September 2014: A modeling study published by the Asian Development Bank (ADB) identifies several positive macroeconomic impacts from improving energy efficiency. The study focuses on seven Asian countries from 2010 to 2050, and finds that energy efficiency policies would have a positive impact on private consumption, government expenditure, investment, and result in an increase in intraregional trade. The study warns that, in the absence of measures to improve efficiency, emissions would increase significantly in most countries.

With a model covering China, India, Indonesia, Japan, the Republic of Korea, Malaysia and Thailand, the study, titled ‘Energy Efficiency Improvements in Asia: Macroeconomic Impacts,’ develops six scenarios through 2050 to reflect different economic growth and energy pathways for the region. The study highlights a number of positive impacts from enhanced energy efficiency, including a significant decrease in energy intensity coupled with high economic growth. It also finds that energy efficiency policies would reduce trade outside Asia, and shift employment from energy and mining to manufacturing and services.

In terms of country-specific implications, the paper recommends that China implement policies to reduce primary energy demand and emissions while minimizing associated negative impacts on the economy. It suggests that policies in India and Indonesia should similarly focus on reducing primary energy demand and emissions, but emphasize promoting economic growth. For Japan and Thailand, the study recommends improving energy productivity, and for the Republic of Korea and Malaysia, it suggests focusing on best-practice technologies for reducing primary energy requirements and greenhouse gas (GHG) emissions.

The study also examines policy trade-offs among key economic, energy and environmental attributes, and finds that these vary across the seven countries. In India, Japan and the Republic of Korea, reduced energy demand and GHG emissions would accompany higher gross domestic product (GDP) growth. In China, Indonesia and Thailand, some scenarios result in positive and others in negative GDP impacts, while Malaysia would encounter negative impacts under all scenarios. Consequently, the study recommends a careful selection of appropriate energy efficiency targets in order for the countries to achieve a set policy objectives. [ADB Publication Webpage] [Publication: Energy Efficiency Improvements in Asia: Macroeconomic Impacts]