additional activity.An exception of energy sector policy that does emphasize gender and women’s inclusion isNepal’s Rural Energy Policy. The 2006 policy recognize women’s primary role in management oftraditional energy sources and the implications for their health. Women are included in thecommunity management of energy systems and energy is linked with other sectors to supportwomen. However, the policy fails to actually address the barriers women face in rural energyprojects, such as difficulties to access project benefits, get employed or influence decision makingundertaken by construction companies and users’ committees.At program level, the Madhya Pradesh Energy Efficiency Improvement Program in India161provides an example of energy efficiency benefiting both household energy access and powersupply to agricultural sector development, as well as women’s energy-based livelihoodsimprovement and business opportunities development through the associated project MadhyaPradesh Enhancing Energy Based Livelihoods for Women Micro-Entrepreneurs.162Gender-disaggregated data related to energy efficiency is very scarce, especially concerningsupply and management systems including enterprises in urban and rural settings. Yet someprogram and project level experiences of gender mainstreaming, women-focused activities andtheir development impacts163 point out issues for policy development and strategies that are neededfor gender mainstreaming and women’s enhancement in EE policy and development incentives.These are discussed below in chapters 7 and 8.161Funded by ADB162ADB 2016163For example, Bangladesh Infrastructure Development Company Limited Program engaging women to select sites forsolar home systems and street lights location and connecting with micro-finance programs for women’s incomegeneration; and the Maldives Preparing Outer Islands for Sustainable Energy Development Project in which themonetary savings made from a shift from fossil fuels to renewable energy systems is used to support start-up businessesin communities, including those by women. ADB 2016. Page 85 of 123
7. EE POLICY GAP ANALYSISThe objective of the policy gap analysis is to identify the inadequacies and gaps of the existing EEpolicy and regulatory framework of Pakistan based on the review of the best practices andlessons/experience from the five studies countries. The policy gap analysis consists of thefollowing steps: Conduct an analysis to identify the key barriers to a successful application of EE in industries. Assess the existing policy and regulatory framework of Pakistan vis-à-vis the identified barriers. Consider the best practices/success factors and lessons learned from the five studied countries, and identify the inadequacies and gaps of the existing EE policy and regulatory framework of Pakistan. Finally, propose suitable policy measures and instruments to overcome the barriers and fill in the identified gaps.7.1 Barriersto EE Application in the Industrial Sector of PakistanThe general level of awareness about policies on industrial EE is quite low in the industry andgovernment organizations. There exist various economic, technical and organizational barrierswithin the industry, such as a lack of Minimum Energy Performance Standards (MEPS) andinstitutional barriers within the regulatory bodies, which explain the low adoption of EE. Based onan in-depth desk study and the findings from the consultation meetings with various stakeholdersin Pakistan, the following barriers were identified.Institutional and regulatory barriersThe relevant regulatory institutions/bodies (such as the newly established NEECA and PEECA)still lack the technical capacity to undertake EE activities. Moreover, there is a lack ofcoordination among the federal and provincial departments (responsible for implementing EEpolicy) to successfully launch, execute and implement EE policies/measures. The coordinationamong the stakeholders is crucial to achieve the objectives of the policy. In some industrialsectors, such as the fertlizer and sugar sectors, the prices are controled by GOP which may alsohave an impact on the adoption of EE&C measures in industries.To implement the EE&C measures, it is of prime importance to coordinate the efforts by all thestakeholders. A lack of coordination can have serious repercussions, especially after the 18thamendment providing more autonomy to provinces in energy matters. According to NEE&C Act2016, as a pererogative, NEECA will recommend the standards for appliances to PEECB uponapproval from Pakistan Standards and Quality Control Authority. The Punjab Energy Departmentis working with Clasp USA for the development of standards for boilers and furnaces.EE policy and measures require a robust monitoring and evaluation (M&E) mechanism to monitorthe progress of EE projects and gauge the level of enforcement of EE policies/measures. EffectiveM&E mechanisms are generally lacking both at the federal and provincial level.An incomplete legal and regulatory framework, especially, the lack of incentive/rebate policy, alsocreates a barrier to EE promotion in the industries of Pakistan. Page 86 of 123
