ADB revises energy policy to cater to the rising demand

Written by Sanjay Jog | Mumbai | Updated: Feb 7 2009, 05:29am hrs
Countries like India and China in particular, where demand for energy is rising rapidly, will benefit the most as the Asian Development Bank (ADB) has proposed wide ranging changes in its energy policy of 1995. ADBs target for increase of its clean energy programme to $1 billion a year has been achieved last year and has established a platform for an increase of the target to $2 billion per year from 2013.

The policy implementation is guided by three pillars emphasised in the updated energy policypromoting energy efficiency and renewable energy, maximising access to energy for all and promoting energy sector reform, capacity building, and governance.

In developing Asia, the projected primary energy demand is expected to grow from 3,227 million tonne of oil equivalent (mtoe) in 2006 to 6,325 mtoe by 2030. Much of the increase in energy demand will be due to projected high economic and population growth.

Industrialisation, urbanisation, and the replacement of non-commercial biomass fuels by commercial fuels will also contribute to the increase in demand. As per the revised energy policy, ADB proposes to expand its operations in the industry sector by collaborating with industry associations, domestic banks, and specialised energy efficiency agencies and energy service companies. ADB will provide assistance in identifying energy efficiency options and preparing financial assistance and guarantees. To address commercial and residential energy needs, which account for 30% of total energy demand, ADB will assist developing member countries in framing legislation and efficiency standards.

Interestingly, Indias rural electrification programme will receive a boost as ADBs revised policy will focus specially on remote communities that are less likely to be connected to the electricity grid in the near future. The bank will develop small-scale demonstration projects which can be replicated in other locations, such as remote mountain villages or island communities. Such projects will be packaged into larger bankable-size projects, and if feasible, will be added to main energy sector projects as a special energy access component.

Besides, the gas-based projects of over 14,000 mw in India will also benefit due to the ADBs revised policy which will continue to support financing of natural gas-based power plants.