Energizing Green Cities in Southeast Asia

Home , Surabaya

Energizing Green Cities in Southeast Asia THREE City Synthesis Report © 2012 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org

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Cover photo credit: Luciano Mortula, Shutterstock Table of Contents

Foreword ...... vi

Acknowledgments ...... vii

Abbreviations and Acronyms ...... viii

Key Messages ...... ix

Chapter 1: Executive Summary ...... 1. Urbanization, Economic Growth, Energy, and Emissions Trends ...... 2 Understanding the Cities: Energy Use and GHG Emissions ...... 4 Sector Diagnostics: Identifying Opportunities ...... 9 The Role of Institutions ...... 10 Governance Mechanisms ...... 12 Next Steps ...... 13

Chapter 2: Introduction and Background ...... 17. Urbanization, Economic Growth, and Impact on Energy and Greenhouse Gas Emissions ...... 17 Report Structure ...... 28

Chapter 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions ...... 29. City Overview ...... 29 City Energy Profile ...... 31 City Emissions Profile ...... 36

Chapter 4: Sector Diagnostics: Identifying Opportunities ...... 41. Public Lighting ...... 41 Transportation ...... 42 Ciy Government Buildings ...... 45 Solid Waste ...... 47 Water and Wastewater ...... 49 Power ...... 52 Identifying City Government Priorities ...... 54

Chapter 5: Governance ...... 57. The Importance of Governance ...... 57 Governance of Energy-Related Issues ...... 57 City-Level and National Energy Programs ...... 58 City Planning ...... 61 Governance Mechanisms ...... 62

iii Chapter 6: Sustainable Urban Energy and Emissions Planning: The Way Forward ...... 65. City Government Leadership and Commitment to “Green Growth” ...... 66 Energy and Emissions Diagnostics ...... 67 Goal Setting and Project Prioritization ...... 67 Planning ...... 70 Implementation ...... 71 Monitoring and Reporting of Progress ...... 74 The Way Forward ...... 77 Appendixes 1 Cebu City Background ...... 79 2 Surabaya Background ...... 93 3 Da Nang Background ...... 105 4 Approach and Methodology ...... 119

References and Other Resources ...... 121.

Figures 1 .1 Urbanization Rate ...... 2 1 .2 Changes in Annual Energy Consumption per Capita (1990 and 2009) ...... 3 1 .3 GHG Emissions by Fuel Source ...... 4 1 .4 GHG Emissions by End Use ...... 5 1 .5 Energy Intensity and GDP per Capita in Select Cities ...... 5 1 .6 Surabaya Sankey Diagram ...... 6 1 .7 Cover Page of TRACE Web-Based Tool ...... 7 1 .8 Level of Influence of City Governments in ariousV Sectors ...... 8 1 .9 Primary Energy Consumption by Sector ...... 9 1 .10 Cover of Sustainable Urban Energy and Emissions Planning Guidebook ...... 14 1 .11 Sustainable Urban Energy and Emissions Planning Process ...... 14 2 .1 Urbanization, 1950–2050 ...... 17 2 .2 World Energy Demand in Cities, 2006 ...... 18 2 .3 Real GDP Growth Rates in Southeast Asia ...... 19 2 .4 Oil and Gas Dominate Southeast Asia’s Primary Energy Supply Mix, 2009 ...... 20 2 .5 Changes in Annual Energy Consumption and Energy Consumption Per Capita ...... 21 2 .6 Changes in Annual Energy Intensity ...... 22 2 .7 GHG Emissions in Southeast Asia (1990–2000) ...... 22 3 .1 Locations of the Pilot Cities ...... 30 3 .2 Electricity Consumption per Capita Benchmarked against Other Cities Using TRACE, 2010 . . . . . 31 3 .3 Primary Energy Consumption per Unit of GDP Benchmarked against Other Cities Using TRACE, 2010 ...... 31 3 .4a Electricity Consumption in Cebu City ...... 32 3 .4b Electricity Consumption in East Java ...... 32 3 .4c Electricity Consumption in Da Nang ...... 32 3 .5 Primary Energy Consumption by Sector ...... 33 3 .6 Efficiencies in Electricity Generation: Principal echnologiesT ...... 33 3 .7 Surabaya Sankey Diagram ...... 34 3 .8 Carbon Intensity of the Electrical Grid ...... 35 3 .9a GHG Emissions by Fuel Source ...... 37 3 .9b GHG Emissions by End Use ...... 37 iv | Table of Contents 3 .10 Energy Efficiency and Economic Development (2008) ...... 38 3 .11 Energy Intensity and GDP per Capita in Select Cities ...... 39 4 .1 Total Transportation Energy per Capita ...... 43 4 .2 City Government Buildings Electricity Consumption ...... 46 4 .3 Percent of Solid Waste Recycled ...... 48 4 .4 Electricity Consumed per Cubic Meter of Potable Water Production ...... 50 4 .5 Nonrevenue Water as a Percentage of Total Potable Water Produced ...... 51 4 .6 Transmission and Distribution Performance ...... 53 5 .1 Overview of Energy Planning System in Da Nang ...... 58 5 .2 Level of Influence of City Governments in ariousV Sectors ...... 59 6 .1 “Bending the Curve”: Defining a 2020 Energy Saving Goal for an Illustrative City ...... 69 6 .2 Energy-Demand Reduction Goals for the Transportation Sector in an Illustrative City ...... 70 6 .3 The Principal Components of a Data Production Chain ...... 76 6 .4 Typical Characteristics of Data Management Systems ...... 76 A1 .1 Map of Cebu City, Philippines ...... 79 A1 .2 Cebu City Government Structure for Energy-Consuming Agencies ...... 80 A1 .3 Cebu City Energy Flows (2010) ...... 82 A1 .4 Cebu City Energy Consumption by End Use ...... 83 A1 .5 GHG Emissions by End Use and Fuel Source ...... 84 A2 .1 Map of Surabaya, Indonesia ...... 93 A2 .2 Surabaya Government Structure for Energy-Consuming Agencies ...... 94 A2 .3 Surabaya Energy Flows (2010) ...... 96 A2 .4 Surabaya Energy Consumption by End Use ...... 97 A2 .5 GHG Emissions by End Use and Fuel Source ...... 98 A3 .1 Map of Da Nang, Vietnam ...... 105 A3 .2 Da Nang Government Structure for Energy-Consuming Agencies ...... 106 A3 .3 Da Nang Energy Flows (2010) ...... 107 A3 .4 Da Nang Energy Consumption by End Use ...... 108 A3 .5 GHG Emissions by End Use and Fuel Source ...... 109

Tables 1 .1 Summary of Structural and Economic Data for the Pilot Cities ...... 4 3 .1 Summary of Structural and Economic Data for the Pilot Cities ...... 30 4 .1 Public Lighting Performance for Three SUEEP Pilot Cities ...... 41 4 .2 Transportation Sector Performance for Three SUEEP Pilot Cities ...... 45 4 .3 Solid Waste Sector Performance for Three SUEEP Pilot Cities ...... 47 4 .4 Power Sector Performance for Three SUEEP Pilot Cities ...... 53 4 .5 Summary Results of the TRACE Prioritization Process in Da Nang, 2011 ...... 55 5 .1 Summary of Current Pilot City Energy Activities ...... 60 5 .2 Summary of National Energy Efficiency Policies and Programs for Indonesia, the Philippines, and Vietnam ...... 60 6 .1 City-Specific KPIs Used in the TRACE ...... 75 A1 .1 Cebu City Sector Prioritization Results ...... 85 A2 .1 Surabaya Sector Prioritization Results ...... 99 A3 .1 Da Nang Sector Prioritization Results ...... 110

Boxes 6 .1 Developing Da Nang: The Environmental City ...... 68 6 .2 Elements of an sueep Process ...... 70

Table of Contents | v Foreword

Cities currently account for about two-thirds green urban development. Achieving this vision of the world’s annual energy consumption and requires institutional reforms and capacity build- about 70 percent of the greenhouse gas (GHG) ing, including strengthening energy governance at emissions. In the coming decades, urbanization the municipal level. Furthermore, to ensure effec- and income growth in developing countries are tive implementation of their green growth plans, expected to push cities’ energy consumption and municipal governments will have to foster alliances GHG emissions shares even higher, particularly and closely collaborate with a coalition of actors where the majority of people remain underserved from the national, state, and local levels, and from by basic infrastructure services and where city civil society and the private sector, who share a authorities are underresourced to shift current commitment to advance the green economy. trajectories. These challenges are facing many cit- The SUEEP framework presented here is ies and hundreds of millions of people in the East designed to facilitate such collaboration and Asia and Pacific (EAP) region, which is experienc- the development of capacity-building programs ing unprecedented rates of urbanization, as the to strengthen energy governance and maximize region’s urban population grows almost twice as energy efficiency across municipal sectors, as well fast as the world’s urban population. as to help define actions and prioritize investments This report lays out the challenges and pro- in energy efficient infrastructure. For this purpose, poses strategies for sustainable urban energy and this report is accompanied by the Sustainable emissions planning (SUEEP) and development. Urban Energy and Emissions Planning Guidebook: It shows that the above challenges also present a A Guide for Cities in East Asia and Pacific, which unique opportunity for EAP cities to become the provides step-by-step guidance to help a city de- global engines of green growth by choosing energy velop its own energy and emissions plan and link efficient solutions to their infrastructure needs and its aspirations to actionable initiatives to improve avoiding locking in energy-intensive infrastructure energy efficiency and reduce emissions. that has accompanied economic growth in the past. The World Bank is committed to providing The SUEEP studies in the three pilot cities— support to EAP cities for sustainable urban energy Cebu City (the Philippines), Da Nang (Vietnam), and emissions planning, and for mobilizing financ- and Surabaya (Indonesia)—show a clear correla- ing for priority investments in green infrastruc- tion between the scaling up of energy efficiency ture. We look forward to working hand in hand in all major infrastructure sectors and economic with cities to facilitate capacity building and pub- growth. This relationship is recognized by the lic and private investments in programs that help municipal governments in the three pilot cities them achieve their green growth objectives and a and has been incorporated into their visions of sustainable future for the generations to come.

John Roome Director Sustainable Development East Asia and Pacific Region The World Bank Group

vi Acknowledgments

his report was produced by the Infrastruc- government officials, nongovernmental organiza- ture Unit of the Department for Sustainable tion and civil society representatives, and the pri- TDevelopment in the East Asia and Pacific vate sector. We would like to express particular (EAP) region of the World Bank under the guidance appreciation and gratitude to municipal officials in of John Roome, Director, and Vijay Jagannathan, Cebu City, Da Nang, and Surabaya for their active Sector Manager. participation in the pilot studies and numerous The core team, which was led by Dejan Ostojic, invaluable comments and suggestions. Energy Sector Leader, EAP, comprised Ranjan K. The team acknowledges the valuable contribu- Bose, Holly Krambeck, Jeanette Lim, and Yabei tions of the Energy Sector Management Assistance Zhang. Program (ESMAP, jointly sponsored by the World The team would like to give special recognition Bank and the United Nations Development to the following World Bank staff for their help Program) and Buro Happold Ltd. with the peer review process and for providing The team would also like to thank Sherrie insightful feedback: Jan Bojo, Feng Liu, Jas Singh, Brown for editing the document, Laura C. Johnson Monali Ranade, and Om Prakesh Agarwal. The for providing the graphic design work, and Laurent team also wishes to acknowledge Luiz T.A. Maurer Durix for his contribution on the dissemination of the International Finance Corporation as well as process. David Hawes, Advisor, AusAID, for his contribu- The team would like to acknowledge the con- tion as external peer reviewer. tinued generous support from the government of Important comments and suggestions were Australia, which funds the EAP Energy Flagship also received from Dean Cira, Arish Dastur, Franz Report series. This series includes Winds of Change: Gerner, Franz Drees Gross, Ky Hong, Paul Kriss, East Asia’s Sustainable Energy Future (2010); One Nguyet Anh Pham, Dhruva Sahai, Victor Vergara, Goal, Two Paths: Achieving Universal Access to Xiaodong Wang, Paul Wright, and Yijing Zhong, to Modern Energy in East Asia and the Pacific (2011); whom we would like to express our appreciation. and the present volumes, Energizing Green Cities During the course of the project, the team gained in Southeast Asia: 3 City Synthesis Report; and considerable knowledge and benefited greatly from Sustainable Urban Energy and Emissions Planning a wide range of consultations in Indonesia, the Guidebook: A Guide for Cities in East Asia and Philippines, and Vietnam and wishes to thank the Pacific. participants in these consultations, who included

vii Abbreviations and Acronyms

ADB Asian Development Bank IEA International Energy Agency AusAID Australian Agency for International ICLEI Local Governments for Sustainability Development IPCC Intergovernmental Panel on Climate BEEC building energy efficiency code Change BERDE Building for Ecologically Responsive ITS intelligent transportation system Design Excellence JICA Japan International Cooperation BRT bus rapid transit Agency C centigrade LED light-emitting diode CDM Clean Development Mechanism LEED Leadership in Energy and CDP Carbon Disclosure Project Environmental Design CFL compact fluorescent lamp LPG liquid petroleum gas LRT light rail transit CO2 carbon dioxide M million CO2e carbon dioxide equivalent DAWACo Da Nang Water Supply Company MCWD Metro Cebu Water District DONRE Da Nang Department of Natural PhP Philippine peso Resources and Environment PJ petajoule EAP East Asia and Pacific PV photovoltaic ESCO energy services company SUEEP Sustainable Urban Energy and ESMAP Energy Sector Management Assistance Emissions Planning Program t ton EU European Union toe ton of oil equivalent F Fahrenheit TRACE Tool for Rapid Assessment of City FIT feed-in tariff Energy GDP gross domestic product US United States GEF Global Environment Facility USAID United States Agency for International Development GHG greenhouse gas VECo Visayan Electric Company HPS high pressure sodium

viii Key Messages

1. Fast-growing cities in the East Asia and Pacific EA( P) region will define the region’s energy future and its greenhouse gas (GHG) footprint. Rapid urbanization and growing standards of living offer a major opportunity to EAP cities to become the global engines of green growth by choosing modern energy efficient solutions to their infrastructure needs and by avoiding locking in the energy-intensive infrastructure of yesterday . The underlying studies in three EAP pilot cities (Cebu City [the Philippines], Da Nang [Vietnam], and Surabaya [Indonesia]) show a clear correlation between investments in energy efficient solutions in all major infrastructure sectors and economic growth—by improving energy efficiency and slowing GHG emissions, cities not only help the global environment, but also support local economic development through productivity gains, reduced pollution, and more efficient use of resources .

2. Mainstreaming energy efficiency on a citywide scale and introducing low- carbon policies require municipal governments to reform institutions, build capacity, and strengthen energy planning and governance. The report reveals that a common barrier to implementing cross-sectoral urban energy efficiency and emissions mitigation programs is the absence of institutional mechanisms that support coordinated project evaluation, planning, and investment across infrastructure subsectors . However, the need for institutional reforms and capacity building is increasingly being recognized and brought to the top of urban development agendas in many EAP cities . This is clearly demonstrated in the three pilot cities, which are strongly committed to implementing their vision of green urban development . To ensure effective implementation of their green growth plans, municipal governments will have to foster alliances and collaborate closely with a coalition of actors from the national, state, and local levels, and from civil society and the private sector, which share a commitment to advance the green economy, placing it centrally within top strategic priorities for the city .

3. The cross-cutting nature of energy efficiency offers a unique platform for the identification and prioritization of green investments across all infrastructure subsectors as demonstrated through case studies in this report. The Sustainable Urban Energy and Emissions Planning (SUEEP) process and methodology used in this study and outlined in the accompanying SUEEP Guidebook is designed to help city leadership formulate long-term urban green growth strategies and identify and evaluate investments in energy efficient infrastructure, thereby maximizing return on investment, relative green impact, and contributions to other social and economic development goals . The result is a high-quality pipeline of green investment projects across all key infrastructure subsectors that can be effectively communicated to local stakeholders, private investors, financing institutions, and the international donor community .

(continued)

ix Key Messages, continued

4. investments in green infrastructure require financing from both public and private sources in a coordinated manner. Investments in the transportation and buildings sectors present some of the largest opportunities for scaling up energy efficiency at the city level . Financing these large investments in fast-growing EAP cities will require partnerships and coordination between public and private investors . SUEEP can help foster such public-private partnerships and mobilize green infrastructure financing by helping to prioritize and coordinate investment projects, as well as through systematic monitoring, reporting, and verification of the impact of the projects on the overall efficiency of energy use and GHG emissions at the city level .

5. The World Bank Group is committed to providing support to EAP cities in building capacity, creating long-term green growth plans, and attracting public and private investments in modern energy efficient infrastructure. The Bank has accumulated global knowledge and experience in supporting institutional development and building capacity for planning and implementing green infrastructure investments in cities around the world, including successful urban development projects in the EAP region . Thus, the Bank is well positioned to assist municipal governments in building institutions, creating policies, and developing long-term green growth plans that will attract financial support and investments from both the private sector and the donor community . The SUEEP process and methodology presented in this report will serve as a starting point for transferring some of the best international practices and for providing a platform for such support and collaboration with all players in the local, national, and global arenas in achieving the green growth objectives at the city level .

x | Key Messages Chapter 1 Executive Summary

Fast-growing cities in the East Asia and Pacific (EAP) region will define the region’s energy future and its greenhouse gas (GHG) footprint. Rapid urbanization and growing standards of living offer a major opportunity to EAP cities to become the global engines of green growth by choosing energy efficient solutions to suit their infrastructure needs and by avoiding locking in energy-intensive infrastructure. The underlying studies in three EAP pilot cities show a clear correlation between investments in energy efficient solutions in all major infrastructure sectors and economic growth—by improving energy and GHG emissions efficiency, cities not only help the global environment, but they also support local economic development through productivity gains, reduced pollution, and more efficient use of resources.

Mainstreaming energy efficiency on a citywide application of advanced infrastructure solutions scale and introducing low-carbon policies requires conducive to long-term energy efficient and low- city governments to reform institutions, build carbon development paths. capacity, and strengthen energy planning and gov- The cross-cutting nature of energy efficiency ernance. The report reveals that a common barrier offers a unique platform for the identification to implementing cross-sectoral urban energy effi- and prioritization of green investments in mod- ciency and emissions mitigation programs is the ern infrastructure across all infrastructure subsec- absence of institutional mechanisms that support tors, as demonstrated through the case studies in coordinated energy project evaluation, planning, this report. The Sustainable Urban Energy and and investment. However, the need for institu- Emissions Planning (SUEEP) process and meth- tional reforms and capacity building is increasingly odology used in this study and outlined in the being recognized across the region, as demon- accompanying SUEEP Guidebook is designed to strated by the governments in the three pilot cities, help city leadership formulate long-term urban Cebu City (Philippines), Da Nang (Vietnam), and green growth strategies and identify and evalu- Surabaya (Indonesia), which are strongly commit- ate investments in energy efficient infrastructure, ted to implementing their visions of green urban thereby maximizing return on investment, relative development. To ensure effective implementation green impact, and contributions to other social of their green growth plans, city governments will and economic development goals. The result is a have to foster alliances and close collaboration high-quality pipeline of green investment projects with a coalition of actors from the national, state, across all key infrastructure subsectors that can be and local levels, and from civil society and the pri- effectively communicated to local stakeholders, vate sector, which share a commitment to advance private investors, financing institutions, and the the green economy, placing it among the top stra- international donor community. tegic priorities for the city. Investments in green infrastructure require It is within the power of cities to develop poli- financing from both public and private sources in cies and establish institutions to support citywide a coordinated manner. Investments in the trans- energy efficiency programs and green urban devel- portation and buildings sectors present some of opment. With the right institutional framework, the largest opportunities for scaling up energy cities can develop and implement policies support- efficiency at the city level. Financing these large ing the next generation of urban infrastructure, investments in fast-growing EAP cities will require which must be more efficient, smarter, and socially partnerships and coordination between public and and environmentally sustainable. Such green infra- private investors. SUEEP can help foster such pub- structure requires changing the way systems are lic-private partnerships and mobilize green infra- designed and decisions are made, as well as the structure financing by helping to prioritize and

1 2 | energizing green cities in southeast asia: three City Synthesis report

Figure 1.1. Urbanization rate

100

80 North America 70

60 Southeast Asia Europe 50 Percent

40 China 30

0 1950 1975 2000 2025 2050

coordinate investment projects, as well as through Urbanization, Economic systematic monitoring, reporting, and verification Growth, Energy, and of the impact of the projects on the overall effi- Emissions Trends ciency of energy use and GHG emissions at the city Cities around the world account for about 70 per- level. cent of global GDP, 67 percent of global energy The World Bank Group is committed to pro- consumption, and nearly 70 percent of world viding support to EAP cities in sustainable urban GHG emissions (IEA 2008). These figures are energy and emissions planning, as well as to mobi- trending ever upward, and about 80 percent of lize financing for priority investments in green infra- global growth in urban energy use and 89 percent structure. The World Bank Group has accumulated of growth in GHG emissions is expected to come global knowledge and experience in supporting from developing countries, and from EAP cities in institutional development and building capacity particular. As rapid urbanization in EAP countries for planning and implementing green infrastruc- continues (see figure 1.1 for urbanization rates ture investments in cities around the world, includ- for Southeast Asia and China), national and city ing successful urban development projects in the authorities will have to make decisions that will EAP region. Thus, the Bank is well positioned to fundamentally define how cities will source and assist municipal governments in building institu- use their energy for decades to come. tions, creating policies, developing long-term green Urban consumers require more energy as the growth plans that will attract financial support and economy grows and their standards of living rise. investments from both the private sector and the Urban growth and increased energy use are strongly donor community, and linking efficiency and low- linked to the economic growth required for cities carbon programs to international concessional to meet their diverse energy needs. In Southeast financing and funding, as well as to the private sec- Asia, which is one of the world’s least urbanized tor investors who will play an important role in regions but whose population is expected to grow achieving green growth objectives. 1.75 times faster than the worldwide urban population (Yuen and Kong 2009), the rapid pace of urbanization is posing huge challenges for city governments to meet increasing energy demand in a CHAPTER 1: executive summary | 3

world. These factors, coupled with EAP countries’ Figure 1.2. Changes in Annual low per capita energy consumption (see figure Energy Consumption per Capita (1990 and 2009) 1.2), ensure continued strong increases in urban energy demand across the region—demand that is expected to double during the next two decades. United States Urbanization and economic growth in Southeast China Asia have not only resulted in a continued increase 2009 in energy consumption, but also a profound shift India 1990 in the energy mix. Although oil and gas will Japan remain major sources of primary energy supply in

Australia Southeast Asia (accounting for 35 percent and 16 percent, respectively, in the ASEAN energy mix by Vietnam 2030), coal is expected to have the fastest annual Thailand growth rate, 7.7 percent on average for the next 20 years in the business as usual scenario. This rate Indonesia of increase would double the share of coal in the Philippines ASEAN energy mix from about 15 percent in 2007 to 30 percent by 2030. With a movement toward Malaysia

more carbon-intensive fuels, carbon dioxide (CO2) Singapore emissions per unit of energy consumption will

0 2,000 4,000 6,000 8,000 increase from 0.49 tons of CO2 equivalent per kilograms of oil equivalent per capita ton of oil equivalent (tCO2/toe) in 2007 to 0.63

tCO2/toe in 2030 in a business as usual scenario. Source: IEA 2012 . Even in an alternative policy scenario considered by ASEAN countries to mitigate the rise of GHG sustainable manner. Given this, the report focuses emissions, the carbon intensity of energy consump- on Southeast Asia. tion is expected to increase to 0.59 tCO2/toe by Annual real GDP growth in Indonesia, Malaysia, 2030. The main reason for the rapid increase in the Philippines, Singapore, Thailand, and Vietnam the share of coal and the carbon intensity of energy (which collectively account for close to 95 percent consumption is the quickly growing demand for of GDP and 86 percent of the population for all electricity in the expanding urban areas—which ASEAN countries)1 is projected to average 6 per- are supplied by coal-fired power plants. cent between 2011 and 2015. Income growth in The region’s governments and city authori- urban areas is also leading to increased demand ties are capable of maintaining economic growth, for new services, particularly those that use elec- improving environmental sustainability, and tricity. City sprawl, which has increasingly led to enhancing reliability of energy supply. Because the development of areas not easily served by pub- energy efficiency and GHG emissions are influ- lic transportation and has discouraged pedestrians, enced directly and permanently by urban form and has resulted in an explosion of personal motor density, cities’ planning and infrastructure invest- vehicles like cars and motorized two-wheelers. In ment choices will have a substantial impact on addition, the lifestyles, and corresponding energy energy and emissions trends (World Bank 2005). use profiles, of urban middle- and upper-income Furthermore, large EAP cities are increasingly residents in the developing world increasingly vocal and influential in formulating national poli- mimic those of their counterparts in the developed cies that will shape the energy future and the ways in which the cities source and use energy. Finally, cities will be the main arena for economic trans- 1. The Association of Southeast Asian Nations, or ASEAN, consists of 10 member countries: Brunei Darussalam, Cam- formation and mainstreaming of energy efficiency bodia, Indonesia, the Lao People’s Democratic Republic, policies and practices, which are the backbone of Malaysia, Myanmar, the Philippines, Singapore, Thailand, and sustainable energy development in the region—a Vietnam (OECD 2010). 4 | energizing green cities in southeast asia: three City Synthesis report

Table 1.1. Summary of Structural and Economic models (World Bank 2010c) focusing on com- Data for the Pilot Cities pact city design, enhanced public transportation,

Parameter Cebu City Da Nang Surabaya green buildings, clean vehicles, and distributed generation. Smart urban planning—higher den- Population (m) 0 .8 0 .9 2 .8 sity, more spatially compact, and more mixed-use City area (km2) 291 1,283 327 urban design that allows growth near city centers Population density 2,748 711 8,458 and transit corridors to prevent urban sprawl— (000’s/km2) can substantially reduce energy demand and CO2 GDP/cap/year ($) 5,732 1,627 8,261 emissions and help cities become greener and more prosperous (World Bank 2009c). With sup- Economic structure (%) Services 73 56 50 port from AusAID, the World Bank Group initi- Industry 19 42 32 ated a regional program—East Asia and Pacific Agriculture/other 8 2 18 Sustainable Urban Energy and Emissions Planning Source: Authors . (SUEEP) Program—to provide support and guidance to city governments in the EAP region to sustained improvement in energy efficiency under formulate such long-term urban energy strategies an alternative energy scenario (ACE 2011) can within cities’ overall development plans. provide a reduction of energy intensity of GDP from 580 toe/million US dollars in 2007 to 408 Understanding the Cities: toe/million US dollars in 2030, compared with 501 Energy Use and GHG Emissions toe/million US dollars under the business as usual The first phase of SUEEP was implemented in scenario in 2030. three Southeast Asian pilot cities—Cebu City, This alternative energy path requires a para- Philippines; Surabaya, Indonesia; and Da Nang, digm shift to new low-carbon development models Vietnam. Pilot city key statistics are summarized and lifestyles. EAP cities need to avoid the carbon- in table 1.1. intensive path and pursue sustainable lifestyles for The rapid population increase and rising stan- their citizens by promoting novel urbanization dards of living in the three pilot cities are causing a considerable increase in city energy consumption. Da Nang is currently experiencing 11.7 percent yearly increases in energy consumption, which will Figure 1.3. GHG emissions by fuel source lead to a doubling of energy demand in six years’

3.5 time. The increases in Surabaya and Cebu City’s yearly energy use are 4.9 percent and 4.3 percent,

3.0 Other sources respectively, still notably high. The main drivers of the strong energy demand are the transporta- Wastewater gas emissions 2.5 tion sector and industry, which account for about Solid waste gas emissions 87 percent of energy consumption in Cebu City, Electricity 2.0 about 66 percent in Da Nang, and 68 percent in

per capita LPG

2 Surabaya. Consequently, transportation and indus-

1.5 Natural gas trial emissions account for more than 53 percent of Diesel emissions for all pilot cities. Transportation alone

Tons of CO is responsible for more than 40 percent of emis- 1.0 Gasoline sions in both Cebu City and Da Nang (see chapter Oil 4 for more details). 0.5 Coal Understanding the city energy balance and carbon footprint is the first step in formulating a 0.0 Da Nang Surabaya Cebu City long-term sustainable urban energy development strategy. The SUEEP approach uses three different Source: Phase I pilot study . city-level diagnostic tools to assess the city energy CHAPTER 1: executive summary | 5

profile. These include (i) the energy balance to ana- Figure 1.4. GHG Emissions by end use lyze energy sources and uses across all sectors and categories of consumers, (ii) the GHG emissions 3.5 inventory to determine the main sources of GHG emissions from energy use, and (iii) the Tool for 3.0 Rapid Assessment of City Energy (TRACE) to evaluate energy efficiency opportunities in city sectors 2.5 and identify priority areas for further investigation Grid based* and intervention. An example of a GHG emissions 2.0 Solid waste per capita inventory based on fuel source and sector for the 2 Water and wastewater Commercial pilot cities is shown in figures 1.3 and 1.4. 1.5 Transportation Most EAP cities, including the three pilot cities, Residential

Tons of CO Industry have relatively low energy consumption and GHG 1.0 emissions per capita. Figure 1.5 illustrates that the current level of energy consumption and associ- 0.5 ated GHG emissions is relatively modest in the three pilot cities when compared with many cities 0.0 around the world and also suggests that countries Da Nang Surabaya Cebu City can follow different paths in energy consumption Source: Phase I pilot study . and GHG emissions as GDP per capita increases. Note: *Grid based refers to electricity internally generated by the city . This is a separate category for Cebu City because data on end-use sector for electricity generated within the city were not available . For example, the paths taken by Seoul and Tokyo

Figure 1.5. Energy Intensity and GDP per Capita in Select Cities

Kathmandu Size of balloon shows 350 per capita GHG emissions

= 10 tons = 1 ton Beijing Cape 300 Town

Da Nang 250 Surabaya Toronto

Washington Bangkok Delhi Prague 200 Seoul Sydney New York Buenos Aires 150 Cebu City Rio Paris de Mexico Tokyo Janeiro Athens Colombo City Madrid Porto Turin London 100 Energy use per $1,000 GDP (national, in kg oil equivalent) 50

0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP per capita (national, in US$)

Source: Authors . 6 | energizing green cities in southeast asia: three City Synthesis report

offer a greener alternative that calls for a significant in Cebu City and Da Nang are significantly lower reduction of energy intensity of economic activities (per capita) and are caused mainly by diesel and (energy use per unit of GDP) and improvements in gasoline fuels used for transportation and local energy efficiency. Only Cebu City is currently at (diesel-based) electricity generation. the level of energy intensity that makes such a path All three cities source the vast majority of their relatively straightforward, whereas Da Nang and electricity from the national grid. The use of distrib- Surabaya have longer paths to reduce the energy uted renewable energy production (such as solar intensity of their economies. photovoltaic) is at a very early stage in all three The fuel used for electricity generation is a pilot cities. Apart from local power production, key determinant of the intensity of GHG emis- which is particularly prominent in Cebu City (11 sions from energy. In Surabaya, electricity gener- percent of the electricity supply), most electricity ated from coal-fired power plants is responsible for is supplied by the national power grid. Therefore, 36 percent of the city’s emissions. Cebu City and the cities have limited influence over the choice of Da Nang both have significant amounts of renew- primary fuel and over the efficiency of energy con- able electricity generation (49 percent of electric- version processes associated with the production ity in Cebu City is generated by geothermal and and delivery of electricity. Furthermore, electric- hydro, and 30 percent of electricity in Da Nang ity tariffs and pricing policies (such as subsidies), comes from hydropower). Thus, GHG emissions which are key tools for demand-side promotion

Figure 1.6. Surabaya Sankey Diagram

Commercial Electrical Power Electrical Power 5.5 PJ Oil Generation Losses Natural Gas 0.03 PJ 34.9 PJ 43.4 PJ

Residential Electrical Power 7.5 PJ LPG 4.3 PJ Electrical Power Natural Gas 0.01 PJ Distribution Losses 2.3 PJ Public Coal Electrical Power 1.6 PJ 31.1 PJ Electrical Power Gasoline and diesel 0.05 PJ Delivered to Substations 26.8 PJ Industrial Electrical Power 10.6 PJ Natural Gas 2.2 PJ Nat. gas Losses LPG 0.9 PJ Gasoline and diesel 0.7 PJ 0.8 PJ Natural Gas Natural Gas 3.0 PJ 7.3 PJ

LPG LPG 6.5 PJ 6.5 PJ

LPG Losses 1.3 PJ Transportation Diesel Gasoline and Diesel 5.8 PJ 10.0 PJ Gasoline and Diesel 27.4 PJ Gasoline 17.4 PJ Gasoline and Diesel Combustion Losses 21.1 PJ

Primary Energy Electrical Power Energy Supplied Electrical Power Fuel Combustion Productive Energy Supply Delivered to Substations to the City Distribution Losses Losses Used by Customers 107.3 PJ 26.8 PJ 62.4 PJ 2.3 PJ 23.2 PJ 39.2 PJ

Source: SUEEP Pilot City Studies 2011 . Note: PJ = Petajoule . “Public” includes the end-use energy of city buildings, street lighting, city vehicles, water, wastewater, and solid waste management . CHAPTER 1: executive summary | 7 of energy efficiency, are outside city control. Thus, better coordination across departments would close collaboration between the city and national solidify the basis for improving energy efficiency authorities is needed for developing an optimal and reducing GHG emissions on a citywide scale. approach to meet fast-growing urban electricity Therefore, EAP cities will benefit from establish- needs in a reliable, efficient, and environmentally ing strong sustainable urban energy and emissions sound manner. planning approaches that take a comprehensive Breakdowns of GHG emissions roughly match view of energy needs to future proof against the three cities’ energy use patterns but with unsustainable increases in energy consumption some variation. Surabaya’s energy balance (fig- and GHG emissions. ure 1.6) illustrates the importance of fuel choice There is a strong need in the pilot cities for fur- and conversion efficiencies in GHG emissions ther development of energy efficiency governance and the relative importance of energy efficiency and capacity. The planning and management of in the industrial and buildings sectors. All three energy is usually a multi-agency function, but pilot cities will face challenges for achieving none of the pilot cities demonstrated a cohesive their economic development aspirations while approach that encouraged communication among managing growing energy demand and develop- the relevant agencies. In addition, some cities ing local generation capacity. More consistency lacked any means of, or concentration on, coordi- in the cities’ approaches to energy planning and nation between national- and city-level initiatives.

