Energy Update: Energy Committee Quarterly Call Notes

Energy Update | February 15, 2017
Authors: Riley Smith
 
ENERGY COMMITTEE QUARTERLY CALL NOTES
 
 

On February 13, the Energy Committee held a planning call to discuss the 2017 Work Plan for the Committee.  The call featured a briefing by Ms. Katy Clarke, Energy Efficiency Officer in the Office of Electricity and Energy Efficiency at the U.S. State Department’s Bureau of Energy Resources (ENR).  Her full bio can be found here.  The briefing covered ENR's initiative to encourage the adoption of harmonized minimum energy performance standards (MEPS) for air conditioners in Southeast Asia as a way to improve energy efficiency in ASEAN countries.  A summary of the items discussed is provided below.

A new draft of the 2017 Energy Committee Work Plan can be accessed here.  Please contact Riley Smith at rsmith@usasean.org if you have any additional suggestions or questions.

  1. Opening Remarks
    1. This is the first Energy Committee call of 2017
    2. Would like to welcome Ms. Katy Clarke, Energy Efficiency Officer in the Office of Electricity and Energy Efficiency at the U.S. State Department’s Bureau of Energy Resources
      1. The Bureau of Energy Resources promotes power sector reform, electricity market integration, and clean energy finance in order to accelerate the global transition to cleaner sources of energy 
      2. Katy previously served as the Acting Environment, Science Technology and Health Officer focusing on renewable energy and energy efficiency at U.S. Embassy Berlin during the peak of the German Energy Transition from a high carbon energy supply to one that incorporates more renewable sources
      3. Katy’s full bio can be found here.
  2. Briefing by Ms. Katy Clarke
    1. Briefing on the USG’s initiative to encourage the adoption of harmonized Minimum Energy Performance Standards (MEPS) for appliances in ASEAN
      1. Katy is lead on energy efficiency and smart grids at Bureau of Energy Resources (ENR); her pillar at ENR is Energy Transformation
        1. Her group in ENR promotes market-based policy and governance reforms to encourage adoption of clean energy technology
      2. ENR created in 2011 with acknowledgement that energy is critical to security and economic development
      3. Approximately 80 people in ENR working on wide range of energy-related issues
      4. ENR supports a diversified approach to helping countries meet their energy goals
      5. Group is currently working on project to promote energy efficiency for air conditioning (AC) units in Southeast Asia
        1. AC uses up to 50% of peak electricity demand in ASEAN; this is expected to grow 10% a year over next five years as economies continue to grow and more people have access to AC
        2. ENR sees increased energy efficiency as a way to wean governments off market-distorting energy subsidies
      6. ENR is working through program called ASEAN SHINE (Standard Harmonization Initiative for Energy Efficiency)
        1. ASEAN SHINE was able to get all 10 Energy Ministers in ASEAN to sign onto energy efficiency standards
        2. Harmonization of these standards ensures that no country in the region becomes a dumping ground for inefficient AC
        3. Energy Ministers also agreed to set up a laboratory network with aim of easing regulatory burden on industry in 10 ASEAN countries and help open up trade
      7. Through ASEAN SHINE, developed a regional and a national roadmap
        1. ENR wants to make sure that these roadmaps actually get implemented
      8. Focusing on showing success in two countries first: Thailand and Vietnam
        1. Thailand is regional leader in adopting and enforcing energy efficiency standards
          1. Thailand has had energy efficiency standards in place since the mid-1990s
          2. Thailand estimates that its energy efficiency policies have helped them reduce demand-side energy use by an amount that is equivalent to the output of seven coal-fired power plants since implemented standards in 1990s
          3. Thailand has met its ASEAN SHINE goals
          4. Thailand also has a fairly strong laboratory system in place for testing an enforcement
        2. Vietnam is second-furthest along in meeting energy efficiency standards
          1. Vietnam has exponentially growing needs
          2. Vietnam has said it needs most help with laboratories
            1. Currently has three laboratories
            2. But do not have capacity to test AC equipment to ensure is up to energy efficiency standards
            3. This results in market access issues for companies looking to sell ACs in Vietnamese market
