Review of Voluntary Agreements on Energy Efficiency: Promoting Energy Efficiency Financing in ASEAN Countries

Abstract

The Association of Southeast Asian Nations (ASEAN) countries need to consider more innovative, market-oriented approaches to accelerate energy efficiency improvement. Well-designed voluntary agreements help companies understand the importance and benefits of energy efficiency and engage in activities to improve industrial energy efficiency. Hence, they can contribute to overcoming some challenges that ASEAN countries face in promoting energy efficiency financing schemes and raising the effectiveness of the schemes. This study reviews how successful voluntary agreements in energy efficiency in five countries (People’s Republic of China, Finland, Japan, the Netherlands, and the United Kingdom) achieved their targets in order to draw implications for designing future voluntary agreements in ASEAN countries. We find that three design elements: ambitious and realistic target setting, effectively enforceable incentives and penalties, and a strong monitoring and evaluation mechanism, are essential for well-functioning voluntary agreements. In addition to these elements, the unique conditions of each country must be considered, and transparency must be ensured to maximize the effectiveness of voluntary agreements.