Figure 1.7. Cover page of TRACE web-based tool 8 | energizing green cities in southeast asia: three City Synthesis report

If conflicts between national and local policies, The Tool for Rapid Assessment of City Energy programs, and initiatives exist, cities are advised (TRACE), developed by the World Bank Group’s to proactively lobby the national government for Energy Sector Management Assistance Program action in areas that are outside of the city’s control (ESMAP),2 offers a quick diagnosis of energy effi- or in which the government has promised action, ciency performance across a city’s systems and but delivery is absent or ineffective in the city. The sectors. It prioritizes sectors and presents a range ability to influence the national government effec- of potential solutions along with implementation tively requires cities to build energy governance guidance and case studies. TRACE is a software into their institutional fabric and use it to lead and guide the planning and implementation of citywide energy efficiency programs. 2. For further details please visit http://www.esmap.org/esmap/ node/235.

Figure 1.8. Level of influence of city governments in various sectors

Da Nang Surabaya Cebu City

Land-use planning Public buildings 5 City energy budgeting

4 Capital investment Mass transit operation 3 planning

Building codes 1 Water tariffs

Solid waste Waste tariffs

Wastewater treatment Electricity tariffs

Water supply Power supply

Public lighting Scale: 1 = No inﬂuence 5 = Maximum inﬂuence

Source: Authors . CHAPTER 1: executive summary | 9 platform for assessing the energy efficiency performance of six city sectors or services: urban passen- Figure 1.9. Primary Energy Consumption by sector ger transport, city buildings, water and wastewater, public lighting, solid waste, and power and heat. As 100 shown in figure 1.7, TRACE consists of three prin- 90 cipal components: an energy benchmarking tool 80 Other that compares key performance indicators among 70 Public services peer cities, a sector prioritization process that iden- 60 Commercial tifies sectors with the greatest potential for energy 50 Residential efficiency improvements, and a “playbook” of Transportation Percent 40 tried and tested energy efficiency recommendations 30 Industry that helps in the selection of appropriate interven- 20 tions. The TRACE deployment is a three-month 10 assessment process that includes several weeks of 0 upfront data gathering and benchmarking, sector Da Nang Surabaya Cebu City meetings, and preparation of a final report. Based Source: Phase I pilot study on TRACE results, city governments can identify early wins in key sectors and start developing citywide energy and emissions strategies. cities were generally not aligned with wider city- level planning strategies, giving rise to the poten- Sector Diagnostics: tial for unforeseen challenges affecting the overall Identifying Opportunities energy performance of the sector. Furthermore, The transportation and buildings sectors present trends in the three cities show a shift from non- the largest opportunities for scaling up energy effi- motorized and public transportation to private ciency at the city level. The buildings sector was vehicles. Compounding the problem of growing found to have the most potential for success of demand for private transportation, all three cities energy efficiency measures based on city authori- experience problems with the low fuel efficiency of ties’ high degree of control or influence, and the their current vehicle fleets. Public transportation transportation sector accounted for significant has the potential to reduce energy consumption energy consumption and GHG emissions (figures and GHG emissions as well as to alleviate growing 1.8 and 1.9). The three pilot cities showed the congestion and pollution problems, but the quality potential to benefit from integrated transporta- of public transportation in each of the three cities tion planning and the deployment of green build- is deteriorating. High-capacity transit systems are ing codes. However, public lighting has the most absent in all pilot cities. impact on city authorities’ budgets; therefore, Building stock is set to double in the region dur- energy efficiency improvements in this sector are ing the next 20 years, and the sector’s energy con- a priority. sumption is projected to grow by 30 percent under A comprehensive approach to integrated trans- a business as usual scenario (IEA 2010b). EAP portation planning is needed in all three pilot cit- cities have low building energy intensity (kWh/ ies. The transportation sector in all pilot cities is m2) because the existing building stock consists responsible for significant energy consumption and predominantly of smaller, low-rise buildings with GHG emissions and is thus a key target for action. basic lighting, air conditioning, and appliances. The transportation sector is the single largest user However, new buildings are responsible for a of energy in Cebu City (51 percent), Da Nang (45 rapid increase in energy consumption in the sector percent), and Surabaya (40 percent) and contrib- because they have larger floor areas, and increased utes significantly to GHG emissions in each of the air conditioning, ventilation, lighting, appliances, three cities (Cebu City 40 percent, Da Nang 46 and computers. Therefore, of all energy-consuming percent, and Surabaya 20 percent). Plans to imple- sectors, the buildings sector holds the most prom- ment public transportation systems in the pilot ise for cost efficient energy reduction. Voluntary 10 | energizing green cities in southeast asia: three City Synthesis report

green building codes, which exist in all three pilot blackouts. The recent advances in smart metering cities, reflect this opportunity. However, none of and grid-control technologies offer opportunities the green building codes have been implemented for cities to work with electricity suppliers to pro- within city boundaries yet because most developers mote and harness demand-side energy efficiency and and financiers still perceive the associated market reduce distribution losses. risks to be too high. Many cities in Southeast Asia, including the EAP cities are recycling waste through infor- three pilot cities, have the capability to increase the mal methods, but action is needed to capitalize use of renewable energy and distributed genera- on energy recovery and composting potential. As tion. However, none of the pilot cities has a renew- household income grows within the region, waste able energy master plan that can guide a scale-up generation is expected to increase, underscoring of renewable energy production at the city level. the future need for formalized methods of waste Another way in which cities can improve efficiency processing. However, landfill gas capture projects of energy conversion and reduce GHG emissions is appear to be difficult for the pilot cities—proposals by increasing the use of natural gas and liquefied for old landfills in two of the three pilot cities were petroleum gas, including for distributed generation not successfully concluded largely as a result of and other applications where it can cost-effectively technical and institutional challenges. Cities need replace other fuels and coal-fired grid-based power to be better equipped to take advantage of special- generation. However, these options are fairly ized procurement and funding arrangements such limited at the moment because subsidies (at the as public-private partnership opportunities and national level) favor large power producers. carbon finance. In the public lighting sector, EAP cities can The water and wastewater sectors face numer- take advantage of potential energy efficiency gains ous challenges, including high leakage rates, lack by replacing existing metal halide bulbs with of city-scale infrastructure, and low demand-side more efficient technologies such as high pressure efficiency awareness. EAP cities can take action to sodium bulbs or light-emitting diodes. In addi- improve or develop their centralized infrastructure tion, optimized operation (on and off times) and by prioritizing energy efficient water resources, maintenance regimes can further reduce energy upgrading pumps, and addressing the high leakage consumption by this sector. The public lighting rates that characterize the region. On the demand sector is characterized by a high level of city gov- side, lack of awareness is a major challenge. Some ernment influence and accounts for a consider- EAP cities are implementing awareness campaigns, able proportion of overall city energy expenditure. but as personal wealth and demand for resources However, limited awareness of technology benefits increase, more aggressive demand-side manage- and available financing are major barriers. All cit- ment initiatives will be required. ies displayed some confusion about the benefits of Managing electricity peak load and increasing energy efficient lighting technologies and concern the efficiency of electricity supply are major chal- about the capital funds required for replacement lenges for the three pilot cities, and also provide programs. Cities can address these issues through opportunities for the application of smart grid tech- pilot studies to demonstrate improved energy per- nologies. Within the power sector, direct city-driven formance and financial viability. interventions to affect energy efficiency performance are limited to the demand side and to the provision The Role of Institutions of decentralized renewables, underscoring the need The institutional and policy environment is emerg- for cities to leverage their influence systematically ing, but EAP cities still lack cohesive, citywide at the national level to shape this sector. Cities can, regulatory frameworks in the energy sector. The however, successfully manage the demand side to degree of regulation and government oversight in reduce the extent of capacity expansion and can the energy sector varies by country, but national level off peak loads, mitigating the risk of rolling and regional governments are always critical for CHAPTER 1: executive summary | 11 energy sector management and regulation, and the emissions profile. The outcome, presented in fig- role of city government in setting energy sector ure 1.8, shows that each pilot city generally has policies and regulations is limited. However, this control of investment, budgets, and several local limitation does not prevent cities from planning energy efficiency activities, as well as of certain and deciding what, where, and how urban energy aspects of public lighting, public buildings, and infrastructure should be built. Furthermore, cities wastewater treatment and water tariffs. The main can take steps to influence national policies while areas in which the city authorities’ influence is lim- continuing to influence local behavior through vol- ited relate to power supply and electricity tariffs. untary programs and incentives. Because city gov- Significantly, in most other energy-related areas ernments are intimately involved with every aspect there is a mix of influence concentrated at the city of urban development and management and wield level, with coordination between local agencies power and influence over urban energy demand, more likely if facilitated by the city government. they have the unique ability to tie urban energy This situation reinforces the need for city govern- supply to demand. ments to be aware of their local circumstances so Promoting sustainable urban energy develop- as to tailor their plans to their own needs and gov- ment requires cities to build institutions, strengthen ernance structures. The institutional mapping exer- energy governance, and create conducive regula- cise is also useful for understanding the range of tory frameworks. Despite their significant regula- stakeholders that are involved in energy planning, tory powers, most cities in Southeast Asia have not delivery, and management, and serves to commu- effectively pursued sustainable energy planning nicate to all parties the relevant responsibilities, and management practices. Several development ensuring that all understand why each stakeholder gaps need to be bridged, including improvement is involved. Furthermore, the institutional map- of legal and fiscal frameworks, land-use planning, ping exercise provides a means for understanding and development practices; leveraging of emerging the interplay between agencies. technologies and innovations; and improvement of The limited number of policies enacted at the the institutional structures for effective monitor- city level stems from the requirement to coor- ing, reporting, and management of city energy use dinate and institutionalize energy policies at a and emissions. Filling the institutional gaps will national level as part of the sustainable energy help EAP cities to ensure that urban energy sup- planning process. Implementing energy policies at ply is reliable, efficient, and affordable, and that the national level is more efficient and effective, energy demand and emissions are efficiently man- and ensures consistency in application throughout aged. Cities can optimize operating costs, improve the country. It is in the national government’s best air quality, and improve quality of infrastructure interests to work with individual cities on national- services, while concurrently supporting economic level policies and plans, because the efforts of development and climate change mitigation objec- city governments will be essential in the effort to tives. Given energy and GHG emissions’ cross- achieve national energy and emissions policy goals sectoral nature, city governments need to evaluate and targets. National governments should provide options holistically. Within the urban planning clear guidance to cities on the direction they will framework, options must be assessed across sec- take on sustainable development to enable cities to tors as well as across time because sustainability plan and, where possible, cooperate on issues for initiatives do not always have immediate impacts which national and city goals are aligned. In these or quick roll-out strategies. areas, policies implemented by both the city and During Phase I of SUEEP, an institutional map- national governments can serve to reinforce each ping exercise was undertaken in each city to estab- other, thus making efforts to develop the city sus- lish the principal agencies and actors involved tainably more effective. The city government’s key in the delivery and management of services task would be to take the lead in energy and emis- that affect the city’s energy efficiency and GHG sions planning and to implement and advocate for 12 | energizing green cities in southeast asia: three City Synthesis report

changes that contribute to the advancement of its To maintain momentum and traction after devel- goals. City governments must recognize the level of opment of the plan, an institutional governance influence they have in implementing policies at the mechanism is required to formalize and govern its city level and be fully responsible for sectors over implementation. One of the principal institutional which they have significant control (for example, recommendations is for each of the pilot cities to street lighting, public buildings, and wastewater establish a citywide energy and emissions task force treatment). For sectors in which national policies to improve coordination and establish an integrated affect the city, the city government should work approach to energy planning and management. closely and establish a strong dialogue with the In all three cities, a committee or like group has national government. The city can seek support or already been entrusted with the governance of vari- financing for measures that are compatible with ous aspects of energy and emissions management. national goals and can ensure that city policies Existing committees can be used by extending their are not negatively affected by national ones. City mandates through broader terms of reference and governments should also work with national agen- enhanced powers (if necessary) to take on the role cies and departments to coordinate activities and of the energy and emissions task force. develop a mutual understanding of responsibilities Because existing urban planning processes in and expectations. the pilot cities rarely include a comprehensive city- A comprehensive sustainable urban energy and wide assessment of and plan for energy needs and emissions plan should demonstrate a clear under- systems, the pilot cities could consider proposing standing of which of its components can be aided the plan for formal review and agreement by an through national programs, and its leaders should executive authority to embed the energy and emis- engage with national agencies from the outset to sions plan into a long-term citywide strategy. By determine the level of support that may be forth- doing so, projects would no longer be at the mercy coming. In discussing areas of common interest of political cycles, and the responsibility to follow between the city and the national governments, cit- through on the plan must be taken seriously. The ies can use the opportunity to secure support or pilot cities will have to consider the appropriate- financing from the national government to imple- ness of this route based on their respective gover- ment national policies. For example, in Da Nang nance structures. several programs with significant energy efficiency Monitoring and reporting systems are crucial components were implemented at the city level for providing credibility to energy and emissions with coordination and cofinancing by a national management; therefore, policies need to be imple- agency (see appendix 3). mented carefully to ensure they do not increase costs unnecessarily, and that they address the Governance Mechanisms needs of investors who may, at some point, become SUEEP results in a strategic plan guided by a involved in financing SUEEP components. The “vision” and a set of objectives that city authorities establishment of a city-level platform for monitor- seek to achieve. Reliability, efficiency, and afford- ing and managing energy and emissions is one of ability of energy supply; reduction of GHG emis- the first practical steps in implementing the vision sions; and the city’s adaptation to climate change of sustainable urban energy development, and is should be strongly featured as strategic objectives a prerequisite for mobilizing “green financing,” in this process. An integrated strategic planning which requires verification and certification of process enables providers of public services, from reductions in GHG emissions. mass transportation to wastewater treatment, to Of the pilot cities, Da Nang had the most read- contribute and identify opportunities that would ily available energy data from a variety of govern- lead to greater energy efficiency, cost savings, and ment agencies; collection of energy data was much reduced GHG emissions, while helping to define less routine in Cebu City and Surabaya. Even when investment programs that respond to future data were available, sharing of data across depart- demand projections. ments was limited in all three cities. Sharing of CHAPTER 1: executive summary | 13 information, experiences, and knowledge will be Institution building enables cities to deploy a major opportunity for improvement of energy effective energy efficiency programs by improv- efficiency for all three cities. For example, analy- ing oversight and coordination of various energy- sis of trending information on population, vehicle related initiatives across sectors. All three pilot use, traffic, economic growth, and industry would cities had begun creating appropriate gover- help all city agencies to make better decisions with nance structures, but it did not appear that they regard to energy consumption and energy policy. had adopted a comprehensive approach by, for Effective monitoring and reporting systems instance, actively engaging a broad range of stake- should be structured and formalized in a way that holders and legislatively formalizing the energy demonstrates a high level of integrity and reliabil- planning bodies. Cities need to ensure that energy ity and should cover the following: governance is adequately structured to allow effective communication, coordination, and action. n Institutional arrangements, roles and respon- The pilot cities also demonstrated a need for a sibilities assigned to individual agencies and SUEEP process to achieve improved energy man- personnel. agement and GHG mitigation. The SUEEP process n Boundaries, defining what the energy and emis- provides a comprehensive approach to planning sions inventories have included and excluded. to maximize energy efficiency across sectors, n Sources of data, including data from national with the intent of helping cities to develop their agencies to city government collection arrange- own initiatives using different mechanisms. The ments and so forth. How data are collected SUEEP process also defines governance systems for and reported (for example, through surveys or implementation and for monitoring and report- meters), and the frequency with which data are ing, which are important outcomes because they collected, should all be defined clearly. improve energy governance in the city and create n Data collation methods, to provide transpar- a common platform for collaboration between the ency to the way in which raw data are pro- city and donors, civil society, and the private sec- cessed. This is particularly important if proxy tor. The SUEEP process also provides a framework data or extrapolations have been used, or where enabling city governments to prepare a pipeline of data are incomplete. investments in energy efficient infrastructure (from n Quality assurance processes, to demonstrate mass transportation to wastewater treatment) as that the methods, processes, and sources used well as to mobilize “green financing” support. have been adequately audited or reviewed to Despite the benefits of such a holistic approach, identify gaps, omissions, and potential improve- none of the pilot cities had established an inte- ments to the monitoring and reporting process. grated approach to energy planning or GHG miti- Monitoring and reporting systems should strive gation, and the study revealed significant conflicts for continual improvement to make them accurate, between various city plans, for example, transpor- reliable, consistent, transparent, and complete. tation planning and land-use planning. Although a comprehensive approach to planning, Next Steps like the SUEEP process, is ideal, cities have differ- The results of the three pilot city studies demon- ent levels of capacity, resources, and priorities. Given strated that there are significant opportunities for this, city governments could engage with energy energy management and GHG mitigation in EAP planning at three different levels. At the first level, cities, but challenges to achieving improvements the pilot cities could undertake a high-level, rapid remain. Lack of coordination and planning, and assessment of its energy efficiency measures (for deficiencies in technical know-how, funding, and example, TRACE). The second level entails deeper procurement capability all impede progress. Cities sectoral engagements in selected areas (for exam- can address these challenges through improved ple, public-private partnerships [PPPs] and sector- energy governance and a robust energy efficiency wide interventions). A city that is fully committed and GHG planning framework. 14 | energizing green cities in southeast asia: three City Synthesis report

to comprehensive planning could approach it from Figure 1.10. Cover of Sustainable the third level—implementation of the full SUEEP Urban Energy and Emissions guidelines. Planning Guidebook City governments are in a unique position to achieve SUEEP goals through their own activities. Although their institutional arrangements and capacity are still works in progress, city governments perform several roles, including policy making, regulation and enforcement, and leading and facilitating across a broad range of stakeholders. A city government is the only body with this unique blend of roles and relationships, reinforced by the credibility and tenure to facilitate citywide, comprehensive, and strategic energy and emissions planning. City governments should also engage in strong dialogue with national governments, and where appropriate, align SUEEP with national and regional programs. This would attract broader support for SUEEP, which could be channeled to locally led initiatives and specific projects driven by the priorities and unique set of circumstances in each city.

Figure 1.11. Sustainable Urban Energy and Emissions Planning Process

MJ 2 Urban energy and $ CO2 GHG emissions diagnostics 3 Goal setting (CO ) 2 Step 4: Inventory energy and emissions Step 7: Make the case for SUEEP Step 5: Catalog existing projects Step 8: Establish goals and initiatives Step 9: Prioritize and select projects Step 6: Assess potential energy and emissions projects

Our City Energy 1 Commitment Plan Step 1: Create a vision statement Step 2: Establish leadership and organization 4 Planning Step 3: Identify stakeholders and links Step 10: Draft the plan Step 11: Finalize and distribute Status Report the plan

6 Monitoring 5 Implementation and reporting Step 12: Develop content for high-priority projects Step 13: Improve policy environment Step 16: Collect information on projects Step 14: Identify ﬁnancing mechanisms Step 17: Publish status report Step 15: Roll out projects CHAPTER 1: executive summary | 15

SUEEP is a continuous process that evolves to develop their own SUEEP processes and cre- through institutional reform, capacity building, ate and start implementing their own sustainable and implementation of priority investments. To urban energy and emissions plans, the next phase develop a successful SUEEP process, cities must of the program will be the creation of a web-based establish sustained city government commitment, platform that cities can use to measure and report create a baseline based on energy and emissions energy consumption and GHG emissions, which is diagnostics, articulate a vision and goals, priori- essential for the creation of carbon assets (such as tize projects, develop an implementation plan, and GHG emissions reduction credits) and mobiliza- regularly monitor and report on implementation tion of carbon financing support. progress. SUEEP has many benefits, including the Looking ahead, the attainment of long-term, following: sustainable urban energy and emissions development is not a goal easily defined or achieved. But n identification of the principal energy and emis- the SUEEP process and its partners bring EAP cities sions issues facing the city; one step closer through three critical contributions: n establishment of what can be achieved by the city government, as well as with the aid of other Institutional Development and agencies, and how it can be achieved; Capacity Building n integration of energy and emissions issues into The SUEEP process introduces a number of key wider city planning processes; foundation-building activities required to sup- n coordination across sectors and agencies and port long-term urban green growth strategies. The the establishment of shared goals; and SUEEP guidelines bring clarity and international n establishment of governance, monitoring, and best practices to the institutional reform, policy reporting processes essential to future manage- development, and stakeholder outreach processes ment of the issues, and that are prerequisites for necessary to achieve targets. The SUEEP pro- third-party involvement in project and carbon cess also includes accounting tools cities can use finance. to quantify their energy consumption and GHG emissions for use in target-setting, as well as for Building on the three-city pilot work completed ongoing monitoring and reporting of results and in Phase I, the project team developed a SUEEP implementation progress. Guidebook and Toolkit that cities can use to facilitate the development of their institutional capac- Creation of a High-Quality Pipeline of ity-building programs and sustainable energy and Green Investments emissions plans. The Guidebook (see figure 1.10) Policy and institutions alone will not create green and Toolkit are designed to give cities a starting growth outcomes—investments in energy efficiency point to begin planning for a more energy efficient improvements and GHG mitigation activities will development path, guiding leadership through also play an important role. Through the SUEEP each key step of the process, including crafting a process, city leadership can evaluate investments vision statement, forming a task team, communi- comprehensively, based not only on their fiscal cating with stakeholders, measuring urban energy return, but also on their relative green impact and consumption and emissions, setting green targets, contribution to other social and economic devel- preparing a sustainable urban energy and emis- opment goals. The result is a well-defined pipeline sions plan, implementing and financing the plan, of green investment projects that can be commu- and ongoing monitoring and reporting (see figure nicated not to just local stakeholders and financ- 1.11). ing institutions, but also to the international donor The SUEEP Guidebook will be tested by the community and potential partners, including pri- pilot cities and refined to support regionwide vate investors. replication. In addition to assisting pilot cities 16 | energizing green cities in southeast asia: three City Synthesis report

Mobilization of Financing identifying means to measure success. The SUEEP The international donor community’s interest in process attenuates these challenges by (i) building supporting sustainable infrastructure for green an institutional and policy foundation for support- growth in rapidly developing EAP cities is substan- ing green investments; (ii) setting up a quantitative tial. However, there have been many challenges: system of indicators for identifying green growth defining green city goals; identifying those activities targets and monitoring and reporting progress over that would optimally support green growth goals; time; and (iii) creating a long-term green growth ensuring local governments have the capacity and plan and a well-defined, thoroughly evaluated pipe- institutional structures needed to support both con- line of bankable investments that can be easily com- struction and maintenance of green investments; and municated to potential investors and financiers. Chapter 2 Introduction and Background

Urbanization, Economic Growth, and Impact on Energy and Greenhouse Gas Emissions The movement of people from rural areas to cities is a prominent feature of the development process and a defining feature of the twenty-first century. The trend is likely to continue. The United Nations projects that approximately 60 percent of the world’s population will live in cities by 2030 as a consequence of the rapid urbanization in developing countries (see figure 2.1).

Cities, which account for about 70 percent of emissions in 2006 (IEA 2008). These figures are global GDP, are engines of economic growth.1 forecasted to grow—by 2030, cities’ share of Their rapid expansion is shaping energy demand energy demand and associated GHG emissions and greenhouse gas (GHG) emissions. According are projected to increase to about 73 percent and to the International Energy Agency (IEA), cities 76 percent, respectively (UN 2010). IEA further accounted for about 67 percent of global energy estimates that approximately 80 percent of the requirements and 71 percent of world GHG growth in energy use and 89 percent of the growth in GHG emissions by cities is expected to occur in developing countries, where the vast majority of 1. “Cities” refers to all urban areas including towns; the terms “city,” “urban,” and “municipal” are used interchangeably in people remain underserved by basic infrastructure this document.

Figure 2.1. Urbanization, 1950–2050

100 Australia and New Zealand 90 North America

80 Europe

70 World 60

50 Latin America and Africa the Caribbean Southeast Asia

Urbanization (%) 40

30 Asia

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: UN 2010 .

17 18 | energizing green cities in southeast asia: three City Synthesis report

services and where city authorities are underre- and wider use of motor vehicles for mobility of sourced to shift current trajectories. goods and people in urban areas. The share of Urban growth and increased energy use are biomass and waste consumption, at 24 percent, fundamentally linked to the economic growth that is much lower in cities than in rural areas. Use of cities need to develop sustainably. Global urban renewables in cities is higher (72 percent), mainly energy use patterns show an increasing trend in for power generation in Organisation for Economic energy intensity, measured by energy used to pro- Co-operation and Development countries. duce one unit of GDP. According to IEA, global city Given the close links between rapid urbaniza- energy use will grow by 1.9 percent per year, from tion, economic growth, and energy and GHG emis- approximately 7,900 million tons of oil equivalent sions growth, the way cities are planned, financed, (Mtoe) in 2006 to 12,374 Mtoe in 2030, compared and managed will be a determinant of sustainabil- with an expected overall global growth rate of 1.6 ity outcomes and of the lives and livelihoods of city percent in energy use in the same period. Because residents today and into the future, thereby plac- of high levels of energy intensity in urban areas, ing cities at the forefront of the climate change and the pattern of energy use in cities will increasingly sustainability agenda. Therefore, policy makers shape global energy use. have a vital role in directing the sustainable devel- The share of natural gas (82 percent) and elec- opment of their cities through the identification of tricity (76 percent) consumed in cities in 2006 the main drivers of energy consumption and GHG was disproportionate to the average consumption emissions—and the implementation of policies and of all fuels (see figure 2.2), and much higher than measures that aim to minimize the growth of these the share of the world’s population living in cit- factors while enabling economic growth. ies. This imbalance results from the more extensive The rest of the chapter focuses on Southeast infrastructure in cities for energy distribution and Asia. It is one of the world’s least urbanized higher appliance ownership rates in developing- regions, but its urban population is growing rap- country cities relative to rural areas. Coal con- idly—the rate of population growth is 1.75 times sumption in cities also accounts for 76 percent of faster than worldwide urban population growth the global total, mainly from coal-fired power gen- (Yuen and Kong 2009). This rapid urbanization eration. Figure 2.2 also illustrates that the share of rate means that Southeast Asia faces huge chal- oil consumed in cities (63 percent) is smaller than lenges in meeting increasing energy demand in a the average of all fuels, resulting from the higher sustainable manner. penetration of electricity for heating and cooking

Figure 2.2. World Energy Demand in Cities, 2006

9,000 90 7,908 8,000 82 80 76 76 75 76 7,000 72 70 67 63 6,000 60 5,000 50 4,000 40 3,000 2,519 30 2,330 1,984 24 2,000 1,019 20 Cities as percent of total

Million tons of oil equivalent 1,000 551 10 195 280 48 0 0 Coal Oil Natural Nuclear Hydro Biomass Other Electricity Total gas and waste renewables

Source: IEA 2008 . CHAPTER 2: introduction and background | 19

Southeast Asia: Trends in Economic its newfound wealth to purchase goods other than Growth and Urbanization basic necessities. Stability of income and employ- According to the Southeast Asian Economic ment, and increasing levels of home ownership, Outlook 2010, economic indicators point toward are also characteristics of increased urbanization. steady economic growth in the region based on Most important, consumerism in the East Asia and strong growth of exports, domestic consumption, Pacific (EAP) region has become a significant force and private investment, supported by improved in the urban economy. business sentiment (OECD 2010). The average Effects of Urbanization on Energy Demand economic growth rate of the six major coun- and Energy Type tries in Southeast Asia (Indonesia, Malaysia, the With urbanization and economic growth, energy Philippines, Singapore, Thailand, and Vietnam) consumers are expected to shift from carbon diox- reached 7.3 percent in 2010, compared with 1.3 ide (CO2)-neutral energy sources (such as bio- percent in 2009. These six countries constituted 95 mass and waste) to CO2-intensive energy sources percent of total GDP and 86 percent of total popu- (fossil fuels), leading to increasing GHG emis- lation in Association of Southeast Asian Nations sions in cities (IEA 2008). This trend is apparent (ASEAN) countries in 2009. in Southeast Asia. Urbanization and economic Real annual GDP growth in the six Southeast growth in Southeast Asia have not only resulted Asian countries is projected to average 6 percent in a continued rise in the proportion of global during 2011–15 (see figure 2.3). The region’s steady energy consumed by cities, but have also caused growth will be led by above-average growth rates profound impacts on the type of energy used. Oil in Indonesia and Vietnam, supported by economic and gas dominate the total primary energy supply growth that is likely to rely on domestic consump- mix of the five major economies of Southeast Asia tion and investment. (Indonesia, Malaysia, the Philippines, Thailand, Economic growth in Southeast Asia is induc- and Vietnam), with coal accounting for a smaller ing the migration of people seeking work, thereby portion of the energy supply mix (see figure 2.4). resulting in an increase in urban population. Although coal accounts for a smaller portion Between 1950 and 2010, the urban population in of the energy supply mix than do oil and gas in the region (currently about 241 million people) these five economies, dependence on coal has sub- grew from 15.5 percent to 41.4 percent and is stantially increased during the past three decades. expected to increase to 50 percent by 2025. Coal-exporting countries such as Indonesia and The effects of urbanization include a signifi- Vietnam have coal reserves and have significant cant increase in an educated urban middle class incentives to continue increasing the share of coal that enjoys greater disposable incomes and uses in their energy mix. For coal importers—Malaysia,

Figure 2.3. Real GDP growth rates in Southeast Asia

16 2010 2015Average, 2003–07 Average, 2011–15 14 12 10 8 6 4

Annual percent change 2 0 Indonesia Malaysia Philippines Singapore Thailand Vietnam Average of the six countries

Source: OECD 2010 . 20 | energizing green cities in southeast asia: three City Synthesis report

Figure 2.4. Oil and gas dominate Southeast Asia’s primary energy supply mix, 2009

202 Mtoe 67 Mtoe 39 Mtoe 103 Mtoe 64 Mtoe 12,150 Mtoe 100

50 Percent 40

0 Indonesia Malaysia Philippines Thailand Vietnam World Coal Oil Gas Hydro Biomass Nuclear Geothermal, solar, other

Source: IEA 2010a . Note: Mtoe = million tons of oil equivalent .

the Philippines, and Thailand—dependence on of gas use in Southeast Asia in response to energy imports to meet coal demand does not raise energy security and environmental concerns. security concerns because of the relatively low Oil and gas will remain major sources of pri- share of coal in their energy mixes and the less mary energy supply in Southeast Asia (accounting volatile nature of coal prices (compared with oil) for 35 percent and 16 percent, respectively, in the in the international market. For these reasons, the ASEAN energy mix by 2030), but coal is expected countries in Southeast Asia are likely to increase to have the fastest annual growth rate, at 7.7 per- their use of coal significantly unless the environ- cent in the next 20 years in the business as usual mental costs are internalized sufficiently to reverse scenario. This will double the share of coal in the this trend. ASEAN energy mix from about 15 percent in 2007 Southeast Asia’s dependence on oil as an energy to 30 percent by 2030. With a movement toward

source has declined during the past three decades, more carbon-intensive fuels, CO2 emissions per although the extent of this decline has varied appre- unit of energy consumption will increase from

ciably among the countries. Vietnam increased its 0.49 tons of CO2 equivalent per ton of oil equiv-

share of oil in total primary energy consumption alent (tCO2e/toe) in 2007 to 0.63 tCO2e/toe by from 1980 to 2006, but Indonesia, Malaysia, and 2030 in a business as usual scenario. Even in Thailand reduced their shares of oil to 40–50 per- an alternative policy scenario that is being consid- cent from 80–90 percent in the same period. ered by ASEAN countries to mitigate the rise of The five countries have significantly increased GHG emissions, the carbon intensity of energy their dependence on natural gas as an energy source consumption is expected to increase to 0.59

over the past three decades. Fuel switching from tCO2e/toe by 2030. The main reason for the rapid coal to gas has been particularly notable in electric- increase in the share of coal and the carbon inten- ity generation. In the five countries, coal’s share of sity of energy consumption is the rapidly growing power generation is only 21 percent, much smaller demand for electricity originating largely in the than the 57 percent share of gas, indicating that expanding urban areas that are supplied by coal- there is still considerable room for the expansion fired power plants. CHAPTER 2: introduction and background | 21

An analysis of the energy consumption patterns services that use electricity. City sprawl, which has in the five major economies of Southeast Asia over increasingly led to the development of areas that two different periods—1990 and 2009—brings the are not easily served by public transportation and following observations to light: which discourages pedestrians, has resulted in an explosion of personal motor vehicles—cars and n Total energy consumption and energy con- motorized two-wheelers. In addition, the lifestyles sumption per capita are still small fractions of and corresponding energy use profiles of urban that of developed countries (see figure 2.5). middle- and upper-income residents in the develop- n Vietnam has substantially reduced its energy ing world progressively mimic those of their coun- intensity although there is much room for terparts in the developed world. improvement because of its higher energy inten- Despite these trends, energy usage in Southeast sity levels in comparison with the EAP region Asian cities is still generally low because of the (see figure 2.6). relative poverty of the majority of the population. Implications of Urbanization for Energy Use Because energy use efficiency is influenced directly Energy is intrinsic to urban settlements, embedded and permanently by urban form and density, cit- in the built environment; directly used to power ies’ investment choices with regard to urban infra- socioeconomic activity, transport, and communica- structure (transportation, water, energy, and so tions; and enabling the provision of city government forth) and capital will have a major impact on both services. Urbanization facilitates the transition from energy demand and associated GHG emissions. traditional energy sources (oil and coal) to alterna- Implications of Urbanization for GHG Emissions tive sources (gas and electricity). The urban poor rely Southeast Asia contributed 5,187 million tons of on biofuels to meet a major portion of their energy CO2 equivalent (MtCO2e) (12 percent) to global needs, resulting in pressure on such resources. GHG emissions in 2000, of which 59 percent was The growth in income in urban areas is leading derived from Indonesia, 6 percent from Thailand, to greater demand for new services, particularly 4 percent from the Philippines, 2 percent from

Figure 2.5. Changes in Annual Energy Consumption and Energy Consumption Per Capita

United States United States

China China 2009 India India 1990

Japan Japan

Australia Australia

Vietnam Vietnam

Thailand Thailand

Indonesia Indonesia

Philippines Philippines

Malaysia Malaysia

Singapore Singapore

0 500 1,000 1,500 2,000 2,500 0 2,000 4,000 6,000 8,000 Mtoe kilograms of oil equivalent per capita

Source: IEA 2012 . 22 | energizing green cities in southeast asia: three City Synthesis report

Figure 2.6. Changes in Annual Energy Intensity

1.8

1990 2009 1.6

1.4

1.2

1.0

0.8

0.6 toe per thousand 2005 USD

0.4

0.2

India Japan Australia Malaysia Thailand Vietnam Indonesia Philippines Singapore United States

People’s Republic of China

Source: World Bank 2010a .

