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Freezing in the tropics: Asean’s air-con conundrum Sponsored by:
2 Freezing in the tropics: Asean’s air-con conundrum “Freezing in the tropics: Asean’s air-con conundrum” is a whitepaper written and produced by Eco-Business Research, the research arm of Eco-Business. The report has been sponsored by Kigali Cooling Efficiency Program. Eco-Business is the leading media and business intelligence company serving Asia Pacific’s sustainable development community. Our platforms include the award-winning Eco-Business. com site, custom publications, research and high-impact bespoke events catered to deepen discussions on sustainability. Credits: Author: Tim Hill Editors: Robin Hicks and Jessica Cheam Contributing writer: Angela Jelita Designer: Joe Poulton Reviewers: Gabby Dreyfus, Helen Picot, Dan Hamza-Goodacre ©2018 Eco-Business. All rights reserved. Contains Eco-Business’ Confidential and Proprietary information and may not be disclosed or reproduced without the prior written consent of Eco-Business. For more information about our products and services, please contact us at: Eco-Business Pte Ltd, The SDG Co., 2 Science Park Drive, #02-06, Ascent, Singapore 118222. +65 6250 2488 partners@eco-business.com http://www.eco-business.com
Freezing in the tropics: Asean’s air-con conundrum 3
Table of Contents
Executive summary 04
A looming crisis - 06
The growth in pollution from the boom in cooling
Asean perspectives 12
Case study: 18
The challenges of driving energy efficiency in Indonesia
Outlook for Asean 22
Appendix 1: Detailed survey results 24
Appendix 2: Bibliography 28
DISCLAIMER: While every effort has been taken to verify the accuracy of this
information, Eco-Business cannot accept any responsibility or liability for reliance
by any person on this report or any of the information, opinions or conclusions set
out in this report. The information contained herein is of a general nature and is
not intended to address the circumstances of any particular individual or entity.4 Freezing in the tropics: Asean’s air-con conundrum
Executive summary
The rapid rise in Asean’s electricity demand in recent years has led to a surge in CO2
emissions and pollutants that threaten to create an environmental crisis for a region
already vulnerable to the impact of extreme weather and poor air quality.
Primary energy demand has increased by 70% in the region, and regionally to manage the demand for electricity, reduce
collectively known as the Association of Southeast Asian Nations emissions and pollutants, and move away from the reliance on
(Asean), from 2000 to 2016 with a further rise of 70% predicted coal-fired power stations
up to 2040. Coal accounts for the largest share of the growth.
The context of Asean’s electricity demand and supply as well as the
Electricity demand is expected to more than double to 2,000 differing economic situations of the member states should also be
tera-watt hours (TWH) up to 2040. Most of this growth comes considered when formulating a strategy to avert the cooling crisis.
from residential and commercial buildings, mostly for cooling,
such that by 2040, air-conditioning could account for up to 40% Economic growth has risen along with fossil fuel based
of Asean’s overall electricity demand. electricity consumption
This crisis can be avoided if the region adopts more efficient Asean’s economic success story over the first 50 years of its existence
technologies and supports a culture change in cooling consumption. can be tracked alongside its thirst for energy. Energy demand has
expanded by two and a half times from 1990 to 2013, and its rate of
A survey of 424 respondents from Indonesia, Malaysia, Singapore, growth is one of the fastest in the world.
Thailand, The Philippines and Vietnam, conducted in November
and December of 2017, highlighted the problems of over- Electricity consumption to power home appliances such as
consumption and lack of awareness of the cooling challenge but air-conditioning (AC) in the tropical Southeast Asian region has
also identified several opportunities. increased at a rate of around 7.5% annually from 155.3 TWh in 1990
to 821.1 TWh in 2013. Over 80% of this electricity came from fossil
They are: fuels, with coal-powered stations being particularly dominant in
the region. Hence overall carbon dioxide emissions for the region
• Manufacturers and suppliers need to focus on producing more have grown at similar rates. Cooling consumes an increasing
energy-efficient AC systems and better educating their customers amount of this growth.
• Poor energy management systems in public buildings need to be Energy efficient appliances can substantially reduce
rectified by commercial operators and systems designers to avoid power demand
excessive cooling
The upward trajectory of electricity consumption and CO2 emissions
• Public awareness campaigns should be considered to help can be significantly reduced through the adoption of better
consumers better understand the energy labelling systems as well technologies. If Asean countries switch to energy efficient products
as the financial and environmental benefits of more efficient AC and lighting, they can reduce their consumption of electricity by
systems and to build a culture of energy sustainability 100 TWH at a saving of US$12 billion annually. This is the equivalent
to the annual production of 50 power plants of 500 MW capacity,
• Stricter government legislation throughout the region should be meaning that 50 power plants would not have to be commissioned.
used to ensure the uptake of more efficient AC products and for
better design and management practices in commercial buildings When energy consumption for ACs in Asean countries is forecast
using the best available technology for air-conditioning (BAT
• A wider array of financial options could be used to ensure scenario), huge savings can be achieved.
consumers install the most efficient AC systems for home use
If Malaysia and Singapore adopted the BAT scenario, for example,
• Consumers, businesses and governments need to work together there would be an actual reduction in overall energy consumptionFreezing in the tropics: Asean’s air-con conundrum 5
for ACs by 2030 for these two countries, compared with 2015 levels. to agree that air-conditioning was a status symbol with respondents
This would be despite growth in populations and affluence. from Singapore (where the installed rate was estimated at between
76-100%) much less likely to see it as anything other than a necessity.
