Ambitious policies, innovative business models and financial mechanisms combined with existing cost-effective technologies could improve energy intensity globally at a rate of 3% per year (IEA, 2019). However, most recent data available indicates that the primary energy intensity level in Lao PDR regressed by 72.3% between 2010 and 2015 due to, among others, limited information on energy consumption patterns, lack of public or private sector capacity for energy efficiency planning and implementation, limited regulatory framework, and low level of understanding of the benefits of energy efficiency. 

The Lao Government is implementing its National Green Growth Strategy (NGGS) approved in January 2019 by the PM, and the industrial sector was selected as a priority because of its importance for local economic & social development and environmental sustainability. Specifically, “the design and implementation of financial mechanisms that provide industrial entrepreneurs access to efficient, environmentally friendly, energy and raw material-saving modern technologies” is one of the focus areas. 

Barriers for energy efficiency in Lao PDR are i.) Lack of information on electricity consumption patterns by rate class or end use ii.) Lack of public or private sector capacity for planning and implementation iii.) Limited regulatory framework, including strategy and targets, and lack of incentives iv.) Limited technical expertise or awareness by end-use customers as regards energy efficiency technologies and practice v.) Low level of understanding of the benefits of energy efficiency (Vongchanch, 2015). The Lao PDR National Green Growth Strategy also highlights the difficulty to access the funding sources for importing modern techniques and technology as one major cause for the reported low efficiency in the industrial sector. Finally, the relatively low cost of electricity in Lao compared to other ASEAN countries, due to abundant hydropower resources, is often perceived as a disincentive for the implementation of energy efficiency measures. 

The project objective is to catalyze investments in the deployment of energy efficiency measures in large, medium and small industrial enterprises, and is to be expanded to the buildings sector. The project endeavors to remove market barriers for the deployment of finance into energy efficiency through the identification of bankable project opportunities, the preparation of associated technical and financial studies and information memorandum, and the organization of an investors’ forum. This project is aligned with IO2. Increased green growth investment flows which enable partner governments to implement green growth policies. 

Impact: GHG emission reduction. 

Outcome: N/A 

Project Outputs completed in 2019:

i. Green Growth Policies:N/A

Policy Assignment:  

• Situation Analysis report builds upon the approved PIN with the purpose of shortlisting industries with high energy intensity, reviewing the relevant regulatory framework as well as existing energy efficiency initiatives, consulting with local stakeholders, identifying sources of financing and barriers to implementation, and providing recommendations on the next steps.

ii. Green Investments:N/A

iii. Capacity Building and Knowledge Products: N/A 

Project Manager: Christophe Assicot 

Annaka Peterson, Da Yeon Choi, Jason Lee