Bali, 21 August 2023: The Economic Research Institute for ASEAN and East Asia (ERIA) in collaboration with the Ministry of the Energy and Mineral Resources of the Republic of Indonesia and the ASEAN Centre for Energy (ACE) organized the 6th East Asia Energy Forum with the theme of ‘Decarbonization in the Final Energy Consumption Sector’ in Nusa Dua Bali, Indonesia on August 21, 2023.

According to the ERIA ‘East Asia Energy Outlook & Saving Potential 2023’ which was launched during the Forum, the total final energy consumption of the Low Carbon Energy transition and Carbon Neutral Scenario is 35% lower than the Business-as-Usual scenario in 2050.

This means that decarbonization in the region calls for innovative energy efficiency and conservation across all sectors. Policies and measures must be mobilized for information campaigns that should influence and respond to consumer preferences, improve demand flexibility, and promote energy-efficient equipment and solutions.

It is also essential to mobilize effective and efficient regulatory frameworks such as vehicle fuel efficiency regulations, building codes, minimum energy performance standards and energy reporting systems for large scale consumers as well as public and private financing. At the same time, decarbonization through electrification in the Asian countries needs to be undergirded by a largely decarbonized power generation mix. 

Key messages from today’s forum:

First, in terms of the future clean energy and energy carrier, hydrogen offers a strong option for replacing fossil fuels. Although hydrogen is currently only used as feedstock for industrial activities, it has great potential as one of the clean energy solutions, especially in power generation, heavy duty road transport, and heating fuel in the industrial sector.

In the industrial sector, measures on energy efficiency and conservation and electrification should be intensified. On top of that, the use of clean electricity, low carbon fuels, including the use of bioenergy, hydrogen, and hydrogen-based fuels, and the use of carbon capture technologies are key in attaining full and far-reaching decarbonization. In this regard, east Asian countries should benefit from the good practices in international initiatives such as the Industry Decarbonization Agenda launched by the G7 in 2019 focusing on regulation, standards, investment, procurements, and joint research related to industrial decarbonization.

In the transport sector, we must recognize a wide range of options for achieving carbon neutrality. Based on specific countries’ circumstances, the options should include the deployment of vehicle fleets and infrastructure that support zero emissions transport such as battery powered electric vehicles, hydrogen fuelled vehicles, and the development of sustainable carbon-neutral fuels such as bio and synthetic fuels. Finally, in the maritime and aviation industries, east Asian and ASEAN countries should seriously consider the implementation of Emission Trading Schemes as supplementary sets of initiatives to decarbonize international travel.

In the residential and commercial sectors, there are three essential findings:

First, we must recognize the huge potential role of energy service companies (ESCOs) in reducing global energy consumption and therefore greenhouse gas emissions.  Financing support structures and funding mechanisms are vital to the success of ESCOs and the development of initial ESCO projects.

Second, heat pumps should play a growing role as an effective energy efficiency and conservation measure in the region that contribute to decarbonization in commercial buildings.

Third, to promote decarbonization of buildings’ lifecycles, supporting measures and regulations should be enhanced in such areas as improved building efficiency, fuel switching, electrification, and provision of heating and cooling services using renewable energy sources as well as digitalization efforts to improve flexibility in building energy management.

Fourth, shifting from LPG to electricity and clean combustion fuels must be promoted in cooking and water heating in residential and commercial sectors in the region.

Finally, three findings on financing:

First, governments, the private sector, the banking sector, and other financial institutions should fund not only renewable and clean technologies but also transition technologies which have so far been underestimated.

Second, while considering the affordability of energy prices, equity, and distributional impacts, governments should prepare for the implementation of carbon markets and carbon pricing among the key measures in promoting decarbonization, driving cost-efficient emission reductions, enhancing the alignment of financial flows with the long-term goals of the Paris Agreement, and facilitating sustainable economic growth.

Third, developing East Asian countries should raise their voices to ensure a smooth, realistic, and step-by-step energy transition that considers energy security, affordability, reliability, and climate change altogether.