Vietnam, and 1 percent from Singapore. The Per capita GHG emissions in Southeast Asia are energy sector was the second largest contributor of higher than the global average, but still low com- GHG emissions in the region2 (see figure 2.7). pared with developed countries. But CO2 emissions are expected to double by 2030, which means that more action should be taken to enable Southeast 2. The largest contributor of GHG emissions in Southeast Asia is land use change and forestry, but the largest rate of increase Asian cities to manage energy use effectively to

in GHG emissions is occurring in the energy sector. minimize the impact of CO2 emissions.

Figure 2.7. GHG emissions in Southeast Asia (1990–2000)

6,000

1990 1995 2000 5,000 e 2 4,000

3,000

Million tons of CO 2,000

1,000

0 Energy Industrial Agriculture Land use Waste Total process change and forestry Source: ADB 2009 . CHAPTER 2: introduction and background | 23

Southeast Asia has 173,251 km of coastline Inadequate solid waste sector. Local governments and high concentrations of population and eco- face huge problems disposing of waste in urban nomic activity in coastal areas. Climate change will areas. Common disposal methods for solid waste expose them to increases in sea level, river flood- in Southeast Asia, such as open dumping and land- ing, and volatile weather conditions. The poor fills, are becoming limited because urban local gov- will be most affected because they live in the most ernments encounter greater and greater difficulties vulnerable locations (low-lying flood-prone areas, in finding suitable sites within city boundaries. marshlands, steep slopes) and lack the resources to Incineration (which has its own negative environ- protect themselves. mental impacts) is costly in the region because much Increasing Concerns about Urban Environmental of the waste consists of organic matter with a high Sustainability moisture content, requiring high temperatures. The rapidly growing cities in Southeast Asia are Cities can turn these environmental challenges encountering mounting issues with environmental into opportunities by promoting sustainable energy sustainability. They face a range of urban environ- solutions across urban sectors. Good environmental mental challenges, from rapidly expanding but stewardship in energy planning and management poorly planned cities to polluted air and water; is essential to mitigate local, regional, and global inadequate water supply, sanitation, and energy; environmental impacts that affect cities’ long-term waste management; deficient drains; and flooding. well-being. Action is required on three intercon- Some of the growing concerns related to environ- nected fronts: increasing eco-efficiency and greening mental sustainability include the following: of urban development; increasing inclusiveness and equity; and increasing resilience to climate change Inadequate sewerage systems. Piped sewer sys- and other shocks and crises. These actions are cross- tems reach only 15 percent of the urban popula- sectoral and would require fundamental changes to tion of Manila (the Philippines). Domestic waste the current development paradigm. of some 192,000 tons yearly enters drains and groundwater and receives only minor treatment in Enhancing the Institutional and unmaintained septic tanks. In Indonesia, the rate Policy Environment of sewerage and sanitation coverage is very low. In general, national and regional legislators and Domestic sewerage, industrial effluents, agricul- governments are responsible for enacting energy tural runoff, and solid waste are polluting surface sector policies and regulations. The degree of regu- water and groundwater. lation and government oversight in the energy sector varies by country. In many large economies, Polluted rivers. Rivers in Vietnam’s major cities are the energy sector is governed by numerous policies severely polluted by untreated industrial wastewater. and regulations and is influenced by a mix of gov- Lakes, streams, and canals serve as sinks for domes- ernment institutions arising from concerns about tic sewerage and municipal and industrial wastes. energy security, market competition, social and environmental issues, and other considerations. Poor air quality. Combustion of fossil fuels for Fuel pricing is also often subject to government power and transportation is causing signifi- intervention through taxes and subsidies. Energy cant deterioration in local air quality in many sector policies and regulations used to be sup- of the region’s largest cities. The United Nations plycentric, but this orientation has changed sub- Environment Programme has ranked Jakarta, stantially since the first oil crisis in 1973. Many Indonesia, and Bangkok, Thailand, among the countries now implement regulations and stan- world’s most polluted megacities. Poor outdoor dards requiring minimum energy performance in air quality in many Southeast Asian cities has been energy-consuming equipment, appliances, and linked to severe health impacts. Extreme levels of building components. Governments also initiate urban air pollution result in about 800,000 deaths special policies and programs to create incentives per year in the world, out of which 65 percent for the adoption of renewable energy and energy- occur in the Asia Pacific region. efficient appliances and equipment. 24 | energizing green cities in southeast asia: three City Synthesis report

The multitiered and multifaceted nature of lack of financing for sustainable development solu- energy sector management and regulation leads to tions; inadequate land-use planning and urban complicated institutional interactions. Institutional land development; insufficient design approaches and regulatory settings for urban energy planning and methodologies, technologies, and innovations; and management in the Southeast Asian region are and lack of institutional structures and capacity currently not conducive to addressing challenges building for effective monitoring, reporting, and and capitalizing on opportunities. management of city energy use. Solutions to bridge National and regional governments play critical these gaps are discussed below. roles in energy sector management and regulation. Strengthening Legal and Fiscal Frameworks National and regional energy policies, legislation, Regulatory and fiscal measures can both be imple- and regulations influence the transparency, con- mented to internalize environmental and social sistency, and predictability of modern energy sup- costs. Legislative measures could be introduced ply systems in cities and address common social to change market incentives and signals and bring and environmental issues. For example, national about changes in consumers’ and producers’ and regional governments can establish general behavior. Examples include the requirement that provisions that give cities incentives to adopt sus- public vehicles in Delhi (India) use compressed tainable energy practices. These provisions could natural gas, passenger occupancy requirements for include renewable energy feed-in tariffs that individual automobiles in downtown Jakarta, and mandate electricity utilities to purchase wind- or the banning of plastic bags in Dhaka (Bangladesh). solar-generated electricity at set prices, and energy Fiscal measures need to be introduced to reflect performance standards that set minimum energy the true cost of providing natural resources, par- efficiency levels for new appliances and new build- ticularly water and energy. Costs can be more ings. Conversely, national and regional regulations accurately reflected through measures such as pro- may hinder achievement of the sustainable energy gressive pricing, which actively subsidizes the poor measures of cities. For example, in most countries, and penalizes overuse and wastage. For example, a the prevailing regulations on electric utilities dis- reasonable level of water, necessary to meet basic courage demand-side management and installa- needs, could be provided for free or at a subsidized tion of distributed generation facilities, including level, if needed, for social developmental reasons, renewable technologies. and more intensive use or wastage could be priced The ability of the city government to set broad at a progressive rate. Similar policies could be energy sector policies and regulations is limited. enacted in the provision of electricity. In the same However, this should not prevent cities from plan- vein, congestion pricing for automobiles entering ning and deciding what, where, and how urban downtown areas is a fiscal measure to internalize energy infrastructure should be built. Cities can environmental costs. Such policies have been intro- take steps to influence national policies, while seek- duced in many Southeast Asian cities but need to ing to influence local behavior through voluntary be strengthened and more effectively enforced. programs and incentives. Because city governments Penalizing the overuse and wastage of natural are intimately involved with every aspect of urban resources, particularly water and energy, would development and management and wield power encourage businesses and households to conserve and influence over urban energy demand, they resources and adopt efficiency measures. Actively have the unique ability to tie urban energy supply making urban infrastructure, particularly water, and demand together. Cities are among the most transportation, and buildings, more energy effi- effective actors in pursuing sustainable energy solu- cient would also reduce the carbon footprint of the tions. Despite this, most cities in Southeast Asia city. Governments would have to take a long-term have not vigorously pursued sustainable energy view on issues and implement policies that may planning and management practices. be costly in the initial phases or may not result in Several development gaps need to be bridged, short-term benefits—but have sustained benefits including inadequate legal and fiscal frameworks; over the long term. CHAPTER 2: introduction and background | 25

Financing Sustainable Urban Development challenges that require a rethinking of urban plan- Solutions ning, management, and governance approaches How urban development is financed is crucial to and institutions. Strengthening and extending the sustainability of cities. Key challenges include planning laws to cover suburban areas is crucial for reforming existing city government finance systems sustainable urban development. Examples include to make them more effective, accessing new exter- local laws and regulations in China, Vietnam, and nal sources of finance, and building stronger links Pakistan that create local intergovernmental agen- between the formal urban development finance cies that cover both urban and suburban areas, system and financing systems for the urban poor. empowering them to strengthen urban planning Although functions and executive authority laws and regulations in these areas. in many countries in Southeast Asia have been A major area for policy reform is urban land devolved to a local level, fiscal authority often use. The commoditization of urban land must be remains at higher levels of government, and local balanced by the recognition that land is a public governments are not able to spend sizable funds and environmental good. Planning and land-use on urban development without authorization from restrictions need to be imposed to increase the higher levels. Even in countries in which local gov- social and environmental functions of land, such ernments may have such authority, many cities as the provision of housing to the urban poor and lack the capacity to make full use of their theoreti- the development of urban green spaces, parks, and cal powers. Reforming the city government finance mass transit corridors. sector and building local government capacity are Promoting Innovation and Technologies therefore important development strategies. Cities are major consumers of energy and emitters Making cities sustainable will require the of GHGs, but they also have the potential to create infusion of funds to finance investment in urban solutions to urban problems because they are cen- infrastructure and services such as mass transit sys- ters of knowledge and of technological and pro- tems, water and sanitation systems, and the like. cess innovation. The EAP region is bursting with Although internalizing environmental costs (for innovative technologies, approaches, and practices example, through the implementation of a carbon that could lead the way toward an inclusive and tax) will increase funds available for investment sustainable future. in urban infrastructure, additional funds will be Recent advances in smart metering and grid- required, at least in the short term. New sources control technologies offer opportunities for cities of finance need to be tapped to provide funding for to work with electricity suppliers to promote and sustainable urban development. harness demand-side energy efficiency and reduce Improving Land-Use Planning and Urban distribution losses. The challenge is to systemati- Development cally identify, document, analyze, adapt, and scale Cities in Southeast Asia have dense cores with up this technology along with other innovative extended suburban areas that tend to grow along solutions. To do so requires the creation of a fis- transportation corridors. New urban develop- cal, regulatory, and institutional environment that ments are often unplanned and haphazard—with allows individuals, businesses, communities, and closely intermingled industrial, residential, com- civil society organizations, and even government mercial, and agricultural land uses—and lack agencies, to find innovative solutions. It would also adequate infrastructure and services. Moreover, require research and training institutes to identify because development occurs along transportation and analyze the reasons for the success of certain corridors, large tracts of land farther away from technologies and to assist governments in scaling the transportation corridor are not developed, up such technologies and innovations. resulting in “ribbon” or “strip” development that Introduction of new technologies, production is environmentally unsustainable and resource processes, and innovative practices often means intensive. Urban development often extends across that those with access to information, knowledge, several provincial and jurisdictional boundaries, and capital benefit whereas those that do not have posing new economic, social, and environmental access are left behind. New technologies often 26 | energizing green cities in southeast asia: three City Synthesis report

mean higher prices given the need to factor in personnel, and so forth—also bring unique biases, costs associated with development—and the poor expertise, incentives, and constraints to efforts often lose out. Therefore, policies that minimize to improve energy efficiency. These constraints the impact on the poor would have to be devel- are especially apparent in cities in which infra- oped and implemented. For example, the cost of structure provision and services lag behind demo- grid-control technologies could be recovered from graphic growth and geographic expansion. These consumers other than those in non-urban slums, challenges are compounded by the cross-cutting whose usage of electricity is at the most basic level. nature of energy services, which often leads to deci- Strengthening Institutional Structures and sions about their efficient use falling through the Building Capacity cracks. At the local level, some of these issues may To improve the resilience of Southeast Asian cities be addressed through policies and programs, but to climate change impacts, institutional strengthen- strong mayoral leadership is often needed to insist ing and capacity building are required. Knowledge that the parties work together. about “green growth” and climate change needs Promoting Sustainable Urban Energy to be embedded in institutions and imparted to the Solutions people who staff them so they can make effective Sustainable urban energy—the provision of energy decisions, allocate resources efficiently to reduce that meets the needs of the present without compro- escalating energy costs, and manage risk and imple- mising the ability of future generations to meet their mentation of programs. To enable this, local and global data would have to be made available, and own needs, within a sound urban planning frame- expertise in energy sector analysis, international work—is critical to sustainable urban development. policy best practices, and carbon finance flows will By ensuring that urban energy supply is secure, reli- have to be developed. able, and affordable, and that energy demand is effi- Sustainable urban energy planning and prac- ciently managed, cities can optimize operating costs, tices are elusive without realistic metrics to quan- improve air quality, and improve quality of infra- tify performance (using indicators) and to measure structure services, while concurrently supporting eco- progress (using benchmarks). Indicators and bench- nomic development and climate change mitigation marks do not merely reveal gaps; they also inspire objectives. These objectives require consideration of actions to better manage services without reduc- issues beyond those in the energy sector, to sectors ing affordability or compromising the environ- that use energy to produce urban services (notably ment. Developing metrics is a crucial but difficult the transportation and water supply and sanitation task because every city is unique in its energy use sectors). Lifetime cost savings and local and global and levels of service. Hence, indicators need to be externalities are key considerations for city govern- selected carefully to avoid distortions. A small set ments in prioritizing sustainable energy measures. of key energy indicators will allow the most mean- Given energy’s cross-sectoral nature, city gov- ingful cross-city comparisons. An energy account- ernments need to evaluate options comprehen- ing framework should be established, supported by sively. Within the urban planning framework, a structured data collection template and a base- options have to be assessed across sectors as line against which progress will be measured. This well as across time, because sustainability initia- framework will help city authorities effectively tives cannot always be rolled out quickly and do carry out monitoring, reporting, and management not always have immediate impacts. Effective of energy uses and carbon emissions to ensure the urban land-use planning and land development city remains on a low-carbon growth path. provide unique opportunities to adopt “systems The issue of energy use cuts across many agen- approaches” to addressing urban energy issues cies, but fostering interagency collaboration is a big by integrating physical, socioeconomic, and envi- challenge, particularly if the costs and benefits are ronmental planning and identifying synergies and distributed unevenly. The functional areas within cobenefits. Land-use planning is also a sound agencies—represented by technical staff members, platform for mobilizing additional and conces- environmental officers, budget teams, procurement sional financial resources because many financial CHAPTER 2: introduction and background | 27 institutions are looking for opportunities to invest long-term urban energy strategies, keeping in mind in “green growth” despite uncertainties about the the cities’ overall development plans. post-Kyoto3 price of carbon. The establishment of SUEEP was a response to Making cities more energy efficient, increas- the report Winds of Change: East Asia’s Sustainable ing accessibility to renewable energy supplies, and Energy Future, which was a joint publication of adopting smart grids all hedge against the risks of the World Bank Group and AusAID. This report higher energy costs if a global agreement were to be concluded that, despite the challenges faced in mit- reached to reduce GHG emissions drastically. But igating the impact of climate change, it is possible EAP cities should not try to address all sustainable for East Asia to develop a sustainable energy path- energy options simultaneously. Pursuing actions on way, maintain economic growth, mitigate climate sustainable energy, however cost effective they may change, and improve energy security, provided that be, requires public and private investment, efforts immediate action is taken to transform the energy on the part of city governments and citizens, and sectors in cities toward much higher energy effi- the strong support of regional and national govern- ciency levels and the widespread use of low-carbon ments. Cities should tailor their efforts to available technologies. For this clean energy revolution to resources and pursue initial steps toward sustain- take place, major institutional and domestic policy able energy practices that generate significant and reforms will be required. immediate local benefits. Phased Approach Adopting sustainable urban energy planning in SUEEP is structured in three phases; this report developing Southeast Asia is a challenge. In recent summarizes the outcomes of Phase I: Three City years, this region has been deluged with warnings, Pilots, whereby the current status of urban energy advisories, and information about climate change and use and GHG emissions in three pilot cities in East energy efficiency—often at the city level. Although Asia is established and a range of policy and tech- city government officials would like to take action, nical measures are identified to enable the city gov- the World Bank Group has found that they often do ernments to formulate long-term sustainable urban not know where to start. They typically need techni- energy development strategies, which will lead to cal assistance to help them take the first few steps programmatic investment plans and policies. toward achieving cross-sector efficiencies, including Phase II uses the lessons learned and outputs evaluating baseline energy consumption and supply from the three pilot city programs to develop a options, identifying priority sectors for promoting Guidebook and SUEEP Toolkit designed specifi- sustainability, and achieving measurable improve- cally for the EAP region, enabling city authorities ments. These activities are the building blocks for the to access the tools and resources developed by the development of comprehensive, phased urban energy program. The Guidebook includes a set of guide- policies and investment strategies. lines that cities can use to develop their own SUEEP Program Objective processes, as well as identifies areas for which cities With support from AusAID, the World Bank Group need support in implementing these strategies. initiated a regional program—EAP Sustainable Phase III of SUEEP is planned for 2013, and Urban Energy and Emissions Planning (SUEEP)— will comprise development of detailed SUEEP in January 2011 to provide support and guidance plans and web-based tools that can be used to help to city governments in the EAP region to formulate cities monitor and manage energy use and GHG emissions.

3. The Kyoto Protocol, which was signed in 1997, is an inter- SUEEP Phase I Approach national agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Phase I involved working closely with three pilot cit- Protocol is the binding targets set for 37 industrial countries ies in three different countries in the EAP region— and the European Community for reducing GHG emissions Surabaya in Indonesia, Da Nang in Vietnam, and equivalent to an average of 5 percent against 1990 levels over the five-year period 2008–12. The “post-Kyoto” period refers Cebu City in the Philippines, to to the time after 2012 for which no international agreements have been made addressing the reduction of GHG emissions, which leaves the price of carbon uncertain. 28 | energizing green cities in southeast asia: three City Synthesis report

n assess their current energy usage, energy expen- This approach was adopted to enable a swift, diture, and GHG emissions; high-level sector analysis for prioritizing projects n review existing and proposed urban plans and with significant energy savings, GHG mitigation, initiatives that affect energy usage; or low-carbon energy generation potential. A sec- n map the institutional structures relevant to pol- tor-based approach was chosen because it allows icy and decision making for sustainable urban energy use to be mapped to institutional structures, energy planning; highlighting areas with both strong governmental n provide information about international best influence and verified significant and beneficial practices that can be adopted by city govern- opportunities. Further details on methodology are ments; and provided in appendix 4. n provide a framework to allow the identification of priority sectors for energy efficiency Report Structure improvements, as well as to develop a sustain- This report is structured to provide the reader with able energy strategy. a clear understanding of Phase I of the SUEEP program, of the process undertaken in the pilot cities, Methodological Summary and of the themes emerging from the pilot that are To achieve the objectives efficiently and consis- of interest to other cities across the EAP region. tently across the three pilot cities, a methodology Following this background and approach chapter, was established that capitalized on the work car- the report is set out as follows: ried out by the World Bank Group’s Energy Sector Management and Assistance Program (ESMAP) in n Chapter 3: Understanding the Cities: Energy 2009–10. ESMAP developed a tool (Tool for Rapid Use and GHG Emissions, provides a brief over- Assessment of City Energy, or TRACE) that was view of each of the pilot cities, followed by a used during a three-month period to quickly assess description of the energy and GHG emissions energy used by a city government, benchmark energy profile of each city. use against peer cities, establish priority areas, and n Chapter 4: Sector Diagnosis: Identifying develop interventions for improved energy efficiency Opportunities, provides a review of transporta- across a wide range of municipal services. tion, solid waste, water and wastewater, power, Alongside the application of TRACE, an energy public lighting, and city government buildings balance assessment was undertaken in each city to sectors; identifies key trends, barriers, and oppor- obtain a reasonable understanding of the types of tunities for energy efficiency and renewable fuel used, the sectors that consumed energy, and energy in areas under city government control; the way energy was consumed within each sector. and discusses how and why respective areas may Notably, the breakdown is limited to the sector be prioritized for action by city governments. level and all data and calculations are contained n Chapter 5: Governance, discusses the principal within a single, practical worksheet. governance issues associated with energy plan- In addition, a GHG inventory was compiled using ning and management at a city level. the Urban Greenhouse Gas Emissions Inventory n Chapter 6: SUEEP: The Way Forward, sets out Data Collection Tool, developed by the World how, given the significant body of evidence pre- Bank Group in 2011. The tool covers emissions sented, city governments can establish a road map from transport, solid waste management, water and for a sustainable urban energy path in the future. wastewater treatment, and stationary combustion n Appendices 1–3 provide more details on the (power generation, building energy usage, industry, studies undertaken in the pilot cities and the and so on).4 The tool aims to provide a simple, user- recommended courses of action for enhancing friendly, and easily replicable approach, and empha- energy efficiency in the various sectors. sizes providing descriptions of data sources, years, n Appendix 4 describes the approach and meth- implied boundaries, and quality of the data. odology taken in Phase I of the program.

4. Urban forestry considerations will be included in the tool in the future. Chapter 3 Understanding the Cities: Energy Use and Greenhouse Gas Emissions

City Overview The pilot cities were selected for the Sustainable Urban Energy and Emissions Planning (SUEEP) Program because they were representative of “second” (not capital) cities and typify cities across the East Asia and Pacific (EAP) region. Like many other cities, these three cities are experiencing the following trends: n Increased urban migration is fueling popula- region and to the Philippines capital, Manila. The tion growth. city’s strategic location and seaport support local n Economies are growing and living standards trade and services, which together employ the are improving. majority of Cebu’s labor force. Some 73 percent n The services sector, especially tourism, is a of the population of Cebu City work in trade or growing component of the economy although related services, such as banking, real estate, insur- the city is still heavily reliant on manufacturing ance, or community services. Another 19 percent industries. are employed in industry, and 8 percent in agriculture and related services. The services sector is Each of these factors alone could reasonably result in an increase in urban energy consumption and growing and is expected to continue to be the big- greenhouse gas (GHG) emissions. Together, the gest contributor to GDP in Cebu City. The major- impact is considerable. ity of establishments in the city are considered to be micro or small enterprises with an average capi- Cebu City talization of 1.5 million Philippine pesos or less. Cebu City is the capital of Cebu Island and the More than two-thirds of these business establish- center of Metro Cebu, which includes the cities of ments are situated in the central part of the city, Lapu-Lapu, Mandaue, and Talisay. Cebu City has and collectively account for more than three-quar- a population of approximately 800,000, and more ters of the city’s economy. Cebu City is the second- than 2.4 million people live in the wider Metro fastest growing city economy in the Philippines Cebu area. Located on the coast of Cebu Island, after Manila, and growth rates are anticipated to flanked by the Cebu Straight, and surrounded continue rising for the foreseeable future. inland by mountainous terrain, the city has limited opportunities for physical expansion, maintaining Da Nang its relatively compact nature. Although the city Da Nang is the largest urban center in central has a land area of 291 square kilometers (km2), Vietnam, with an area of 1,283 km2 and a popu- the population density for the city is 2,748 inhab- lation of more than 900,000. Population density itants per km2 because of the concentration of the is relatively low in comparison with the other population in a dense urban area of 23 km2. pilot cities, at just over 700 inhabitants per km2. Cebu Island occupies a strategic position in Located at the mouth of the Han River and fac- the Philippines, being centrally located and easily ing the South China Sea, Da Nang is the fourth- accessible by air and water. Cebu City is an impor- largest seaport in Vietnam, and forms an important tant port city and is well connected to the EAP gateway to the Central Highlands of Vietnam, as

29 30 | energizing green cities in southeast asia: three City Synthesis report

well as to Cambodia, the Lao People’s Democratic low-value-added production in the city and “brain Republic, Myanmar, and Thailand. drain” to other parts of the country. Da Nang’s economy has historically been domi- Surabaya nated by the industrial and construction sectors. Surabaya is a large city with a population of about However, in 2006 services became the largest eco- 2.8 million, which is more than three times the nomic sector in the city as measured by gross output. populations of Cebu City or Da Nang. Much of Although economic growth has been concentrated the city’s center is densely populated—population in the road, rail, and seaport hubs, as well as other density can be as high as 8,000 persons per km2 in service-oriented industries, the tourism sector’s con- some areas. The city occupies coastal terrain with a tribution to GDP is expected to grow. As the city’s land area of 327 km2, and is located in the Brantas economy moves from primary and secondary sec- River Delta at the mouth of the Mas River, an area tors toward tertiary and services sectors, changes in that confronts a high flooding hazard. Surabaya is its energy demand can be expected to occur. the capital of the Indonesian province of East Java. Population growth in the early twenty-first Surabaya is a key node in air, water, and land century was relatively slow (1.7 percent annu- transportation. The city is served by Juanda ally between 2000 and 2007), but Da Nang now International Airport and Perak Port, one of Asia’s appears to be poised for a significant increase in largest and busiest seaports. Hence, Surabaya population, primarily because of migration from serves as an important gateway to the East Java neighboring rural areas. In 2007, Da Nang’s offi- region for both passengers and goods. Surabaya cial population was approximately 807,000, with has an annual population growth rate of 0.65 per- projections that it will increase at a 3.7 percent cent. However, GDP grew 6.3 percent in 2008, annual rate through 2015, and at a rate of 4.9 compared with a national GDP growth rate of 6.1 percent per year between 2015 and 2020, result- percent. Surabaya’s main industries are the trade, ing in a 70 percent increase in population by 2020. hotel, and restaurant sectors (which together Counting unregistered migrants, the population account for 36 percent of GDP) and the manu- may reach nearly 1.65 million people by 2020. Da facturing sector (which accounts for 32 percent of Nang’s economy is also growing rapidly; between GDP). Other significant contributors to Surabaya’s 2000 and 2007, Da Nang’s gross regional domestic GDP are transportation and communications, con- product grew at 12.3 percent annually and in 2009 struction, financial services, and the services sector. totaled US$1.48 billion. Household income has also See table 3.1 for a summary of the pilot cit- risen rapidly, increasing from 187,000 Vietnamese ies’ characteristics and figure 3.1 for their relative dong (D) per month in 1996 to 853,000 D/month locations. in 2006. Despite the steep increase, household income levels are still less than the national average for the same period, due to the preponderance of Figure 3.1. Locations of the Table 3.1. Summary of Structural and Economic Pilot Cities Data for the Pilot Cities

Parameter Cebu City Da Nang Surabaya

Population (m) 0 .8 0 .9 2 .8

City area (km2) 291 1,283 327

Population density 2,748 711 8,458 (000’s/km2) GDP/cap/year ($) 5,732 1,627 8,261

Economic structure (%) Services 73 56 36 Industry 19 42 32 Agriculture/other 8 2 18

Source: Authors . CHAPTER 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions | 31

City Energy Profile Energy Demand To understand the cities’ energy profiles, an energy Electricity consumption per capita for the three cit- balance assessment was undertaken in each city to ies is low in comparison with other Asian cities in obtain an overview of energy demand and supply. the TRACE benchmarking tool (see figure 3.2), but In addition, a number of key performance indi- energy intensity, or energy consumption per unit of cators were collected and benchmarked against GDP, is high (see figure 3.3). Given this fact, these peer cities using the Tool for Rapid Assessment of cities will have to become more energy efficient to City Energy (TRACE; see chapter 2 for a further dampen sharp increases in energy demand as eco- description). nomic growth occurs.

Figure 3.2. Electricity Consumption per capita benchmarked against other cities using TRACE, 2010 (SUEEP pilot Cities in Blue)

12,000

10,000

8,000

6,000 kWhe per capita 4,000

2,000

Tokyo Pune Mysore Jakarta IndoreKarachi Dhaka Toronto AmmanBangkok Da Nang Pokhara SingaporeShanghai New York GaziantepSurabaya Cebu City Hong Kong Cape Town Mexico City Quezon City Kathmandu Phnom Penh Kuala Lumpur Ho Chi Minh City Bengaluru (Bangalore)Cities

Figure 3.3. Primary Energy Consumption per Unit of GDP benchmarked against other cities using TRACE, 2010 (SUEEP pilot Cities in Blue)

6 MJ/$GDP 4

Paris Tokyo Da Nang Toronto Singapore Shanghai Surabaya Cebu City Gaziantep New York Hong Kong Quezon City Cape Town

Bengaluru (Bangalore) Cities 32 | energizing green cities in southeast asia: three City Synthesis report

Not only is electricity demand growing year on EAP region and will present a challenge to local year in the three pilot cities (see figures 3.4a–3.4c), infrastructure, utility services providers, and city but it is outstripping population growth, a trend governments to supply sufficient energy to satisfy playing out in other EAP cities as well. Da Nang’s growing demand. The EAP region should therefore annual growth in electricity demand is significantly use this as an opportunity to integrate low-car- higher than that in Cebu City and in Surabaya, bon generation technologies into the supply mix as is its population growth, which will result in a through long-term SUEEP. doubling of energy demand in six years if demand Energy Demand by Sector growth continues unabated. These growth rates Energy use in different sectors in each city was ana- are likely to be replicated across much of the lyzed, and clearly demonstrated that the two major energy-using sectors are transportation and industry (see figure 3.5). Figure 3.4A. Electricity Consumption in Cebu City Figure 3.5 excludes the use of solid fuel for residential cooking. As in many other studies, the energy 1,200 balance data did not include these solid fuels because 1,000 Public of the difficulties with data collection. However, cit- 800 Residential ies should continue to monitor this sector given that 600 Commercial every second household in the region still relies on 400 Industry solid fuel for cooking, and uses a traditional stove, in Cebu City (GWh) 200 Electricity consumption 0 which has negative impacts on health, gender equal- 2008 2009 2010 ity, poverty reduction, and the local and global envi-

Source: Phase I pilot study . ronment. This phenomenon affects both rural and urban areas. The use of transition and traditional fuels continues to be high in urban areas that are Figure 3.4b. Electricity Consumption in East Java characterized by low incomes. In light of this, cities need to actively pursue policies that can achieve uni- 12,000 versal access to clean cooking solutions to all resi- 10,000 dents to save energy and improve quality of life. 8,000 Public 6,000 Energy Supply Industry 4,000 Commercial An energy supply profile can provide insights into 2,000 in East Java (GWh) Residential a city’s reliability of energy supply, GHG emis-

Electricity consumption 0 sions levels, and economic growth, which will be 2004 2005 2006 2007 2008 of value for strategic planning. The outcome of the

Source: Phase I pilot study . analysis of energy supply across the pilot cities is Note: Data for Surabaya was not available . Data for East Java is representative and was therefore used broadly discussed below. as a proxy for Surabaya . Energy Conversion Is Inherently Inefficient The generation of electrical energy requires the Figure 3.4C. Electricity Consumption in Da Nang conversion of one energy source to another, a process that inherently results in losses, although the 1,400 magnitude of the losses depends on the type of 1,200 Other energy or fuel used and the technology deployed. 1,000 Agriculture 800 Figure 3.6 presents the typical efficiencies associ- 600 Residential ated with a range of generation technologies, from 400 Commercial highly efficient, large hydroelectric plants to still-

in Da Nang (GWh) Industry 200 emerging solar technologies. Electricity consumption 0 2007 2008 2009 2010 Many EAP countries rely heavily on coal and oil for electricity generation. Although newer oil- and Source: Phase I pilot study . coal-fired steam turbine power plants operate at CHAPTER 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions | 33 efficiencies between 39 and 47 percent, older power plants are significantly less efficient. Sankey dia- Figure 3.5. Primary Energy Consumption by sector grams, such as the example for Surabaya in figure

3.7, illustrate the efficiencies inherent in energy sys- 100 1 tems. Surabaya exhibits conversion losses exceed- 90 ing 60 percent for primary fuel energy, and about 80 Other 77 percent for primary fuel energy for combustion 70 Public services engines (mainly for transportation) that occurs in 60 Commercial the conversion process. In Cebu City and Da Nang, 50 Residential similar trends are observed. The electrical genera- Transportation Percent 40 tion conversion losses are reasonably typical of the 30 Industry generating plants in use (although efficiencies are 20 generally better with modern technologies). In the 10 0 Da Nang Surabaya Cebu City

1. The Sankey diagrams provide an overview of the primary fuel used upstream to supply energy within the city boundaries. Source: Phase I pilot study . The diagrams also illustrate the magnitude of final energy put to productive use across the city sectors following losses due to conversion inefficiencies. Therefore, the distribution of the transportation sector, conversion losses are directly total energy supplied to the individual sectors before conver- related to engine and transportation infrastructure sion losses (labeled Energy Sold to Customers) is not apparent from the Sankey diagrams; this distribution of energy supply efficiencies, and are thus more dependent on indi- and consumption on a sector basis is detailed instead in the vidual city composition and context. Energy Consumption figures A1.4, A2.4 and A3.4.

