Energy Efficiency Financing and Market-Based Instruments (Economics, Law, and Institutions in Asia Pacific)

This book is devoted to investigating the policy design and effectiveness of financial and market-based instruments to promote energy efficiency financing. The concept of this monograph is to present the latest results related to energy efficiency funding schemes, energy efficiency obligations, voluntary agreements, auction mechanisms, and Super Energy Services Companies (Super ESCOs) in major jurisdictions across the world. The book focuses on financial and market-based instruments as they deliver a price signal, which provides an incentive for firms to invest in innovation or implement more energy-efficient technologies and deliver energy savings while minimizing costs. Such instruments can have significant advantages for the government, supporting the fiscal sustainability of the government’s energy efficiency efforts, requiring less enforcement than regulation and according the market flexibility to select the most cost-efficient technologies. This book is highly recommended to researchers, policy experts, and business specialists who seek an in-depth and up-to-date integrated overview of energy efficiency financing. Introduction: Energy Efficiency Financing and Market-Based Instruments Acknowledgments Contents About the Editors Part I Driving Factors of Energy Efficiency Financing 1 Understanding Cross-Economy Dynamics of Energy Efficiency: Driving Factors and Stylized Patterns Abstract 1.1 Introduction 1.2 Literature Review 1.3 Energy Efficiency Development Between 2000 and 2017 1.3.1 Improved Energy Efficiency 1.3.2 Driving Factors of Energy Efficiency 1.4 Distribution Dynamics of Energy Efficiency 1.5 Distribution Approach 1.6 Distribution of Energy Efficiency in the Steady State 1.7 Conclusions and Policy Implications Appendix A Economies and Sectors Appendix B References 2 Off-Balance Sheet Equity: The Engine for Energy Efficiency Capital Mobilization Abstract 2.1 Energy Efficiency Outlook 2.2 Business-as-Usual Financing 2.3 Energy Service Companies (ESCOs) 2.4 ESCO Markets in Asia 2.5 Market Enablers 2.6 Case Studies 2.7 Conclusion and Recommendations References 3 Review of Voluntary Agreements on Energy Efficiency: Promoting Energy Efficiency Financing in ASEAN Countries Abstract 3.1 Introduction 3.2 Voluntary Agreements Mechanism 3.2.1 Implementation Process 3.2.2 Advantages and Disadvantages of Voluntary Agreements 3.2.3 Company-Level Motivation to Participate in Voluntary Agreements 3.3 Voluntary Agreements and Energy Efficiency in ASEAN Countries 3.3.1 Energy Efficiency of ASEAN Countries 3.3.2 Voluntary Agreements and Other Market-Based Instruments to Improve Industrial Energy Efficiency of ASEAN Countries 3.3.3 Need for Voluntary Agreements to Overcome Challenges for Energy Efficiency Financing 3.4 Lessons from Successful Voluntary Agreements 3.4.1 Selected Voluntary Agreements 3.4.2 Comparison of Design Elements 3.4.3 Lessons for ASEAN Countries 3.5 Conclusion and Policy Implications References 4 R&D Investments in Energy Efficiency, Economic Impact, and Emissions Abatement Abstract 4.1 Introduction 4.2 R&D Investments in Energy Efficiency 4.2.1 Description of Energy R&D Investments 4.2.2 Energy Efficiency R&D Projects from the Supply Side 4.3 Literature Review 4.3.1 Financing Energy Projects 4.3.2 Induced Technological Change and Energy R&D Investment 4.4 Model 4.4.1 Utility 4.4.2 Production Sector 4.4.3 Modeling Energy Services and R&D Investments in Energy Efficiency 4.4.4 Emissions and Regulation 4.5 Policy Regimes 4.6 Results 4.6.1 R&D Investments 4.6.2 Economic Impacts 4.6.3 Energy Substitution, Carbon Emissions, and Climate Change 4.7 Conclusion and Recommendations References Part II Regional Studies 5 Nexus of Energy Efficiency and Energy Access in ASEAN: Trends and Financing Schemes Abstract 5.1 Introduction 5.1.1 Background of the Study 5.2 Literature Review 5.2.1 Nexus of Energy Access and Energy Efficiency in the Context of ASEAN 5.2.2 Growing Challenges of Future Energy Demand in ASEAN 5.3 Energy Efficiency in ASEAN 5.3.1 Trends in ASEAN 5.3.2 Energy Targets 5.3.3 Investment in Energy Efficiency 5.4 Financing Schemes for Energy Efficiency 5.4.1 Energy Efficiency and Conservation Institutional and Policy Framework at the ASEAN Level 5.4.2 Financing Schemes and Instruments for Energy Efficiency and Conservation Projects Used in ASEAN 5.4.3 Types of Energy Efficiency and Conservation Financing Required for ASEAN 5.4.4 Replicability of Innovative Financial Schemes 5.4.5 Barriers to Improving Energy Efficiency 5.5 Policy Recommendation and Conclusion References 6 The Role of Fiscal Incentives and Market-Based Incentives in Promoting Energy Efficiency in the Industrial Sector: Case Studies from Asia Abstract 6.1 Introduction 6.2 Literature Review 6.3 Review of Policies Improving Energy Efficiency 6.3.1 Policies Incentivizing Energy Efficiency 6.3.2 Market-Based Instruments 