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ADB suggests energy subsidies for poor only

  • Published at 11:43 am April 9th, 2013

 

Asian policymakers need to replace general fuel subsidies with targeted subsidies for poor and accelerate cross-border interconnection of power and gas grids to achieve a pan-Asia energy market by 2030, says an Asian Development Bank report.

The report, released in Hong Kong Tuesday, finds Asia’s energy management “dangerously unsustainable” which could spell disaster for environment and further widen rich-poor gap in access to energy.    

Ensuring the poor are not left out will require policies to secure an adequate energy floor for low income earners, and the development of effective off-grid power supply options for remote communities, it points out.

Narrowing the energy divide between richer and poorer countries requires targeted international aid to build power infrastructure which benefits the less well off, ADB says in its Asian Development Outlook 2013 (ADO 2013) Tuesday.

It says subsidies artificially lower the cost of power and impose huge fiscal burdens and suggests eliminating wasteful subsidies worldwide would also lower CO2 emissions by 2.6 billion tons in 2035.

The Manila-based financial institution feels that Asian nations should step up carefully designed support for renewable energy technologies, including next generation wind, solar and biofuel.

“Asia could be consuming more than half the world’s energy supply by 2035, and without radical changes carbon dioxide emissions will double,” said ADB Chief Economist Changyong Rhee.

Asia’s Energy Challenge, the special theme chapter in the outlook, highlights the complex balancing act the region faces to deliver energy to all its citizens while scaling back its reliance addiction on to fossil fuels.

It says if by 2035 Asia merely expands energy access without fundamentally changing the way it consumes, the report predicts the region’s oil consumption will double, natural gas consumption will triple, and coal consumption will rise a whopping 81%, with costly and devastating environmental impacts.

With only 9%  of proven global oil reserves, the region is currently on track to almost triple oil imports by 2035, it forecasts.

Since countries cannot meet all their power requirements on their own, Asia must accelerate cross-border interconnection of power and gas grids to improve efficiency, cut costs, and take advantage of surplus power, the report says.