Conversely, if there is no change to current consumption habits
(the business as usual, or BAU scenario) then energy consumption Government initiatives needed to manage the cooling crisis
in all Asean countries would increase by a compound annual
growth rate (CAGR) of 5.7% by 2030. Despite concerns about the excessive cooling of public buildings,
77% of Singapore respondents agreed or strongly agreed that
Excessive cooling in public spaces gives the wrong their government was actively managing power demand through
message to consumers initiatives such as promoting energy efficiency standards in
air-conditioning. At the other end of the scale, only 30% of
Consumers in the region seem to have a basic awareness that respondents from Vietnam agreed or strongly agreed that
more efficient technologies can result in a lower electricity bill. the same was happening in their country. The most populous
Yet they are not aware of quite how important this is to ensure country in the region, Indonesia, scored 38% for this question,
that the region achieves its targets for CO2 emission reductions, as indicating the scope for improvement across the region through
reflected in Nationally Determined Contributions (NDCs) to the Paris government intervention.
agreement. This lack of awareness is not helped by the experience
of the average city dweller in the region, who regularly encounters There was no shortage of suggestions from survey respondents
excessive cooling in buildings which sends the wrong message that as to how the region could better manage its cooling challenge.
controlling efficiency is not a major priority. These ranged from more effective use of passive cooling methods
or refrigerant-free alternatives to air-conditioning, to innovative
Survey respondents in Singapore seemed the most vocal about finance and recycling programmes to promote the uptake of more
the excessive cooling of public spaces with 68% of respondents energy efficient models. Respondents were also unanimous in
indicating that they often encounter settings that are too cold. This wanting to see their countries move towards clean energy adoption.
was also a common response across the region, with significant
numbers indicating that they often encounter excessive cooling. Governments around the region have agreed on targets for AC
The situation seemed to be better managed in Indonesia, where efficiency and are at different stages of local implementation.
only 38% of respondents stated that they often encountered AC Given the radical differences in the size, state of economic
settings in public spaces that were too cold. development, and political situations of the countries that
make up the Asean region, the challenges for governments
Changing consumer habits vary considerably. However, in all cases, there are some clear
areas where governments can be focusing efforts and directing
The behavioural habits of survey respondents on air-conditioning change more effectively to ensure more efficient cooling.
reflect the relative affluence of the different countries in the region
and the installation rate of air-conditioning units in households. This paper aims to highlight both the economic and
Respondents from Vietnam, The Philippines and Indonesia were environmental benefits for driving the region towards more
more likely to report the use of other cooling systems apart from efficient use of ACs as well as highlighting some of the most
air-conditioning being used in public buildings, whereas respondents obvious areas that governments, businesses and consumers can
from the more developed economies of Malaysia and Singapore were direct their immediate attention. Without significant efforts to
less likely to notice more environmentally-friendly alternatives. make cooling efficient and clean in Asean, the region will miss
out on economic and social gains while over-polluting the local
Similarly, respondents from Vietnam and Indonesia were more likely and global environment.6 Freezing in the tropics: Asean’s air-con conundrum
A looming crisis -
the growth in pollution from the
boom in cooling
50 years of growth in Asean countries As the graph below shows, electricity
consumption tends to rise with affluence
Since Asean was formed in 1967, all of levels. Electricity consumption to power
358 new coal-fired its member states have enjoyed over home appliances has increased at a rate
power plants have 50 years of economic growth1. Gross of around 7.5% annually from 155.3 TWh in
Domestic Product (GDP) per capita has 1990 to 821.1 TWh in 20133.
been planned in Asean grown over 30 times from US$122 in 1967
to US$4,021 in 2016. New member states About 80% of Asean’s electricity supply
countries between 2011 have joined the five original members. has been generated from fossil fuels
and 2030 and coal is Rising birth rates and populations have over the last decade. Coal-fired plants
more than tripled the number of Asean are still dominant in many countries
projected to become residents from 185 million to 634 million with Indonesia and Vietnam operating
in the same timeframe. Poverty has the largest number. According to the
the largest energy declined from 47% in 1990 to 15% in 2016. Norwegian Institute of International
source for the region Literacy, life expectancy and urbanisation Affairs (NUPI)4, 358 new coal-fired power
rates have all gone up in tandem with plants have been planned in Asean
from 2040 onwards. rising incomes. countries between 2011 and 2030, and
coal is projected to become the largest
But the surge of rising, more affluent energy source for the region from 2040
populations has taken a toll on the onwards.
environment. Tree cover has decreased
throughout the region with Indonesia’s With such a large reliance on fossil fuels,
Sumatra alone losing nearly ¼ of its Asean’s carbon emissions have risen over
forests between 2000 and 20102. Rural time along with the growth of affluence
villages have been replaced by suburban levels and the demand for electricity. The
apartment blocks and new towns. This has graph below shows that CO2 per capita
led to increasing demand for grid-based emissions for the core Asean countries
electricity produced by power plants. excluding Singapore for 2000 to 2014 have
Evolution of Asean GDP and GDP per capita at current market prices
4,500 3.0
4,000 1967, Asean 5, By 1999, Brunei, Cambodia,
Indonesia, Malaysia, Laos, Myanmar and Vietnam 2.5
3,500 Singapore, Thailand had also joined
Asean GDP US$ (tn)
GDP per capita US$
3,000 2.0
2,500
1.5
2,000
1,500 1.0
1,000
0.5
500
0 0
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2016
Year
Asean GDP US$ (tn)
GDP per capita US$ Source: http://www.aseanstats.org/infographics/asean-50/
1
http://www.aseanstats.org/infographics/asean-50/ 2 Rhett A. Butler, mongabay.com 3 http://cornerstonemag.net/coals-role-in-asean-energy/
4
Indra Overland et al. (2017) Impact of Climate Change on ASEAN International Affairs: Risk and Opportunity Multiplier, Norwegian Institute of
International Affairs and Myanmar Institute of International and Strategic StudiesFreezing in the tropics: Asean’s air-con conundrum 7
Electricity consumption per capita and GDP per capita
(2016)
53,000
10,000 9,502
8,845
9,000
8,000
7,000
GDP per capita US$
5,908
6,000
5,000 4,569
4,000 3,570
3,000 2,186 2,540
2,000 1,546 1,439
699 812
1,000
0
The Philippines Indonesia Vietnam Thailand Malaysia Singapore
Year
Electricity consumption per capita (kwh) 2014
GDP per capita (US$) 2016 Source: World Bank. Charting normalised.
risen at a compound annual growth rate The benefits of energy efficiency
(CAGR) of 3.2%. Even if population levels and green AC
remain unchanged, carbon emissions
will continue to rise with energy demand Fortunately, technological innovations
assuming no technology changes in the and tighter regulation of standards are
appliances used. reducing the electricity consumption
and carbon emissions of household
The air pollution caused by coal appliances sold in the region.
combustion was estimated to cause
nearly 20,000 unnecessary deaths per Studies have found that if Asean countries
year in the region in 2011, a number that switch to energy efficient products
is expected to rise to nearly 70,000 by and lighting, they can reduce their
20305. consumption of electricity by 100 TWH,
which equates to savings of US$12 billion
The risks of ‘business as usual’ annually. This is equivalent to the annual
production of 50 power plants of 500 MW
Asean’s CO2 emissions is forecasted to capacity, meaning that 50 power plants
continue growing over the next decade that would not have to be commissioned.