Economic and financialbarriersEconomic and financial barriers to adoption of EE technologies/practices in the industries ofPakistan include the following: High investment cost and long payback period of EE&C projects; Lack of access to capital for investing in EE&C technologies; Different priorities for capital investment (the industries often have limited capital available for investment, so they usually give priority for investment in their core business); Limited financial incentives for EE&C projects; Financial loss due to disruption in production; Cost associated with identification of EE&C measures (i.e., cost of energy audit).Technical and operational barriersTechnical and operational barriers include the following: Limited availability of EE products in the local market; Risk of disruptions in the production process; Lack of technical details and energy consumption data of purchased equipment.Risk of disruptions in the production process is one of the biggest barriers to adoption of EEtechnologies/measures in the industries of Pakistan. This can be attributed to the focus of themanagement on production rather than on EE.Organizational barriersOrganizational barriers refer to the awareness, behavior and capability of the industrial enterprisesin energy management and adoption of EE&C measures. These consist of: Inadequate integration of EE&C objectives into operation, maintenance and purchase plans of the enterprises; Lack of awareness on EE&C measures and their social and environmental benefits by industry decision makers; Low priority of energy management; Lack of accountability on energy use. Lack of an in-house skilled or properly trained workforce to install, operate and maintain EE technologies. Therefore, the risk of new EE equipment malfunctioning is significant and increases the reluctance of top managers to invest in EE measures.Lack of standards and labelling of EE productsAdoption of energy performance standards in industry is one of the most effective mechanisms forsuccessfully implementing policies on EE in Pakistan. There is still limited awareness of theminimum energy performance standards (MEPS) in Pakistan industries.Moreover, the absence of laws and regulations is one of the major reasons for the lack of MEPS inPakistan. At present, Pakistan has promulgated MEPS for a few types of energy equipment, such Page 87 of 123
as AC electric fans, CFL, Single-phase induction motors (0.37-7.5 kW), and Window and Split AirConditioners. However, similar standards for other industrial energy equipment are still lacking.The Pakistan Energy Label has been applied to electric fans only.Local capacity barriersAt present, there are no national certification available in the field of EE&C and only fewinternationally certified energy auditors and energy managers in Pakistan.There is also lack ofcompetent ESCOs that can offer services to customers who wish to contract out the managementof their energy consumption. There is also insufficient competent EE consultants, R&D institutionsand EE equipment manufacturers. However, NEECA has recently enlisted the energy auditingfirms and is also working on the certification of energy professionals.7.2GapAnalysis of EE Policies in Pakistan and five Asian Countries based on their best practices7.2.1 Summary of existing EE policy instruments in Pakistan and fivestudied countriesThe EE policy gap analysis between Pakistan and the five reference Asian countries is based onthe comparison between existing EE policy instruments in those countries. This comparison isprovided in Table 15.Table 15: Comparison of EE policies in Pakistan and five other Asian countries EE policy instruments CH IN PH TH VN PK √√√√√EE targetsFinancial incentives √√√√ O • Soft loan √ √√ • Investment grant/subsidy • Financial subsidy (Loan guarantee, etc.) √√• Carbon/CDM credit transactions O√ OFiscal incentives √ • Accelerated depreciation• Exempted/reduced CIT √ √√• Exempted/reduced ID&T √√√√√√Mandatory energy performance and management √√ • EE obligation• Mandatory energy management, audit & reporting √√ √√• EE product standards and labelling• Forced retirement of low efficient equipment √√√√√√ √√• Penalties for non-compliance to EE&C regulations √√ √√Other EE policy measures √√ O • Support to R&D activities• Support to knowledge development and capacity building √ √ √ √ √ √• Support for local manufacturers √O• Support for ESCOs √√√√√• Annual EE Awards √√ √“√” – policy already deployed; “O” – policy under development Page 88 of 123
