SINGAPORE (Reuters) - China, the world’s top greenhouse gas emitter, and five other East Asian nations, need a net additional investment of $80 billion per year to get on to a sustainable energy path, the World Bank said on Monday.
Such investment was crucial to curb an otherwise inevitable surge in planet-warming greenhouse gas emissions as regional economies grow to lift millions out of poverty and to meet the energy needs of rapid urbanization, the Bank said in a report.
The report, “Winds of change: East Asia’s sustainable energy future,” said it was possible for China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam to stabilize their greenhouse gas emissions by 2025 without compromising growth.
But the move would require major policy changes and investments in energy efficiency and a concerted switch to renewable sources of power.
Such a switch would also increase energy security while improving local environments.
Underscoring the region’s rapid rise, the bank said East Asia achieved a 10-fold increase in GDP over the past three decades, leading to a tripling of energy consumption, which was expected to double again in the next two decades.
“Countries need to act now to transform the energy sector toward much higher energy efficiency and widespread deployment of low-carbon technologies,” Jim Adams, World Bank Vice President for the East Asia & Pacific Region, said in a statement.
The report looked at two scenarios in which development continued according to current government policies and an alternative, low-carbon growth path.
Under the alternative sustainable energy development (SED) path, the report said renewable energy, including hydropower, wind, biomass, geothermal and solar, could meet a significant proportion of the region’s power needs by 2030.
And to achieve this sustainable energy path, net additional investment of $80 billion per year was needed over the next two decades, or an average of 0.8 percent of regional GDP. But mobilizing this financing was a major hurdle, the Bank said.
“Historically, financing has been a constraint in developing countries. The results have been under-investment in infrastructure and a bias toward energy choices with lower up-front capital costs,” it said.
It also estimated that approximately $25 billion per year would be required as concessional financing to cover the incremental costs and risks of energy efficiency and renewable energy.
Under the reference (REF) scenario, emissions of local air pollutants and CO2 would double over the next two decades. Coal would also continue to be the dominant fuel.
This would lead to growing energy security concerns triggered by increased risks of price volatility and exposure to disruptions in energy supplies, the report says.
“Throughout the next two decades, imports of oil and gas will grow across the region. Under the REF scenario, by 2030 China is expected to import 75 percent of its oil and 50 percent of its gas demand and become the largest oil importer in the world. Malaysia and Vietnam are projected to switch from being net energy exporters to net importers,” it says.
Under the SED scenario, CO2 emissions of the six countries could peak at 2025 and decline slightly thereafter.
Local environmental damage costs by 2030 would drop to $66 billion versus $127 billion under the REF scenario.
The study said the share of coal in power generation was projected to decline from 70 percent under the REF scenario to 36 percent under the sustainable development scenario by 2030. This assumed that carbon capture and storage would play a key role.
This would also require a 3-fold increase in the share of low-carbon technologies such as renewable energy and nuclear in power generation from today’s 17 percent.
“Scaling up renewable energy requires putting a price on carbon and providing financial incentives to deploy renewable energy technologies,” the report says.
Editing by Clarence Fernandez