with increasing population sizes,
affluence levels, urbanisation, building This would also result in a saving of 74
construction and life expectancy. If million tonnes of CO2 emissions annually
Asean member states continue to – the equivalent of taking 40 million
develop under a ‘business as usual passenger cars off the roads6.
scenario’, this is going to result in
accelerating demand for electricity and Air-conditioning (AC) contributes to the
even higher rates of carbon emissions. bulk of Asean’s electricity bill. In city
Coal plants by country (MW) CO2 emissions
(for units of 30MW and more) (metric tons per capita)
80,000 20
70,000 18
16
60,000
14
50,000 12
40,000 10
30,000 8
6
20,000
4
10,000 2
0 0
PHL IDN VNM THA MYS 2000 2007 2014
Announced, pre-permit and permitted Indonesia Thailand Year
Construction Malaysia Vietnam
Operating Source: Endcoal.org The Philippines Source: World Bank.
5
Burden of Disease from Rising Coal-Fired Power Plant Emissions in Southeast Asia - Shannon N. Koplitz, Daniel J. Jacob, Melissa P. Sulprizio,
Lauri Myllyvirta, and Colleen Reid
6
http://united4efficiency.org/countries/asean/8 Freezing in the tropics: Asean’s air-con conundrum
Gross domestic electricity consumption forecast
(TWh)
1,400
1,200
1,000
800
600
400
200
0
2017 2020 2023 2026
Indonesia Thailand Year
Malaysia Vietnam
The Philippines Singapore Source: BMI.
areas with hot climates, air-conditioning considerable cuts in percentage terms to
is estimated to take up as much as 60% their current consumption.
of the overall electricity load. The majority
of Asean’s citizens are city dwellers; The energy performance of ACs is
highly-dense buildings and the lack of measured by the Energy Efficiency Ratio
vegetation in cities create a further heat (EER), which is the ratio of the total
island effect, placing further demand on cooling capacity to the effective power
cooling systems. input to the device. The larger the EER
value, the more efficient the equipment.
A study done in Singapore for example,
put the share of electricity consumed by The EER score for different capacity AC
household air-conditioning at 37%7. And in unit models varies significantly among
many parts of the region, the problem is Asean countries because of differences in
compounded by the use of less efficient the brands and models available as well
AC units. The most advanced ACs are as the regulatory and labelling systems in
up to 30% more efficient than average place in each country.
products on the market8. Hence, tackling
Asean’s cooling challenge might be most As shown in the graph below, Thailand
effectively addressed by technology has the largest numbers and hence
upgrades. However, there are multiple the most efficient market for all AC
parameters and stakeholders to consider capacity categories among the surveyed
in implementing a region-wide upgrade. economies. (Singapore products have
a higher EER score mostly due to a
The graph below considers the energy more stringent regulatory environment,
gains that could be achieved through a but were not included in this survey).
transition to the best available technology The Philippines has the least efficient
in 2030. Thailand and Indonesia would product market, due to the large market
achieve the greatest energy savings in share of less efficient window units
this scenario, although Vietnam and and the lack of more efficient inverter
The Philippines also stand to make product models.
If Asean countries switch to energy efficient products and lighting, they can
reduce their consumption of electricity by 100 TWH at a saving of US$12 billion
annually. This is the equivalent to the annual production of 50 power plants. This
would also result in a saving of 74 million tonnes of CO2 emissions annually – the
equivalent of taking 40 million passenger cars off the roads.
7
http://www.nea.gov.sg/corporate-functions/newsroom/news-releases/stricter-energy-performance-standards-for-air-conditioners-from-september-2016
8
http://www.aseanshine.org/news-activities/d/switching-markets-to-energy-efficient-and-climate-friendly-air-conditioners-brings-significant-
environmental-and-economic-benefits-and-savings-for-countries-businesses-and-consumersFreezing in the tropics: Asean’s air-con conundrum 9
Projected population growth
(2017-2030)
800
700
600
500
400
300
200
100
0
2017 2020 2023 2026
Indonesia Thailand Year
Malaysia Vietnam
The Philippines Singapore Source: BMI, EIU.
When energy consumption for ACs in As part of the roadmap, it was agreed that
Asean countries is forecast using the best “Asean countries would adopt a minimum
available technology (BAT scenario) it is EER (2.9W/W or CSPF of 3.08W/W) by 2020
clear that immense savings can be gained. as mandatory MEPS (Minimum Energy
Performance Standards) for all fixed and
In two cases, Malaysia and Singapore, variable drive ACs below 3.52kW capacities.
the BAT scenario would actually lead to a This would be periodically reviewed and
reduction in energy consumption by 2030 revised at an interval of 5 years or less.9”
compared with 2015 levels.
Following the adoption of the roadmap,
Conversely, if there is no change to individual Asean countries have
current consumption habits (the business been adopting national policies with
as usual, or BAU scenario) then energy technical assistance from United Nations
consumption in all Asean countries would Environment and ICA. Some of the
increase by a CAGR of 5.7% by 2030. recommendations from the roadmap
involved regulatory changes as well as
The future of minimum energy policy suggestions.
performance standards (MEPS)
For instance, it was noted that Malaysia,
Work is underway in the region to address Philippines, Thailand, Singapore and
the need for more efficient cooling. In Vietnam have AC markets where the
September 2015, the Asean Ministers of average efficiency of all products is
Energy Meeting (AMEM) endorsed the around 15% to 30% more efficient
“Asean Regional Policy Roadmap for than the current MEPS. Hence, it was
Harmonisation of Energy Performance recommended that if those markets
Standards for Air Conditioners.” adopted more stringent efficiency
Construction industry value forecast
(US$bn)
500
400
300
200
100
0
2017 2020 2023 2026
Indonesia Thailand Year
Malaysia Vietnam
The Philippines Singapore Source: BMI.