Table 15 shows that all five studied countrieshave set EE targets, provide ID&T exemption orreduction on imported EE equipment, have established energy performance standards & labellingfor EE products and provide support to knowledge development and capacity building.7.2.2 Best practices and lessons learned from the five studiedcountriesChina:China has been a pioneer in promoting EE&C with the promulgation of the Energy ConservationLaw in 1997 (amended in 2007) and the creation of the Energy Conservation InformationDissemination Center in 1998, the National Development and Reform Commission in 2003 andthe National Energy Administration in 2008. China has also got a solid package of policyinstruments that has helped significantly reduce its energy intensity.GOC set up realistic and achievable targets for reduction of primary energy intensity (20%reduction by 2010 for the 11th Five-Year Plan) which was almost met (19.1% reduction achieved).The target was then set at 16% reduction for the 12th Five-Year Plan (2011-2015) and wassurpassed by 2015 (18.2% reduction achieved). This success can be attributed to the followingfactors: The availability of soft loans and financial guarantees from the government fund (e.g. China CDM Fund), from local banks and international financial institutions (WB, ADB, AFD). The financial subsidies/rewards offered by GOC to companies that successfully achieve the energy-saving targets assigned to them by GOC. The strict policy measures such as EE obligations, mandatory energy management, audit and reporting and penalties for non-compliance which were used in the “Top 1,000 Energy- Consuming Enterprise Programme” and the “Top 10,000 Energy-Consuming Enterprise Programme”. The adoption of mandatory EE standards for a large number of energy-consuming products and the China Energy Label programme for various energy-consuming products. The forced retirement of low efficiency equipment. Considered as adrastic policy instrument. it was nevertheless successfully implemented in energy-intensive industries such as coal-fired power plants, iron, steel and cement companies which consume large amount of coal thatwith a negative impact on the environment. A strong support to R&D activities, knowledge development and capacity building via a broad use of media. A strong support to the development of the ESCO market. It included the provision of financial subsidies, tax incentives and capacity building to ESCOs. The China Energy Management Company Association, established in 2004 plays a key role in promoting the ESCO market.IndiaWith the promulgation of the Indian Energy Conservation Act in 2001 and the creation of theBureau of Energy Efficiency (BEE) in 2002, India has established a comprehensive policy Page 89 of 123
framework for promoting EE&C. BEE plays a key role in the development of policies andstrategies to accelerate the adoption of EE&C in all sectors.India has set and surpassed a national target of saving 10,000 MW of electricity for the 11th Five-Year Plan (2007-2012). For the industrial sector, the target set under the PAT (Perform, Achieve,Trade) Scheme Cycle I (2012-2015) was also over-achieved. The success of EE in India can beattributed to the following: Soft loans provided by local commercial banks (such as SIDBI, ICICI, IDBI, etc.) and by international financial institutions (IREDA, JICA, WB, ADB, KfW, AFD, UNIDO, etc.). Financial incentives (capital subsidies and loan guarantee credits, accelerated depreciation, tax reduction/exemption for EE projects in the SMEs). The establishment and successful implementation of the PAT scheme. The policy instruments such as EE obligation, tradable Energy Saving Certificates, and penalties for non-compliance are implemented effectively and successfully under that scheme. The enforcement of mandatory energy management, audit and report in DCs and penalties for non-compliance has helped increase awareness and knowledge of DCs in EE&C. The number of certified Energy Managers and Energy Auditors were increased since 2004, and,by September 2015, had reached 12,682 and 8,809, respectively. The Standards and Labelling Scheme for EE products was one of the most successful policy measures implemented in India. During the 11th Five-Year Plan (2007-2012), the Scheme helped save 7,766 MW of electric capacity, accounting for around 72% of total power savings in India (10,836 MW).164 A strong support to R&D activities, knowledge development and capacity building via a broad use media. A strong support to local EE equipment manufacturers. A strong support to the development of the ESCO market. It includes the provision of soft loans, risk capital and capacity building to ESCOs.ThailandThailand is considered as one of the most successful countries in ASEAN for its effective supportto EE development. It all started in 1992, when the Thailand Energy Conservation Promotion Act(ENCON Act) and the ENCON Fund were established. Since then, a number of EE policyinstruments have been deployed.The 20-year Energy Efficiency Development Plan (EEDP) for the 2011-2030 period set upambitious, but achievable targets for the reduction of the final energy consumption (30 Mtoe by2030, as compared to that 2005 baseline, equivalent to around 1.2 Mtoe per year). This targetedannual reduction was in fact already achieved after three years (the average reduction of finalenergy consumption was 1.48 Mtoe/year for the 2011-2014 period). The EEDP was then revised in2015 (EEDP 2015) which set the target to reduce the country final energy consumption by 56.14Mtoe by 2035 compared to 2010 level).164 BEE Annual Report 2014-15 Page 90 of 123