Figure 3.6. Efficiencies in Electricity Generation: Principal Technologies

100 Maximum Minimum 90

% conversion efﬁciency 30

Nuclear Coal IGCC Coal CFBC Coal PFBC Large hydro Large CCGT Geothermal

Large gas turbine Photovoltaic cells Steam turbine fuel oil Steam turbine coal-ﬁred Pulverized ultra-critical steam

Source: Eurelectric 2003 . Note: CCGT = combined cycle gas turbine; CFBC = circulating fluidized bed combustion; IGCC = integrated gasification combined cycle; PFBC = preserved fluidized bed combustion . 34 | energizing green cities in southeast asia: three City Synthesis report

Figure 3.7. Surabaya Sankey Diagram

Commercial Electrical Power Electrical Power 5.5 PJ Oil Generation Losses Natural Gas 0.03 PJ 34.9 PJ 43.4 PJ

LPG LPG 6.5 PJ 6.5 PJ

LPG Losses 1.3 PJ Transportation Diesel Gasoline and Diesel 5.8 PJ 10.0 PJ Gasoline and Diesel 27.4 PJ Gasoline 17.4 PJ Gasoline and Diesel Combustion Losses 21.1 PJ

Source: SUEEP Pilot City Studies 2011 . Note: PJ = Petajoule . ”Public” includes the end-use energy of city buildings, street lighting, city vehicles, water, wastewater, and solid waste management .

Power Generation Sources Play an Important Role Electricity generation in the pilot cities is fueled by in a City’s GHG Emissions a unique mix of energy sources governed by resource Cities must address both the choice of generating availability in each country. Surabaya’s electricity technology (if the opportunity exists), as well as is generated mainly from coal and oil, whereas Da the manner in which electrical energy is used when Nang uses a significant proportion of hydropower considering long-term issues of reliability of energy and gas, and about 49 percent of Cebu City’s elec- supply, climate change mitigation, and energy effi- tricity is generated from hydro and geothermal ciency. The less efficient the generation technology sources. These electrical generation differences alter used, the more important it is to address electrical the cities’ electricity carbon emissions factors, which end use—small efficiency gains at the point of use in turn alter their emissions profiles. The relative car- will have an even greater effect on primary energy bon intensity of grid-supplied electricity in the three inputs for electricity generation. This focus is also pilot cities is presented in figure 3.8. important because of the long-term and relatively Currently, none of the pilot cities generates a static nature of generation infrastructure, which significant proportion of its electricity require- provides limited opportunities to alter generat- ments within the city boundaries. They depend ing efficiencies after a generation plant has been heavily on the national or regional electricity grids. commissioned. The reliance on external sources of electricity has CHAPTER 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions | 35

rise, is associated with a range of environmental Figure 3.8. Carbon Intensity of the and economic challenges. These challenges include Electrical Grid increased fossil fuel use, higher carbon emissions, local air pollution (and health impacts for inner- city inhabitants), and traffic congestion. This trend, Surabaya if unabated, will lead to greater expenditures on imported energy, health care, and typically, transportation infrastructure to reduce congestion. By Da Nang acknowledging the likelihood that the trend will continue unless addressed, city governments open up opportunities to take an alternative path. Cebu City It is apparent in the pilot cities that a substantial amount of transportation energy is lost in fuel 0 0.2 0.4 0.6 0.8 1.0 combustion (in Surabaya, Cebu City, and Da Nang, kgCO2/kWh the figures are 77 percent, 75 percent, and 75 per-

Source: SUEEP Pilot City Studies 2011 . cent, respectively). A range of opportunities exists to increase efficiencies at a city level. An integrated program of regulatory, fiscal, technological, and the potential to expose these cities to power short- infrastructure-based reforms and investments can ages that could have major impacts because of the improve energy efficiency. City governments have concentration of economic activity in urban areas. some level of control over citywide transportation In light of the above, improving energy effi- planning and management, and these powers can ciency and increasing decentralized energy sup- be used in coordination with railroad or national plies should both be key strategies for enhancing agencies to bring about greater efficiency in trans- cities’ reliability of energy supply. In particular, portation energy use. cities should prioritize the use of local low-carbon There are three types of activities cities can energy sources in their energy planning if such undertake to reduce energy consumption and opportunities exist within the confines of the city mitigate GHG emissions from the transportation or metropolitan area. City governments have the sector: capacity to promote decentralized low-carbon power generation and fuel switching to lower-car- n reduce the carbon intensity of fuels and energy bon, lower-pollution alternatives and should work sources (to reduce tons of CO2 per unit of fuel with utilities to define long-term low-carbon strat- combusted); egies that stimulate local energy production. This n improve the fuel efficiency of vehicles through effort can be achieved in concert with national and vehicle technology improvements and retrofits, regional plans to decarbonize the grid. The point improvements in vehicle operations efficiency, to emphasize, therefore, is that city governments and improvements in driving conditions, such should engage in strong dialogue with the national as road surface quality, congestion, and the like government in power generation planning and (to reduce units of fuel combusted per kilome- should seize opportunities at the city level that help ter traveled); and stimulate investment and jobs, while strengthening n reduce systemwide vehicle-kilometers traveled, resilience to energy shortages and lowering the car- through a modal shift to high-occupancy tran- bon intensity of grid-supplied power. sit and nonmotorized transportation (to reduce vehicle-kilometers). Sustainable Solutions in the Transportation Sector Nearly every activity that can be undertaken by The current trend in transportation, whereby a city requires one or some combination of these inefficient public transportation is increasingly three approaches. For example, replacement of a replaced by two-wheeled motorized vehicles and traditional diesel bus system with a network of then four-wheeled vehicles as household incomes dedicated bus lanes and compressed natural gas 36 | energizing green cities in southeast asia: three City Synthesis report

(CNG) hybrid buses would reflect a combination of fuel used in the transportation system by carrying of all three of these activities, in that such a pro- more passenger-kilometers on CNG buses; improves gram would (i) affect the carbon content of fuel fuel efficiency of the public transportation network (replacement of diesel by CNG), (ii) improve the through use of more efficient technology to move fleet fuel efficiency (through new technology, as a given number of passengers, and by improving well as improved drive cycle through use of a dedi- the drive cycle through use of dedicated lanes and cated lane), and (iii) reduce the activity level per signal priority; and reduces overall vehicle activity passenger transported (through better transporta- by inducing a modal shift from private passenger tion management). modes, such as motorcycles, to buses. As with activities in other sectors to improve energy efficiency, these measures are evaluated New Delhi Regenerative Braking Project with respect to their broader economic, social, and City: New Delhi, India fiscal impacts on the city. Activity categories: (i) Reduce carbon intensity of The following are specific examples of cities that fuel; (ii) Improve fuel efficiency

have undertaken activities to reduce emissions and Average annual CO2 reductions (estimated by the improve energy efficiency in urban transportation: Clean Development Mechanism): 41,000 tons Description: Through the implementation of elec- Egypt Vehicle Scrapping and Recycling Program trified rail and locomotives with regenerative brak- of Activities ing capabilities, energy typically lost when braking City: Cairo, Egypt is saved and resupplied to other vehicles. The project Activity category: (ii) Improve fuel efficiency reduced the carbon intensity of the system through

Average annual CO2 reductions (estimated by the the switch to electric vehicles and improved fuel Clean Development Mechanism): 250,000 tons efficiency by about 30 percent by reducing losses Description: The average age of a taxi in Cairo is associated with stopping and starting. 32 years. Before the program, more than 48,000 taxis in Cairo were more than 20 years old. Although cities have mechanisms on hand to Through a scrapping and recycling program man- enhance the energy efficiency of their transporta- aged by the Ministry of Finance, taxi owners were tion systems, the success of their policies will also given packages of incentives toward the purchase depend somewhat on national policies. For exam- of new, more fuel-efficient vehicles (in most cases, ple, national subsidies for fuel will hinder the pro- about 12–15 percent more efficient) in exchange motion of more efficient modes of transportation, for voluntarily submitting their old vehicles for as illustrated by the limited take-up of LPG and recycling. To date, more than 35,000 vehicles have CNG in Indonesian cities despite the government’s been exchanged under the program. promotion of these fuel types in the transportation sector. Transmilenio Bus Rapid Transit (BRT) System City: Bogota, Colombia City Emissions Profile Activity categories: (i) Reduce carbon intensity of GHG inventories can add a useful layer of analysis fuel; (ii) Improve fuel efficiency; (iii) Reduce vehicle to that gained from the city energy balance. The activity GHG inventory demonstrates the relative impact

Average annual CO2 reductions (estimated by the of different fuels on overall emissions, as well as Clean Development Mechanism): 73,000 tons the contribution of non-energy-related sectors such Description: The Transmilenio BRT replaced an as agricultural production. The GHG inventories aging, inefficient network of micro-buses with mod- carried out for the pilot cities proved informative, ern articulated diesel and CNG buses operating on highlighting trends relevant to the wider region. dedicated busways, which feature priority traffic Perhaps more important, cities that main- signaling, quick-boarding stations, and frequent tain robust systems for monitoring GHG emis- headways. The system reduces the carbon intensity sions earn access to additional sources of funding CHAPTER 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions | 37 and financing for energy efficiency and emissions Figure 3.9A. GHG emissions by Fuel Source mitigation programs that may otherwise not be available. 3.5 When energy-related GHG emissions are analyzed according to fuel source, the differences in 3.0 Other sources electrical generation in the three pilot cities become Wastewater gas emissions 2.5 apparent. For Surabaya, use of electricity generated Solid waste gas emissions mainly from coal is responsible for 36 percent of the Electricity city’s emissions. For Cebu City and Da Nang, which 2.0

per capita LPG both use significant renewable electrical generation, 2 diesel and gasoline used for transportation and local 1.5 Natural gas electricity generation contribute heavily to the emis- Diesel Tons of CO sions profile. This difference is due to the impact of 1.0 Gasoline the carbon factors of grid electricity demonstrated Oil in figure 3.8. An inventory of GHG emissions based 0.5 Coal on fuel source and end-use sector for the pilot cities is shown in figures 3.9a and 3.9b. 0.0 Da Nang Surabaya Cebu City Transportation and industrial emissions account for more than 53 percent of emissions for all pilot Source: Phase I pilot study . cities—sectors that are only partially controlled by the city governments. Transportation alone is responsible for more than 40 percent of emissions Figure 3.9B. GHG Emissions By End Use in both Cebu City and Da Nang. However, this does not necessarily mean that the transportation 3.5 sector in Surabaya is any less carbon intensive than in Cebu City and Da Nang. 3.0 Urban GHG emissions analysis incorporates processes such as waste management and waste- 2.5 water treatment. These sources should not be over- Grid based* looked because they may contribute a fair portion 2.0 Solid waste per capita

2 Water and wastewater of a city’s total emissions. GHG emissions asso- Commercial ciated with solid waste management in Da Nang 1.5 Transportation account for about 7 percent of the city’s emissions. Residential

Tons of CO Industry 1.0 Growing Economic Prosperity and

Carbon Emissions 0.5 A large body of evidence supports the assertion that more highly developed and richer nations have 0.0 greater carbon intensities than less-developed and Da Nang Surabaya Cebu City poorer nations. However, empirical evidence also Source: Phase I pilot study . suggests that more developed nations use energy Note: *Grid based refers to electricity internally generated by the city . This is a separate category for Cebu City because data on end-use sector for electricity generated within the city were not available . more efficiently than do developing nations, as illustrated in figure 3.10. Figure 3.10 demonstrates that as per capita GDP (approximated by increases in GDP) and the reduc- increases, energy use per unit of GDP decreases, tion of energy intensity, that is, energy efficiency plateauing at about 125 kilograms of oil equiva- improvement. lent per US$1,000 of GDP. Hence, there is a posi- The key agents of economic development are tive correlation between economic development widely accepted to be investment, employment, 38 | energizing green cities in southeast asia: three City Synthesis report

Figure 3.10. Energy Efficiency and Economic Development (2008)

350 Mongolia Kenya Nepal Russian Federation AFR 300Côte d’Ivoire South Africa China Saudi Arabia Iran, Isl. Rep. of EAP 250 Vietnam Bulgaria Indonesia Thailand MENA Canada Cambodia ECA

(kg oil equivalent) Malaysia Estonia 200 India Australia SAR WORLD Republic of Korea Arab Rep. of Egypt Czech Republic United States Poland Philippines New Zealand 150 Argentina Hungary OECD Sweden Bangladesh LAC Chile France Brazil EU Mexico Israel Greece Germany Turkey Spain Japan Netherlands 100 Portugal Italy United Kingdom Switzerland Singapore Energy use per $1,000 GDP

50 Hong Kong, China

0 0 10,000 20,000 30,000 40,000 50,000 GDP per capita (US$)

Source: Authors . Note: AFR = Africa; ECA = Eastern Europe and Central Asia; EU = European Union; LAC = Latin America and the Carribbean; MENA = Middle East and North Africa; OECD = Organisation for Economic Co-operation and Development; SAR = South Asia Region .

and productivity, all of which have a positive cor- The figure suggests that although cities may relation with the improvement of energy efficiency. be able to reduce energy intensity, a correspond- The empirical evidence in figure 3.10 illustrates the ing reduction in carbon emissions may not occur. positive correlation in EAP cities, which are at the Thus, investments in energy efficiency alone are early or middle part of the curve linking economic not sufficient to keep cities on a sustainable energy growth to the energy efficiency improvement rate. path; for the most developed cities, GHG emis- A key message for EAP cities is that energy effi- sions per capita may plateau or even start increas- ciency improvements lead to ing with GDP growth unless more comprehensive measures are implemented. Such measures or plans n increases in investments, must take into consideration other causes of energy n jobs creation, and demand and emissions, for instance, land use, n productivity improvements, public transportation, distributed power genera- all of which, in turn, generate economic growth. tion and its mix, and so forth, which are part of a Thus, the case for investment in energy efficiency comprehensive SUEEP process. Hence, cities may is clearly demonstrated. However, with respect to quickly run out of “low hanging” energy efficiency carbon intensity, a different story emerges. Figure opportunities and get stuck in the inherently highly 3.11 illustrates, using the same indicators as fig- energy-intensive infrastructure and economic ure 3.10, the relative per capita GHG emissions in models if they fail to address sustainability issues each city. The magnitude of per capita emissions is comprehensively. denoted by a larger balloon (see key in figure). CHAPTER 3: Understanding the Cities: Energy Use and Greenhouse Gas Emissions | 39

Figure 3.11. Energy Intensity and GDP per Capita in Select Cities

Kathmandu Size of balloon shows 350 per capita GHG emissions

= 10 tons = 1 ton Beijing Cape 300 Town

Da Nang 250 Surabaya Toronto

0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP per capita (national, in US$)

Source: Authors . .

Chapter 4 Sector Diagnostics: Identifying Opportunities

City government energy expenditure across the three pilot cities accounted for 3.0–4.5 percent of annual city budgets and is expected to increase as cities grow and expand. The increase in city government energy expenditure across the pilot cities was attributed to a combination of increased energy use and increased energy unit costs. Although energy expenditure as a proportion of city budgets in the three cities appears to be small, potential exists for even that level of expenditure to be reduced.

Minimizing energy expenditures in the three cities lighting must consider a range of factors such as is crucial, given the expectation of rising energy cost, public safety, and the aesthetics of public demand and the need for city governments to space. demonstrate good practice to wider stakehold- In the pilot cities, public lighting constitutes ers. The importance of the second point should a considerable proportion of overall city govern- not be underestimated. Many of the levers a city ment energy expenditure. In Cebu City, it accounts government can use to reduce citywide energy for about two-thirds of electricity expenditure use (such as energy efficient building codes) will (see table 4.1). Because public lighting is an activ- affect a wide range of stakeholders. It is therefore ity with significant city government influence in imperative that the city government demonstrates each of the three pilots, awareness of the potential good housekeeping in its own affairs and, poten- resource and financial gains to be achieved with tially, uses lessons learned to influence the activi- energy efficiency measures in the sector is high. ties of external organizations through mentoring Focus on Bulb Technology or guidance. Energy consumption in public lighting systems is Public lighting and city government vehicles controlled by a relatively small range of factors, accounted for a significant proportion of the including the placement of lighting poles, pole energy budget in the three pilot cities. Wastewater treatment, waste management, and city government buildings also accounted for significant Table 4.1. Public Lighting Performance for energy spending. This chapter describes the analy- Three SUEEP Pilot Cities sis undertaken across the sectors and identifies Public lighting Cebu City Da Nang Surabaya opportunities for energy efficiency improvements. % Energy expenditure 37% — 34% Proposed projects were developed based on several % Electricity 67% 24% — factors: (i) level of potential for energy efficiency expenditure improvement, (ii) scope of control or influence of Coverage (% of city 95% 90% 79% the city government, (iii) resource constraints, and roads lit) (iv) compatibility of the projects with other devel- Energy consumption/ 656 416 400 pole (kWhe/pole) opment goals. Bulb technologies -— 55% sodium 95% HPS 18% LED Public Lighting 13% HPS As cities grow and citizens expect quality of life 12% CFL improvements, city authorities face increasing 2% metal pressures to enhance the coverage and quality of halide public lighting. Any program to enhance public Source: Phase I pilot study . Note: — = Not available .

41 42 | energizing green cities in southeast asia: three City Synthesis report

height, angle of lighting coverage, and the efficiency for public lighting retrofits. Energy performance of the light source. The installation of new bulbs is contracting is an innovative financing mechanism, a costly procedure, so actions seeking short-term normally offered by energy services companies, return on investments usually focus on optimiza- that uses cost savings from reduced energy con- tion using appropriate light bulb technology. This sumption to repay the cost of installing energy con- approach can often reduce energy consumption servation measures. These financing mechanisms significantly, reduce maintenance requirements, allow cities to achieve energy savings without and increase the life span of light bulbs, the com- upfront capital expenses. Although such a mecha- bination of which reduces the associated costs of nism has yet to be attempted in the three cities, it is public lighting for city authorities. worth pursuing actively. Future developments will Traditional lighting technologies such as metal likely promote financially attractive combinations halide bulbs are inefficient compared with contem- of photovoltaic power sources with energy efficient porary technologies. Replacement with more effi- technologies such as LEDs for public lighting, as is cient high pressure sodium (HPS) or light-emitting currently being investigated in Surabaya for both diode (LED) bulbs offers potential in all pilot cities. street lights and traffic signals. The energy performance and extended life spans of Implementing Strategic Timing or these bulbs, and their ability to withstand fluctuat- Dimming Programs ing power conditions common in the region, con- Energy consumption in the public lighting sec- tribute to their usefulness. tor can be further reduced by strategic timing or Improving Awareness and Support dimming programs tailored to the needs in spe- Although audit and replacement programs have cific areas, while maintaining appropriate levels of recently been implemented in each of the three cit- lighting for public safety. In Da Nang, the public ies, significant potential remains for improvement lighting sector uses twin timing regimes that have in the selection and application of bulb technol- yielded significant reductions in the sector’s elec- ogy. A common barrier to selection of appropri- tricity consumption. Under this scheme, every third ate bulbs and fixtures is persistent confusion about light in 40 of Da Nang’s main streets is switched the comparative performance of the technologies off from 6:30 pm to 11 pm, after which only every on the market. Despite awareness of the availabil- third light is kept on from 11 pm to 5 am. The ity of energy efficient technologies, such as LEDs, second regime maintains full use of all lights in the these bulbs are rarely deployed by the three cities. remaining streets through the night. An effective means of overcoming such barriers is the implementation of pilot studies to build aware- Transportation ness among the involved stakeholders. Full-scale The transportation sector in all pilot cities is demonstration projects are usually required to val- responsible for significant energy consumption and idate manufacturers’ promised performance and greenhouse gas (GHG) emissions and therefore to secure necessary support from decision makers should be carefully studied. Fuel used for transpor- for public lighting retrofit programs. Once support tation is the single largest energy-consuming sector is received, public lighting procurement guide- in Cebu City (51 percent), Da Nang (45 percent), lines (currently lacking in the cities) would bolster and Surabaya (40 percent), and contributes nota- continued energy efficient operation of the public bly to GHG emissions in each of the three cities lighting sector. (40 percent in Cebu City, 46 percent in Da Nang, Lack of upfront investment funds is often cited and 20 percent in Surabaya). Across the East Asia as a second major barrier to implementation of and Pacific (EAP) region, transportation is both energy efficient public lighting. However, existing the largest as well as the fastest growing source of cost-effective financing models can overcome such GHG emissions. obstacles. For example, many cities in developing Although all three cities currently experience economies in the region have reported success with low energy intensity (megajoules per capita, or implementation of energy performance contracting MJ/capita) in the transportation sector (see figure CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 43

Figure 4.1. Total Transportation Energy Per Capita (SUEEP Pilot Cities in Blue)

50,000

40,000

30,000

MJ per capita 20,000

10,000

Tokyo Pune Dakar JakartaMysore Indore Toronto Bangkok Da Nang Amman Pokhara New York SingaporeCebu City Surabaya Gaziantep Shanghai Mexico City Quezon CityCape Town Hong Kong Kathmandu Kuala Lumpur Ho Chi Minh City Cities Bengaluru (Bangalore) Source: Authors, using TRACE .

4.1), the sector’s energy consumption is rapidly vehicles for personal mobility. Thus, vehicle taxa- increasing as a consequence of trends toward two- tion alone will have only a limited direct impact on wheeled and four-wheeled motorized private trans- the increase in vehicles. Other regulatory and plan- portation. This trend is representative of the sector ning interventions will be necessary to decrease fuel across the region. City authorities, who are faced consumption. None of the three cities currently with the considerable challenge of influencing the places restrictions on the number of new vehicle type, length, and frequencies of trips that their citi- registrations. Given these factors, the number of zens take, urgently need to intervene. A comprehen- vehicles in these cities is set to increase, similar to sive approach is essential to address travel behavior the trend throughout Asia, where vehicle fleets are patterns, modify urban development patterns, and estimated to double every five to seven years. take action to improve the energy efficiency of indi- Growing vehicle ownership increases traffic vidual vehicles by increasing the distance traveled congestion, which is already apparent in some of per unit of fuel and encouraging adoption of fuels the pilot cities during peak hours. Increased con- that result in fewer GHG emissions. gestion increases local air pollution, GHG emis- Addressing Motorization sions, noise pollution, and personal fuel expenses, Population expansion and economic growth are and also contributes to reduced health, deteriorat- rapidly driving demand for enhanced personal ing road safety, decreased quality of life, and loss mobility. Motorized two-wheeled vehicles are the of economic productivity for the city. predominant choice today, offering cheap and None of the three cities has yet implemented readily accessible personal mobility. But four- mechanisms for internalizing the externalities of wheeled modes of transportation are in demand as personal vehicle transportation. Users of private well. Da Nang, where car ownership and monthly vehicles currently do not pay the costs of con- income are highly correlated (r = 0.846), and where gestion or pollution, and these costs are borne in a progressive shift from public transportation to equal proportion by public transportation passen- two-wheeled vehicles to four-wheeled vehicles is gers. Nonmotorized travel is becoming more dif- occurring, illustrates this trend. In addition, low ficult and decreasingly socially attractive. Walking elasticity in vehicle prices in the three cities means in the three cities involves weaving across uneven that the market offers few substitutes for private pavement amid a range of obstructions, including 44 | energizing green cities in southeast asia: three City Synthesis report

vendor stalls and parked cars. Despite these trends, when they are first registered, there is no formal Surabaya is putting measures in place to encourage repeat testing during the vehicle’s life cycle and the reemergence of pedestrian- and bicycle-friendly they are typically tested only after being appre- areas, increasingly focusing on improving acces- hended when an officer observes smoke belching sibility and services for pedestrians and nonmo- from the tailpipe. The situation is exacerbated by a torized vehicles, including smaller pedestrianized lack of awareness by vehicle owners themselves of streets and car-free days in two locations in the city. the value of regular vehicle maintenance. The shift toward motorcycles and cars shapes Energy use in the transportation sector is cur- energy performance in the transportation sector. rently dominated by petroleum products and the The fuel efficiency of two-wheeled vehicles (0.01– rate of consumption is growing quickly. Some 0.02 kilometer per liter, or km/liter) is better than vehicles, such as the angkots (minibuses) in that of four-wheeled vehicles (0.1–0.2 km/liter). Surabaya, run on highly polluting fuels like kero- High-capacity buses are even more fuel efficient sene. Currently available vehicle engine and fuel per passenger-km than two-wheeled vehicles when technologies could reduce emissions substantially, ridership rates are high. A shift toward clean and and all three cities have introduced liquid petro- efficient public transportation therefore results in leum gas (LPG) infrastructure for their taxi fleets. greater fuel efficiency. In Cebu City, public trans- Strengthening Public Transportation portation ridership is high (85 percent of all trips) The three cities use different modes of public but the mode is inefficient (see next section). In transportation. Cebu City’s public transportation all pilot cities, the overall fuel economy of vehicle mainly comprises jeepneys, which operate on an fleets is worsened by growing numbers of idling ad hoc schedule. In Surabaya, 5,000 registered engines. angkots run city-government-determined routes to Importance of Improving Fleet regional bus lines served by three major bus sta- Performance tions and one regional train station. Da Nang has The distribution of vehicle types and performance regular passenger bus service on six routes travers- characteristics produces the difference in energy ing the city. Despite the different modes, common intensity illustrated by figure 4.1, which shows threads among the three cities are the deteriorat- that Cebu City underperforms in comparison with ing quality of public transportation services, and Da Nang and Surabaya, despite its higher public a lack of clear knowledge on the role of public transportation ridership. The disparity arises from versus the private transportation sector and on Cebu City’s highly inefficient and aging fleet of the (dis)incentives for use of public versus private jeepneys (which have a capacity of 8 to 12 people transportation. per vehicle) with much poorer fuel economy than The majority of public transportation trips are Surabaya’s and Da Nang’s predominantly two- handled by the informal sector and operate inef- wheeled modes of transportation. ficiently. In light of this, city authorities should Inefficient and aging fleets result in higher initiate a modal shift that promotes lower fuel emissions levels. In response, the three cities have consumption per passenger-km traveled. Because adopted European emissions standards (rang- buses have significantly better energy performance ing from Euro II to Euro IV1). Emissions testing and emissions per passenger-km compared with for older vehicles is carried out, but enforcement private transportation, and to substantially reduce is fragmented and ad hoc. For example, although congestion, city governments should consider put- vehicles in Cebu City are required to be tested ting in place high-capacity public transportation networks. The three pilot cities, all of which have conducted bus rapid transit studies, are moving in 1. Euro II and Euro IV are European vehicle emissions standards that define acceptable levels of vehicle exhaust emissions the right direction. In Surabaya, plans for a mass on new vehicles sold in Europe. Euro II was passed in 1996 and transportation system comprising tramway and regulates passenger cars and motorcycles. Euro IV was passed in 2005 and regulates all vehicles. monorail systems to serve heavy traffic corridors CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 45 into the city center are being developed, and stud- Table 4.2. Transportation sector performance ies on integrating the rest of its public transpor- for Three SUEEP Pilot Cities tation network with the mass transit system have Cebu City Da Nang Surabaya been initiated. Total transportation energy 13,394 8,668 8,481 Although steps are being taken in the three use (MJ/capita) cities to promote more efficient public transpor- Private transportation energy 3 .7 1 .2 1 47. tation systems, city governments will continue to use (MJ/capita) face multiple challenges. A key hurdle will be the Public transportation energy 0 .75 0 .22 0 .85 use (MJ/passenger-km) ability to measure system performance, given the Nonmotorized transportation 5 34 40 informal nature of the sector. The pilot cities have mode split (%) good vehicle registration data, but detailed data Public transportation mode 86 1 5 on modal split, passenger- and vehicle-km trav- split (%) eled, origin-destination, and environmental perfor- % of citywide GHG emissions 40 46 20 mance are largely nonexistent or, if they do exist, Source: Phase I pilot study . are of variable quality. Another challenge is attributable to the employment of a large number of citi- an effective strategy for delivering the targeted zens in the informal public transportation sector. reductions in private trip lengths and frequen- City governments will have to include this group cies. Engaging in a strong dialogue with national of stakeholders in the planning of future public governments on transportation policies will also transportation projects to ensure the efficient and ensure that the city’s plans are compatible with, effective operation of the formal sector. or at least not in conflict with, national policies. Planning Integrated Development Minimal efforts have been made so far in the three Similar to other Asian cities, urbanization at the cities to effectively integrate transportation pol- edges of Cebu City, Da Nang, and Surabaya is high icy with land-use planning. Much scope remains and increasing, exerting pressures on road space, for developing density, zoning, and development as do the higher density areas and city centers. approaches to support pedestrian-friendly, transit- Accelerating urban sprawl exacerbates motoriza- oriented transportation and urban development. tion trends, so pilot cities need to promote mixed- use urban development that reduces distances from City Government Buildings origins to destinations to reduce motorized travel. Energy consumption in the buildings sector has Table 4.2 shows that the share of nonmotor- grown along with the rapid urbanization that has ized transportation is the determining factor for increased volumes of building stock and with the total transportation energy use. In Cebu City, total behavioral changes that accompany economic transportation energy use (MJ/capita) is still sub- growth. If prevailing practices and trends con- stantially higher than in Da Nang and Surabaya tinue, global final energy consumption in build- even though it has a much higher public transpor- ings will grow by 30 percent between 2007 and tation share. This occurs because Cebu City’s non- 2030, with the increase expected to be greatest in motorized share is much lower. fast-growing EAP cities, including Cebu City, Da Although vehicle ownership will rise with Nang, and Surabaya. This sector has been identi- increased incomes, demand for motorized trans- fied by the Intergovernmental Panel on Climate portation can be managed by integrating land-use Change as having the greatest potential for cost- planning and transportation planning. A compre- effective reduction of GHG emissions by 2030 hensive approach will ensure that plans for mass (IPCC 2007b). public transportation, land use, parking policies, Because the urban building stock in develop- registration pricing, street signaling, pavement ing countries is expected to more than double upgrades, and other measures affecting transporta- by 2030, there is enormous potential to improve tion systems are integrated and collectively provide energy performance in the sector by focusing on 46 | energizing green cities in southeast asia: three City Synthesis report

new construction—preventing the lock-in effect Reducing Electrical Loads in new buildings—as compared with retrofitting Energy use in buildings is relatively low because existing buildings to improve energy efficiency. a large proportion of hallways in city government This is relevant for the pilot cities, given the poten- buildings, schools, and hospitals use natural ven- tial for newly constructed buildings to consume tilation and daylight. Minimal energy is used for higher levels of energy. City buildings in Cebu City air conditioning and for providing hot water to and Da Nang currently exhibit low energy inten- supplement the black water tanks on the roofs in sity (see figure 4.2) because the existing building the pilot cities. Newer commercial buildings such stock comprises predominantly smaller, low-rise as retail malls and office buildings are much larger buildings minimally equipped with lighting, air and require central air conditioning, ventilation, conditioning, and appliances. However, this situ- and much more lighting. ation will change with the trend for new buildings As incomes grow, the size of homes and the use to have larger floor space and increased cooling, of electrical appliances, such as air conditioning, ventilation, lighting, and plug load intensities. computers, and washing machines, also increase. Thus, authorities in the three cities have ranked the In Da Nang, air conditioner ownership in homes buildings sector as having the highest potential for is correlated with higher monthly incomes (r = energy efficiency action following the public light- 0.837). This trend is likely to continue as incomes ing sector. keep rising in the three cities. Given that electricity is the primary energy Electrical load reduction can be addressed with source in buildings, two areas can be targeted to targeted policies and programs. In the pilot cities, reduce energy use and emissions: (i) reducing elec- national-level energy efficiency standards for major trical loads and (ii) reducing energy loads through appliances and equipment are broadly recognized building design and codes. as necessary interventions. A range of tactical and educational energy efficiency initiatives were

Figure 4.2. City government buildings electricity consumption (SUEEP Pilot Cities in Blue, Surabaya data not available)

500

400

300 2 kWhe/m 200

100

Pune Jakarta Indore Toronto Mumbai Jabalpur Da Nang Gaziantep New York Singapore Cebu City Quezon City Kuala Lumpur Cities

