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Analyzing Energy Transition in South Asia: Issues and Challenges
Abstract
Apart from being a leading energy consumer, South Asia has the most significant carbon emission. Significantly all South Asian countries have ratified the Paris Agreement. Consequently, they must craft a robust transition policy to meet their commitment. Though the local context essentially defines the transition strategy, the global processes have a vital role in shaping and making. The renewable energy industry is globalizing, incentivizing big companies to invest in renewables while integrating the supply chain across the markets. Sustaining the strength of financial power and control of technology, these companies are emerging as essential players in the energy transition in South Asia. This growing influence of external players in shaping the transition strategy raises some vital questions about the political economy. The present paper will focus on the institutional and regulatory regime in the context of the interface of global and local processes influencing the transition processes.
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The increased demand for energy in agriculture raised the cost of production and hence caused greenhouse gas emissions. Therefore, improving energy efficiency is essential to decrease energy demand and, consequently, reduce costs and reduce greenhouse gas emissions. The objective of this study was to compute energy efficiency and assess the influence of technological innovation on technically computed energy efficiency of the agricultural sector in South Asia. A two-stage analysis was carried out using panel data over the period 2002–2019. First, energy efficiency was computed employing the stochastic frontier analysis (SFA) approach. Second, the influence of technological innovation on technically derived energy efficiency was examined employing a system generalized method of moments (GMM) approach. Findings of the SFA approach show that the average energy efficiency of the South Asian agricultural sector was 84%, ranging from 79 to 86%, showing that there is still 16% room for improvements in energy efficiency of the agriculture in South Asia. In addition, this study found that India has relatively high energy efficiency (86%) compared to other countries in South Asia. The study also found that energy efficiency shows a slight upward trend in the agricultural sector in South Asia. The findings of the system GMM revealed that technological innovation is playing a significant role in improving energy efficiency of the agricultural sector in South Asia. Based on our findings, South Asia can reduce energy inefficiency by spending more on research and development (R&D) in the agricultural sector.
Energy is a crucial component of the ASEAN Economic Community (AEC) vision, which strives for an integrated, competitive and resilient region, opening investment opportunities. All the developing economies within the Asia-Pacific region are expected to account for approximately two-thirds of global energy demand growth by 2040 (International Energy Agency, IEA). The countries in this region are energy dependent and rely substantially on energy imports, primarily on oil and natural gas, mainly conventional energy. A substantial production and consumption of energy in ASEAN is based on conventional energy sources. Moreover, renewable energy consumption in the region has been declining over the years. This paper attempts to explore two main objectives. Firstly, the paper examines the renewable energy potential of the region and the level of energy security related to renewable energy. This objective is achieved by computing energy security index for renewable energy, deploying 4A energy framework and Principal Component Analysis (PCA method). Secondly, the paper attempts to examine the significance of legal and regulatory framework in the energy cooperation of renewable energy. Energy cooperation in the arena of renewable energy would entail a well-structured legal framework that formulates various energy-related Acts, tariffs, custom duties on raw material, technology patents, etc. The paper proposes certain crucial policy recommendations for achieving energy security related to renewable energy, proposing a legal regulatory framework for energy cooperation to strengthen deployment of renewable energy.
Phasing out fossil fuel dependency to adopt renewable energy technologies is pertinent for both ensuring energy security and for safeguarding the well-being of the environment. However, financial constraints often bottleneck the prospects of the developing countries undergoing renewable energy transition to ease the environmental hardships. Against this background, this study makes a novel attempt to evaluate the impacts of FDI inflows on the prospects of undergoing renewable energy transition and attaining environmental sustainability in Bangladesh between 1972 and 2015. Using the autoregressive distributed lags with structural break approach to estimate the short-and long-run elasticities, it is found that FDI inflows enhance the share of renewable electricity output in the total electricity output levels of the country. Besides, FDI inflows are also evidenced to directly hamper environmental quality by boosting the ecological footprints figures. The key findings from the econometric analysis reveal that FDI promotes renewable electricity generation but transforms the nation into a pollution haven. However, although FDI inflows cannot directly reduce the ecological footprints, a joint ecological footprint mitigation impact of FDI inflow and renewable electricity generation in Bangladesh is evidenced. Besides, the findings also verify the authenticity of the Environmental Kuznets Curve hypothesis in Bangladesh's context. This, economic growth can be referred to as being both the cause and the panacea to the environmental problems faced in Bangladesh. Therefore, these results, in a nutshell, calls for effective measures to be undertaken for attracting the relatively cleaner FDI in Bangladesh whereby the objectives of renewable energy transition and environmental sustainability can be ensured in tandem. In line with these findings, some appropriate financial globalization policies are recommended.