          3. If Vietnam successfully implements ASEAN SHINE standards, estimate they can reduce demand-side energy use by an amount that is equivalent to the output of two coal-fired power plants by 2030
        3. ENR is working to build capacity to test ACs in Thailand and Vietnam, and looking into possibility of using private labs in other ASEAN countries
        4. ENR is hoping to raise profile of successes in adoption and enforcement of energy efficiency standards in these two countries through two workshops
          1. First tentatively scheduled for May (exact dates yet to be confirmed) in Vietnam
          2. Second will be in Thailand later in the year
          3. Both workshops will include participation by subject matter experts; workshop in Thailand will possibly include study tour
      9. ENR’s partners for ASEAN SHINE are International Copper Association, UN Environment Programme (UNEP), and Lawrence Berkley National Lab
      10. ENR is always open to industry feedback because it is the private sector that will be implementing the new standards
  3. Q&A with Ms. Katy Clarke
    1. Question:
      1. Mentioned that not having a lab in Vietnam effectively creates an import barrier. Is there a prohibition on importing or selling AC below a certain standard in Vietnam?  How is that enforced?  Is there an MRA (Mutual Recognition Agreement) that Vietnam could accept certifications from other ASEAN countries or private sector certifications?
    2. Answer:
      1. Yes, there is.
      2. Some of the biggest barriers to market access in Southeast Asia are regulatory compliance issues.
      3. In Vietnam, enforcement apparently stronger than initially thought
        1. Inspectors will go into stores to conduct spot checks
        2. Have implemented a labeling program to show which ACs have passed laboratory inspections; labels show what efficiency ratings are
        3. Nevertheless, could always be better enforcement.
      4. Vietnam currently has three labs; one is brand new.
        1. There is a backlog of around 3-5 months to move through the testing process
      5. Do not have an MRA yet, but they are considering it
        1. ENR encourages adoption of MRA
    3. Question:
      1. Have mainly been talking about individual AC units.  Can you get economies of scale on efficiency using new technologies such as internet of things to increase efficiency in larger HVAC (heating, ventilation, and air conditioning) systems?
    4. Answer:
      1. We are trying to move the market in that direction
      2. In ASEAN, have split level air conditioning units that are not as efficient
      3. If we can set up these standards and regulatory framework, it can translate to larger scale systems
    5. Question:
      1. What other countries in ASEAN have shown an interest in implementing MEPS?
    6. Answer:
      1. All 10 energy ministers signed off on standards, so all should be moving towards implementing them
      2. Believe that they are, but depends on the capacity they have
      3. Myanmar is definitely interested because can introduce standards as they are building up their power sector and more and more people are able to afford air conditioning
      4. Laos is interested, but has not been able to make much progress thus far
      5. Cambodia is one country to watch for
      6. Indonesia currently working with DOE to raise their standards and set up a testing system
    7. Question:
      1. Suggest framing metrics to measure energy savings from increased energy efficiency in a way that does not discourage uses of other sources of energy, such as fossil fuels.  For many countries in the region, fossil fuels will remain a major source of energy, so we want to encourage them to cleaner plants or improve the efficiency of existing ones.
    8. Answer:
      1. ENR takes a holistic approach to helping countries meet energy needs
      2. Use fossil fuel comparisons is a way to visualize energy savings
      3. Energy doesn’t just apply to demand management, but also have to look at the generation- and transmission and distribution-side of things
      4. Demand is growing at such a high rate that ASEAN countries need to be able to utilize as many sources of energy as possible
      5. If the private sector has suggestions for better comparisons that could be used, the Bureau is open to finding new ways to frame and convey magnitude of energy savings
    9. Question:
      1. Power companies are fully embracing the digital economy.  Is department looking at digitization as a factor to help increase energy efficiency?