Source: Authors, using TRACE . CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 47 also undertaken by the city authorities, including emissions. To enforce BEECs successfully, cities restricted air conditioning operation times, dim- will have to ensure the following: ming light switches, and compact fluorescent lamp n government commitment to energy efficiency, replacement programs. n effectiveness of government oversight of the Reducing Energy Loads through construction sector, Building Design and Codes n compliance capacity of domestic and local Baseline energy loads are intrinsically related to building supply chain, and building shape, orientation, structure, and materi- n financing of energy efficiency measures (for als, and are best addressed during the design and example, retrofitting). construction phases. Several considerable barri- Major capacity-building is necessary in the three ers impede energy efficient building design in the cities; key stakeholders need to be trained and edu- three cities, not least being the conflicting incen- cated, and systematic approaches for enforcement tives among key stakeholders, the lack of available with complementary incentives need to be pre- information and knowledge, and issues relating to pared, implemented, and regularly updated. the visibility of energy cost signals. The enforcement of efficiency standards through building Solid Waste energy efficiency codes (BEECs) may overcome The solid waste sector in each of the three cities is these barriers and offer the greatest impact on currently characterized by relatively low waste gen- future energy consumption in the buildings sector. eration rates with varying waste recycling rates (see BEECs are not currently implemented in the table 4.3; for comparison with other cities, see figure pilot cities. Both the Philippines and Vietnam have 4.3). Waste generation rates are projected to increase recently introduced national green building guide- as the economies grow and lifestyles change, and city lines, but these are voluntary best practices rather governments are expected to manage increased waste than mandates for minimum standards for all build- collection and treatment needs with well-functioning ings. In Cebu City, the Building for Ecologically collection and transport systems. Responsive Design Excellence code offers an Energy efficiency improvement opportunities initial and valuable guideline for BEEC develop- are available primarily in the energy embodied ment. In Da Nang, the Vietnam Green Building in the waste and its associated GHG emissions. Council’s LOTUS green building rating system Energy used for waste transportation is of lesser has drawn inspiration from other building certifi- significance. In particular, potential exists in cation programs, including Leadership in Energy the region to scale up organic waste manage- and Environmental Design in the United States and ment activities. About 60–70 percent of city solid Building Research Establishment Environmental waste is estimated to be high-moisture organic Assessment Method in the United Kingdom. These waste. Organic waste decomposes anaerobically codes include specifications for building design beyond energy performance, such as landscaping and noise pollution. Although the remaining work Table 4.3. Solid Waste sector performance for on development and implementation of appropri- Three SUEEP Pilot Cities ate BEECs for warm-climate developing countries Cebu City Da Nang Surabaya is considerable, Da Nang’s adoption of building Waste generation 183 248 256 codes is a positive step toward enhancing energy (kg/capita/year) efficiency in its buildings. Capture of solid waste (%) 80 90 70* BEECs in Indonesia, the Philippines, and Solid waste recycled (%) 24 0 15 Vietnam are not compulsory, but it would be beneficial for Cebu City, Surabaya, and Da Nang to Waste that goes to landfill (%) 26 90 64 enforce BEECs to prevent themselves from being % of citywide GHG emissions 0 7 1 .4 locked in to energy inefficient buildings that would Source: Phase I pilot study . contribute substantially to their cities’ carbon *Because no data were available on the proportion of solid waste captured by volume in Surabaya, a proxy using the proportion of the population served by solid waste collection was used instead . 48 | energizing green cities in southeast asia: three City Synthesis report

Figure 4.3. Percent of Solid Waste Recycled (SUEEP Pilot Cities in Blue)

30 Percent

Paris Seoul Tallinn Tokyo Toronto Bhopal Mysore WarsawLjubljana Da Nang GaziantepCebu CityVijaywadaBratislava Surabaya Bucharest Budapest Hong Kong Quezon City New York City Jeddah (Jiddah) Cities

Source: Authors, using TRACE .

in landfills and releases methane gas, which is 23 and are organized through cooperatives, such as the times more potent than carbon dioxide as a GHG daily collections at the barangay level in Cebu City. and has other potential public safety risks emanat- In Da Nang, bins are collected daily and a flat rate ing from the decomposition process. is charged for residential customers. Businesses are charged a volume-based rate. Similarly, Surabaya’s Segregating at the Source citizens are charged rates for collection that vary A primary constraint to the effective management with distance from the main road. of organic waste, which comprises the bulk of solid waste, is weak performance in source segregation. Reducing Volume to Landfill Composting and biogas projects using mixed waste Three principal treatment options can be applied inputs often fail. Hence, mandatory organics sepa- to waste: landfilling, composting, and incinerating. ration at the household level, as practiced in both The selection of treatment depends on a range of Cebu City and Surabaya, is critical. Surabaya has factors, including population size, waste volume, a strong community-based waste self-management waste composition, availability of land, and exist- program based on the principles of “reduce, reuse, ing policies. However, because the dense and moist recycle.” The community is involved in compost- waste in the region is characterized by low caloric ing organic waste and recycling or selling inorganic values, incineration—which is ideal for dry waste waste to waste collectors. A similar scheme oper- with high caloric value—is not a suitable option, ates in Cebu City. Da Nang has no formal recycling as was demonstrated in the failure of a waste incin- program, but 28 percent of households report that eration pilot project in Da Nang in 2003. they remove recyclable materials from their waste The most prevalent current treatment option is before discarding. The majority of these recovered landfilling because it remains the cheapest and sim- resources are given to scavengers or sold to compa- plest means of waste disposal. However, waste is nies that recycle and reuse the materials. dumped indiscriminately and landfills in the three Formal waste collection systems in the pilot cit- cities are poorly designed and are mostly beyond ies have substantial capture rates (see table 4.3), their design capacity. Waste pickers labor in all of CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 49 the cities’ landfills, and informal landfill recycling In Surabaya, thousands of residential compost- has substantial volume capture. In Cebu City, it ing bins have been distributed to residents by the is believed that a recycling rate of 16 percent is city government, which also operates several com- achieved through activities of the waste pickers. posting houses that are supplied with organic waste Only Da Nang has a landfill with a leachate col- from the park maintenance program and fruit lection system. An important benefit of scaling up and vegetable markets. These larger schemes use organic waste management is that leachate man- static pile methods with forced aeration. Compost agement will be easier with less organic waste is reused in the city’s public parks. Cebu City has going to landfills. small-scale composting in the barangays, as well as Landfills require large areas of land for the larger-scale facilities at the landfill. disposal site itself and for the buffer that usually Second-generation biofuels, which are pro- surrounds it. With expanding city limits, increas- duced using nonfood sources (and therefore are ing land value, and increasing costs, authorities not in competition with food production), are an will find it increasingly difficult to locate afford- expanding area of research and development. Of able land reasonably close to the city. Reducing the relevance to EAP coastal cities is the production of volume of total waste treated at landfill therefore extends the operational life of such facilities. energy using fish waste. For example, Integrated Renewable Energy Solutions for Seafood Processing Capturing Landfill Gas (Enerfish), a project developed by VTT Technical Landfill gas emissions present potential sources Research Centre of Finland in collaboration with of energy generation that might receive financ- the European Commission, produces biodiesel ing through the Clean Development Mechanism. from waste generated by a fish-processing plant Studies have been undertaken in the pilot cities in Vietnam. EAP cities in coastal areas, especially to determine the potential for such projects. Thus those with fish-processing industries, could poten- far, Surabaya has solicited alternative bids from tially harness such technologies, enabling them to potential partners for landfill gas capture projects produce local energy and reduce GHG emissions. on the Benowo landfill, but no contracts have been completed. Cebu City is considering capping the Inayawan landfill, and studies are being considered Water and Wastewater The primary concerns guiding city authorities to reduce emissions by 5,000 tons of CO2/year through the project. Da Nang has identified a large in the water and wastewater sector are the need project at the Khanh Son landfill that would gen- to reduce both costs and the negative impacts erate 1 megawatt of electrical power and reduce of treatment and distribution, while simultaneously expanding water and wastewater services to GHG emissions by 140,000 tons of CO2/year or nearly 5 percent of total city emissions. underserved populations. Many still lack access to safe drinking water and adequate sanitation facili- Composting Organic Waste ties. In Surabaya, 70 percent of the population has Organic waste can be recycled into compost, and if access to clean drinking water; in Da Nang, the managed aerobically, would not result in the pro- figure is 60 percent, and in Cebu City, above 50 duction of methane. If managed properly, aerobic percent. The lack of water supply, or its unreliabil- decomposition would result in carbon sequestra- ity, can have detrimental health impacts, and result tion in soil solids. Because compost improves soil fertility, there is significant potential demand from in significant social and economic costs. the agricultural, residential, and landscape man- Although only 2–3 percent of the world’s energy agement sectors. Increased production of compost consumption is used to pump and treat water for from city organic waste benefits urban agricultural urban residents and industry, there is much scope productivity and urban food security, as experi- to enhance energy efficiency in this sector. It is esti- enced by Cebu City, which produces 25 percent of mated that energy consumption in most water sys- its own food and supplies urban farmers with com- tems worldwide could be reduced by at least 25 post from the city’s composting facilities. percent by cost-effective efficiency actions alone. 50 | energizing green cities in southeast asia: three City Synthesis report

Figure 4.4. Electricity consumed per Cubic Meter of potable water production (SUEEP Pilot Cities in Blue)

0.6

0.5

0.4 3

0.3 kWhe/m

0.2

0.1

Tokyo Pune Mysore Sydney Jabalpur Da Nang Toronto Cebu City Vijaywada Surabaya Hong Kong Quezon City Johannesburg Cities

Source: Authors, using TRACE .

Enhancing Energy Efficiency in Pumping consistently maintain high rates of pressure even The significant requirement for pumping means that when demand is low can result in increased leakage sourcing water supplies from groundwater is a rela- across the system. Remedial measures to improve tively energy-intensive process. Because Cebu City’s pump operation can provide attractive returns on potable water supply is sourced from groundwater, investment. Low-cost measures, such as soft starters its energy intensity is higher than that of the sur- for motors and trimming impellers, as well as higher- face water, gravity-fed systems that supply Da Nang cost measures such as the replacement of inefficient and Surabaya (see figure 4.4). To reduce Cebu City’s pumps and installation of variable speed drives that reliance on energy-intensive water sources, the city adjust pressure based on the demand on the system, is considering the study of rainwater harvesting are available. Da Nang has installed variable-speed schemes in its buildings and ways to encourage the drive pumps, and Cebu City has partnered with uptake of these schemes in private developments. an external organization to implement a wide- Rainwater harvesting systems, which are not yet scale pump efficiency program. Although no pump widely used in the region, are expected to receive upgrade or maintenance is currently performed in Surabaya, a program to improve network pressure much more attention in the future. will introduce additional reservoirs and in-line lift Improving Distribution Networks stations across the network. Improvements in distribution network perfor- Enhancing the efficiency of the distribution sys- mance, in particular, efficiency of pump operations tem can also be accomplished by minimizing leak- throughout the network, can deliver large energy age—the cost of every liter of water delivered to efficiency gains in the water sector. Considerable consumers is increased by every liter lost to leak- energy is used inefficiently when pump motors oper- age. Wider water-loss management programs focus ate at suboptimal speeds. In addition, pumps that on theft as well as leaks, and water losses should be CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 51

Figure 4.5. Nonrevenue water as a percentage of total potable water produced (SUEEP Pilot Cities in Blue)

Percentage of nonrevenue water 10

Pune Dakar Tokyo Jakarta Dhaka Karachi Indore Amman Da Nang Surabaya Cebu City Shanghai Singapore Gaziantep Cape Town KathmanduHong Kong Quezon PhnomCity Penh Kuala Lumpur Ho Chi Minh City

Bengaluru (Bangalore) Cities

Source: Authors, using TRACE .

targeted to be brought to less than 10 percent. This increasing overall energy use levels—as a result recommended level is significantly lower than the of increasing concerns about public health threats levels of nonrevenue water experienced in the three arising from the contamination of groundwater cities’ networks (see figure 4.5). Because old pipes supply by septic tank seepage and septic waste are a primary cause of system losses, Da Nang and dumping. Cities can take advantage of this oppor- Cebu City have implemented audits and programs tunity to learn from global best practices and leap- to replace them. In an effort to overcome the high frog inefficient systems design. initial investment cost of a leak-reduction program, Cebu City has no citywide wastewater infra- the water utility company in Surabaya has consid- structure. Its wastewater is currently managed ered performance-based contracting agreements to through household septic tanks. The partially upgrade the network. treated waste stored in the septic tank is removed Pressure management is generally more cost by private septic waste haulers and disposed of, effective than expensive repairs to leaks in buried untreated, in the landfill. A similar process takes pipes. This approach will likely be the preferred place in Surabaya, though several private waste- focus of distribution network improvement pro- water treatment companies also operate treatment facilities for large buildings, industrial sites, grams in the region, ahead of the replacement of and campuses. Da Nang is the only pilot city existing networks. with wastewater treatment plants and a sewage Scaling Up Treatment Infrastructure pipe network that handles approximately 65 per- Many cities in EAP have limited wastewater treat- cent of wastewater. The remaining wastewater is ment infrastructure. Therefore, the impact on stored in septic tanks. Da Nang’s energy consump- energy is minimal. However, more comprehen- tion for wastewater management is relatively low sive systems are likely to be developed—thereby compared with other cities in the wider region, 52 | energizing green cities in southeast asia: three City Synthesis report

probably because the system has been designed these companies is largely out of city government as a “dry weather” system. During dry months, control, so the number of city interventions that all wastewater flows through the system to treat- can affect energy efficiency performance in this sec- ment facilities where it is processed anaerobically. tor is limited. City governments, therefore, would However, during the monsoon season, wastewa- need to work closely with national governments on ter and rainwater are diverted directly into local energy policies to ensure the reliability and afford- waterways. This method increases pathogen lev- ability of electricity supply to their cities. Despite els in the receiving waters because the pumps are this, as cities in the region increasingly localize and automatically switched off when rainfall floods the decentralize power generation in the future, city capacity of the system. authorities will need to build capacity to understand the complexities and critical elements of Capturing Sludge Gas power generation, distribution, and consumption. In addition to treated effluent, wastewater treatment plants produce sludge composed of biomass Managing Peak Loads and settled biological material. There is increasing The daily load curves of the three cities are charac- awareness in the wastewater sectors in the three cit- terized by high peaks of short duration. Smoother ies that sludge can be digested anaerobically or gas- load curves would enhance the efficiency of power ified to produce biogas for electricity generation. In plant operations, allowing generators to perform Surabaya, smaller-scale composted sludge already within their steady optimal performance ranges contributes to soil fertilizer in city parks. A pilot proj- and reducing the need to add new generation ect in Cebu City, aiming to treat septic tank waste capacity. City authorities are in a good position using a biodigester, recently failed because of con- to influence energy demand to enhance the over- tamination of the sludge by industrial waste, which all efficiency of the power sector. Authority can be compromised the possibility of biological treatment. wielded in various ways, such as the imposition of building codes (discussed earlier) and flexible tar- Managing Demand iffs to encourage energy use during off-peak hours, Further energy improvements can be achieved by which is practiced in Da Nang. encouraging conservation and water-conscious behavior. Technological devices that promote Generating Renewable Power water conservation, such as low-flow toilets, Both Cebu City and Da Nang rely on electricity shower heads, and sink faucets, can be fitted in city generated outside the city using significant renew- government buildings and encouraged in private able sources (see table 4.4). No major renewable developments through outreach. In Cebu City and sources of energy, however, have been deployed Da Nang, water utilities have implemented tariff within any of the city limits, despite significant structures and embarked on campaigns to educate potential for solar-powered technologies. The consumers about the importance of water conser- potential deployment of distributed and local- vation. However, more can be done to improve ized generation (smart metering) is not limited to customer knowledge about the importance of and renewable technologies such as solar sources on means of reducing consumption at home because buildings—methane gas from the solid waste and the initiatives are still not widespread. wastewater sectors could also be captured. To successfully encourage expansion of renew- Power able and localized generation, each of the three With rapidly increasing energy demand, electric cities would need to produce a renewable energy utilities in the region are challenged to establish strategy. Steps should include the transformation of and maintain generation and transmission capa- the transmission grid to enable two-way metering bilities and improve quality of service. All three for localized generation as well as the development cities are served by national electricity companies of smart-grid technology, which offers significant that provide subsidized power. Management of potential for improving electricity distribution and CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 53 controlling demand. In addition, incentive schemes Table 4.4. Power sector performance for Three to encourage the uptake of renewable energy can be SUEEP Pilot Cities implemented. Such schemes include incentives such Cebu City Da Nang Surabaya as feed-in tariff structures that can make renewable Transmission losses (%) 7 .45 4 .23 1 .8 generation more financially attractive, given the (combined) (combined) failure of the market to account for environmental Distribution losses (%) 6 .7 externalities. Although schemes like feed-in tariffs Renewable generation 49 (geo 30 0 are usually implemented at the national level, city (% of total) and hydro) (hydro) governments can encourage the use of renewables Peak load (MW) — 250 MW — by favoring development that uses on-site renew- % of citywide GHG emissions 26 31 69 ables and by updating building codes to encourage Source: Phase I pilot study . the uptake of renewables in their cities. Note: — Not available .

Optimizing Transmission and Transmission and distribution losses in the Distribution three cities are comparable (see figure 4.6). Several As cities expand and the energy demand load interventions, such as the installation of compos- increases, existing primary infrastructure, includ- ite core conductors, high efficiency transformers, ing transmission and distribution networks, expe- energy storage, smart controls, and localization riences increased stress. Greater transmission of energy generation, can be made to reduce these inefficiencies and congestion occur, which, in turn, losses. National energy suppliers to the three cit- lead to reduced grid reliability and lower quality of ies are aware of these engineering solutions, and electricity supply. have been performing ongoing maintenance on

Figure 4.6. Transmission and Distribution performance (SUEEP Pilot Cities in Blue)

8 Percent of total T&D loss 4

Pune Hanoi Tokyo Karachi Jakarta Dhaka Pokhara Amman Toronto Da NangBangkok Surabaya Cebu City Shanghai Singapore Gaziantep Cape Town Mexico City Kathmandu Hong PhnomKong Penh Quezon City New York City Kuala Lumpur Ho Chi Minh City Cities

Source: Authors, using TRACE . 54 | energizing green cities in southeast asia: three City Synthesis report

transformers and substations and making power ultimately has in improving energy efficiency in factor corrections. In Da Nang, the power utilities each sector is very important. are planning to ground distribution lines to mini- To prioritize specific actions and recommendations mize nontechnical losses from illegal connections, derived through the program, or additional recom- which is a persistent problem in the EAP region. mendations that may be developed at a later date, Identifying City Government the following factors should also be considered: Priorities n Resource constraints. Within each sector, mul- The preceding sections of this chapter provide a tiple fiscal and human resource constraints that review of sectoral energy use and issues across the will hinder the success of programs should be three cities. Based on the opportunities and chal- considered. lenges posed, a range of potentially viable recom- n Compatibility with other development goals. mendations were derived for each sector that would In addition to the improvement of energy effi- enable emissions reductions and improvements in ciency and reduction of a city’s carbon foot- energy consumption efficiency. The challenge for print, a city government would also seek to city governments is to accurately determine which improve the city’s environmental, social, and sectors and recommendations should be prioritized economic conditions. Therefore, energy effi- for action. This activity in the first phase of the ciency and low-carbon activities that would Sustainable Urban Energy and Emissions Planning most effectively help the city achieve these par- (SUEEP) Program was undertaken using a prioriti- allel objectives would be given a higher priority. zation process that forms the second module of the n Timing. Given other ongoing initiatives in the Tool for Rapid Assessment of City Energy (TRACE) city, it is useful to identify those activities that system. The process is summarized below. would be the most complementary in the short, The following factors were taken into account medium, and long terms. in prioritizing sectors for action in the pilot cities: Based on the above, a methodology was formu- n Greatest potential for improvement. Sectors lated to prioritize programs using the following that have the most potential for improvement factors: in energy efficiency and GHG mitigation are n Energy expenditure information: This informa- identified. To this end, “improvement” was tion can be obtained either from city govern- defined as a function of ment budget offices or through the conversion – current energy expenditures on a given sec- of energy use across the city into a monetary tor (estimated citywide expenditures) and value. – energy savings potential (based on bench- n Energy efficiency opportunity: Key perfor- marking work conducted as a part of the mance indicators from the TRACE benchmark- study). ing process that are most indicative of energy n Scope of control or influence of the city govern- use across a particular sector or subsector were ment. Although city governments may be able to chosen. To define opportunity, the mean value implement several measures that reduce energy of sectoral energy use of the better-performing consumption and emissions, the impact will be cities in the peer group is calculated; the differ- limited if the sector represents a small fraction ence between this value and the city’s current of citywide energy and emissions. The degree performance provides an improvement target to which the city government can affect energy for the city. This is termed the “relative energy consumption and emissions in sectors such as intensity” (REI) of the sector. industry, wastewater treatment, building design, n The control or influence of the city authority: or power distribution varies substantially from This factor ranges from minimum (national city to city. Thus, in the sector prioritization governments have full or greater control) to process, knowing the level of influence a city maximum influence (city has full budgetary and CHAPTER 4: Sector Diagnostics: Identifying Opportunities | 55

regulatory control). Each of the seven options Note that table 4.5 presents priorities for sec- in the range has a range of values; therefore, tors in which the city authority has maximum the TRACE user can determine the extent of the influence, and for citywide issues over which the city authority’s control or influence in each sec- authority has limited influence. The ranking sug- tor. This final component is used as a weighting gests that the city of Da Nang should prioritize factor, with values ranging from 0.01 to 1. programs as follows:

The prioritization calculation is based on simple n Street lighting multiplication of each factor’s potential for energy n City buildings improvement, spending, and degree of city author- n Solid waste ity influence. Thus the calculation is as follows: n Water treatment system.

On a citywide basis, the power supply system is P = (CGSe × REI × C), a clear area of focus, as are public and private transportation. in which This sector prioritization methodology relates P = prioritization, only to energy efficiency. However, other factors CGSe = city government expenditure on energy, that promote energy sustainability, such as increas- REI = relative energy intensity, ing the share of renewable energy in the energy C = level of city authority influence. supply system, which will enhance the reliability of energy supply and reduce GHG emissions, can The prioritization table for Da Nang is illustrated also be incorporated into the recommendations to in table 4.5. be considered in due course without the need for further prioritization.

Table 4.5. Summary results of the TRACE prioritization process in Da Nang, 2011

Priority 2010 energy Relative energy Level of city Savings potential ranking Sector spending (US$) intensity (%) authority control* (US$)** City authority sector ranking 1 Street lighting 1,200,000 78 .2 1 .00 939,141 2 City buildings 2,069,047 15 .1 1 .00 312,426 3 Solid waste 452,380 48 .8 0 .97 214,277 4 Potable water 564,349 26 .4 0 .96 143,163 5 Wastewater 95,000 11 .1 0 .96 10,133 Citywide sector ranking 1 Power 54,285,714 33 .8 0 .38 6,973,725 2 Private vehicles 44,665,149 10 .0 0 .14 669,977 3 Public transportation 361,773 65 .8 0 .90 214,416

Source: Phase I pilot study . *0 = no influence; 1 = maximum influence **Based on TRACE benchmarking; these figures are indicative of the quantum of savings that may be possible, not necessarily practicable .

Chapter 5 Governance

The Importance of Governance Energy governance refers to a city government organizational framework established specifically to deal with energy- related issues. It is a key mechanism for deploying effective energy efficiency projects on a citywide level. The city’s approach to energy is undertaken in an integrated manner, and the city’s projects are aligned with the national government’s efforts to improve energy efficiency in the city.

Improved energy governance will benefit cities energy planning, delivery, management, and the through better oversight and enhanced transpar- SUEEP process, and also serves to communicate ency and through the coordination of various to all parties the relevant responsibilities, ensur- energy-related initiatives across sectors. It will also ing that all understand why each stakeholder is enhance the potential for innovation by giving involved. Institutional mapping is also a useful tool local agencies and stakeholders the opportunity to for understanding the interplay between agencies. engage and exchange ideas. In particular, being aware of which agency reports Sustainable Urban Energy and Emissions to whom, which agency has decision-making Planning (SUEEP) cuts across sectors, and touches power, and which agency can influence the formula- on most areas of public service provision and tion and implementation of policy will be a crucial private enterprise. SUEEP also has a temporal determinant of the success of SUEEP. Knowledge dimension, especially with planning, design- of such dynamics will also minimize the possibility ing, procuring, constructing, and operating new that overlapping issues are left unaddressed, espe- facilities and infrastructure. In this regard, SUEEP cially if more than one agency is responsible for the must also guide spatial and investment plans. For implementation of a policy. instance, suppliers of electrical power and pota- Figure 5.1 illustrates the institutional arrange- ble water, among other stakeholders, should be ments in Da Nang. It shows clearly that planning actively engaged in the strategic and economic and management of energy issues involved mul- development planning of cities over the long term. tiple agencies, underscoring the importance of This not only enables them to provide inputs but cross-agency collaboration in the planning and also allows them to identify where capital invest- management of sustainable urban energy and ment will be required for new or improved utility emissions issues. The institutional maps from infrastructure. As a result of these various consid- Cebu City and Surabaya displayed a similarly erations, the active and structured management of complex pattern with respect to the numbers of a wide variety of stakeholder relationships is nec- organizations involved and the spread of control essary to ensure successful and lasting outcomes. and influence over energy- and emissions-related matters. Despite this, differences in the governance Governance of Energy-Related structures in each of the pilot cities became evi- Issues dent, illustrating the need for city governments During SUEEP Phase I, an institutional mapping to fully understand city-specific relationships exercise established the principal agencies and between stakeholders before embarking on an actors involved in the delivery and management of SUEEP exercise. services that directly or indirectly affect the energy The degree of control or influence each city has and greenhouse gas (GHG) emissions profile of was also mapped. The outcome, presented in fig- each pilot city. Institutional mapping is useful to ure 5.2, shows that each city generally has control understand the range of stakeholders involved in of investment, budgets, and several local energy

57 58 | energizing green cities in southeast asia: three City Synthesis report

Figure 5.1. Overview of Energy Planning System in Da Nang

Da Nang People’s Committee

Department of Department of Industry and Trade Finance

Direct inﬂuence or control

Consultation Da Nang Power Oversight

Department of Department of Department of Department of Department of Natural Science and Planning and Construction Transportation Resources and Technology Investment Environment

Da Nang Private Center for Da Nang Priority Infrastructure water supply bus Energy Urban Environment Investment Project (PIIP) company operators Conservation Company Management Unit— World Bank priority investment projects only

Da Nang Drainage and Wastewater Treatment Company

Source: Authors, Phase I pilot study .

efficiency activities, as well as public lighting, pub- stems from the requirement to coordinate and lic buildings, wastewater treatment, and waste institutionalize energy policies at a national level tariffs. City authorities’ influence was much more as part of the sustainable energy planning process. limited with respect to power supply and electricity Implementing energy policies on a national level tariffs. It is significant that in most other sectors, is more efficient and effective, and ensures con- the pilot cities had varying degrees of influence, sistency in application throughout the country. with coordination between local agencies more Examples of such measures include vehicle stan- likely when facilitated by the city government. dards, energy labeling, and industrial energy effi- Thus, city governments need to be well aware of ciency programs. Likewise, programs that facilitate local circumstances so as to tailor plans to their and promote low-carbon energy generation are unique needs and governance structures. also usually sponsored at a national level to enable and facilitate the country’s economic development. City-Level and National Energy Examples of national-level programs in each of the Programs three pilot cities are listed in table 5.2. Although local governments have control or sig- Given the close links between city and national nificant influence over policies at the city level, few energy policies, city and national governments energy policies, plans, and programs were imple- must clearly understand the allocation of roles and mented at the city level (see table 5.1). The lim- responsibilities for bringing about a sustainable ited number of policies enacted at the city level future. These roles are described below. CHAPTER 5: governance | 59

Figure 5.2. Level of Influence of City Governments in Various Sectors

Da Nang Surabaya Cebu City

Land-use planning Public buildings 5 City energy budgeting

4 Capital investment Mass transit operation 3 planning

Building codes 1 Water tariffs

Solid waste Waste tariffs

Wastewater treatment Electricity tariffs

Water supply Power supply

Public lighting Scale: 1 = No inﬂuence 5 = Maximum inﬂuence

Source: Authors .

The City Government’s Roles and city should be responsible for planning its develop- Responsibilities ment comprehensively and sustainably. To do this, Energy efficiency cuts across sectors and pertains in the city government should take the lead in energy some way to most areas of public service provision and emissions planning and implementation, and and private enterprise. Cities often have the most in advocating for changes that contribute to the direct line of public communication to residents, advancement of the city’s goals. One of its respon- businesses, and industries, which means that edu- sibilities would thus be to set up an appropriate cation and incentives are most efficiently delivered organizational structure for energy planning that through city governments. These factors, com- includes national, regional, and local governments bined with the city government’s intimate knowl- as well as key stakeholders in the SUEEP process. edge of city development and possession of the Achieving sustainable urban energy plan- tools to influence or regulate sectors, mean that the ning objectives through market transformation 60 | energizing green cities in southeast asia: three City Synthesis report

Table 5.1. Summary of Current Pilot City Energy governments will need to build their capacity to Activities (i) understand the environmental, economic, and Surabaya Cebu City Da Nang equity impacts of the embedded energy costs and City energy team 3 operational energy needs of urban infrastructure systems and urbanization; (ii) identify the local City energy plan or program 3 3 environmental, economic, and equity benefits of Mayoral mandate for 3 3 sustainable urban energy planning, especially with energy efficiency respect to the private sector; (iii) develop informa- Renewable energy research 3 tion and materials that lead to a better understand- and development program ing of planning options, particularly the costs and benefits of alternative technologies, practices, and Technical progams (for 3 3 example, waste, buildings) development scenarios; and (iv) develop effective

Source: Authors . decision-support tools and methods for community-based energy systems planning. and integrated demand-side management will In planning its sustainable development, a city require the capability to better understand, char- government must recognize its level of influence in acterize, and shape energy demand and use within implementing policies at the city level. To this end, urban built environments. In this regard, city the city government will have to be fully responsible

Table 5.2. Summary of National Energy Efficiency Policies and Programs for Indonesia, the Philippines, and Vietnam National Policies, Plans, and Programs Indonesia Philippines Vietnam Government buildings energy efficiency management program 3 3 3 State-owned energy services company (ESCO) 3 Public-private partnership program on energy conservation 3 Energy benchmark and best practice guide 3 Building energy codes 3 3 3 Energy labeling for appliances and products 3 3 3 Energy efficient lighting program in the residential sector 3 3 Energy awards 3 3 3 Lower rates on investments in energy conservation 3 3 3 Government awareness raising for energy conservation in households and 3 3 industries Training and accreditation for energy managers and energy auditors 3 3 3 Energy management services and energy audits 3 Fuel conservation and efficiency in road transport program 3 3 Power conservation and demand management in all commercial, 3 3 3 residential, and industrial sectors System loss reduction program 3 Technical assistance to domestic producers on energy efficiency 3 3 compliance Support for industrial enterprises improving, upgrading, and optimizing 3 3 technology

Source: Derived from Asia Pacific Energy Research Center, 2010 . CHAPTER 5: governance | 61 for sectors over which it has significant influence region, national governments will have to take the (for example, street lighting, public buildings, and lead in implementing policies (in the form of reg- wastewater treatment). At the same time, city gov- ulations or incentives) that will promote the effi- ernments should determine those aspects of energy cient use of energy. However, because the efforts planning that can be aided by national programs of city governments will usually be essential to and engage in a strong dialogue with national agen- achievement of national policy goals or targets, it cies from the outset of the process to determine the will be in the national government’s best interests level of support that may be expected. In finding to work closely with individual cities on national- compatible interests between the city and national level policies and plans and to welcome interest governments, cities can use the opportunity to by city governments in furthering efforts to imple- secure support or financing from the national gov- ment national policies on the ground. For example, ernment to implement national policies in their cit- national energy, transportation, and environment ies. For example, there were programs in Da Nang departments or ministries should be included in that were implemented at the city level but were city-level SUEEP discussions. cofinanced by a national agency. The Department The national government should provide clear of Science and Technology, via its Center for Energy guidance to cities on the direction it plans to take Efficiency and Conservation, coordinates the Da on sustainable development so that cities can plan, Nang City Project on Efficient Use of Energy and and where possible, cooperate in areas in which Application of Renewable Energy in accordance national and city goals are aligned. In these areas, with the central government’s energy efficiency policies implemented by both the city and national mandates. The Center for Energy Efficiency and governments can serve to reinforce each other, thus Conservation provides support to local businesses making efforts to develop the city sustainably more and government agencies on strategies to reduce effective. energy consumption, conducts energy audits, and aids in implementation of audit findings at local City Planning businesses. A strategic plan is usually guided by a “vision” City governments should also work with and a set of objectives that city authorities seek national agencies and departments to coordinate to achieve. Thus, energy, GHG emissions, and activities with a clear understanding of individual the city’s adaptation to climate change should be responsibilities and expectations. Cities should also prominently featured as strategic objectives in determine the kinds of policies and programs that this process. SUEEP, which is intrinsically linked must be undertaken at a national level (for exam- to strategic spatial, transportation, and economic ple, specific aspects of energy generation and use), development planning, will determine the future and those aspects of implementation for which location, scale, typology, infrastructure, and utility demands for development. With a long-term national-level assistance is required (for example, planning horizon, rapidly growing cities will ben- capacity building and finance). Such feedback from efit from early consideration of these issues while city governments will be valuable to national gov- determining the future form and economic focus of ernment policy formulation, and establish a start- their cities. ing point for future dialogue and collaboration. An integrated strategic planning process enables The National Government’s Roles and providers of public services, from mass transporta- Responsibilities tion to wastewater treatment, to contribute and Many aspects of energy consumption, such as identify opportunities that would lead to greater the sources of electricity and gas supply, gasoline reliability of energy supply, energy efficiency, and subsidies, household appliance energy efficiency reduced GHG emissions, while at a minimum standards, and vehicle fuel efficiency standards, helping to define investment programs targeted to are influenced by national energy policies. Given projections of future demand. Integrated planning the expected increase in energy consumption with is particularly important for transportation plan- rapid urbanization in the East Asia and Pacific ning. Currently, some of the pilot cities suffer traffic 62 | energizing green cities in southeast asia: three City Synthesis report

congestion during peak hours and growing car use been entrusted with the management of various will only exacerbate this problem. The energy bal- aspects of energy and emissions. Where possible, ance studies and emissions inventories both point existing committees can be used by extending their to the fact that transportation-related energy use mandates through broader terms of reference and already constitutes a significant share of each city’s enhanced powers (if necessary) to take on the role energy and emissions burden. Encouraging nonmo- of an energy and emissions task force. torized modes of transportation along with robust Membership in the task force should not be public transportation will be critical to mitigating limited to government—businesses and residential the spread of congestion and improving the quality property managers, along with other members of of transportation in all cities. industry and the public, can provide valuable input In addition to transportation management, and offer a fresh perspective on the challenges. In local leaders may wish to consider preparing addition, implementation of projects will require renewable energy master plans to improve the support from these stakeholders. The task force’s robustness of energy supply and harness the roles would be threefold: opportunities for renewables. Even if some renewable energy technologies are currently economi- n coordinate city-government and citywide cally unattractive, “future proofing” the city for energy efficiency projects and initiatives; their widespread deployment (for example, struc- n develop long-term energy plans to identify and tural strength requirements for flat-roofed build- develop supply-side opportunities (for example, ings) will be hugely beneficial when the economics distributed energy generation and low-carbon of renewables become more attractive. The estab- generation projects); and lishment of new green building guidelines provides n act as a liaison between various departments a particularly potent mechanism for encouraging and external agencies, especially with regard to renewables and future proofing cities. energy infrastructure planning. These types of interventions are only possible if In addition, the task force should establish the city governments have carefully considered energy means to monitor energy-related issues over the issues during strategic planning cycles, and if col- long term, such that annual energy-use and GHG laboration across agencies is practiced to enable emissions performance (both city government and planning and implementation on a comprehensive citywide) can be monitored. basis. Transparency during collaboration is neces- The effectiveness of the task force will depend sary to obtain support and buy-in for programs. on several factors, in particular,

Governance Mechanisms n the body to which the task force reports, This chapter thus far has focused on the need for n the task force’s decision-making powers, and city authorities to adopt an integrated and strate- n the extent to which the task force can champion gic approach to SUEEP. To maintain momentum energy issues. and gain traction after plan, program, or initiative Formalizing Energy Plans development, subsequent steps are required to for- In cities in which SUEEP might take place outside a malize and govern activities. formal (that is, city or national government) urban Energy and Emissions Task Force planning process, the plan may require formal One of the principal institutional recommenda- review and agreement by an executive authority. tions is for each of the three pilot cities to estab- For example, in some EAP cities, the support of lish a citywide energy and emissions task force to the mayor is insufficient for a program to be imple- improve coordination and establish an integrated mented. In this case, the program may need to be approach to energy planning and management. approved by the local parliament, which will also In all three pilot cities, committees have already have to approve its budget. CHAPTER 5: governance | 63

Monitoring and Reporting Systems Effective monitoring systems should be struc- Monitoring and reporting systems are crucial for tured and formalized to demonstrate a high level of providing credibility in energy and emissions man- integrity and reliability, and should cover agement. These systems need to be implemented n institutional arrangements, roles and respon- carefully to ensure they do not increase costs to the sibilities assigned to individual agencies and city unnecessarily, and to ensure that they do ful- personnel; fill the needs of the donor community that may, at n boundaries, defining what has been included some point, become involved in financing energy- in and excluded from the energy and emissions or emissions-related projects. The establishment of inventories; a city-level platform for monitoring and managing n sources of data, including data from national agen- energy and emissions is one of the first practical cies to city government collection arrangements steps in implementing the vision of sustainable and others; how data are collected and reported urban energy development, and is a condition for (for example, through surveys or meters); and the mobilizing “green financing.” frequency with which data are collected; Regular collection of energy data is a prereq- n data collation methods, provide transparency uisite for the success of the SUEEP process. Of the into how raw data are processed (particularly pilot cities, Da Nang had the most readily available important if proxy data or extrapolations have energy data from across a variety of government been used, or where data are incomplete); and agencies, whereas collection of data was much less n quality assurance processes, to demonstrate that customary in Cebu City and Surabaya. Even when the methods, processes, and sources used have data were available, the three cities were character- been adequately audited or reviewed to identify ized by limited sharing of data across departments. gaps, omissions, and potential improvements to Sharing of information, experiences, and knowl- the monitoring and reporting process. edge will be a major area of improvement opportunity for energy efficiency for all three cities. For Monitoring and reporting systems should be con- example, analysis of trends in population, vehicle tinually improved for accuracy, reliability, consis- use, traffic, economic growth, and industry data tency, transparency, and completeness. would be useful for all city agencies to make better decisions with regard to energy consumption and energy policy.