Many positive lessons can be learned from Thailand’s successful experience in supporting theimplementation of EE projects. Soft loans and financial incentives provided by ENCON Fund. Fiscal incentives (CIT and ID&T exemption and reduction) granted by the Revenue Department and the Board of Investment. Mandatory energy management, audit and reporting by certified energy managers and energy auditors and penalties for non-compliance. Enforcement of EE standards and labelling scheme (both mandatory and voluntatry) together with a clear and transparent certification scheme for EE products. Strong support to R&D, knowledge development and capacity building activities. Strong support to the development of the ESCO market. It includes the provision of soft loans,guarantee credit, tax deductionand technical assistance to ESCOs.VietnamEE development in Vietnam started in 2003 with the first Decree on Energy Efficiency andConservation. However, the EE implementation got momentumwith the establishment of theVietnam National Energy Efficiency Program (VNEEP) in 2006, and especially after the issuanceof the Law on Economical and Efficient Use of Energy in 2010.During the 2006-2010 period, the total energy savings in Vietnam were estimated at 4.9 Mtoe,equivalent to 3.4% of total energy consumption (compared to BAU scenario) which was within thetarget set up by GOV (3-5% of total energy consumption). The target was revised for the 2011-2015 period, with a 5-8% of savings of total energy consumption.In comparison with Thailand, Vietnam has a moderate development of EE. However, it can beconsidered successful thanks to the following policy instruments: Financial support to enterprises to conduct energy audits, for the adoption of energy management systems, and for labelling of EE products. Fiscal incentives (CIT and ID&T exemption and reduction) for EE&C projects. Mandatory energy management, audit and reporting required for the key energy-consuming enterprises (KECE). These activities shall be conducted by energy managers and energy auditors certified by MOIT. Penalties for non-compliance are also applied. Enforcement of EE standards and labelling scheme (both mandatory and voluntatry) together with a clear and transparent certification scheme for EE products. Force retirement of low efficient equipment/devices, especially the office and household appliances. Strong support to knowledge development and capacity building.However, Vietnam was not so successful in the implementation of the policy measures to developthe ESCO market. The limited access to the financing sources, in particular soft loans, is a keybarrier to the development and implementation of EE projects in Vietnam. Another barrier is lowtariff of electricity purchased from the grid. Page 91 of 123
The PhilippinesThe EE policy in the Philippines is still incomplete. There have no law or act on EE&C in thePhilippines. The policy recently issued was the Philippine Energy Efficiency Roadmap 2011-30, toprovide guidance for an economy-wide and sectoral improvement.Except the EE standards and labels enforced to few EE products, the Philippines still lack anadequate policy package for EE development. These include mandatory requirements on energymanagement, audit and EE obligation, financial and fiscal incentives for EE projects, support toknowledge development and capacity building and support for development of ESCO market.7.2.3 Policy gap analysisPakistan is lagging far behind the reference countries in EE development. Financial support to EEactivities is still soft. Though there are energy performance standards, they are not enforced asthere is no compulsary EE measures such as energy management, audits and reporting. Additionalpolicy instruments need to be deployed. They are identified and systematically listed, based onTable 16which summarizesthe barriers, the current EE measures/policies deployed in Pakistan vis-à-vis the barriers, the international EE policy best practices, and the measures recommended forPakistan to overcome the barriers. Page 92 of 123
Table 16: Analysis of EE policy gaps in Pakistan Barriers Assessment of policies deployed International polic in Pakistan vis-à-vis the barriers overcome tInstitutional and Inadequate support for capacityregulatory Strong support for cabarriers building of policy makers. policy makers in both enforcement of the pEconomic and Only few incentives (e.g., studied countries (Chfinancial barriers upcoming soft loan scheme and and Vietnam). ID&T exemption/reduction) areTechnical and provided. A full package of finoperational incentives is providebarriers NEECA/PEECA and few Thailand and Vietnam international donor-fundedOrganizational programs are providing support Strong support (inclubarriers for capacity building of the support) to knowledg industries. capacity building in a countries. Lack of support to knowledge development and capacity EE obligations in Ch building of industries in EE Top 10,000 Energy-C aspects. Programs) and India Trade Scheme), inclu No mandatory requirements for reward policies. EE obligations, energy audits and management in industries. Mandatory energy au reporting in China, In Vietnam.Barriers related Only few energy-consuming EE standards and mato standards and products have minimum energy number of EE produclabelling for EE performance standards. countries.products Only labelling for electric fans Also, use of penaltie (under NEECA voluntary of low efficient equip labelling scheme). &Vietnam.