9
http://www.aseanshine.org/asean-shine-task-force/d/asean-regional-policy-roadmap-for-harmonization-of-energy-performance-standards-
for-air-conditioners10 Freezing in the tropics: Asean’s air-con conundrum
Mandatory standards requirements, then less efficient products of retail presence and the preference of
would be eliminated from the market consumers.
are essential to market and manufacturers would be forced to
introduce more efficient ones. Mark Radka, chief of UN Environment’s
transformation as they Energy and Climate Branch, warned that
specify energy efficiency Most of the popular brands on sale at “ inefficient polluting appliances, which
retailers in the region interviewed for are also more costly to run, may enter
and other environmental this study were from outside the region, these markets if appropriate and effective
although there was often some form of minimum energy performance standards
requirements for a local product assembly involved. The are not in place. Mandatory standards
product to be sold in most popular foreign multinational are essential to market transformation as
brands seen in the retailers across Asean they specify energy efficiency and other
the market. countries were from Japanese and Korean environmental requirements for a product
manufacturers such as Daikin, Hitachi, LG, to be sold in the market.”
Mitsubishi, Panasonic, Samsung, Sanyo,
Sharp and Toshiba. Other popular brands To help with the high cost of replacing or
included Electrolux and Philips. installing AC units, industry experts suggest
Mark Radka that governments consider implementing
Chief of UN Environment’s In most countries, the foreign brands had policies that provide incentives to businesses
Energy and Climate Branch local offices and local assembly functions. or households. These could consist of
One concern raised during interviews consumer rebates, tax credits, accelerated
conducted in Indonesia was that the depreciation or loan financing. As the region is
technology for cooling was predominantly at different stages of development, a tailored
produced by foreign brands and therefore approach would be most effective to achieve
the local markets could only perform the full adoption of the most efficient ACs.
basic assembly before sending the
product to retailers. It is clear that both the technologies
and technical assistance required are
Other brands on display included Hi-Sense available in the Asean region to address
and Midea from China, Pensonic from the challenges of cooling and control
Malaysia and Trentios from Singapore. greenhouse gas emissions. It is up to
Singapore and Malaysia brands were the governments to put the right policies in
only ones that had a presence in some of place, for businesses to offer the best
the retail shops visited for this study that technologies, and for consumers to
were outside their home country. demand the most efficient products.
In the interviews for this study and from The survey results in the next chapter
other surveys in the region, foreign suggest that in most cases, there is a
multinational brands were seen to be huge opportunity for the region to make
dominating the regional market in terms swifter and more effective progress.
Potential energy savings in Asean as per percentage and in GWh
10,000 45%
38% 40%
9,000 40%
Energy savings in 2030 (GWh)
8,000 35%
30%
Savings potential (%)
7,000
30%
6,000 24%
22% 25%
5,000
20%
4,000
15%
3,000
2,000 10%
1,000 5%
0 0
Thailand Indonesia Malaysia The Philippines Vietnam
Country
Savings potential (%)
Energy savings in 2030 (GWh) Source: Asean Shine AC regional roadmap.Freezing in the tropics: Asean’s air-con conundrum 11
Average EER of ACs in Asean region
3.70
3.50
3.30
EER (x/W)
3.10
2.90
2.70
2.50
30,000
Cooling capacity (Btu/h)
Thailand Malaysia
Vietnam The Philippines Source: Asean Shine AC regional roadmap.
Indonesia - energy consumption of Philippines - energy consumption of Vietnam - energy consumption of room
room airconditioners in three scenarios room airconditioners in three scenarios airconditioners in three scenarios
(BAU, policy scenario, BAT scenario) (TWh) (BAU, policy scenario, BAT scenario) (TWh) (BAU, policy scenario, BAT scenario) (TWh)
69 20 13
59
15
49
8
39
10
29
19 5 3
2015 2029 2015 2029 2015 2029
Year Year Year
BAU BAU BAU
Policy Scenario (Min. energy Performance Standards) Policy Scenario (Min. energy Performance Standards) Policy Scenario (Min. energy Performance Standards)
BAT Scenario (Best available technology) BAT Scenario (Best available technology) BAT Scenario (Best available technology)
Source: United4efficiency.org. Source: United4efficiency.org. Source: United4efficiency.org.
Thailand - energy consumption of room Malaysia - energy consumption of room Singapore - energy consumption of
airconditioners in three scenarios airconditioners in three scenarios room airconditioners in three scenarios
(BAU, policy scenario, BAT scenario) (TWh) (BAU, policy scenario, BAT scenario) (TWh) (BAU, policy scenario, BAT scenario) (GWh)
42 30 8,000
37 7,500
32 7,000
25
27 6,500
22 6,000
17 20 5,500
2015 2029 2015 2029 2015 2029
Year Year Year
BAU BAU BAU
Policy Scenario (Min. energy Performance Standards) Policy Scenario (Min. energy Performance Standards) Policy Scenario (Min. energy Performance Standards)
BAT Scenario (Best available technology) BAT Scenario (Best available technology) BAT Scenario (Best available technology)
Source: United4efficiency.org. Source: United4efficiency.org. Source: United4efficiency.org.12 Freezing in the tropics: Asean’s air-con conundrum
Asean perspectives
A survey of 424 respondents from Similarly, respondents agreed that there
Indonesia, Malaysia, Singapore, Thailand, seemed to be limited smart use of air-
The Philippines and Vietnam conducted in conditioning such as sensors to reduce AC
November and December of 2017 showed a intensity when occupants were absent, or
number of opportunities as well as some of other measures to adjust temperatures
the regional considerations and domestic when the outside temperature dropped.
issues at play. There were also a number
of innovative suggestions on how these Jair Smits, Managing Director of the
different approaches could be considered. Hydroinformatics Institute based in
Singapore, suggested that “aircon settings
Aircon settings (should Poor energy controls in public (should be) dependent on outside
buildings temperature and humidity. It is ridiculous
be) dependent on that they remain unchanged during
Perhaps the most obvious concern rainstorm events, turning aircon-cooled
outside temperature
affecting all countries in the region was spaces into fridges.”
and humidity. It is that energy was being wasted in the
excessive cooling of public buildings such Dave Mackerness, Director at Kaer, an
ridiculous that they as shopping malls and cinemas. This was airconditioning-as-a-service supplier
one of the most common findings among based in Singapore, explained that the
remain unchanged
interviewees and survey respondents. technologies used to adjust temperatures
during rainstorm events, have been in place for some time. However
Jeff Smith, Director of Sustainability for Six most building operators directly manage
turning aircon-cooled Senses Hotels, Resorts, Spas commented: their own cooling systems and do not
“Shopping malls in Bangkok use more usually prioritise fine-tuning the settings
spaces into fridges.
electricity than most provinces in Thailand”. for maximum efficiency, even though this
would result in energy savings.