Chapter 6 Sustainable Urban Energy and Emissions Planning: The Way Forward

Chapters 2 through 5 of this report present the contextual background, citywide challenges, and sectoral issues faced by the pilot cities. These were illuminated with the use of the Energy Sector Management Assistance Program’s (ESMAP’s) Tool for Rapid Assessment of City Energy (TRACE), which was designed to enable cities to assess how they use energy and to recommend energy efficiency initiatives to be implemented by the city government in a targeted manner. These chapters review and analyze the level of energy use and emissions in a small sample of East Asia and Pacific region countries, and identify areas in which reinforcement and capacity building may be required to enable these cities, as well as others in the region, to embed Sustainable Urban Energy and Emissions Planning (SUEEP) practices through city government leadership. However, these areas do not claim to be, and should not be, all-encompassing, given the need for cities to take into account their unique circumstances.

The SUEEP program has gone beyond the TRACE will be refined when experiences in implementing to explore ways for city governments to embark the SUEEP process from these pilot cities, as well on citywide strategies to plan and manage the as others using these guidelines, are incorporated. reduction of energy and emissions over the long Although a comprehensive planning approach term. Long-range energy planning will bring about is recommended, cities have varying levels of economic growth and social benefits, such as the resources and capacity as well as differing pri- improvement of public health and safety, and will orities. For example, the pilot cities experienced increase living standards. SUEEP’s purpose is to difficulties in sustainable energy planning across provide a comprehensive approach to citywide multiple sectors, so had mainly undertaken proj- energy planning to maximize energy efficiency ect-oriented measures aimed at addressing issues across sectors. Its intent is to help cities to develop on a sectoral basis, resulting in planning that was their own initiatives using different mechanisms not geared toward a systemic strategy. Based on and to define a governance system for implemen- this reality, there is flexibility in working out dif- tation and monitoring and reporting. These out- ferent levels of engagement to suit cities’ circum- comes will improve energy governance in the city stances. The three levels of engagement that city and create a common platform for collaboration governments could undertake are between the city and donors, civil society, and the n a high-level, rapid assessment of energy private sector. The SUEEP process also provides efficiency measures in a city (for example, a framework for city governments to plan a pipe- TRACE, the Energy Balance and Greenhouse line of investments in energy efficient infrastruc- Gas [GHG] Emissions Inventory); ture and to mobilize “green financing” support. n deeper sectoral engagements in selected areas To help cities establish and implement a road map (for example, public-private partnerships and for achieving a sustainable energy future, a SUEEP sector-wide interventions); or Guidebook, which recommends a set of steps n implementation of the full SUEEP guidelines, based on the experiences in the pilot cities, has subject to city governments’ interest in and been prepared. It is envisaged that the Guidebook ownership of the process.

65 66 | energizing green cities in southeast asia: three City Synthesis report

Feedback from the pilot cities suggests that the and that the public and stakeholders can identify SUEEP process would be useful although the level with and thus support. To work toward this vision, of engagement may differ. Da Nang expressed a city government will have to engage with stake- interest in engaging at the most comprehensive holders in a transparent manner, identify the agen- level whereas Cebu City and Surabaya found cies and organizations involved in the planning engagement at the second level, focusing on proj- and management of energy issues, and recognize ects in specific sectors, to be more relevant. its ability to control or influence specific issues and This chapter defines the principal requirements pertinent relationships with other agencies. With for a full SUEEP process based on the observations a clearer view of realizable solutions, city gov- from the study of the three pilot cities and experi- ernments can establish energy and emissions task ences of other cities. The chapter is divided into forces (or leverage existing ones) and hand them a six parts that lay out the key stages in the SUEEP strong mandate to enable change. Task forces must process: be empowered to oversee energy and emissions issues that cut across agencies and to establish n city government leadership and commitment to plans and programs of energy- and emissions- “green growth,” related activities. City governments’ roles will also n energy and emissions diagnostics, include coordinating efforts with national agencies n goal setting and project prioritization, to facilitate sustainable practices. Finally, cities will n planning, be responsible for putting in place or strengthening n implementation, and monitoring and reporting systems to ensure that n monitoring and reporting of progress. energy activities lead to the realization of the city’s A detailed description of these stages with exam- vision and goals. ples of best practices in other cities is found in the Thus, city governments have an extensive role SUEEP Guidebook. in enabling sustainable growth. Critical to effective energy planning and implementation will be City Government Leadership governance, which will determine the success (or and Commitment to “Green failure) of sustainable policies. Good governance Growth” improves oversight and enhances coordination and City governments’ multiple roles as regulator, data sharing among agencies, which will facilitate enforcer, supplier, producer, and consumer provide the implementation of a comprehensive solution. great leverage in facilitating citywide, comprehen- Missed opportunities in comprehensive urban plan- sive, and strategic energy planning. As the sole ning arising from insufficient coordination among body with the credibility, tenure, and strong link- government agencies were evident in some EAP ages with the public and various stakeholders to cities, where the Departments of Transportation, put in place long-term measures to enable sustain- which were responsible for planning the cities’ bus able energy growth, city governments must exhibit rapid transit systems, worked separately from the commitment and leadership to enable “green departments that were responsible for city plan- growth” in their cities. Leadership is required at all ning. Because of this, the EAP cities could have levels, from the mayor’s office to legislative bodies missed the opportunity to reap new economic and and city government departments, given their abil- energy-saving opportunities through density plan- ity to understand the local situation and connect ning and zoning, which arise when new bus rapid with the public and stakeholders. It is with strong transit systems are designed as an element of city- leadership and commitment that sustainable solu- wide planning strategies. tions will gain traction and support to facilitate Institutional structures and clarity of respon- economic growth and social development. sibilities are also key to good governance. In Da In embarking on the journey toward sustain- Nang, for example, the institutional structures ability, city governments must first create and were modified to allow a comprehensive approach clearly communicate the vision the city aspires to, to energy governance to be taken. However, CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 67 overlaps in energy planning remained, involving recommendations are most appropriate for the a number of agencies, including the Department city context. of Industry and Trade, Da Nang Power, the The application of these three processes will enable Department of Construction, the Department of Natural Resources and Environment, and a city to establish a well-grounded overview of its the Department of Science and Technology. This current energy and emissions situation and, where meant that a segmented approach was embarked data exist, build time series to provide trend and upon despite efforts to implement a cohesive strat- growth information. egy across agencies. In developing the energy balance study and GHG emissions inventory, the data- and informa- Energy and Emissions tion-gathering process must be tightly managed to Diagnostics ensure coordination between the various agencies Having accurate baseline energy use and emissions that possess energy and emissions information, data is important to enabling city governments to and to ensure that data are evidence-based rather formulate policies in line with the SUEEP vision than anecdotal. It is also important to ensure that and overarching goals. The following are key diag- sources of information are known and can be nostics used to set energy and emissions targets. revisited, if necessary. For this purpose, a trained n An energy balance study. This study maps pri- (but not necessarily large) team is needed to ensure mary and secondary energy supply and use in the consistency, accuracy, and reliability of the data each city. Energy balance studies highlight the and information. Gaps in knowledge and informa- relative importance of different fuels through tion should also be accurately identified during their contribution to the city’s economy, the and after data collection so that these gaps can be efficiency of different energy conversion tech- actively pursued as an area of future work. nologies, and where energy efficiency, reliability, and conservation efforts can be targeted. Benchmarks can also be set to enable a city to Goal Setting and Project assess the effectiveness of different policies. Prioritization n A GHG emissions inventory. An inventory Set Goals establishes the principal sources of GHG emis- Goal setting is the process of linking the city’s sions, which helps to identify potential policy vision to its targets to reduce energy use and emis- or project initiatives that would not be chosen sions through initiatives that do not compromise based on a purely energy-based analysis. Just city development. Although the pilot cities had as important, this inventory provides the emis- developed high-level visions, none had linked sions information that may help local government agencies or utilities obtain carbon finance them to specific, measurable goals, indicating that funding for renewable energy or energy effi- robust connections between energy, emissions, and ciency projects. the city’s aspirations had not yet been established. n TRACE. TRACE is a decision support tool that The goal-setting process affects the SUEEP pro- compares one city’s energy performance with cess in three principal ways: that of other cities through a custom bench- n linking citywide goals to energy and emissions marking mechanism. Benchmarking results are goals by pairing them with city aspirations; used to identify priority sectors to which a city should consider targeting its energy efficiency n building consensus, engaging stakeholders, and efforts. Policy recommendations built into securing their buy-in; and TRACE are linked to each sector, triggering n establishing key success factors to enable per- field interviews and further data gathering by formance monitoring of the city’s energy and the TRACE project consultant to assess which emissions strategy. 68 | energizing green cities in southeast asia: three City Synthesis report

Linking Citywide Goals to Energy and Emissions Goals Box 6.1 Developing Da Nang: Linking wider economic, social, and environmen- The Environmental City tal city goals to energy and emissions goals clarifies In 2008, the Da Nang People’s Committee, the role that energy and emissions play in economic through its Department of Natural Resources and development and builds the case for SUEEP to be Environment, produced a plan for “Developing a key contributor to the city’s sustainable growth. Da Nang: The Environmental City ”. This holis- Connecting energy goals to the city’s priorities (for tic environmental plan was prepared to redress example, access to energy or potable water) and the environmental damage caused by the recent to its current and projected development path, and urbanization and industrialization of Da Nang communicating the benefits and potential impacts of energy planning beyond the energy sector, will and covers air, water, soil, and urban environ- galvanize stakeholder support and strengthen the mental management over a 12-year period . The case for adoption of SUEEP. In the pilot cities, plan addresses energy use and planning via the commitment to energy efficiency and formulation “air environment” objective, with interventions of the city vision were evident, but formalized links tackling the public bus transportation network, between citywide goals and energy planning have encouraging the use of clean energy and saving not been established. For example, the three cit- energy and fuel, and developing models using ies had implemented energy conservation measures renewable energy, in particular, wind and solar that included initiatives such as lighting off-hours energy . The plan is particularly specific on gover- and air conditioning energy saving, but none had nance and funding, as well as on how the plan will an integrated strategy covering the short, medium, be monitored and reviewed . and long terms. This informal approach to energy efficiency and emissions limits cities’ ability to link planning over varying time scales and sectors, government and to show evidence of active manage- build lasting internal capacity and partnerships, ment of energy to external stakeholder groups. and secure financing for major projects as part of Clearly stated goals and expected outcomes an integrated and comprehensive plan. engage stakeholders by formally setting out the Building Consensus, Engaging Stakeholders, benefits that can be expected from SUEEP (see box and Securing Their Buy-In 6.1). Figure 6.1 shows an illustrative city’s 2020 Early engagement with potential stakeholders helps energy savings goal, indicating how the energy- to gain support for energy and emissions planning. growth trajectory can be “bent” over time in Seeking widespread participation from the general comparison with the business as usual scenario. public, the private sector, and public agencies helps More important, figure 6.1 shows clearly how to ensure that all potential interests are represented individual sectors contribute to the process, start- and that no segment of society can claim exclusion ing with known trends during the first three years from the process. This becomes highly pertinent in (2008–10). Figure 6.2 further illustrates a detailed the early stages of SUEEP, during development of a plan by the city to achieve 25 percent energy sav- vision and setting of goals. ings against a business as usual scenario in the Effective buy-in from stakeholders can also be transportation sector through a targeted approach. earned by demonstration of a city government’s abil- Graphs such as these are powerful tools that help ity to manage energy issues through elements of city- communicate the task at hand and the targets for government-controlled energy use. Typically, this each sector. would include activities such as the retrofitting of Establishing Key Success Factors existing public buildings and public lighting, and pur- Goal setting identifies the means by which the suc- suit of renewable energy technologies. City authori- cess of the proposals can be measured. To set goals, ties generally have good control over these issues and two requirements must be satisfied: can use them to galvanize support within the city CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 69

Figure 6.1. “Bending the Curve”: Defining a 2020 energy saving goal for an illustrative city

107,000 M MJ 110,000

18% 100,000 Savings target 88,000 M MJ 90,000 business as usual

80,000 energy and emissions plan

62,850 M MJ 70,000 39

60,000 40%

50,000 Transportation 25,500 M MJ 21

40,000 Percent 28% Industry 30,000 17,300 M MJ 15

20,000 Commercial buildings 11% 7,050 M MJ 25 Total annual primary energy consumption (M MJ/year) 10,000 Residential buildings 21% 13,000 M MJ 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Base year

Note: MMJ = million megajoules .

n Quantitative indicators, either intensity (for that enable the city to attain its goals. Energy goals example “X” kWh/m2) or absolute (for exam- that balance the political and technical aspects of energy use in cities provide the foundation for ple “Y” tons CO2e), must be used. n An accurate, complete, and replicable baseline widespread acceptance. must be established, from which changes will In many instances, cities will be required to be measured. establish targets that address national energy or emissions goals. Ideally, cities should consider how The use of empirical and calculated evidence is they might work toward national goals while iden- vital to successfully creating and achieving goals. tifying practical measures that account for their Using evidence-based numbers that are aggregated unique conditions. For instance, a national target from several sources (that is, the sum of a number relating to energy consumption or efficiency in the of technical interventions and application of other manufacturing sector is of little relevance to a ser- levers) also reduces the chances for goals to be vices-based city economy. Therefore, the city gov- overly influenced by political cycles or other extra- ernment must identify targets that navigate between neous factors. national goals and city practicalities. National goals In phased plans, the process can begin without could be better addressed in the pilot cities. a known baseline. However, creating the baseline would be one of the first enabling tasks, with goal Prioritize Projects setting taking place subsequently. Goal setting is not an abstract process. It should Ultimately, whether SUEEP succeeds or fails be undertaken with the full knowledge of the city’s depends on the support and commitment of the ability to bring to fruition a variety of operational, stakeholders involved in implementing projects technical, and infrastructure-related proposals that 70 | energizing green cities in southeast asia: three City Synthesis report

Figure 6.2. Energy-demand reduction Box 6.2 elements of an sueep goals for the transportation sector in process an illustrative city • Identification of key energy and emissions

50,000 issues faced by the city Business as usual • Establishment of goals that can be achieved by 45,300 M MJ the city government and a plan for attaining those goals (with or without the aid of other

25% agencies or external parties) Savings goal 40,000 • Integration of energy and emissions issues into wider city planning processes 34,000 M MJ • Coordination across sectors and agencies and the establishment of shared goals; in particu- Public mini-buses lar, engagement in a strong dialogue with the

30,000 Taxis national government • Establishment and improvement of gover- Light 25,500 M MJ trucks nance, monitoring, and reporting processes essential to future management of the issues, as well as prerequisites for third-party involve- 20,000 Two-wheel ment in project and carbon finance Total annual primary energy consumption (M MJ/year)

of influence the city government has, existing institutional structures and culture of a city, as well as 10,000 the relevance of the project to a city’s overall sustainability and its relationship to national goals, all Four-wheel play a part in determining the success of a project. Therefore, prioritization of projects needs to com- bine common sense, quantifiable solutions aligned 0 with the city’s goals, and judgment by city leaders 2010 2020 who understand the city’s issues and politics. Note: MMJ = million megajoules . Planning Armed with data on energy use and emissions collectively work to achieve a specific goal. Given and clarity about its goals, a city government can the number of barriers cities will face in imple- proceed to address its energy and emissions issues menting an SUEEP process, it is important that through a SUEEP process (see box 6.2) to help ful- the city’s goals are aspirational, but also realistic fill its vision. SUEEP enables cities to set out the and achievable. Therefore, a focus on priorities is case for sustainable energy, define actions they essential to successful deployment of the SUEEP can take to improve energy and emissions perfor- process. Prioritization is part of a project manage- mance, and garner support through the inclusion ment approach to SUEEP and is meant to break of stakeholders in the planning and implementa- down initiatives into manageable activities. To tion processes. this end, cities will have to prioritize projects to Despite the potential benefits that can be reaped maximize their impact using available (but usually using SUEEP, there are barriers that can hinder limited) resources. Factors such as the impact on its implementation. These include unfamiliarity energy use and emissions, funds available, extent with the process; absence of formal institutional CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 71 structures and capacity; and lack of political buy- Implementation in, cross-agency collaboration, and awareness of Successful implementation of the energy and emis- the importance of energy planning. These barri- sions plan depends on many factors. In the pilot ers were evident in the pilot cities, which gener- cities, the lack of capacity and financing were cited ally approached energy and emissions planning as the strongest impediments to the successful on a fragmented basis that limited their capabil- implementation of energy and emissions planning. ity to develop a plan. Despite this, the pilot cit- In addition to these constraints, the pilot cities ies have taken steps in the right direction. Da were faced with challenges that included the lack Nang, Surabaya, and Cebu City had begun insti- of personnel, low public awareness, poor commu- tuting energy governance, indicating the poten- nication with stakeholders, and lack of governance tial for the cities’ development in the future. Da processes. This section discusses the most common Nang City People’s Committee had identified the barriers in greater detail. local Department of Industry and Trade as the Policy and Regulatory Environment lead agency on energy, supported by a number of Typically, sustainable energy and emissions issues other departments and local academic institutions. are not considered in tandem with city policy Similarly, Surabaya had initiated energy planning development. Hence, cities may find that they face through Bapekko, which is a department in the challenges related to misaligned policy (or even mayor’s office responsible for overseeing long-term cases in which policies work against each other) planning initiatives. The Philippine Department of or policy gaps that will need to be addressed when Energy in Cebu City was responsible for a variety they embark upon an SUEEP process. For example, of energy efficiency initiatives fostered and sup- street lights in Cebu City were being upgraded, but ported by national policy, and the recently formed energy efficiency was not a key consideration and City of Cebu Government Committee on Energy carbon or other financing options had not been Efficiency had been tasked with promoting energy sought. In the transportation sector, the three pilot efficiency across city government departments. cities have yet to develop integrated and effective The scope of an energy and emissions plan can policy approaches for tackling rising congestion vary from citywide issues to internal city govern- and private vehicle ownership despite the large ment energy management because of the city’s contribution of the transportation sector to energy plethora of energy-related functions—consumer, use and emissions. Regardless of these challenges, regulator, motivator, educator, and sometimes cities should persevere in formulating and imple- supplier. The approach to each of these functions menting policies and projects on a comprehensive should be an explicit part of the planning process basis because the benefits that can be reaped are to clarify the available levers for action and the substantial. potential impact of each measure, as well as the In some instances, city governments may feel potential for conflicts of interest. For example, two that their ability to influence or control issues is key initiatives identified for Da Nang include the limited if national policies take precedence. For citywide deployment of green building codes and sustainability issues for which national and local the development of a city procurement code for governments’ interests are aligned, city govern- street light installations. Although the latter will ments should review existing policies, projects, positively impact energy efficiency in Da Nang, and initiatives to determine whether the policies that impact is limited because street lighting rep- can be tweaked or strengthened so that the city can resents only 2 percent of total city energy use. In build on or contribute to national policies. If so, contrast, the deployment of green building codes the SUEEP process will gain national-level support. targets all potential development in the city and Policies are vulnerable to political cycles and are involves cross-sectoral stakeholders in city govern- subject to change by incoming mayoral administra- ment and the private sector, expanding the poten- tions. Because energy and emissions plans require tial impact of the intervention to all buildings in consistent application spanning a number of politi- the city. cal cycles, codifying SUEEP policies into law could 72 | energizing green cities in southeast asia: three City Synthesis report

minimize political uncertainty. EAP cities will have City governments can also actively seek out to review this option carefully, taking into consid- alternative forms of funding that offer conces- eration their respective governance structures. sional financing for climate-positive projects. The potential to attract financing from international Financing institutions and bilateral and multilateral agen- The manner in which energy and emissions projects cies should be reviewed during the evaluation of are financed is particularly important. Financing potential projects that the city plans to undertake. tends to be subject to a range of factors such as Some financing schemes are region specific or will knowledge and experience with financing similar only fund certain types of projects or programs. projects, access to capital, perceived risk, and the For example, if an analysis of return on investment need for delivery partners that possess implementa- demonstrates that the proposed project cannot tion skills. compete with projects in non-environmental sec- A fundamental challenge facing cities wish- tors, tailored finance can be sought from investors ing to implement energy efficiency and emissions that are experienced in environmental project risk projects is achieving a return on investment accept- and have obligations to direct capital into certain able to investors while mitigating perceived risks. market segments. Socially responsible investment Many such projects tend to face higher invest- funds, for instance, deploy capital according to ment hurdle rates than more conventional projects refined criteria that include environmental and because investors are not familiar with the calcula- social performance indicators. tion methodologies used to determine investment Various financing mechanisms can be lever- return, and energy efficient technology tends to be aged to support projects. They differ not so much relatively new to the market. This problem is ampli- by sector as much as they do by applicable project fied in developing economies in which the level of stage. The following sections describe the different perceived risk is heightened, especially for newer subsidized international mechanisms applicable to technologies in the environmental sector, thereby different stages of development: (i) design and pilot- resulting in higher hurdle rates. Another barrier to ing, (ii) construction and implementation, and (iii) financing is the improbability of a private financial operations and maintenance. The common thread institution accepting a return on investment lower among them is that they are made possible through than that provided by a government bond, as the estimation and ongoing monitoring of GHG opposed to a city government that might consider emissions associated with specific investments. investments with very low or even negative returns if the socioeconomic benefits are significant. Project Design and Piloting Still, city governments have a number of tools at Significant barriers can obstruct the implementa- their disposal to encourage investment, including tion of new energy efficiency measures, including the lack of experience or technical capacity, chal- n reducing regulatory risks stemming from uncer- lenging regulatory environments, investor concerns tainty about the long-term policy environment about risks associated with untested projects, and (which can be mitigated if the city is willing to most important, uncertainty about the potential make policy guarantees); payback. To overcome these barriers, local govern- n pursuing a range of partnering options (for ments can leverage an array of international grant example, public-private partnership initiatives programs. and partnering with energy services compa- Grants are made available at various times by nies); and multilateral financial institutions for specific proj- n providing incentives and tax breaks (for exam- ect objectives, such as GHG mitigation. Grants are ple, by providing loan guarantees for initial often provided by international agencies, including seed funding of investments or fast-tracking the World Bank Group, the Asian Development regulatory permits). Bank, and the United Nations, along with many multilateral agencies. Some large nongovernmental CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 73 organizations and research agencies may also pro- government-owned) entity failing to perform its vide funding and technical assistance for financing obligations with respect to a private project. In the certain types of projects. case of default resulting from the nonperformance The most widely known program that supports of contractual obligations undertaken by govern- project development is the Global Environment ments or their agencies in private sector projects, Facility (GEF), which was established to provide PRGs ensure payment and thereby significantly incremental cost financing for projects that sup- reduce the risk assumed by investors. PRGs are port energy efficiency, renewable energy, new clean available for projects with private participation energy technology, and sustainable transportation depending on certain government contractual projects. Its approach focuses on removing barri- undertakings, such as build-operate-transfer (BOT) ers to “win-win” mitigation projects by providing and concession projects, public-private partnership support for technical assistance, policy reform, projects, and privatizations. PRGs are available for capacity building, piloting, and partial risk guar- both greenfield and existing projects. antees. GEF grants through the World Bank Group Combined with grants for removing initial average between US$8 million and US$10 million barriers and developing pilots, these financing per project. mechanisms can be strong incentives—but more These grant programs can be very successful in assistance may be needed to ensure long-term sus- getting new ideas and technologies off the ground tainability during the operations and maintenance and establishing greater certainty on payback phase of GHG mitigation projects. periods for some initiatives, but grant funding is Project Operations and Maintenance generally too small to support large-scale imple- A final hurdle in supporting low-carbon invest- mentation of projects and policies, or to support ments is ensuring that sufficient funds are available construction of new infrastructure facilities. for ongoing operations and maintenance, espe- Project Construction cially in the short term. Very often, green financ- After project design and piloting hurdles are over- ing and funding mechanisms that support project come, a new, more robust source of financing is design and implementation or construction do not needed to support construction or wide-scale provide sufficient resources for ongoing monitor- implementation. Financial products such as soft ing to ensure that the project is meeting expected loans, which are becoming more common than environmental objectives—a critical step to ensur- grants, are rising to meet this need. Soft loans are ing that future investments are suitably allocated. also provided by international agencies and mul- This is an area in which early engagement of tilateral financial institutions, as well as by some carbon financing mechanisms, such as the Clean larger commercial banks. These loans make funds Development Mechanism (CDM) or the volun- available at reduced interest rates, and often with tary carbon markets, can improve the feasibility longer repayment times than a commercial loan. of GHG mitigation projects. The CDM, which Terms can be negotiated directly between the can be leveraged exclusively by developing coun- funder and the city. Commercial banks may pro- tries, is a performance-based funding mechanism, vide these loans only with an external guarantee or through which annual payments are made to proj- partial loan guarantee, or an external agency may ect sponsors based on realized emissions reduc- provide funding to reduce the interest rate. tions (for example, energy efficiency performance). Another type of financing that can be used to If the potential benefits of carbon financing are facilitate construction is guarantees, such as the recognized and pursued early in the project’s life partial risk guarantee (PRG). These guarantees (before commission), these mechanisms can ensure are particularly helpful in supporting energy effi- optimal and continuous project operation and ciency projects that do not fall into traditional maintenance. The three pilot cities have identified lending categories. PRGs protect private lenders opportunities to leverage CDM financing across or investors against the risk of a government (or most sectors. 74 | energizing green cities in southeast asia: three City Synthesis report

City governments can also actively seek alter- Monitoring and Reporting of native forms of funding. For example, tailored Progress finance may be sought from investors experienced EAP cities will need to establish citywide monitor- in environmental project risk who have obligations ing and reporting systems as well as systems specific to direct capital into certain market segments. to individual technical projects, given that per- Procurement and Implementation formance monitoring is a requisite component of Supervision both goal setting and performance measurement. Procurement and implementation supervision are The pilot cities all have scope for improvement aspects of energy efficiency and emissions reduc- in this aspect of SUEEP, based on the scarcity of tions programs that require strong technical capac- city-specific energy performance data. In addition, ity and experience, which often is not available in energy and emissions plans require regular review, city governments. Technical and resource capac- based on measured outcomes, to realign efforts to ity may not be an issue for SUEEP initiatives that achieve stated goals, if necessary, during the course modify governance structures or for specific small- of the plan’s operation. SUEEP Phase I found that scale projects. However, successful delivery of the performance monitoring in the pilot cities had not majority of technical and infrastructure projects been adequately implemented except in some cases requires a robust procurement process and strin- as required by the national government. gent contract management, neither of which are Identification of Performance Measures often realistically available. For example, in Cebu The first requirement for performance monitoring City, a landfill gas capture project had been pro- is the selection and deployment of performance posed on a number of occasions, but progress was indicators. Typically, performance indicators will limited because of a lack of institutional capacity to be either “gross” or “intensity” related. Gross implement it. To preempt procurement and imple- indicators measure the totality of a given mea- mentation problems, city authorities may consider sure, for example, tons of carbon dioxide per year, a number of strategies: and are useful for measuring urban issues at a city scale. Intensity indicators are more usually associ- n develop a favorable policy environment, for example, enact regulations enabling public- ated with efficiency (for example, kilowatt-hours private cooperation, contract law enforcement, per square meter of city buildings per year), and and so forth; measure the intensity of energy use or emissions on the basis of indicative units (for example, per n establish a procurement policy to enable SUEEP projects; person, unit of area, or unit of length). Both types of indicators may be used in benchmarking perfor- n nurture a collaboration network to gain access to technical assistance from nongovernmental mance. Table 6.1 presents the range of indicators organizations; deployed in the TRACE that enable benchmarking of city energy use against other cities; these indi- n share resources and knowledge with neighboring cities or areas; cators are also useful for long-term performance measurement. n develop pilot projects to increase the skill level of the city work force; and Data Acquisition and Management n prioritize projects to ensure achievable work- City governments and external agencies make loads are maintained for city employees. long-term policy and investment decisions based All of these strategies can enable procurement and on data. Hence, it is imperative that city gov- implementation that reduces the burden on the ernments give appropriate consideration to the city, thereby increasing the probability of effective requirements of reliable data management systems project rollout. and processes, as well as the risks inherent in data acquisition and management, to ensure that data are reliable, accurate, consistent, and complete. CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 75

Table 6.1. City-specific KPIs used in the TRACE

Citywide KPIs

CW-1 Electricity consumption (kWhe/capita) CW-2 Electricity consumption (kWhe/GDP) CW-3 Primary energy consumption (MJ/capita) CW-4 Primary energy consumption (MJ/GDP)

Transportation KPIs

T-1 Total transportation (MJ/capita) T-2 Public transportation (MJ/passenger-km) T-3 Private transportation (MJ/passenger-km) T-4 Transportation nonmotorized mode split (%) T-5 Public transportation mode split (%) T-6 Kilometers of high capacity transit per 1,000 people Buildings KPIs

B-1 Municipal buildings (kWhe/m2) B-2 Municipal buildings heat consumption (kWhth/m2) B-3 Municipal buildings energy spend as percentage of municipal budget Street Lighting KPIs

SL-1 Electricity consumed per km of lit roads (kWhe/km) SL-2 Percentage of city roads lit SL-3 Electricity consumed per light pole (kWh/pole) Power and Heat KPIs

PH-1 Percentage heat loss from network PH-2 Percentage total T & D losses PH-3 Percentage of T & D loss due to nontechnical losses Water and Wastewater KPIs

WW-1 Water consumption (liter/capita/day) WW-2 Energy density of potable water production (kWhe/m3) WW-3 Energy density of wastewater treatment (kWhe/m3) WW-4 Percentage of nonrevenue water WW-5 Electricity cost for water treatment (potable and wastewater) as a percentage of the total water utility expenditures Waste KPIs

W-1 Waste per capita (kg/capita) W-2 Percentage capture rate of solid waste W-3 Percentage of solid waste recycled W-4 Percentage of solid waste that goes to landfill

Source: TRACE model . Note: kg = kilogram; KPI = key performance indicator; kWhe = kilowatt-hour equivalent; kWhth = kilowatt-hours thermal; MJ = megajoule; T&D = transmission and distribution .