    10. Answer:
      1. Digitization is an important factor in Bureau’s energy efficiency work
      2. In consultations, experts brought to region by Bureau promote energy management systems and digital management of buildings
    11. Question:
      1. How do you finance it all?
    12. Answer:
      1. ENR has a program that supports ESCOs (Energy Services Companies) and energy performance contracting, especially for US companies abroad
        1. Have worked with Mexico, Canada, Israel, and Germany, but have not yet worked with any ASEAN countries
        2. Hope to expand program to ASEAN and talk about in a complementary way with work on energy efficiency for ACs
      2. ESCOs do energy performance contracting, which is an interesting model for getting more energy efficient and sustainable buildings
        1. The ESCO will come in and make upgrades to the building and then get paid back through the energy savings on a yearly basis until they are paid back in full
  4. Review of 2017 Work Plan for Energy Committee
    1. Themes and policy priorities
      1. Engage ASEAN Energy Ministers and regional energy sector stakeholders more effectively to provide input on policies and regulations shaping regional energy markets and cross border trade of energy goods and services
      2. Improvement of business environment of national energy markets
      3. Provide intelligence and opportunities for relationship building in priority ASEAN countries
      4. Prioritize three areas for increased private sector engagement at regional and country level:
        1. Promotion of increased energy efficiency as one way for countries to work towards achieving their energy policy goals
        2. Diversification of energy sources in countries' energy mixes, including the increased incorporation of renewable energy sources
        3. Human capital development and management in the countries’ energy sectors
    2. Engage ASEAN Energy Ministers and regional energy sector stakeholders more effectively to provide input on policies and regulations shaping regional energy markets and cross border trade of energy goods and services
      1. Advocate for increased private sector stakeholder engagement in policy formulation at the regional level via increased engagement with sub-sector networks, senior officials, and regional organizations (e.g. ASEAN Centre for Energy)
        1. Hold a U.S.-ASEAN Government-Industry Energy Dialogue alongside the annual REPP-SSN meeting
          1. Prioritize private sector stakeholder engagement in three areas:
            1. Promotion of increased energy efficiency as one way for ASEAN countries to work towards achieving their energy policy goals
              1. Optimization of existing energy assets
                1. Increasing efficiency and reducing emissions from coal-fired power plants
                2. Creation of regional Minimum Energy Performance Standards for appliances and other items
                3. Standardization and increased enforcement of building codes (e.g., use of reflective coatings on windows)
                4. Opportunities for demonstrations and site visits for relevant government officials
            2. Diversification of energy sources in ASEAN countries' energy mixes, including the increased incorporation of renewable energy sources
            3. Human capital development and management in ASEAN's energy sector
              1. Use pilot project for Human Capital Management in ASEAN’s Oil and Gas Sector report for increased engagement at regional level
              2. More details will be coming out about pilot project
        2. Continue participation in the Senior Officials Meeting on Energy (SOME)
        3. Engage all 10 of the AESAN Energy Ministers at the annual ASEAN Energy Ministerial (AMEM) as well as at a variety of bilateral engagements throughout the year
    3. Comments:
      1. Think there is a keen appetite for efforts to improve efficiency of existing energy assets
        1. Because of the price of different energy sources and the natural resources that they have in the region, coal will be an important part of ASEAN countries’ energy mixes for the next several decades
          1. ASEAN countries know they will have to continue using coal for a long time, and if the Council and US companies can help them do that in a cleaner and more economic way then they know they will be better off
          2. Council wants to help these countries use the energy that they are producing more efficiently
      2. On the bullet point about incorporation of more renewables into countries’ energy mixes, there is an emerging issue of the successful integration of renewables into existing grid infrastructure and the balance between synchronous generation.