cy best practices to Measures to overcome barriersthe barrier M1.Provision of support to enhance the capacity ofapacity building of policy makers to formulate policies promoting the h development and deployment of EE in industries.policies in most of thehina, India, Thailandnancial and fiscal M2. Development and implemention of scheme(s) toed in China, India, provide financial and fiscal incentives for EE activities m. and projects.uding financial M3. Creation of a program to support knowledgege development, and development and capacitate industries to adopt andall the studied utilize EE solutions.hina (Top 1,000 and M4. Creation of a legal framework that will obligateConsuming Enterprise industries to save energy, conduct energy audits, adopt (Perform, Achieve, an Energy Management System (EMS) and report onuding penalty and their energy performance. M5. Development and implementation of a scheme toudit, management and provide support in conducting energy audits and ndia, Thailand and incentives to implement EE solutions. M6. Creation of a program to disseminate informationandatory labellingfor a and to raise awareness of industry decision makers in cts in all five studied using EE technologies. M7. Creation of a program to develop and implementes to force retirement energy standards and labelling, including the pment/plants in China applicationof appropriate penalties and incentives
Barriers related Only a few certified energy Strong support (incluto local capacity auditors and energy managers in support) to developmin EE&C Pakistan. China, India, the Phi Thailand. Limited support to ESCOs Insufficient competent EE Financial and other s development of local consultants, R&D institutions manufacturers in Chi and local equipment manufacturers Strong financial supp in China, India and T
uding financial M8. Creation of a program to provide support (incl.ment of ESCOs in financial)to ESCOsand EE technology manufacturersilippines and M9. Creation of a program to providesupport (incl.financial) to R&D activities on EEsupport for capacity solutions/technologies l equipment ina and Indiaport toR&D activitiesThailand Page 94 of 123
7.3Gaps and Lessons for Gender Mainstreaming in EE PolicyGaps remain between EE related policies and the practical context of men and women who needand use energy. At a household level, women have a key role in both producing, managing, andpotentially saving energy, but also as potential micro and small entrepreneurs in the EE sector orbenefitting from energy savings in their businesses. Gender mainstreaming and women’sparticipation is virtually absent in the EE sector and there are obstacles for women to fully benefitfrom the EE interventions and to be involved in the development of the EE sector.The needs and priorities in energy access and useEnergy efficiency policies and development initiatives have a strong technology-focused approach.EE development strategies and, consequently, programs and projects are, in general, formulatedfrom the supply perspective and not from the needs and priorities perspective of the target groupsthat need reliable and affordable energy for their social and economic development.Implementation arrangements in the supply-side interventions are in general easier to handle thanthe demand-side ones, because such interventions involve mainly a few large power utilities withadequate technical capacity. They require large investments that can, in general, be providedthrough various existing financing mechanisms. The demand-side options such as the use ofenergy-efficient appliances and practices usually do not require large investments on the part of theusers, yet many steps at different levels are needed from development and implementation ofrelevant policies and regulations to arranging financing mechanisms mostly through financialintermediaries. However, the benefits of demand-side interventions when implemented aresubstantial and immediately felt.165On the demand side, men’s and women’s needs and priorities related to energy access and use aredifferent, based on their different roles and responsibilities in society. Worldwide women ingeneral appear highly motivated for efficient energy use and energy saving initiatives whenbecoming aware of energy use options. Accordingly, there will be great benefits frommainstreaming gender perspective into the assessment of needs, priorities and capacities forformulation of policies leading to EE initiatives that will be designed to meet both men’s andwomen’s energy needs and priorities of access and use through technology adaptation that is bestsuitable for the different target groups. Initiatives considering the needs and priorities of both menand women will be best suitable for enhancing social and economic development at both householdand community level, and for providing potential for enterprise development. Likewise, themethods of awareness raising on EE may need to be designed separately for men and women,given their different living spheres, experience background, communication networks and access tofunding.Inclusion of women as potential EE entrepreneurs and employeesWomen are generally considered to be less adept than men to work in technological branches suchas energy business, and far more men than women are engaged in the energy sector166. Despite the165 ADB 2016.166IRENA 2013