Figure 6.3 provides an overview of the princi- process for data management. The typical charac- pal components of a data production chain. The teristics of increasingly sophisticated data manage- first two bubbles (darker shade) relate to the means ment systems are presented in figure 6.4. of measurement and are generally defined through In practice, most systems start at the informal international standards and best practices, or by level, and develop following a management system using a generic energy and emissions tool such as approach such as the International Organization for the SUEEP Guidebook. The remaining bubbles Standardization’s recently released energy manage- relate to the systemization of data acquisition and ment systems standard (ISO 50001:2011), which management. specifies requirements applicable to energy use Data management systems are used to establish, and consumption, including measurement, docu- document, implement, and maintain an effective mentation and reporting, design, and procurement 76 | energizing green cities in southeast asia: three City Synthesis report

Figure 6.3. The principal components of a data production chain

Structure and responsibility

Measurement • Continuous • Discontinuous

Methodology Collection Processing Analysis Reporting

Calculation

Mass balance

Checking Annual Energy and Emissions Report

Source: Robert Carr, 2005, for British Standards Institute .

practices for equipment, systems, processes, and In many instances, the data provider’s role is not personnel that contribute to energy performance. a priority (especially if it is an external organiza- Data management systems can take many years tion), which results in inaccurate and inconsistent to perfect, especially if data are only collected annu- assumptions that affect data. The review process ally. Data management systems need to be regu- should be designed to analyze the data production larly tested and reviewed to ensure that accurate, chain critically, identify gaps or inaccuracies, and reliable, and consistent data are being reported. deploy corrective actions to resolve these issues.

Figure 6.4. Typical characteristics of data management systems

Have systems certiﬁed to EMAS, ISO 50001,14001, 9000, OHSAS 18001. Sophisticated software for management of energy and other impacts, undertake regular compliance assessments, proactive process control, undertake regular Increasing training. level of reliance

Certiﬁed Loosely follow known standards, have processes and procedures in place, responsibilities assigned, some Formal reporting and communication systems, some training.

Informal

Handwritten records, processes reliant upon knowledge and Nothing experience of individuals, minor reactive process reviews, minimal checking, minimal communication, destruction or loss of records, minimal computerization, incomplete records.

Source: Robert Carr, 2005, for British Standards Institute . CHAPTER 6: Sustainable Urban Energy and Emissions Planning: The Way Forward | 77

The Way Forward social and economic development goals. The The attainment of long-term, sustainable urban result is a well-defined pipeline of green invest- energy and emissions development is not a goal ment projects that can be communicated to easily defined or achieved. However, the SUEEP local stakeholders and financing institutions, process can facilitate cities’ efforts toward a and to the international donor community and more sustainable future through the following potential partners, including private investors. contributions: n Mobilization of Financing. The international donor community has substantial interest n Institutional Development and Capacity in supporting sustainable infrastructure for Building. SUEEP introduces a number of key green growth in rapidly developing EAP cit- foundation-building activities required to sup- ies. However, there have been many challenges: port long-term urban green growth strategies. defining the green city goals, identifying those The Guidebook brings clarity and international activities that would optimally support green best practices to the institutional reform, policy growth goals, ensuring local governments development, and stakeholder outreach processes necessary to achieve targets. Also, the have the capacity and institutional structures SUEEP process includes accounting tools cities needed to support both the construction and can use to quantify their energy consumption maintenance of green investments, and iden- and GHG emissions for use in target setting, as tifying means to measure success. The SUEEP well as for ongoing monitoring and reporting of process brings the donor and investor commu- results and implementation progress. nities and city governments one step closer by n Creation of a High-Quality Pipeline of Green (i) building an institutional and policy founda- Investments. Policy and institutions alone will tion for supporting green investments; (ii) set- not create green growth outcomes—investments ting up a system of quantitative indicators for in energy efficiency improvements and GHG identifying green growth targets and monitor- mitigation activities will also play an important ing and reporting progress over time; and (iii) role. Through the SUEEP process, city leader- creating a long-term green growth plan and a ship can evaluate investments comprehensively, well-defined, thoroughly evaluated pipeline of based not only on fiscal return, but also on bankable investments that can be easily com- relative green impact and contribution to other municated to potential investors and financiers.

Appendix 1 Cebu City Background

Cebu City is the second biggest growth area in the Figure Philippines after Manila. Cebu City is a midsize A1.1. map of cebu city, Philippines coastal city with a population of 799,763. Metro Cebu includes several other cities, Lapu-Lapu, Mandaue, and Talisay, which cumulatively have a population of about 2 million. Cebu City occupies mountainous terrain and has a land area of 291 square kilometers (km2). The highest point in Cebu City reaches an elevation of 900 meters. Cebu City’s plateau area occupies 23 km2, about 8 percent of its total area, but is home to two- thirds of the city’s population. Cebu Island occupies a strategic location, easily accessible by air and water, and is an important port. Cebu City is less than an hour away from Manila by plane and within a few hours of any city in Southeast Asia (figure A1.1). It is served by an international airport and busy seaport. The city has a tropical climate and an average temperature of 25.6 C with an average relative humidity of 75 percent. Rainfall is at its lowest levels from February to April and gradually increases from May to July. Cebu City has a thriving commercial seaport, and a majority of the city’s labor force (73 percent) is employed in trade and other related services such as banking, real estate, insurance, and community and personal services. About 19 percent of the population is employed in industry, and 8 percent in agriculture and related services. The services sector is growing and is expected to maintain its economic dominance. Cebu City’s strategic location and seaport help support trade and services. The majority of establishments in Cebu City are still considered micro or small enterprises with an average capitalization of 1.5 million Philippine

79 80 | energizing green cities in southeast asia: three City Synthesis report

pesos (Php) (US$34,445) or less. Some 67 percent The city government fully controls solid waste of these business establishments are situated in the management and its government buildings. It has central part of the city, and collectively account for partial control over transportation through traffic about 77 percent of the city’s economy. planning and regulation. Other agencies exercising The central Philippine government and Cebu control over the transportation sector are the Land City government are the focal points for policy Transportation Office and the Land Transportation action, but there is a strong base of grassroots Franchising and Regulatory Board, which enforce action in Cebu City. Under a new local govern- vehicle emissions and registrations, respectively. ment code, which aims to devolve certain powers Public lighting is largely within the jurisdiction away from the central government, the city has the of the city, although there is a mix of responsi- power and authority to establish an organization bilities, with the national government responsible responsible for the efficient and effective imple- for lighting of trunk roads, and Visayan Electric mentation of its development plans, programs, Company (VECo, the electricity utility) owning all and priorities. The main departments, committees, street lighting poles and responsible for installing and external agencies responsible for the planning, luminaires. The city does not generate electricity, development, and operation of energy-consuming which is provided by VECo. The majority of water sectors in Cebu City are represented in the flow is supplied by Metro Cebu Water District, a pub- chart in figure A1.2. lic water utility, with a number of private water

Figure A1.2. Cebu City Government Structure for Energy-Consuming Agencies

Ofﬁce of the External National City Mayor Agencies Ministries

Boards, Commissions, and Special Bodies

Trafﬁc Ofﬁce of the Environment Energy Management City Administrator

Office of the City City Agriculture City Budget Office Land Transportation Accountant Department Office Department of Transport and Transportation Communications Authority Cebu City Traffic Office of the Land Transportation Office of the City Operations Accountant Building Official Franchising and Management Regulatory Board

Visayan Electric Department City Planning Company of Energy Department of General Services and Development Public Services Ofﬁce Ofﬁce Metro Cebu Water District

Street Lighting Landﬁll Division Management

City Barangays Appendix 1: Cebu City Background | 81

companies engaged in smaller-scale potable water n Infomercials and publications encourage energy supply. Cebu City has no formal sewerage system, efficiency. although septic tank waste (septage) is currently n The Partnership for Energy Responsive disposed of at the city landfill. Companies encourages industrial and commercial establishments to voluntarily monitor their National Energy Efficiency energy consumption and implement energy effi- Strategy ciency and conservation programs. At the national level, President Benigno Aquino n The Partnership for Energy Responsive III announced his intention to encourage more Ecozones is a partnership of private sector com- public-private partnerships to improve Cebu panies formed in conjunction with the Power City’s economy. Cebu City officials and business- Patrol Project (http://projects.wri.org/sd-pams- men have identified seven areas of concern: the database/phillipines/power-patrol-program) to need for more infrastructure, tourism improve- encourage energy efficiency and conservation ment, reduction of power costs, modernization of in economic zones. Mactan-Cebu International Airport, realization n Energy standards and labeling of appliances of Panglao International Airport, implementation and equipment aim to improve the efficiency of of a mass transit system, and building the Cebu- appliances by requiring energy rating labeling Bohol Bridge. The priority attached to these sec- of products. tors illustrates the importance to the Philippines of n The Enercon program is an initiative to incor- energy efficiency and infrastructure projects, which porate energy efficiency into the procurement are also relevant to Cebu City. guidelines of government agencies, bureaus, The Philippine government has initiated a num- and offices. ber of energy efficiency programs to achieve the n Energy use standards for buildings have been targeted annual savings of 23.4 million barrels of developed, but are not yet mandated, to give fuel oil equivalent in 10 years through the National guidance on energy efficient building design. Energy Efficiency and Conservation Program. n Initiatives for heat rate improvement in power Programs and initiatives include the following: plants will bring power plant generating units to their optimum performance levels by improving n The Road Transport Patrol program targets their operational capability. a 10 percent reduction in fuel consumption n The systems loss reduction program requires by providing consumers with information on energy utilities to implement measures to cut the efficient use of fuel through proper vehicle nontechnical losses. maintenance and efficient driving through semi- nars and workshops and the use of all types of media. City-Level Energy Efficiency Strategy n Voluntary agreements between government The city government has enacted a number of and the private sector encourage industrial eco- energy efficiency initiatives: nomic zones in which businesses voluntarily

monitor energy consumption and implement n The Cities for Climate Protection Campaign energy efficiency and conservation programs. in 1999, which is administered by Local n An energy audit service is provided by the Governments for Sustainability. Philippine Department of Energy to manufac- n The International Resource Cities Program, which turing plants, commercial buildings, and other is a technical cooperation program between Cebu energy-intensive companies to help them under- City, Philippines; Larimer County, Colorado; and stand their energy use patterns and identify ini- Fort Collins, Colorado. The program was funded tiatives to improve their energy performance. by the US Agency for International Development 82 | energizing green cities in southeast asia: three City Synthesis report

(USAID) and implemented by the International addressing energy consumption, and the city has City/County Management Association. In March proposed and engaged in a variety of energy effi- 2001, an action plan was prepared that estab- ciency activities, including the following: lishes the objectives of the partnership and serves n building initiatives, light fixture replacements as the framework for the relationship between and air conditioning operation hours policy; the communities. It also identifies how Cebu City n waste sector initiatives, barangay-level com- intends to target the financial assistance from posting, “No Segregation, No Collection” USAID. policy, which requires residents to sort their n A climate change forum initiated and conducted trash into three containers: recyclables, organic by the Cebu City government in 2008. waste, and others; and n Cebu City action plans on energy. n efforts to encourage sustainable transportation, The city government already has a focus on energy for example, bicycle lane pilot areas and side- issues covering a wide range of departments and walk repair schemes. services. Considerable progress has been made in

Figure A1.3. Cebu City Energy Flows (2010)

Oil Electrical Power Generation Losses 1.8 PJ 7.5 PJ

Coal Electrical Power 5.8 PJ Distribution Losses Public 0.6 PJ Electrical Power 0.1 PJ Gasoline and Diesel 0.03PJ Electricity from hydro and Electrical Power Commercial geothermal power Delivered to Substations 4.3 PJ 4.4 PJ Electrical Power 0.7 PJ LPG 0.3 PJ

Residential LPG LPG 1.4 PJ Electrical Power 1.2 PJ 1.4 PJ LPG 0.3 PJ LPG Losses 0.3 PJ Industrial Electrical Power 1.9 PJ

Fuel Oil 5.8 PJ Fuel Oil 2.3 PJ Fuel Oil Losses 3.5 PJ Natural Gas 0.003 PJ Nat. gas Losses 0.001 PJ Transportation Diesel Gasoline and Diesel 2.5 PJ 4.5 PJ Gasoline LPG 0.5 PJ and Diesel Gasoline Natural Gas 0.002 PJ 10.2 PJ 5.8 PJ Gasoline and Diesel Combustion Losses 7.7 PJ

Primary Fuel Electrical Power Energy Supplied Electrical Power Fuel Combustion Productive Energy Energy Delivered to Substations to the City Distribution Losses Losses Used by Customers 29.3 PJ 4.4 PJ 21.8PJ 0.6 PJ 11.5 PJ 9.8 PJ

Building on these initiatives to develop a strategic or 6 megawatt-hours/capita). Some 20.4 percent of approach to demand management will be beneficial this is in the form of electricity and 79.6 percent to Cebu City’s future development, contributing to is in the form of petroleum products. A very small the city’s energy security, improving its citizens’ amount of natural gas is also imported into the city. quality of life, and attracting businesses. The reliability of energy supply is consequently an important consideration for future energy plan- Profile of Energy Use and ning. Transportation is the biggest energy user Carbon Emissions in Cebu City, consuming 51 percent of the city’s An overview of Cebu City’s energy supply pro- primary energy and accounting for a substantial file provides the city government with valuable share of fuel combustion losses (see figure A1.4). insights for strategic planning with respect to Industry is the second biggest energy user in Cebu energy security and economic growth. Cebu City City, consuming 36 percent of energy. The residen- imports almost all of its energy; other than the 11 tial sector accounts for 7 percent of consumption percent of electricity consumed that is generated and the commercial sector 5 percent. Industrial, within city boundaries, all energy sources (electric- residential, and commercial users are the biggest ity, oil products, and natural gas) are imported. consumers of electricity. The residential sector was Although Cebu City has significant potential to the dominant electricity user in 2008, but saw a 26 harness solar power, it does not do so because no percent decline in consumption in 2009 and only a renewable power technology is installed in the city. moderate 4 percent increase in 2010. The commer- Cebu City’s energy flows and profile are summa- cial sector has held relatively steady. In contrast, rized in a Sankey diagram (figure A1.3) to illustrate industrial sector electricity use has grown explo- citywide energy supply and demand characteristics sively, with a 50 percent increase in 2009 and a of its different sectors. more moderate 8.2 percent increase in 2010. The total primary energy supplied to Cebu On the whole, citywide usage increases steadily City is 21.8 billion megajoules (MJ; or 6.5 giga- year-on-year, with electricity demand growing joules/capita), or 6 billion kilowatt-hours (kWh; 4.3 percent from 2008 to 2009 and 4.5 percent from 2009 to 2010. If Cebu City maintains this trend, electrical energy demand will double in 16 Figure A1.4. Cebu City Energy years. From a policy-making perspective, untem- Consumption by End Use pered electricity consumption will negatively affect energy security, economic growth, and quality of Residential life, and should be addressed by Cebu City officials. 7% Transportation Greenhouse gas (GHG) emissions present a 51% slightly different picture from the energy balance results. Close to 1.8 million tons of carbon diox- Industry 36% ide equivalent (MtCO2e) were emitted by all sectors in Cebu City in 2010. Residual fuel oil and electricity are the biggest contributors by source, at 31 percent and 26 percent, respectively (figure A1.5). Both of these energy sources are used almost entirely by the industrial, commercial, and residential sectors. Gasoline and diesel, which make up 22 percent and 17 percent of emissions, respectively, Public Services 1% Commercial are used exclusively by the transportation sector. 5% The transportation and industrial sectors are the largest contributors to Cebu City’s emissions

Source: Phase 1 pilot study . with 40 percent and 38 percent shares, respectively 84 | energizing green cities in southeast asia: three City Synthesis report

Figure A1.5. GHG Emissions by End Use and Fuel Source

2.0 2.0

1.8 1.8

1.6 1.6 Grid based Other sources

1.4 Solid waste 1.4 Wastewater gas emissions Water and wastewater Solid waste gas 1.2 1.2 Commercial emissions equivalent 2 Electricity Transportation 1.0 1.0 LPG Residential Natural gas 0.8 Industry 0.8 Diesel Gasoline Oil Million tons of CO 0.6 0.6 Coal

0.4 0.4

0.2 0.2

0 0 End Use Fuel Source

(figure A1.5). The residential sector accounts for city buildings, water and wastewater, public light- 9 percent of emissions and the commercial sector ing, solid waste, and power and heat. These were, accounts for 6 percent. in turn, assessed against the performance of a Transportation and industry are the most sig- range of peer cities through a benchmarking pro- nificant sectors for both the energy balance and the cess. This review provided a number of significant GHG inventory results. It is worth noting, how- findings that helped focus activity during the early ever, that transportation uses just over half of the part of the study and contributed to the definition city’s energy, but its share of GHG emissions is 40 of priority sectors for further study. percent, whereas industry consumes 36 percent Key findings of the Cebu City diagnostics in of Cebu City’s energy but produces a dispropor- comparison with the cities in the TRACE database tionate 38 percent of emissions. This points to the follow:

importance of fuel choice and systems efficiencies n low electricity use per capita and low energy in linking energy and GHG emissions. use per unit of GDP. n high transportation energy use per capita, Sector Review and despite very high dependence on public trans- Prioritization portation, arising from the dominance of inef- Cebu City’s interest in pursuing the TRACE (Tool ficient jeepneys, as well as from congestion and for Rapid Assessment of City Energy) diagnostic low fuel efficiency. Many jeepneys are aging, underscores its commitment to achieving optimal with older, inefficient engines, and also typically energy efficiency. The analysis was carried out carry fewer passengers than they are designed across six city sectors: passenger transportation, to carry. These factors, as well as the common Appendix 1: Cebu City Background | 85

Table A1.1. Cebu City Sector Prioritization Results

Savings Priority 2010 energy Relative energy Level of city potential ranking Sector spending (US$) intensity (%) authority control* (US$)** City authority sector ranking 1 Street lighting 2,238,761 20 .0 1 .00 447,752 2 City buildings 1,363,920 19 .9 1 .00 271,420 3 City vehicles 2,187,659 10 .0 1 .00 218,766 4 Solid waste 622,922 15 .0 1 .00 93,438 Citywide sector ranking 1 Public transportation 89,696,607 10 .0 0 .21 1,883,629 2 Potable water 1,410,895 30 .0 0 .15 63,490 3 Power Unknown 15 .0 0 .11 Potentially large

Source: Phase 1 pilot study . *0 = no influence; 1 = maximum influence . **Based on TRACE benchmarking; these figures are indicative of the savings that may be possible, not necessarily practicable .

practice of operating the vehicles for many line a number of policies and investments that years with occasional second-hand engine could help local authorities in Cebu City achieve replacements, point to significant potential for higher energy efficiency standards. improvement in the energy and operational effi- The table shows priorities with respect both ciencies of this public transportation mode. to sectors over which the city authority has maxi- n low per capita water use but high energy den- mum influence, and to citywide issues for which sity of potable water production. the authority has limited influence. The ranking n mid-range electricity consumption per kilome- suggests that the city government should prioritize ter of lit roads with room for improvement in street lighting, followed by city buildings and city public lighting. vehicles. On a citywide basis, public transportation n low but increasing electricity consumption in is clearly a focal area, followed by potable water city buildings. supply. n low levels of recycling due to the absence of a Following the sector-by-sector analysis, each formal solid waste recycling program. recommendation was reviewed to establish its n low levels of transmission and distribution applicability to the Cebu City context. This filter- losses in the electricity network. ing helped focus the process on those recommendations that are both viable and practical. The TRACE analysis identifies priority areas in which significant energy savings are possible. Table Recommendations A1.1 indicates the amount of energy spending in each of these sectors, the relative energy intensity Transportation (the percentage of energy that can be saved in each Transportation in Cebu City is dominated by sector, based on TRACE benchmarking), and the jeepneys, with private automobiles, taxis, and motor- level of influence the city government has over cycles also playing increasingly important roles. A these sectors. The savings potential is calculated high proportion of Cebu City’s taxis run on liquefied by multiplying these three factors. The TRACE petroleum gas as a response to the incentives in place contains a playbook of 58 energy efficiency rec- for drivers to upgrade their engines to combat urban ommendations applicable across all sectors.1 The air pollution. With regard to fuel use minimiza- recommendations themselves are not meant to be tion, the city’s General Services Office (GSO) imple- either exhaustive or normative. They simply out- mented a biofuel project in which ethanol was used as an additive in city government automobiles. This

1. For further details on TRACE, see chapter 4. 86 | energizing green cities in southeast asia: three City Synthesis report

activity is expected to result in a 15 percent reduc- problem. Encouraging nonmotorized transportation in fuel use in the transportation sector. tion alongside the development of robust public Cebu City experiences significant congestion transportation will be critical to mitigating conges- during rush hour. Parking restrictions are in place tion and improving the quality of transportation. and are regulated by zoning ordinances. However, Cebu City Planning and Development and City these restrictions have not been rationalized by any Traffic Operations Management are responsible strategic plan for the city. The last transportation for ensuring that nonmotorized modes are encour- plan was produced in 1972 and a new plan is cur- aged through city planning. rently being prepared. The high-profile proposal Coupled with nonmotorized transportation, to introduce a bus rapid transit (BRT) system in the promotion of public transportation should be combination with the city’s efforts to reduce traffic part of an energy efficient strategy for Cebu City. congestion indicate that a comprehensive transpor- A formal public transportation system has been tation plan that is aligned with overall city plan- in the works for a number of years. A BRT pre- ning will be essential. feasibility study has been completed and further Nonmotorized modes of transportation such studies are under way. The city plans to improve as bicycles are not common, which may be due to public transportation and authorities have placed safety concerns associated with using crowded and an emphasis on the need for capacity building to often chaotic streets. In an effort to encourage sus- institutionalize transportation data gathering and tainable transportation, a local nongovernmental management. The city could take advantage of a organization has spearheaded the Road Revolution few carbon financing resources, such as the Clean initiative. The Road Revolution involves closing Development Mechanism (CDM), for its BRT Osmena Boulevard to vehicular traffic for a day to program. enable the public to enjoy entertainment activities Vehicle Emissions Standards Testing and to experience the street’s improved environ- Vehicle emissions standards testing infrastructure ment when it is occupied by pedestrians rather than could be more effectively applied to encourage and automobiles, all the while reducing GHG emis- enforce better vehicle emissions. Lower emissions sions. This program has been implemented twice will lead to better air quality and reduced energy and received mixed reactions. Some members of the consumption. The current testing and enforce- public enjoyed the initiative while some, especially ment system is fragmented because different city businesses located on Osmena Boulevard, were neg- and national government departments regulate atively affected by the lack of access. (license) test centers, and enforcement is either Public Transportation Development weak or ineffective because cars can be back on The public transportation sector in Cebu is pri- the road after a few simple measures are applied vately run and is dominated by jeepneys. The pub- to get the vehicle to pass. New testing equipment lic transportation mode share is 80 percent, which that meets standards for measuring an engine’s effi- is particularly high, but jeepneys tend to work ciency would be required. Enforcement activities inefficiently, with regard to both fuel consumption and resulting sanctions should also be revised to and route optimization. One of the most notable ensure that poorly performing vehicles are identi- observations made by the SUEEP team was the fied and removed from service. The implementation need for an integrated planning approach to ensure of such a measure is potentially administratively that plans for BRT, land use, street signals, park- difficult because of the fragmented nature of Cebu ing policies, vehicle registration pricing, and side- City’s existing testing system and the magnitude walk policies are all adequately integrated and that of enforcement required. One way to address this there is an effective means for turning plan into issue would be to establish a government-run emis- practice. Integrated planning is especially impor- sions testing center as a model for private testing tant for transportation planning. Currently, traffic centers. flow in Cebu City is congested during peak hours Inefficient two-stroke motorcycle engines are and growing private car use will exacerbate this widespread in Cebu City. Fifteen two-stroke to Appendix 1: Cebu City Background | 87 four-stroke engine replacement programs have City in 2008 by Dr. Koji Takakura of Japan. Dr. been successful in a number of other cities, and this Takakura’s research team monitors the progress is an area in which Cebu City could make signifi- of composting in Cebu City as part of an ongoing cant gains with minimal investment. project to establish a pilot area for successful home Cebu City’s fleet vehicles do not follow a formal composting. All these initiatives have collectively maintenance regime beyond the first few years fol- contributed to Cebu City’s recent reduction in the lowing purchase. Initially, cars are well maintained percentage of domestic solid waste that is disposed to keep up their warrantees. After the warrantees of at the landfill. expire, a city-operated vehicle maintenance center Disposal of hazardous and medical wastes repairs faulty vehicles as necessary. The replace- is an ongoing challenge because no appropriate ment parts are usually the cheapest available, treatment facilities are available for these waste leading to early failure of replacements in many streams. Currently, they are disposed of at the cases. Life-cycle costing is not factored into parts landfill, exacerbating the risks posed by its cur- procurement. rent operation and ultimately, its restoration. To It is highly recommended that the GSO spear- address this problem, the city government, through head a city vehicle fleet efficiency program. the office of Councillor Nida Cabrera, chairperson Procurement and maintenance policies should be of the Committee on Environment, and in conjunc- implemented to maximize the efficiency of the city’s tion with a local nongovernmental organization fleet. This includes incorporating life-cycle costing and educational institutions, has initiated a house- in replacement parts procurement for vehicles. hold survey in the urban barangays to determine the types of household hazardous wastes that are Solid Waste generated and how they are disposed of. Residential and commercial waste is collected at the Until the end of 2011, Cebu City had one land- barangay2 level and by city garbage trucks through fill in Barangay Inayawan that accepted hazard- the Department of Public Services. Barangay- ous, septic, and noncompostable domestic solid collected waste is brought to the landfill in baran- waste. The landfill was constructed in 1998, with gay-owned vehicles using fuel provided by the city a design life of seven years. Dumping activities are government. Waste collection and processing in no longer allowed in the area. Barangays located Cebu City is currently characterized by grassroots in the North District have started delivering their initiatives at the barangay level. Barangay Luz, in waste to a privately owned sanitary landfill facility particular, has spearheaded a number of actions, in Consolacion, about 27 km from the Cebu City including the “Kwarta sa Basura” (Money from Hall Building. Barangays in the South District will Trash) program, which organizes a women’s group use a transfer station that is currently being devel- to create marketable products from waste. oped by the city in a private lot of nearly 8,000 Composting is widespread in Cebu City and square meters about 1 km from the old Inayawan operational at the city, barangay, and household landfill. levels. At the city level, the Inayawan landfill Landfill leachate at Inayawan currently remains includes composting facilities for collected com- untreated, posing further land and water contami- post while barangays engage in small-scale com- nation issues. The city has earmarked Php 11 mil- posting, which benefits the city in two ways. First, lion (US$250,000) for funding of a facility to treat it minimizes waste sent to the landfill, and second, the landfill’s leachate, but no action has been taken it responds to the high demand for compost in to date. Cebu City, which produces 25 percent of its own As of 2011, recycling activities were largely food. Households use the Takakura home method carried out by the approximately 300 waste pick- of composting, which was introduced to Cebu ers operating as part of a collective at Inayawan landfill. It is believed that a recycling rate of 16 percent was achieved through the activities of the 2. A barangay is the smallest administrative division in a city in the Philippines, equivalent to a district or a ward. waste pickers. There are plans to implement waste 88 | energizing green cities in southeast asia: three City Synthesis report

segregation at source, and potentially to install a Collection Route Optimization centralized materials recovery facility, but no con- Following the cessation order issued by the mayor, clusive actions have been taken to date. no more dumping will occur at the Inayawan land- Efforts to minimize the amount of solid waste fill. As a consequence, garbage trucks operated by disposed of at landfill have been highly effective. the barangays and the city will deliver their waste Some 60 percent of domestic solid waste is biologi- to a private landfill located 27 km north of the city. cal or compostable waste. Some of this is compos- Barangays in the north deliver their waste directly ted at the barangay level, and some is brought to to the landfill and barangays in the south deliver the landfill where there are larger-scale compost- waste to a transfer station 1 km away from the ing and wormery facilities. This policy has been in Inayawan landfill to reduce the distance waste must operation since April 2011. be transported by trucks originating in the south. Although the Department of Public Works is The SUEEP team notes that the city has already responsible for waste infrastructure, the barangays established a new route scheme for the diversion of do much of their own waste haulage and manage- waste from the old landfill site at Inayawan to the ment. A separate nonprofit organization at the new Consolacion site and recommends that Cebu landfill manages waste treatment. Because of the City continue to assess ways to optimize waste slightly fragmented institutional arrangements collection to minimize traffic and enhance fuel for waste management in Cebu City, the SUEEP efficiency. team recommends that the Department of City Septage Treatment Planning, with the support of the mayor, identify There is potential for the development of a septage the appropriate party to undertake waste studies waste treatment facility in Cebu City. The Spanish or to review previous recommendations made in government funded an initiative to treat septage such studies for their relevance. waste using a biodigester, but this project failed Landfill Gas Capture because the septage waste was often contaminated The city is developing plans to close the Inayawan by industrial wastes before treatment, compro- landfill, creating an opportunity to capture landfill mising the biological treatment process. Although gas and produce energy. It is recommended that a technical knowledge in Cebu City for managing study be undertaken to investigate the feasibility of septage waste is limited, it is understood that the a landfill gas capture project. A successful landfill landfill will be closed to septage by early 2012. gas capture project would potentially remove up Thus, the need to address treatment of landfill

to 4,900 tCO2e annually from Cebu City’s GHG leachate and septage is pressing. It is suggested that emissions profile, and if used to generate electricity, the city government consider the possibility of a could contribute to satisfying the city’s electricity combined septage and leachate treatment facility requirements. located at the Inayawan landfill site. A feasibility Energy from Waste study should first be undertaken to assess the tech- The city has approved an allocation for waste from nical viability of such a proposal and how the issues energy projects to be established at four sites for with contamination of septage can be overcome. implementation in 2012: three at barangay mate- Solid Waste Treatment rial recovery facility (MRF) cluster sites in Luz, With the closure of the Inayawan landfill, and the Quiot, and Talamban, and one upland site. The pressing need to identify alternative means for the three MRF sites will use organic waste as feed and disposal of domestic solid waste, it is suggested the upland site will use animal waste. The energy that the city government undertake a feasibility generated will be accessible to barangay residents study for development of a centralized MRF and, for electrification and cooking purposes. possibly, a new composting facility. The MRF can be staffed by former waste pickers (who are skilled in identifying waste types). Recovered materials could be bulked and shipped to local markets. Appendix 1: Cebu City Background | 89