South Asia is the leading consumer of energy, out of which hydrocarbon accounts for a predominant share. However, it is neither richly endowed with hydrocarbons nor has been able to harness its potential comprehensively. Consequently, with economies gaining pace, it has become an energy-deficit region, meeting most of its demand from imports. There is no uniform path to transition because every country has its ecosystem, and there is no one size that fits all. Each country has to invent its path reflecting on the convergence of multiple factors drawing from the local and global milieu. The transition path in South Asia has to be conceptualised as part of a global transition project because failing of any country to meet its target has obvious implications for global targets. In the case of South Asia, which is one of the big emitters of carbon, the global stakes are relatively high.
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Energy security and environmental sustainability have become an integral policy agenda worldwide whereby the global economic growth policies are being restructured to ensure the reliability of energy supply and safeguard environmental well-being as well. However, technological inefficiency is one of the major hindrances in attaining these over-arching goals. Hence, this paper probed into the non-linear impacts of ICT trade on the prospects of undergoing renewable energy transition, improving energy use efficiencies, enhancing access to cleaner cooking fuels, and mitigating carbon dioxide emissions across selected South Asian economies: Bangladesh, India, Pakistan, Sri Lanka, Nepal, and Maldives. The results from the econometric analyses reveal that ICT trade directly increases renewable energy consumption, enhances renewable energy shares, reduces intensity of energy use, facilitates adoption of cleaner cooking fuels, and reduces carbon-dioxide emissions. Moreover, ICT trade also indirectly mitigates carbon-dioxide emissions through boosting renewable energy consumption levels, improving energy efficiencies, and enhancing cleaner cooking fuel access. Hence, these results, in a nutshell, portray the significance of reducing the barriers to ICT trade with respect to ensuring energy security and environmental sustainability across South Asia. Therefore, it is ideal for the government to gradually lessen the trade barriers to boost the volumes of cross-border flows of green ICT commodities. Besides, it is also recommended to attract foreign direct investments for the potential development of the respective ICT sectors of the South Asian economies.
The Global Climate Risk Index 2020 analyses to what extent countries and regions have been affected by impacts of weather-related loss events (storms, floods, heatwaves etc.). The most recent data available— for 2018 and from 1999 to 2018 —were taken into account.
The countries and territories affected most in 2018 were Japan, the Philippines as well as
Germany. For the period from 1999 to 2018 Puerto Rico, Myanmar and Haiti rank highest.
This year’s 15th edition of the Climate Risk Index clearly shows: Signs of escalating climate change can no longer be ignored – on any continent or in any region. Impacts from extreme weather events hit the poorest countries hardest as these are particularly vulnerable to the damaging effects of a hazard and have a lower coping capacity and may need more time to rebuild and recover. The Climate Risk Index may serve
as a red flag for already existing vulnerabilities that may further increase as extreme events will become more frequent or more severe due to climate change. The heatwaves in Europe, North America and Japan also confirm: High-income countries are feeling climate impacts more clearly than ever before. Effective climate change mitigation is therefore in the self-interest of all countries worldwide.
South Asia, a developing region housing almost a quarter of the world population, faces stringent energy and environmental problems including acute vulnerability to climate change. To improve their socioeconomics and achieve the United Nations Sustainable Development Goals (SDGs), it is imperative for South Asian countries to address their energy and environmental challenges. A thorough review of the national and regional achievements and challenges concerning SDGs is important for finding fast and sustainable solutions. This article aims to provide a comprehensive review of the energy and environmental outlook for the region taking into account the faced challenges and their potential solutions. It also aims to examine the prospects of the relevant SDGs taking into account the accomplishments and the faced challenges. It maps the progress South Asian countries have made towards the concerned seven SDGs - SDG6, SDG7, SDG11, SDG12, SDG13, SDG14, and SDG15-also identifying the challenges ahead. The article undertakes a thorough review of the literature including national and regional reports on energy and environmental scenarios and the SDGs. It finds that although South Asian countries have made considerable progress in power generation capacity and rural electrification, they face serious challenges with regard to SDG6, SDG7, and SDG11. South Asian countries need to benefit from their vast renewable energy potential and align their energy sectors with the trends of the unfolding sustainable energy transition. To achieve the targeted SDGs, concentrated efforts are required especially in terms of governmental support, budget allocation, and robust policy formulation and implementation.
The South Asia region is lagging behind many regions in regional electricity trading despite the huge potential for trade. Using an electricity system optimization model, this study quantifies the benefits of unrestricted cross-border electricity trade in South Asia during the 2015–2040 period. The study finds that the unrestricted electricity trade provision would save US9 billion per year) of electricity supply costs over the period (~ $100 billion when discounted at 5% rate). The ratio of benefits, in the form of reduction of fuel and other operating costs, to increased costs of generation and interconnection investment would be more than 5:1. The provision would reduce regional power sector carbon dioxide emissions by 8%, mainly through substitution of coal-based generation with hydro-based generation, although regional emissions would be well above current levels absent other policy interventions because of rapidly growing demand. To achieve these benefits, the region would need to add 95 GW of new cross-border transmission interconnection capacity; but at the same time it would avoid 36 GW of additional interconnection capacity between the regional grids within India.
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