6.4 Energy Efficiency in Selected Asian Countries 6.4.1 People’s Republic of China 6.4.2 India 6.4.3 Indonesia 6.4.4 Japan 6.5 Conclusion and Policy Recommendations References 7 Promoting Energy Efficiency Through Foreign Direct Investments: Evidence from South Asian Countries Abstract 7.1 Introduction 7.2 Literature Review 7.3 Methodology and Data 7.3.1 Empirical Model 7.3.2 Panel Co-integration Test 7.3.3 Panel FMOLS and DOLS Estimation for Long Run 7.3.4 Panel Granger Causality Test 7.3.5 Data 7.4 Empirical Results 7.4.1 Panel Unit Root Test 7.4.2 Results of Co-integration 7.4.3 Panel Estimation Results 7.4.4 Panel Granger Causality Test 7.5 Conclusions and Policy Recommendations References 8 The Effect of Global Value Chain Participation and Position on Energy Efficiency in Belt and Road Countries Abstract 8.1 Introduction 8.2 Literature Review 8.2.1 Energy Efficiency Financing 8.2.2 Global Value Chains 8.2.3 Belt and Road Initiative 8.3 Methodology 8.3.1 Design 8.3.2 Sampling Technique and the Data 8.3.3 Variables Used 8.4 Empirical Results 8.4.1 Level of GVC Participation Before and After the BRI 8.4.2 Determining the Level of GVC Position After BRI 8.4.3 Impact of GVC Participation Before and After the BRI on Energy Efficiency Investment 8.5 Conclusions and Policy Recommendations Acknowledgements Conflict of Interest References Part III Country Case Studies 9 District Heating Business Models and Policy Solutions: Financing Utilization of Low-Grade Industrial Excess Heat in the People’s Republic of China Abstract 9.1 Introduction 9.2 Opportunities and Challenges in the PRC’s District Heating Market 9.2.1 The PRC’s Low-Grade Excess Heat Potential 9.2.2 Characteristics of District Heating Systems 9.2.3 Challenges in the District Heating Market 9.3 Business Models to Enhance Energy Efficiency of District Heating 9.3.1 Utility-Led with Third-Party Access Model 9.3.2 Heat Production Competition Model 9.3.3 ESCO-Integrated Business Model 9.4 Pricing Industrial Excess Heat 9.4.1 Impact of Industrial Excess Heat on District Heating Prices 9.5 Conclusions and Policy Recommendations References 10 Market-Led Energy Efficiency Transformation in India: A Deep Dive into the Perform, Achieve, Trade (PAT) Scheme Abstract 10.1 Background 10.2 Policy Landscape Governing Energy Efficiency Initiatives in India 10.3 Trends and Patterns of Energy Intensity in India: A Snapshot 10.4 Perform, Achieve, and Trade (PAT) Scheme: Brief Review of Scholarly Writings 10.5 Market-Led Energy Efficiency Transformation in India: The Case of the PAT Scheme 10.6 Financing Energy Efficiency Projects 10.6.1 Energy Efficiency Financial Platform 10.6.2 Framework for Energy Efficient Economic Development 10.6.3 Concessional Financing through IREDA 10.6.4 State Energy Conservation Funds 10.6.5 ESCO-Based Financing 10.7 Obstructions for Uptake of Energy Efficiency Interventions under the PAT Scheme 10.8 Conclusion References 11 Financing of Energy Efficiency in Public Goods: The Case of Street Lighting Systems in Indonesia Abstract 11.1 Introduction 11.2 Review of Global Instruments for Energy Efficiency 11.3 Policy Challenges in Indonesia 11.4 ESCO Case Study in Indonesia 11.5 Policy Recommendations 11.5.1 Auction Mechanism Improvements 11.5.2 Design a Super ESCO to Strengthen the Financial and Technical Capacity of Private ESCOs 11.6 Conclusion References 12 The Viability of Green Bonds as a Financing Mechanism for Energy-Efficient Green Buildings in ASEAN: Lessons from Malaysia and Singapore Abstract 12.1 Introduction 12.2 Outlook on Investment in Green Buildings in ASEAN 12.2.1 Incentives to Invest in Green Buildings 12.2.2 Reasons for Under-Investment in Green Buildings in ASEAN 12.3 Issuance of Green Bonds to Fund Energy-Efficient Buildings 12.3.1 Suitability of Green Bonds for Financing Energy Efficiency Projects 12.3.2 Landscape of Green Bonds in ASEAN 12.3.3 Green Bonds Issued to Fund Green Building Projects in ASEAN 12.3.4 Green Bonds as an Effective Instrument to Finance Green Buildings in Singapore and Malaysia 12.3.5 Challenges in the Widespread Adoption of Green Bonds to Finance Green Building Projects 12.4 Conclusion and Policy Recommendations 12.4.1 Enabling the Demand for Green Bonds Through Information Provision 12.4.2 Endorsement of Green Buildings Through Building Codes 12.4.3 Promoting Local Currency Bond Financing Through Domestic Institutional Investors Appendix References 13 Energy Efficiency Financing in Viet Nam: Current Status and Solutions Toward Market-Based Mechanism Adoption Abstract 13.1 Introduction 13.2 Current Status of Energy Efficiency in Viet Nam 13.2.1 Energy Conservation Potential in Different Sectors of the Economy 13.3 Financing for Energy Efficiency in Viet Nam 13.3.1 Energy Efficiency Investment Need 13.3.2 Financial Instruments to Unlock Energy Efficiency Potential in Viet Nam 13.4 Barriers in Accelerating Energy Efficiency Financing in Viet Nam 13.5 Conclusion and Policy Recommendations References