        1. Countries want to ensure that energy security is maintained as build out renewables capacity
    4. Improvement of business environment of national energy markets
      1. Prioritize the same three areas mentioned previously for private sector engagement with country energy officials at the bi-lateral level
        1. Promotion of increased energy efficiency as one way for ASEAN countries to work towards achieving their energy policy goals
          1. In addition to the different ways to promote energy efficiency that were mentioned previously, at the bilateral level we could use Climate Change Working Group as a platform to help ASEAN countries find fiscally appropriate solutions to increase energy efficiency and meet unique climate commitments
        2. Diversification of energy sources in ASEAN countries' energy mixes, including the increased incorporation of renewable energy sources
        3. Human capital development and management in the country’s energy sector
          1. Use pilot project for Human Capital Management in ASEAN’s Oil and Gas Sector report to increase engagement at national level
      2. Encourage national governments to implement policies and regulations that are market-based and which promote:
        1. Greater adherence to the rule of law/contract sanctity and greater transparency in energy sector
        2. Reduction/elimination of fuel and electricity subsidies
        3. Diversification of energy sources
        4. Adoption and enforcement of energy efficiency targets
    5. Comments:
      1. Member companies that dialed in did not have any comments or questions about the proposed Climate Change Working Group (CCWG)
        1. The Council will continue to gauge member interest in the CCWG
      2. In terms of rule of law and contract sanctity issues, are stricter mining regulations and, in the case of some markets such as the Philippines and Indonesia, the clamping down on and closure of mines affecting any member company operations?
        1. Members who dialed into the call indicated they have not yet been affected
      3. Want to emphasize more clearly the efficiency benefits from high efficiency, low emission (HELE) coal-fired power plants (also called ultra-supercritical power plants)
        1. There are between 35-40 of these types of plants under construction or planned in Japan
        2. Because Southeast Asia will continue to use coal, is incumbent on this group to help policymakers in region realize that they need to be building the most modern plants, possibly with carbon, capture, utilization, and storage (CCUS) as well as emission abatement control technologies on the back-end
        3. Would recommend addition of bullet point about helping countries get capital necessary to build these modern plants
        4. There is not a particular cost advantage to building plants with these new technologies, but believe that case can be made that international lending institutions should be willing to support these additional costs rather that prohibit building of new coal fuel plants altogether
          1. Electricity demand will continue to increase, and coal will continue to be an important energy source in the region
        5. We want to encourage replacement/modernization of old coal fuel plants or building of new coal fuel plants that have the best available control technologies
    6. Provide intelligence and opportunities for relationship building in priority ASEAN countries
      1. The Committee will prepare country specific advocacy papers (1-2 pages) for use during individual bilateral engagement opportunities
        1. The papers will:
          1. Identify national Government Energy and Mining strategies/plans
          2. Include a high-level description of the decision-making landscape in the energy sector
          3. Identify who are the key decision makers and stakeholders in the government for energy policy
          4. Identify opportunities for increased investment or cooperation
          5. Identify barriers to market access in the energy and mining sectors
          6. Provide key recommendations or advocacy messages
        2. Priority countries for 2017 are:
          1. Indonesia, Thailand, the Philippines, Malaysia, Vietnam, and Myanmar
          2. Already have drafts for Thailand, the Philippines, and Vietnam; will be reviewing those soon
    7. Comments:
      1. Agree with priority countries; see Vietnam as one of two ASEAN countries where there is a lot of potential for modernizing old coal fired power plants
      2. Think that inclusion of advocacy papers in briefing book is probably the best way to utilize them
  5. Upcoming events
    1. USABC workshop alongside Regional Energy Policy and Planning Sub-Sector Network (REPP-SSN) in June
      1. Workshop likely focus on energy efficiency
      2. REPP-SSN is scheduled to take place June 5-7 in Metro Manila
    2. USABC Mission to the ASEAN Ministers on Energy Meeting (AMEM) will be in late September
      1. AMEM is scheduled to take place September 18-22 in Metro Manila