Marc Loo, CEO of Loola Adventure
Group, a resort operator in Indonesia, He further observed: “Public buildings
Jair Smits suggested: “We’ve got to get rid of this that we have seen in Singapore are
Managing Director of the idea that public malls and hotels should commonly designed with an excess of
Hydroinformatics Institute resemble freezers.” There were some slight peak cooling operational output of close
differences around the region on this to 40%. This is because a combination
issue, with Singapore-based respondents of worst case scenarios of equipment
showing the largest concern over this. downtime, peak hot days, and maximum
capacity have been factored into a
How often do you encounter AC settings in public buildings that are too cold
Singapore
The Philippines
Malaysia
Vietnam
Thailand
Indonesia
Average
3.0 3.10 3.20 3.30 3.40 3.50 3.60 3.70
Source: Eco-Business Research survey, Nov-Dec 2017, 424 respondents, weighted avg.
1=never, 2=rarely, 3=sometimes, 4=oftenFreezing in the tropics: Asean’s air-con conundrum 13
system that might be run with minimal conditioning systems as the core cooling
adjustments. mechanism. This could be because of the
association of affluence and prestige with
This makes sense if the designer assumes cool indoor temperatures.
the system will be fine-tuned during
operations to accommodate real-time Respondents generally agreed that air-
external conditions. But this is usually conditioning was regarded as a status
not the case, resulting in the buildings symbol in their countries, although the
becoming too cold and consuming majority also agreed that it was also a
excessive amounts of electricity.” necessity. There were regional variations,
with the less urbanised populations more
Respondents in countries such as Vietnam likely to agree that it was a status symbol –
and The Philippines reported a higher and the more urbanised populations more
adoption of non AC cooling systems in public likely to agree that it was a necessity.
places such as shades, fans and blinds
than those in the more urban and affluent One of the respondents from Singapore
countries of Singapore and Malaysia. Hence, government research agency A*STAR
there is clearly an opportunity for more commented on how cooling had become
effective design to reduce the use of air- associated with blasts of cold air:
conditioning in public buildings. “Air-conditioning has evolved into an
entitlement that people feel they cannot
AT Guinto, an environmental consultant live without. Alternative initiatives are seen
in The Philippines, suggested government as reducing the comfort level of people
intervention “to require the use of more even if cooling capacities remain the same.
efficient air conditioners in offices, malls For instance, some cars use diffusion AC
and cinemas right from the design stage. systems that are energy efficient, and
The same permit renewals can be enforced can cool the interior fast, but passengers
for existing structures, once these need to complain about the lack of cold wind.”
expand or be renovated.”
For domestic use, respondents agreed that
Green building codes implemented by they and other citizens were also quite
governments around the region are likely to use other or additional forms
addressing this to some extent. But of cooling beyond air-conditioning such
they seem to still allow shopping malls as fans and air coolers (which are fans
in central locations to design fierce air that blow air chilled by ice or cold water).
How often do you encounter public buildings using other cooling systems
(apart from air conditioning, such as fans, blinds, natural airflow systems, chilled beams, shading, cool roofs etc)
Vietnam
The Philippines
Indonesia
Thailand
Singapore
Malaysia
Average
2.50 2.60 2.70 2.80 2.90 3.0 3.10 3.20 3.30 3.40
Source: Eco-Business Research survey, Nov-Dec 2017, 424 respondents, weighted avg.
1=never, 2=rarely, 3=sometimes, 4=often14 Freezing in the tropics: Asean’s air-con conundrum
Home air conditioning is regarded as a status symbol in my country
Vietnam
The Philippines
Thailand
Indonesia
Malaysia
Singapore
Average
2.70 2.80 2.90 3.0 3.10 3.20 3.30 3.40 3.50 3.60 3.70
Source: Eco-Business Research survey, Nov-Dec 2017, 424 respondents, weighted avg.
1=strongly disagree, 2=disagree, 3=neither agree nor disagree, 4=agree, 5=strongly agree
Indeed, over 75% of respondents agreed or needed to address this in the Philippines:
strongly agreed with this statement. “Refrigerant release into the environment
is rampant here. Thermostats should be
Conservative home use, but lack of required in all installations and sales of
awareness of energy savings with AC refrigerants should be regulated. Anyone
can purchase gases and do (AC) servicing
There should be Although respondents generally indicated here,”
more conservative uses of AC for home
better use of product use rather than business use, there was Limited advice from retailers
limited understanding of the impact of
advertising to fully air-conditioning on the environment. The limited understanding of the impact
explain the energy of AC on the environment coincided with
About half of the respondents voted for further interviews conducted with retailers
consumption and cooling “ increasing the development of solar in the region in November and December
plants” as the most important way to 2017. In many stores, there was a lack of
power to buyers. reduce greenhouse gas emissions in consistency in the energy labels and rating
the region, rather than increasing the systems. Even in the countries where the
efficiency of air-conditioning units. The rating system was more prevalent, not
only country that selected “efficient every model carried any labelling.
Lany Harijanti use of air-conditioners” as the most
Development Advisor for 2030 important way for reducing greenhouse Shop assistants in most of the stores
Youth Force, an NGO based gases was Singapore. visited did not seem familiar with
in Indonesia labelling systems, or the presence of
Over 45% of respondents disagreed or inverters or refrigerants beyond the
strongly disagreed with the statement stated claims that certain models were
‘People in my country are aware of the supposed to consume less electricity.
harm that air-conditioning refrigerants
do to the environment’. And over 30% There were one or two exceptions to this.
of respondents disagreed or strongly Most of the models in the stores visited
disagreed with the statement “People in in Thailand showed a relative consistency
my country are familiar with the energy in comparisons of specifications. One of
label and rating systems that indicate the stores visited in Indonesia showed a
electricity savings with different brands model for the type of air conditioners for
and models of air conditioners”. different sizes of rooms. And none of the
stores visited offered window AC units on
Only Singapore, Thailand and Malaysia display, although these systems were still
respondents felt any degree of confidence in common use in residential areas in all
about the consumer awareness levels of countries and still available for sale.
the energy label and ratings systems. And
even these respondents felt that consumer A significant proportion of survey
awareness of the harm that refrigerants do respondents noted the lack of advice from
to the environment was lacking. sales staff as being an issue. About 14%
Tom Tirey, CEO of Cebu Solar, said that of regional respondents selected ‘better
government legislation was urgently education of sales staff to explain theFreezing in the tropics: Asean’s air-con conundrum 15
differences between models to customers’ Thailand, commented on the problem: “AC
as the highest priority factor to ensure the is the biggest energy consumer in Thailand
take up of efficient AC units in the region. and Southeast Asia. However, most systems
are over-sized and run inefficiently.