fact that women are daily involved in energy management as main players at a household andcommunity level, they are merely given the end-user role in any EE and energy saving initiatives,and women are not considered as potential suppliers and maintainers of energy services.EE related projects involving women have been largely focused on basic household energy such asimproved cooking stoves and energy saving home lighting solutions, improved biomass-basedenergy production and related micro-business opportunities. Little attention has been paid towomen’s potential as entrepreneurs and laborers in energy production, distribution andmaintenance, and the economic opportunities these roles could provide women.167 Yet projectssupporting women’s small-scale entrepreneurship in EE sector appear especially successful inenhancing local economic, social and living standards development.168Women are typically engaged in the informal sector, and agriculture accounts for more than 60%of female employment in South Asia169. The benefits of improved energy access for women interms of saved time and costs are significant, added with new income earning opportunities throughsmall industries and other entrepreneurial activities. Electrification of rice mills and other grain, oiland food processing facilities are usually the first rural industries to be electrified after grid access.Further encouragement of women to become energy entrepreneurs rather than only consumers hasshown to have multiple development effects through e.g. home-based170 women-run micro-enterprises, expansion of economic activities and diversification of production options, energyaccess enabling new sources of income to support family investments in education, health andliving standards. Women-owned businesses are a significant source of self-employment andeconomic growth, but majority of them are typically small and micro enterprises in trade andservices. However, across the world women are establishing energy sector enterprises such as smallelectricity production and distribution networks, charcoal production and solarbusinesses.171Energy policies that support development of entrepreneurial energy activities andbusiness approaches that involve and benefit women, have shown to have positive impactsbeyond the energy sector, such as improved health and education, reduced household poverty, andwomen’s empowerment.172A recent analysis of women’s economic participation and empowerment in Pakistan173 identifieswomen’s total share in the labor force to be low at 26% of all women in ages 15-64 years, morethan 2/3 of them working in agriculture. Of the total industrial sector labor force, women makeonly 20%. Technical and vocational training for women is occasional and the training provided iswithin traditional skills such as knitting, sewing and embroidery, which will generate income underthe minimum wage level. Lack of access to finance appears as another major fallback for women’seconomic development; only 5% of women own a bank account and 13% of women have access toloans from microfinance organizations. Microfinance or rural support programs administered byNGOs typically allocate the types of loans taken by women.167 Lumampao, Lopez and Go, N.D168Sarkar 2016, www.energia.org169Dutta, S. In ADB 2016170 home-based micro enterprises are also known in Pakistan as cottage industries171IRENA 2013172Dutta, S. 2003173Zaidi Y., Farooq S. et al. 2016 Page 96 of 123
Women as entrepreneurs and employees in the EE sector face many barriers such as lack ofaccess to information about new forms of energy and energy technology, lack of knowledge,education and technical training, lack of training in business management, and lack of access tofinancial sources and services that are necessary for business start-up.174 For gender mainstreamingin the EE sector, specific women-focused policy incentives are needed to encourage and enhancewomen in energy production and services, as entrepreneurs and employees, with targeted programsproviding required technical and entrepreneurial skills as well as specific funding mechanisms.175Government policy measures should encourage both the public and private sector to promotewomen’s employment in the EE sector. Cross-sectoral policy incentives are needed, including e.g.quotas and economic benefit measures for female employment, technical training provided forwomen, and application of core labor standards, non-discriminatory practices and safety inworkplace.Women being typically deeply involved in daily energy production and management at lowerlevels are furthermore in a key position for information education and behavior change for efficientuse of energy and energy savings in their communities. Women should be employed as EEinformers for both consumer and small enterprise focused information should be utilized in EEinitiatives. The costs of training and employing women are low but the benefits of user awarenessand behavior change considerable.Inclusion of women in policy formation, planning and decision makingRepresentation of women is generally low in decision-making bodies in the energy sector and inthe formal governance systems in general. Few women are involved in the sector policydevelopment, planning and decision making. Consequently, energy policy and energy sector ingeneral is lacking women’s perspectives in energy needs, access and use priorities, women’sknowledge, capacities, and women’s economic development options through EE and savings arenot considered in the planning of policy incentives, strategies, programs and investments. Aswomen, to a greater extent than men, hold a less technology and more practical socio-economicand community-focused perspective, the male-dominated energy sector planning remains rathertop-down, technical and supply-driven.176Bringing in women’s perspectives has potential tocontribute to a more demand-driven policy formation and to grounding decision making andplanning in a practical community development context. For a more sustainable and inclusive EEsector development, government policy should therefore designate obligatory quotas for womenin all policy formation, planning and decision-making bodies at all levels.In most countries, the energy sector management is more centralized compared to other sectors,and less open to input from stakeholders representing local communities and small businesses.Procedures for setting national energy priorities often do not take into account gender-separatedneeds and use of energy in both household, service and productive sectors.177However, gender174 UNIDO 2014, IRENA 2013175 ADB 2016, IRENA 2013, ENERGIA 2015, Sarkar 2016176ENERGIA 2015, ADB 2016177ENERGIA 2015 Page 97 of 123
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