Lany Harijanti, a development advisor Architects, designers and mechanical and
for 2030 Youth Force, an NGO based in electrical system consultants often don’t
Indonesia, said: “There should be better put in the most energy efficient systems
use of product advertising to fully explain in buildings. And owners only look for low
the energy consumption and cooling first cost AC systems and do not look at the
power to buyers.” However, this factor life-cycle costs of operating an inefficient
was a third place in priority with 45% of AC system.”
regional respondents voting for stricter
government legislation to ensure that One respondent from the financial
stores sell only the most efficient models. sector in Singapore suggested that
the government should “mandate or
The second most popular priority was encourage commercial buildings to not
creating better consumer awareness of drop (their temperatures) below 23-25
the efficiency of models. The option for degrees. Most buildings are too cold”.
better financing schemes so that the
cost of a new air-conditioning system Another respondent noted that “promoting
might be spread over a longer timeframe high efficiency ACs is a must. Governments
was the least popular option, although need to help fund this.” Singapore-based
there were a number of suggestions from respondents had the most confidence
respondents as to how countries might in their government to actively manage
better incorporate such choices. power demand through initiatives such
as promoting energy efficiency standards
Stricter government legislation in air-conditioning systems. Vietnam and
needed to manage commercial and Malaysia-based respondents showed the
retail AC efficiency least confidence for this point.
One of the top observations that came Building a culture of sustainability
out from survey respondents and experts
interviewed for this study was the need Beyond government legislation, there
for greater government legislation, both were some interesting suggestions for
for commercial use of air-conditioning how Asean countries could better build
(so that public spaces are not excessively a culture of sustainability. William Kwok,
chilled) and for retail distribution of more General Manager for a shopping mall
efficient models. in Johor, South Malaysia, reflected the
opinions of many with his suggestion “to
Alan Boswell, Asia Pacific Manager for have more public awareness campaigns
Advanced Energy Savings Solutions and have more energy efficient AC
Company Ltd, a services company in units available for sale in all retailers”.
Awareness of efficiency and environmental impact of ACs
Vietnam
Indonesia
The Philippines
Malaysia
Thailand
Singapore
Average
2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.0 3.10 3.20
People in my country are aware of the harm that refrigerant substances used in air conditioning do to the environment
People in my country are familiar with the energy label and rating systems that indicate electricity savings with different
brands and models of air conditioners
Source: Eco-Business Research survey, Nov-Dec 2017, 424 respondents, weighted avg.
1=strongly disagree, 2=disagree, 3=neither agree nor disagree, 4=agree, 5=strongly agree16 Freezing in the tropics: Asean’s air-con conundrum
Eric Raymundo, Director from the Jennifer Sandiego, an interior decorator
Water Environment Association of the with RCHITECTS Inc based in The
Philippines, agreed that “information Philippines, suggested that retailers
education campaigns are vital”. implement “proper recycling facilities for
old and less efficient air-con units as part
Arlene Tablan, Regional Marketing Director of sales and marketing campaigns for more
for AkzoNobel Decorative Coatings, based efficient air-con units, as well as offering
in Singapore, suggested that governments price rebates for trade-ins of old units.”
needed to go beyond awareness
campaigns. Speaking with an Asean Another innovative suggestion came from
perspective, she commented: “It’s important Shahazwan Harris, formerly an executive
to provide alternatives to AC to keep director for investments at the Malaysian
homes cooler. Most consumers are not so financial institution Khazanah Nasional
concerned about environmental protection, Berhad, that governments and the
so education alone will not be effective.” industry could introduce “energy savings
bonds to finance energy savings projects
Lou Arsenio from the Archdiocese of (which would) promote energy savings as
Manila Ecology Ministry in The Philippines a business, through a guaranteed savings
suggested getting help from nature to business model.”
address the cooling problem by “restoring
the forests and trees even in urban areas”. Consumers, governments and
Any visitor to the region’s rural areas can businesses to drive change
see how villages and houses are designed
to maximise air flow and use trees to The interviews and survey formed a
provide shade and natural cooling. useful gauge of the awareness of the
It’s important to challenge of cooling the region and some
Similarly, any urban traveler can usually of the differences between countries.
provide alternatives see the marked absence of trees in most At a basic level, the survey showed that
cities as well as the absence of traditional people were aware that air conditioning
to AC to keep homes construction techniques for natural was a big consumer of electricity, and
cooler. Most consumers cooling such as overhanging roofs, the largest component of energy bills
balconies and access to wind flows in and that it would continue to rise with
are not so concerned most modern buildings. population levels and affluence levels.
about environmental A suggestion from Janya Rattanaliam, Most respondents were not aware of the
protection, so education Head of International Marketing at extent to which faster adoption rates of
Bangkok Hospital Pattaya, Thailand, was more efficient technologies and consistent
alone will not be to have “more plants in each household adjustments of standards could actually
(and) to have chilled beam home lead to net decreases in energy consumption
effective. cooling systems”. Similarly, Jed Wio from and greenhouse gas emissions.
Singapore suggested designers consider
greater use of “natural airflow systems And yet most survey respondents felt that
like in traditional kampong houses, to governments could play a larger part in the
Arlene Tablan avoid the heavy use of air conditioning.” issue, even in countries where they were
Regional Marketing Director for felt to be doing a good job in promoting
AkzoNobel Decorative Coatings Financing solutions energy efficiencies in air conditioning.
Although financing options were not seen as It also showed some of the most obvious
an important priority by survey respondents targets for raising efficiency and some of
overall, there were some interesting the wasted energy that is a by-product
suggestions involving governments, utilities, of the industry. There were two clear
retailers and manufacturers. solutions from the survey.
“Utility companies could help finance 1. Consumers can do more to manage
home air conditioning by packaging the power consumption of their home
equipment costs into the monthly use systems, although they can be
electricity bill,” said Marina Yong, aided by more awareness campaigns to
Managing Director of Sustainability demonstrate the efficiencies of the more
Momentum, an IT company in Malaysia. advanced models.Freezing in the tropics: Asean’s air-con conundrum 17
My country is actively managing power demand through initiatives such as
2. Governments can help through
promoting energy efficiency standards in air conditions systems
legislation. Legislation of the commercial
sector could help to urgently address
Vietnam
the excessive use of cooling that many
respondents noted throughout the region Malaysia
in public buildings and the building codes Thailand
that allow this. Legislation of suppliers
The Philippines
and manufacturers could also eliminate
low cost inefficient systems from the Indonesia
markets and drive consumers to select
Singapore
the most efficient systems to use in their
homes. Businesses can also help drive Average
efficiency by ensuring public buildings are 2.70 2.80 2.90 3.0 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.0
best managed for optimum temperatures Source: Eco-Business Research survey, Nov-Dec 2017, 424 respondents, weighted avg.
1=strongly disagree, 2=disagree, 3=neither agree nor disagree, 4=agree, 5=strongly agree
and that their retail customers are better
educated about the most efficient brands.
Summary of key findings
The
Indonesia Malaysia Singapore Thailand Vietnam
Philippines
Current room AC use TWH 23.9 22.7 6.8 20.8 7 4.3
Projected room AC usage 2029
59.2 30 7.8 42.6 19.4 11.1
(BAU scenario)
Not
Potential energy savings using BAT 30% 22% 38% 24% 40%
measured
% of respondents highlighting AC
efficiency as the best way of reducing 16% 23% 38% 19% 7% 33%
GHG emissions
Estimations from respondents of % of
11-25% 51-75% 76-100% 51-75% 11-25% 26-50%
households with AC
People in my People in my People in my
country often country often country often
Home AC is Home AC is Home AC is
Perceptions about cooling use other use other use other
necessary necessary necessary
methods methods methods
[than AC] [than AC] [than AC]
Average response to question “My country is
actively managing power demand through 2.93 2.98 2.18 2.77 2.93 3.3
promoting energy efficiency standards in AC”
What action would help to ensure Better
Better Better Better Better
Better labelling consumer
the uptake of more efficient AC (after labelling of labelling of labelling of education of
of models awareness
consumer awareness and gov legislation) models models models sales staff
campaigns
Innovative
Government
financing Enforced Use of
legislation Public
solutions public natural Building code
Top suggested areas for improvement and awareness
that building AC methods for regulations
education campaigns
encourage levels cooling
programmes
efficiency18 Freezing in the tropics: Asean’s air-con conundrum
Case study:
The challenges of driving energy
efficiency in Indonesia
As the graphs in the earlier chapters have shown, Indonesia has
the largest population by far in the Southeast Asian region and
is the largest consumer of electricity.
Any regional initiatives towards the significant electricity savings in Indonesia
uptake of more efficient use of air- are possible by further improving the
conditioning requires a high level of energy efficiency of air conditioning.
participation from Indonesia. Accelerating progress to keep pace with
shared targets within Southeast Asia
Situated between the Indian and Pacific could save Indonesian consumers nearly
Oceans, consisting of more than 17,000 USD 690 million per year by 2030.
islands, Indonesia is also the 7th largest
country in the world in terms of sea Regulatory framework
and land area. The enormities of the
scale of the country have undoubtedly In Indonesia, the ministry responsible
caused challenges in forging a cohesive for policy and regulations concerning
programme for driving energy efficiency. energy efficiency of air conditioners
is the Ministry of Energy and Mineral
A report released in April titled World Air Resources (MEMR). The government
Conditioner Demand by Region, conducted agency responsible for implementing the
by The Japan Air Conditioning Industry regulations is the Directorate of Energy
Association (JRAIA), estimates Indonesia’s air Conservation, under the Directorate
conditioner demand in 2016 was the third General of New and Renewable Energy
highest in Asia, behind China and India. and Energy Conservation.
According to data from Indonesia’s In 2015, the latest set of regulations
Ministry of Energy and Mineral from MEMR (Permen No. 7 2015) was
Resources’ (MEMR) Directorate of Energy introduced, which puts a framework in
Conservation, the use of air conditioners place to regulate new air conditioners
in Indonesia per year has reached 4 being sold in the country. It came into
million units, with an average annual effect in August 2016. The aim of the
growth rate of 7 percent. regulations is to encourage producers
of air conditioners to compete in the
The International Energy Agency‘s (IEA) market by using labels which certify the
Energy Efficiency 2017 report suggests that energy efficiency of their models. ThisFreezing in the tropics: Asean’s air-con conundrum 19
At a Glance
Third highest AC use in Asia
According to The Japan Air Conditioning Industry Association
(JRAIA), estimates put Indonesia’s 2016 air conditioner
demand at third highest, behind China and India
Low public and consumer
understanding
“There is still low public and consumer understanding of the
benefits of using energy-efficient air conditioners,”
Farida Zed,
Former MEMR Director of Conservation of Energy
Campaigns lack Government
involvement
The Indonesian government has authorised manufacturers
to do their own campaigns without government intervention.
“The only intervention is that all air con products must
comply with the SKEM rating system,”
Michael Adisuhanto, Digital Appliances Product Marketing Head,
Samsung Electronics Indonesia
Need for higher EER limits
“Indonesia has been left behind when compared to other
countries.” To achieve better EER ratios, producers need to be
willing to improve the quality of their products.
Farida Zed,
Former MEMR Director of Conservation of Energy20 Freezing in the tropics: Asean’s air-con conundrum
enables consumers to choose units that exhibitions. However, it seems the
are cheaper to run. public awareness campaigns run by the
government have not been effective.
The regulations apply to all new units
sold since 2016, both locally made and Farida Zed worked at MEMR for 31 years
imported. Air conditioners in Indonesia before retiring in July 2017 from the position
must bear the SKEM (Standar Kinerja of Director of Conservation of Energy. She
Energi Minimum) label and the Energy agrees that one of the main obstacles to
Saving Label (Label Tanda Hemat Energi) Indonesia adopting more energy friendly air
in accordance with the Indonesian conditioners is public awareness. “There is
National Standard board so that still low public and consumer understanding
household equipment conforms with of the benefits of using energy-efficient air
energy efficiency rules. conditioners,” she says.
The Energy Saving Label uses a four-star MEMR had a public awareness campaign
rating – a higher energy efficiency ratio called ‘Potong 10%’ (Save 10%), which
(EER) and more stars means a higher Adipurwoko says “can be seen on personal
energy efficiency. Four stars is the highest TV screens on Garuda Indonesia planes, on
and equals an EER higher than 10.41 Btu/W the Jakarta commuter line, and in several
(3.05 W/W). One star is the lowest, with an print media.” The campaign hoped to share
EER of between 8.53 Btu/W (2.5 W/W) and the message that by reducing day-to-day
9.01 Btu/W (2.64 W/W). Performance levels individual energy consumption by 10%,
set in the regulation are on the low side, the energy savings could be directed to
if compared to the efficiencies of models providing electricity to areas where the
already available in Indonesia. electrification ratio is limited.
There is still low The regulation also only applies to single split Zed explains that the ‘Save 10%’ campaign
wall-mounted units of up to 3 horsepower was designed to be carried out on a large
public and consumer (hp), which are usually used in the home. This scale and over a period of five years (since
means commercial buildings can continue to 2015). “However,” she says, “this activity is
understanding of the
use non-energy efficient models. no longer being carried out because of
benefits of using energy- reallocation of funds and limited funding.”
Wisnu Adipurwoko is an Energy
efficient air conditioners Conservation Analyser at the Directorate Herbert Innah is a lecturer of Electrical
of Energy Conservation at MEMR. “From Engineering at the University of Cendrawasih
the supervision we’ve carried out, all in Jayapura, where he has lectured for 15
air conditioners with a maximum power years. According to Innah, Indonesia has to
Farida Zed output of 3 hp now use SKEM and EER overcome behavioural challenges in order to
Former MEMR Director of labels,” he says. “If there are any found save energy from air conditioning.
Conservation of Energy without these labels, they are goods issued
by the producers before the mandatory “Most Indonesians don’t understand how
date of implementation in August 2016.” to operate ACs and lack awareness of the
importance of saving energy,” he said. “If
It will be some years until older, less people want to cool the room as quickly
efficient units already in use come to as possible, they set the temperature
the end of their useful lives and need as low as they can. If they want to use a
replacing. For Indonesia to move forward meeting room the next day, they turn the
quickly with energy efficient cooling, AC on the day before.”
owners of old models need to understand
the cost-saving benefits of replacing them Industrial sector improves, but no
with more energy efficient products. change in retail and hospitality
sectors
Low levels of public awareness
cause behavioural challenges Zed does believe that an improvement
in public awareness can be seen, but
Within the 2015 regulations, there is a mainly in the industrial sector, to use
clause (pasal 18 and 19) stating that energy efficient air conditioners in
MEMR should carry out public awareness order to improve the competitiveness of
campaigns on SKEM and Energy Saving products. “Meanwhile, hotels and malls
Labels through the media and at energy are not changing much, mainly becauseFreezing in the tropics: Asean’s air-con conundrum 21
of the high investment costs needed to stars, we do not need to incentivise them.”
replace existing air conditioners with According to Adisuhanto, four out of six
energy efficient ones,” she said. of Samsung’s air conditioner lines are
equipped with inverter technology.
Public incentives
For Indonesia to move forward quickly,
Currently, there is no incentive mechanism he says that the government needs to
in place to encourage the public to cooperate with local as well as foreign
purchase new air conditioners that would companies. “So far, government campaigns
compensate for the higher price of the don’t involve local or foreign companies
newer, more energy efficient models. directly to increase energy efficiency. But
Zed believes a tax reduction could be at Samsung, we always educate consumers
introduced, which would assist ESCOs, about the benefit of our products, and
a controlled environment laboratory energy efficiency is one of them.”
equipment company, in helping the public
choose energy efficient products. Adisuhanto says that the Indonesian
government has authorised manufacturers to
To assist the consumer, she says several do their own campaigns without government
mechanisms can be put in place. These intervention. “The only intervention is that all
include: the provision of retail sales air con products must comply with the SKEM
staff who are able to explain and guide rating system,” he says.
customers to purchase energy efficient air
conditioners; socialising and encouraging Dependence on imported components
the public to use energy calculators;
ensuring that only energy efficient Ditsy Aksella works at Indonesia’s Ministry
products are available on the market; and of Environment and Forestry (MEF) in the
encouraging and educating the public so Directorate of Climate Change Mitigation
that energy saving becomes a part of life. as a data analyser of ozone destruction
control. She believes Indonesia can
There is considerable scope for improving progress quickly if global markets are able
the minimum energy performance standard to provide access to environmentally-
for air conditioners in Indonesia. friendly cooling technologies.
“Introducing higher EER limits is something “Developed countries and producer countries
that needs to be continued,” says Zed. like China should take the initiative so that
“Indonesia has been left behind when developing countries like Indonesia can
compared to other countries.” To achieve follow, and the availability of the required
better EER ratios, producers need to be willing product components can be guaranteed at an
to improve the quality of their products. Zed affordable price,” Aksella says.
goes on to say that imports of non-inverter
air conditioners (which are not energy All sources in this article stated that in
efficient) should not be allowed in the future. order for Indonesia to be able to move
forward with energy efficient cooling,
The importance of trained sales staff the country should no longer be reliant
and government cooperation on importing product components from
abroad. The prices of environmentally-
There is still a low sales service capacity at air friendly components were perceived to
conditioning retailers to explain the benefits of be too expensive for the market which is
energy-efficient air conditioners to consumers. a heavy user of “Freon” cooling, a trade
name for a class of chemicals known as
Michael Adisuhanto is the Digital Appliances Chlorofluorocarbons used as a refrigerant
Product Marketing Head at Samsung in air conditioning systems.
Electronics Indonesia. Adisuhanto observes:
“The obstacle is the consumer’s low “Domestic air-conditioning manufacturers
awareness of how energy efficient home choose not to expand their production
appliances would benefit them.” capacity and prefer to import components due
to lower prices,” states Zed. “This condition
When asked if his sales staff are impedes the government’s aim to increase the
incentivised to sell energy efficient models, added value in the country and – at the same
he says: “Since most of our line are four time – the provision of employment.”You can also read