Alternatively the city government may wish to but losses have not been reduced significantly. The consider providing incentives for the establishment company does not have a complete understanding of materials reprocessing businesses colocated with of the reasons behind this and is conducting fur- the MRF, thereby creating a positive economic ther research into the issue. impact. MCWD has started an awareness-raising cam- Because the city pays for garbage truck fuel and paign to educate consumers about the importance many of the vehicles are old and inefficient, the city of water conservation. However, this initiative would benefit from vehicle upgrades and improved is not yet widespread and could be more widely procurement processes. Maintenance regimes and promoted. driver education to encourage energy efficient driv- Energy Efficient Water Resources ing practices are also recommended to improve Prioritizing energy efficient water sources by vehicle performance. deploying rainwater harvesting in city buildings Water and providing incentives for its uptake in private Cebu City’s potable water supply is sourced from developments would reduce reliance on energy- groundwater. Metro Cebu Water District (MCWD) intensive groundwater and reduce the currently is the principal water utility, serving 50 percent of unsustainable water withdrawal rate. Cebu City’s population. The rest of Cebu City’s Water Efficient Fixtures and Fittings water is provided by independent suppliers that Water efficient fixtures and fittings should be sell piped potable water from private wells. There installed in government buildings and encouraged is strong competition between these private suppli- in private developments through educational mea- ers and MCWD. Although MCWD’s competitors sures. Types of energy and water efficient fittings are technically subject to the same regulations as applicable to both retrofit and new-build develop- MCWD, there is reportedly minimal enforcement ments include of regulations relating to the siting, abstraction rates, and water quality from private wells. n low-flow taps and showers; Groundwater resources are a relatively energy- n water efficient household appliances; intense source of water supply because of the n dual, very low, or siphon flush toilets; requirement for pumping, in comparison with n low-flush or waterless urinals; and surface water gravity-fed systems. Despite this, n rainwater harvesting tanks. MCWD’s water system is generally well main- Water efficient fixtures and fittings help to reduce tained and uses energy efficient equipment, result- water consumption by reducing the volume of ing in energy costs constituting about 30 percent of water used in each application, which also reduces MCWD’s operating costs. the associated energy needed to treat and convey MCWD has been the beneficiary of a number the required flows. of energy efficiency projects funded by USAID. Efficient fittings can help to raise consumer In 2006, the Alliance to Save Energy assessed awareness of the link between water use and energy MCWD’s system and helped the agency to make consumption and generally leads to the consumer a 0.5 kWh/m3 reduction in overall energy use. installing additional energy efficient products. MCWD is currently working with the Las Vegas Water District to improve energy efficiency by an Wastewater additional 5 percent. MCWD has also taken strong Cebu City has no citywide wastewater treatment action to improve leakage rates, but has run into facility. Wastewater is currently managed through some difficulties distinguishing its pipes from those household, or clusters of household, septic tanks. of private suppliers, and has limited abilities to fix The septage is removed by tankers and disposed leaks even when they are known to exist. It is of of, untreated, at the landfill. For this reason, Cebu interest that MCWD has undertaken a thorough City’s energy use for wastewater is technically audit of the system to identify and remedy leaks, minimal (fuel use in haulage), but in the interests 90 | energizing green cities in southeast asia: three City Synthesis report

of public health, it is expected that a more com- committee was established to address energy use prehensive system will be developed. Wastewater in the city. management in the city will encounter significant Additionally, the GSO has been intensifying challenges, including contamination of the ground- efforts to save energy. The GSO has begun collat- water supply from septic tank seepage and landfill ing data on energy use, issuing advice on energy leachate, and illegal dumping of septage waste. efficiency tips, and collecting information on Cebu City government can do little to influ- energy saving commitments from all departments ence the activities of the private septage haulers. across the city. Although this is a positive start, Technical interventions may only be leveraged by there is still a considerable range of opportunities the city government’s use of the planning system, to improve energy efficiency throughout the life which requires citywide technological measures the cycle of city buildings. city can undertake. Little focus has been given to energy efficiency It is recommended that the potential for sludge across the city estate, although recent initiatives reuse be investigated. Cebu City does not currently are starting to gain momentum. Audits of public have a sustainable sludge management strategy, buildings and energy efficiency calculations show but CDM funding could increase the feasibility that energy efficiency retrofits have good payback of developing a sludge reuse project. Such a proj- potential (less than three years), with continued ect would include treating the sludge under aero- savings thereafter over the lifetime of the project. bic conditions (for example, dewatering and land City Building Energy Efficiency Task Force application), or installing a new anaerobic digester Currently, some measures are being implemented at that treats wastewater or sludge (or both), from the barangay level to improve energy efficiency in which the biogas extracted is flared or used to gen- buildings. For example, Barangay Luz has collabo- erate electricity, and the residual after treatment is rated with a paint company to provide homeowners directed to open lagoons or is treated under clearly with materials to create “cool roofs” for their homes. aerobic conditions. However, these initiatives are not coordinated at a City Buildings city level and are therefore difficult to track. The Department of Engineering and Public Works In light of the above, as well as the need to coor- (DEPW) and Office of the Building Official (OBO) dinate energy efficiency measures in the building have complete control over the design of all city sector, it is recommended that a city building energy buildings with the exception of schools. There is efficiency task force, comprising representatives no formalized refurbishment cycle for government from GSO, OBO, DEPW, VECo, and the national buildings, which poses a significant challenge to government’s Department of Energy, be set up. The achieving energy efficient performance in the exist- task force would design, implement, and manage ing building stock. In addition, energy efficiency energy efficiency initiatives in city buildings. The is not currently a consideration in capital invest- establishment of a task force will put in place a ment planning or life-cycle costing. This poses a formal structure for these agencies to share ideas barrier to the uptake of energy efficiency initiatives and approaches and streamline the city’s efforts to that require higher upfront investment but result in enhance energy efficiency in buildings. long-term savings. A number of efforts have been made in the city As an initial step, the city government is using buildings sector to improve energy performance, the landmark City Hall building as a pilot proj- such as lighting replacement programs and the ect for achieving energy savings in buildings. The implementation of air conditioning schedules. building is being retrofitted for a centralized air Although the SUEEP team endorses these efforts, conditioning system as one of the project’s major opportunity remains for improvement by replac- efficiency measures. ing old air conditioning units and other inefficient VECo has provided energy-saving tips to city appliances, and by improving the design and con- departments and an ad hoc energy conservation struction of building envelopes. It is recommended Appendix 1: Cebu City Background | 91 that the existing efforts be continued and a city BERDE system, city government personnel with building audit and retrofit program by imple- knowledge of Cebu City building practices and mented through a city building energy efficiency contractor tenders will need to review the system’s task force. requirements. Identification from the outset of the It is noted that the Philippine Department aspects of the BERDE system that may not be prac- of Energy supports energy efficiency through tical for Cebu City, or components that are bet- its Advisory Services for Major Industries and ter applied to select developments, is imperative. Commercial Buildings program. An energy audit is It may also be appropriate to initially target high- provided for a fee by the Department of Energy to end developments or develop a phased rollout that manufacturing plants, commercial buildings, and prioritizes some elements of BERDE above others. other energy-intensive companies. A team of engi- The city can support its building industry neers from the department evaluates the energy by drawing on the experiences of Quezon City, utilization efficiencies of equipment, processes, including the identification of key challenges and and operations of these companies and recom- opportunities associated with complying with mends energy efficiency and conservation measures such codes, and providing the resources needed to attain energy savings. These advisory services to address them. It is strongly recommended that may be a further avenue for the city government Cebu City establish contacts with the relevant to pursue. agencies to capture the knowledge that Quezon City will have gained from its experience. Green Building Guidelines A consistent, citywide approach to procure- Public Lighting ment and green building guidelines is needed. Cebu City has good street lighting coverage, with Formalizing sustainability standards in the local the majority of areas being lit by low pressure design and construction industries is a huge chal- sodium fixtures (mainly used in smaller streets), lenge. The city should carefully consider adopting as well as significant numbers of fluorescent bulbs, the Building for Ecologically Responsive Design mercury halides, and compact fluorescents. Along Excellence (BERDE) code, which was recently the coastline, high pressure sodium fixtures are introduced by the Philippine Green Building used. Council, in city building ordinances and future The city’s previous efforts to upgrade street new build or renovation work. Both the DEPW lighting encountered problems with fixture quality, and OBO have expressed interest in formalizing which has resulted in undesirable or unacceptable the design and construction process to encourage lighting in some cases. General Electric, Phillips, energy efficient green building design. The city has Sylvania, and American Electric fixtures have been the power to enact ordinances for building codes, used in Cebu City, but it was unclear to the SUEEP which will be advantageous should authorities team which fixtures had delivered the best per- wish to mandate compliance with green building formance. The city currently operates a program codes. to upgrade low pressure sodium fixtures to metal If a green building code is adopted, rigorous halides along main thoroughfares, which does not implementation and monitoring will be big chal- take advantage of the more energy efficient tech- lenges for the construction industry. Typically, con- nologies available. struction materials procurement and contractor However, the city government has put aside tenders are the biggest impediments to the imple- a budget of Php 5 million (US$114,800) for the mentation of green building codes in industries installation of light-emitting diode (LED) fixtures that have not evolved to incorporate sustainability along Osmena Boulevard in 2012, a pilot area for requirements. Thus, these areas will require par- this project. The purpose of the project is to test ticular attention and focus from the parties respon- the benefits of LEDs for power consumption and sible for overseeing the implementation of a Cebu GHG emissions to inform decision making about City green building code. Before deployment of the a future rollout of LEDs. The city has concerns 92 | energizing green cities in southeast asia: three City Synthesis report

about potential theft of the expensive LED fix- that meet national street lighting standards could tures, indicating the importance of site selection to also be considered. avoid this problem. The team recommends that the city trial a Public lighting in Cebu City is in the remit range of LED luminaires in pilot areas to test their of the Department of Public Services: Street efficacy as a precursor to rolling out a more com- Lighting Division. Responsibility for street lights prehensive street lighting replacement program. on national roads lies with the national govern- The city can apply CDM methodology AMS-II.C, ment, and individual barangays maintain the which comprises activities that encourage the lights on smaller streets. The imprecise ownership adoption of energy-efficient equipment and appli- and accountability for proper operation of the ances (for example, lamps, ballasts, refrigerators, system has resulted in several maintenance prob- motors, fans, air conditioners, pumping systems). lems. Given this, definitive responsibilities of each Lighting Timing Program agency should be provided to ensure clear owner- The current use of photosensors to determine light- ship and accountability. ing on and off times may not be optimal. Because Street Light Audit and Retrofit Program safety is the primary purpose of public lighting, Despite the high cost of LED luminaires when the team has avoided drawing specific conclu- compared with other types of fixture, the low sions about the deployment of a lighting timing energy and maintenance costs of efficient LED program but recommends that the Department of lamps makes them financially and technically via- Public Services work in conjunction with other city ble. A simple cost-benefit analysis undertaken by authorities to determine if a lighting timing pro- the SUEEP team suggests that an investment of gram would be effective for the city. Php 312 million (US$7.1 million) would have a payback period of 4.95 years, and would save an Conclusion additional Php 540 million (US$12.4 million) over Cebu City government has recognized the need for the 10-year lifespan of the project. This would also a sound energy strategy as evidenced by its numer- lead to an annual reduction in GHG emissions of ous excellent existing energy initiatives. The steps

4,043 tons of CO2. Cebu City has taken to improve energy use provide a The SUEEP team notes that Cebu City had sound starting point and clearly show the city’s com- piloted the use of LED luminaires in parts of the city mitment to improving energy efficiency. In particular, previously and is aware that the beam pattern of better energy governance in government operations the luminaires did not meet current national street and on a citywide scale, better coordination between lighting standards. Although this issue could be city planning and agencies, and enhanced procure- addressed by altering the height or spacing of light ment and green building codes, are all key steps Cebu poles, all of which adds cost to the program, using City officials must initiate to work toward a genu- LED luminaires from alternative manufacturers inely coherent energy strategy and policy for the city. Appendix 2 Surabaya Background

Surabaya is a large city with a population of Figure 2,765,908 people. The city occupies coastal ter- A2.1. Map of Surabaya, Indonesia rain and has a land area of 327 square kilometers (km2). The highest point in Surabaya reaches an elevation of about 30 meters. Surabaya is located in the Brantas River Delta, an area that has a high hazard of flooding. Surabaya’s population density is 8,458 inhabitants/km2. The city is highly urbanized, and the numerous industries located in the city have attracted migrants, contributing to growth of slum areas. The city’s annual population growth rate As the provincial capital, Surabaya is also home is 0.65 percent, and much of the city’s center is to many offices and business centers and is an edu- densely populated. cational hub for Indonesian students. Surabaya’s Surabaya is a tropical city characterized by dis- economy is also influenced by the recent growth tinct wet and dry seasons. The city enjoys plenty in foreign industries and the completion of the of sunny weather, with temperatures regularly Suramadu Bridge. Surabaya is currently building peaking at more than 30°C (86°F). The city’s wet high-rise apartments, condominiums, and hotels season runs from November through May, and as a way of attracting foreigners to the city. the dry season covers the remaining five months. The city has a GDP of US$22,850 million, Surabaya on average sees approximately 1,500 which grew at the rate of 6.3 percent in 2008 (com- millimeters (more than 59 inches) of precipitation pared with national GDP growth of 6.1 percent). annually. The primary industries contributing to the city’s Surabaya is located in the northeastern corner GDP are the trade, hotel, and restaurant (together of Java (see figure A2.1), and is a key node in vari- accounting for 36 percent) and manufacturing (32 ous national and international air, water, and land percent) sectors, with smaller contributions by transportation networks. Surabaya is less than the transport and communication, construction, two hours away from Jakarta (the country’s capi- financial services, and services sectors. tal) by plane and within a few hours of any city in The formal sector accounts for 44.1 percent Southeast Asia. It is served by Juanda International of employment. A significant factor in Surabaya’s Airport and Perak Port, one of Asia’s largest and economic profile is the large contribution of the busiest seaports. These two international nodes informal sector to employment (22 percent). The serve as important gateways to the province of main employment sectors (both formal and infor- East Java not only for passengers, but also for the mal) are trade, hotel, and restaurant (41.5 percent), transport of goods. Surabaya has a large shipyard community and personal services (21.2 percent), and numerous specialized naval schools. and industry (15 percent). Historical employment

93 94 | energizing green cities in southeast asia: three City Synthesis report

data were only available for the manufacturing between central and local government are articu- industry, which saw a decline of 2.8 percent in the lated in Law No. 32/2004. In Surabaya, it is pri- 2000–07 period. marily the departments and agencies, under the Surabaya city governance (Kota Surabaya) guidance of the main coordinating planning body, comprises the city government and the city’s par- Bappeko, that implement policy changes and liamentary body. A decentralization policy imple- actions that could affect energy supply and con- mented in Indonesia in 1998 has devolved public sumption. Figure A2.2 provides an overview of services provision to district and city levels; details Surabaya’s institutional structure and the relation- of the structure and institutional relationships ships involved in the city’s energy management.

Figure A2.2. Surabaya Government Structure for Energy-Consuming Agencies

Mayor and vice mayor

Bappeko (Development and DPRD Regional Planning Agency) (City parliament) secretariat

National Departments Agencies

PGN Spatial Environment (National gas) planning agency

DKP PLN (public lighting, solid Public (National electricity) waste, wastewater) hospitals

Ministry of Energy and Transportation Transportation Mineral Resources

Local revenue and ﬁnancial management PDAM (City water)

Public works

Buildings division

Source: Phase 1 pilot study . Note: Bappeko = city spatial and development agency; DKP = Cleansing and Park Department; DPRD = city parliament; PDAM = Regional Drinking Water Company; PGN = state-owned gas company; PLN = state-owned electricity company . Appendix 2: Surabaya Background | 95

Energy Efficiency Initiatives are mandated to report their monthly energy use in buildings to the National Team on Energy and National Level Water Efficiency every six months. At the national level, energy policies are formulated n Building energy codes. Indonesia has four by the National Energy Council. Energy efficiency energy standards for buildings that cover the and conservation programs are implemented by the building envelope, air conditioning, lighting, Ministry of Energy and Mineral Resources. The and building energy auditing. Indonesian government has initiated a number of n Fuel and electricity subsidies. Fuel and electric- energy efficiency programs, including the following: ity subsidies were scheduled to be phased out by n National Energy Conservation Master Plan 2014, mainly prompted by an increasing deficit (RIKEN) (2005). RIKEN stipulates a target in the state budget—electricity subsidies peaked for Indonesia to decrease its energy intensity by at 83.9 trillion Indonesian rupiah (Rp) (US$11.05 about 1 percent per year on average. It iden- billion) in 2008 and were estimated to be Rp 65.6 tifies sectoral energy savings potential: 15–30 trillion (US$8.6 billion) in 2011. Currently, all cat- percent in industry, 25 percent in commercial egories of customers pay for electricity at rates far buildings for electricity, and 10–30 percent in below market price—the average electricity tariff the households sector. Without this plan, energy is about Rp 655 per kWh (US$8.62 per kWh), use is projected to increase rapidly under a busi- whereas the market price is about Rp 1,030 per ness as usual scenario by 41 percent in 2025. kWh (US$13.5 per kWh). In May 2011, the gov- n National Energy Management Blueprint (PEN) ernment announced an increase in the base tariff (2006). PEN supports the RIKEN through the of 10–15 percent to reduce the swelling subsidy. implementation of energy efficiency and conser- Funds formerly used for subsidies will be used to vation measures. It provides development road fund energy investments, including geothermal maps for various sectors that involve the imple- electricity generation, energy efficiency, and other mentation of supply- and demand-side manage- low-carbon energy generation projects. These will ment, intensification of efforts to search for and be implemented via the Clean Technology Fund, use renewable energy sources, implementation which has amassed more than US$4 billion since of fiscal measures such as tax allowances, devel- its establishment in 2008. The change in policy opment of energy infrastructure, community and approach from energy subsidy to investment participation in commercial energy, and the in low-carbon, highly efficient technologies is a restructuring of energy institutions. major component to the background in which n National Energy Policy (2006). This policy energy policy decisions will be made in the future stipulates national targets for an optimal energy in Surabaya. Despite the government’s aspira- mix in 2025: less than 20 percent from oil, more tions and efforts to phase in the reduction of sub- than 30 percent from gas, more than 33 percent sidies, the threat of faster inflation amid gains in from coal, more than 5 percent from biofuel, oil prices have delayed the national government’s more than 5 percent from geothermal, and plans, which will likely impact the timeline for more than 5 percent from other renewables. the proposed phasing out of subsidies. It further stipulates a national energy elasticity target of less than 1 by 2025. The primary national focus is to transition public n Presidential Decree No. 2/2008 on Energy and transportation to using gas and the household sec- Water Efficiency. This decree mandates energy tor from kerosene to liquefied petroleum gas (LPG). conservation practices in government office build- In June 2010, the government planned to improve ings. Government departments and agencies and fuel efficiency for private cars by imposing limits on regional governments are required to implement engine capacity to no greater than 2,000 cubic cen- best-practice energy-saving measures outlined in timeters. However, this plan was delayed for recon- the government’s guidelines and directives and sideration. Although the national government has 96 | energizing green cities in southeast asia: three City Synthesis report

long promoted LPG and compressed natural gas for city. (There is a separate Surabaya Spatial Plan transportation, uptake will continue to be limited as 2009–2029; however, it has yet to be codified.) long as fuel and power continue to be underpriced. The development plan does not explicitly deal with issues of energy management. City Level n Bus rapid transit (BRT) studies. The city has pre- Currently, the city has neither an energy plan nor pared several transportation studies for the devel- a policy directed at issues of energy efficiency. opment of a BRT system in the next few years. However, a number of relevant energy efficiency n Mayor’s letter. Following Presidential Decree initiatives have been enacted by the city govern- No. 2/2008 on Energy and Water Efficiency, the ment, including the following: mayor issued a letter to city departments man- n Surabaya development plan 2010–2014 dating the implementation of energy efficiency (RPJMD). This is the city’s urban develop- measures such as energy efficient light bulbs. ment plan, which is renewed every five years. n Eco2 Cities. Surabaya is hosting a pilot World It addresses several issues, including the devel- Bank Group Eco2 Cities program, which will opment of clean water networks for the city, focus on strengthening its core urban plan- utilities development, development of the trans- ning, management, and finance capacities while portation system, and spatial planning in the investing in a catalyst waterfront redevelopment

Figure A2.3. Surabaya Energy Flows (2010)

Commercial Electrical Power Electrical Power 5.5 PJ Oil Generation Losses Natural Gas 0.03 PJ 34.9 PJ 43.4 PJ

LPG LPG 6.5 PJ 6.5 PJ

LPG Losses 1.3 PJ Transportation Diesel Gasoline and Diesel 5.8 PJ 10.0 PJ Gasoline and Diesel 27.4 PJ Gasoline 17.4 PJ Gasoline and Diesel Combustion Losses 21.1 PJ

project. The waterfront redevelopment will Although the transportation sector accounts enhance environmental and quality of life for the highest proportion of Surabaya’s primary aspects of the city while increasing accessibility energy consumption, the proportions of energy and social inclusiveness, and will revitalize the consumed in the commercial, industry, and resi- urban economy. dential sectors are also significant (see figure A2.4). In contrast, energy use is insignificant for city Energy Use and Carbon public services (solid waste, public lighting, water Emissions Profile supply). Surabaya’s 2010 energy flows and profile are sum- Apart from analyzing the energy end-use pro- marized in a Sankey diagram, shown in figure file, an overview of Surabaya’s energy supply A2.3, to illustrate the citywide energy supply and profile can provide the city government with valu- demand characteristics of its different sectors. able insights for strategic planning with respect to Although 62.4 billion megajoules of primary issues of energy security and economic growth. A fuel energy is supplied to Surabaya, a substantial negligible amount of energy is currently generated portion is lost through thermodynamic conversion from renewable energy sources or primary energy processes in vehicles (about 77 percent) and in elec- fuels sourced from within the city boundary, but trical power generation. Similarly, low-efficiency this could be a major potential source of energy combustion motors in the transportation sector production (through thermal solar) for residential, result in only 6.3 out of 27.4 petajoules of gasoline industrial, and hotel uses. and diesel energy supplied to the sector being used Of the energy supplied to the city, 58 percent is effectively. In comparison, LPG use clearly shows in the form of petroleum products. The majority its efficiency advantage because no conversion is (68 percent) of the petroleum products consumed involved until its final use. Thus, it would be ben- in Surabaya is used in the transportation sector; eficial both to increase the use of LPG and to locate another 18 percent of the city’s petroleum use gas-fired distributed generation closer to consum- occurs in the industrial sector. The remaining 42 ers. In particular, the industrial sector can make percent of energy imported is electricity. Currently, further efficiency gains by using heat (through only 2 percent of energy supplied to Surabaya cogeneration), which is otherwise wasted in coal- is generated within the city boundaries. For elec- fired plants. tricity generation both within and outside its city boundaries, Surabaya relies on oil, natural gas, and coal. Greenhouse gases (GHG) totaling 8.6 million

Figure A2.4. Surabaya Energy tons of carbon dioxide (CO2) equivalent were emit- Consumption by End Use ted by all end-use sectors in Surabaya in 2010 (see figure A2.5). Industrial energy use represents 35 Residential 21% percent of GHG emissions. Commercial and residential energy use represents 43 percent of GHG Transportation 40% emissions. Transportation fuel results in 20 percent of the city’s GHG emissions, with the remaining emissions emanating from methane released from the city’s wastewater treatment operations and local landfills. On a fuels basis, coal is the domi- Industry 27% nant contributor to GHG emissions in Surabaya (36 percent) and oil the second largest contributor (29 percent). Gasoline, diesel, LPG, and natural Commercial Public Services 9% gas collectively account for another 31 percent of 3% emissions from fuel use.

Source: Phase I pilot study . 98 | energizing green cities in southeast asia: three City Synthesis report

Figure A2.5. GHG Emissions by End Use and Fuel Source

10 10

9 9

8 8 Other sources Solid waste 7 7 Wastewater gas emissions Water and wastewater Solid waste gas equivalent 2 6 Commercial 6 emissions Transportation Electricity LPG 5 Residential 5 Natural gas Industry Diesel 4 4 Gasoline Million tons of CO Oil 3 3 Coal

2 2

1 1

0 0 End Use Fuel Source

Source: Phase I pilot study .

Sector Review and n high electricity use per capita and high energy Prioritization use per unit of GDP; Surabaya’s interest in pursuing the Tool for Rapid n relatively low energy consumed by trans- Assessment of City Energy (TRACE) underscores portation due to the low level of automobile its commitment to achieving optimal energy effi- use and high usage of relatively fuel-efficient ciency. The analysis was carried out across six city motorcycles; sectors: passenger transportation, city buildings, n low use of public transportation coupled with water and wastewater, public lighting, solid waste, growing private vehicle ownership and wide- and power and heat. These were, in turn, assessed spread use of private motor scooters, resulting against the performance of a range of peer cities in relatively low operating energy intensity for through a benchmarking process. This review pro- mobility; vided a number of significant findings that helped n high per capita water consumption and rela- to focus activities during the early part of the study tively high water losses from the distribution and contributed to the definition of priority sectors system, but midrange energy density for pota- for further analysis. ble water production; Key findings of the Surabaya diagnostics in n low electricity consumption per light pole but comparison with the cities in the TRACE database room for improvement in public lighting; are the following: n low energy consumption in city buildings but electricity use is on the rise; Appendix 2: Surabaya Background | 99

Table A2.1. Surabaya Sector Prioritization Results

Priority 2010 energy Relative energy Level of city Savings ranking Sector spending (US$) intensity (%) authority control* potential** City authority sector ranking 1 Street lighting 6,089,000 20 1 .00 1,217,000 2 City buildings 2,237,000 10 0 .95 212,515 3 Public vehicles 1,617,840 10 0 .05 6,235 Citywide sector ranking 1 Potable water 6,528,000 36 0 .96 2,256,000 2 Public transportation 68,889,000 5 0 .38 1,309,000 3 Power Unknown 12 0 .05 Potentially large 4 Solid waste 1,306,000 15 . 0 .75 146,000

Source: Phase 1 pilot study . *0 = no influence; 1 = maximum influence . **Based on TRACE benchmarking; these figures are indicative of the savings that may be possible, not necessarily practicable .

n low level of recycling and high amount of solid influence, and to citywide issues over which the waste that goes into one landfill; and authority has limited influence. n low levels of transmission and distribution The rankings suggest that the city government losses in the electricity network. should prioritize street lighting, followed by city buildings, and then public vehicles. On a citywide The TRACE analysis identified priority areas for basis, potable water supply is clearly deserving which significant energy savings are possible. Table of attention, followed by public transportation, A2.1 indicates the energy spending in each of these power, and solid waste. sectors, the relative energy intensity (the percentage of energy that can be saved in each sector, Recommendations based on the TRACE benchmarking), and the level The recommendations to improve the city’s energy of influence the city has over these sectors. The efficiency concentrate on areas over which the city savings potential is calculated by multiplying the has direct influence and are, for the most part, three factors. The TRACE contains a playbook of derived from TRACE. Many of the recommenda- 58 energy efficiency recommendations applicable tions are targeted at reducing energy use to lower across all sectors analyzed.1 The recommendations the city’s energy expenditure. The recommenda- are not meant to be either exhaustive or norma- tions will help city officials identify how the ini- tive. The recommendations only outline a number tiatives can be implemented in Surabaya. The of policies and investments that could help local recommendations are embedded in TRACE and authorities achieve higher energy efficiency stan- their details can be made available. The recom- dards. Following the sector-by-sector analysis, mendations are expected to be refined by the city each recommendation was reviewed to establish and the SUEEP team as further analysis and dis- its applicability to Surabaya. This filtering process cussions occur. Although the energy balance and helped concentrate the process on those recom- GHG emissions inventory provide an overview of mendations that are both viable and practical. the energy and emissions profile of Surabaya, addi- Table A2.1 shows priorities with respect both to tional analysis beyond the public sector is required sectors over which the city authority has maximum to develop a sustainable urban energy and emissions plan that includes sectors outside the direct

1. For further details on TRACE, see chapter 4. influence of the city government. 100 | energizing green cities in southeast asia: three City Synthesis report

Transportation efficiency could be easily implemented at this loca- More than 1.3 million motorcycles and motor tion. The city government is responsible for more scooters dominate private vehicle transportation in than 500 vehicles that support the following ser- Surabaya as they do in many cities in Southeast vices: garbage collection and transfer, official vehi- Asia. The other important modes of transporta- cles, street sweeping, and street light maintenance. tion in Surabaya are private automobiles, taxis, Public Transportation Development and angkot buses. Surabaya currently experiences The traffic congestion in Surabaya, which is exac- a high-volume rush hour, during which traffic flow erbated by growth in private vehicle ownership, is severely impeded. has led city officials to enhance planning efforts to Although motor scooters in Surabaya are pre- increase public transportation networks. Irregular dominantly new and fuel efficient, a shift toward public transportation schedules and a declining private cars—influenced by higher wages and perception of the attractiveness of road-based increasing standards of living, as well as the lack of transit have been identified as the main challenges. restrictions on new vehicle registration (although Therefore, the city is focusing its planning efforts progressive taxes apply to second, third, and fourth on the implementation of multimodal transpor- vehicles)—is driving up fuel usage. Fuel usage is tation systems based on a light rail transit line, rising despite the fact that new vehicles tend to be the development of an Intelligent Transportation smaller and more fuel efficient than cars in other System, and park-and-ride facilities. Campaigns developed cities. to increase public awareness include programs No high-capacity public transit system serves such as car-free days and license plate restrictions. Surabaya aside from regional commuter trains A recent increase in the use of bicycles has also that run only three or four times each morning and prompted plans for the development of bicycle and account for a very small share of mode split, esti- pedestrian path networks. mated at less than 1 percent. Angkot minibuses, One of the most notable observations was the another mode of public transportation in Surabaya, need for an integrated planning approach to ensure generally have older and inefficient engines, and that plans for public transportation systems, land typically use kerosene fuel that may be blended use, street signals, parking policies, vehicle registra- with gasoline, which can damage the engine and tion pricing, and sidewalk policies are adequately is highly polluting. Despite the low usage of pub- integrated and that there is an effective means for lic transportation in the city, transportation energy turning plan into practice. Integrated planning is intensity per capita remains fairly low because of especially important for transportation planning. the widespread use of fuel-efficient motor scooters. Encouraging nonmotorized modes alongside the These factors point to significant potential development of robust public transportation will for improvement in the energy and operational be critical to mitigating congestion and improving efficiencies of the public transportation system. the quality of transportation in Surabaya. Furthermore, the lack of access to nonmotorized Coupled with nonmotorized transportation, modes as well as safety concerns regarding the the promotion of public transit should be part of use of crowded streets have made nonmotorized an energy efficient strategy for Surabaya. Various modes of transportation such as bicycling unat- proposals for enhancing the public transportation tractive. Bicycle lanes could potentially be estab- system have been in development for a number lished on a few main thoroughfares wide enough of years. A bus rapid transit (BRT) pre-feasibility to accommodate them, though the vast majority of study was completed with the support of Japan streets in Surabaya are too narrow to safely make International Cooperation Agency (JICA), and the room for bicycle lanes. World Bank Group is involved in helping Surabaya With respect to Surabaya’s city operations, its conduct more detailed studies. Because of the com- fleet vehicles are maintained at a single facility plexity involved in the development of public trans- so projects to improve maintenance and energy portation and the level of documentation available Appendix 2: Surabaya Background | 101 for the proposed BRT, this report will not go into issues and to allocate funds to the lowest-cost solu- detail on this issue. Surabaya is also developing tions for the most pressing problems. plans for a mass transportation system comprising Solid Waste tramway and monorail systems to serve heavy traf- Surabaya has one landfill, which accepts hazard- fic corridors into the city center, and is initiating ous, septic, and noncompostable waste. The land- studies to integrate the rest of its public transporta- fill is fairly new and has capacity for approximately tion network with this system. 10 years, with expansion sites nearby. Residential Vehicle Emissions Standards waste is collected by the kampungs2 and brought Surabaya’s transportation system is dominated by to transfer stations. DKP (Dinas Kebersihan dan motorcycles and cars, which are currently fairly Pertamanan, or Cleansing and Park Department) new and fuel efficient. However, vehicle emissions waste transfer trucks take waste from the transfer standards testing could be more effectively applied stations to the landfill. to encourage and enforce better vehicle emissions, Sludge from wastewater treatment is collected which will be important as vehicles begin to age. from private wastewater treatment companies and This, in turn, will lead to better air quality and processed by DKP. Composted sludge is used as reduced energy consumption. The current system soil fertilizer for city parks. of testing and enforcement of vehicle emissions Landfill leachate currently remains untreated, is fragmented because different city and national posing contamination and disposal issues. Surabaya government departments regulate (license) test produces nearly 707,000 tons of domestic solid centers, and enforcement is either weak or ineffec- waste annually, giving rise to approximately tive because cars can be back on the road after a 37,800 tons of CO2e from landfill gas emissions. few simple measures are applied to get the vehicle Programs have started in four of the transfer to pass. New testing equipment that meets stan- stations to extract compostable waste to be turned dards for measuring an engine’s efficiency would into soil for use as fertilizer in parks throughout be required. Enforcement activities and result- the city. Kampungs are also engaged in small- ing sanctions should also be revised to ensure scale composting with thousands of residential- that poorly performing vehicles are identified and scale composting bins distributed to households. removed from service. The implementation of such Surabaya has reviewed numerous energy-from- a measure is potentially difficult because of the waste proposals for the landfill, and proposals fragmented nature of Surabaya’s existing testing for a number of different technologies by a vari- system and the magnitude of enforcement required. ety of bidders are being evaluated; however, no It is highly recommended that the Bappeko lead projects have yet been implemented. The landfill a city vehicle fleet efficiency program. Procurement in Surabaya is currently set up to capture methane and maintenance policies should be implemented gas, but the gas is not being used as a resource. to maximize the efficiency of the city’s fleet. Vehicle Maintenance Program and Vehicle In response to the limited transportation Operations Program data available to support the Department of The first easy win for energy efficiency in the waste Transportation’s decision making for energy effi- sector is a vehicle maintenance program for the ciency issues, a data collection program is also rec- collection and transfer vehicles under control of ommended. A variety of informal and inexpensive the city government. These vehicles, if tuned up data collection systems are now becoming avail- and operated with the correct tire pressure and able with software applications that collect data with clean fuel, could run at least 10 percent more from cell phones or city vehicles and do not rely on efficiently. manual counts to collect transportation data. Finally, the establishment of a Surabaya regional transportation planning authority is highly recom- 2. Kampungs are the local neighborhood level of city gover- mended to study all types of regional transportation nance. 102 | energizing green cities in southeast asia: three City Synthesis report

An effective vehicle operations program would Surabaya has a large number of storm water improve the efficiency of routes for the trucks by ejector pumps in the canals to move water through running them through less-congested areas and and out to the sea during rain events. Although making the routes shorter and more direct. many of these facilities are quite old and use large, Composting Program inefficient pumps, the limited time that these pumps The existing composting programs should be are operated each year means that total energy sav- expanded and be run at all of the waste transfer ings potential is unlikely to be significant. facilities, not just the four sites where composting The city is facing significant challenges in is already happening. wastewater management, including the contamination of water supply from septic tank seep- Landfill Gas Capture Program age, contaminated landfill leachate, and the lack Finally, the proposal for a landfill gas capture proof treatment of wastewater sludge. However, the gram should be executed. The program would Surabaya city government has the opportunity to provide quick and easy energy and reduce GHG overcome these issues because it owns PDAM (as emissions at a very low cost to the city. is common in Indonesia). The large leakage rates Water and the low water pressure in the east and north The regional drinking water company (PDAM) sectors of the network also provide opportunities produces and distributes Surabaya’s drinking water to greatly reduce nonrevenue water losses. and manages the treatment and distribution infra- Pump Replacement Program structure. PDAM is owned and operated by the Considering the age of Surabaya’s water network city government. About 70 percent of the popula- and water treatment facilities, a pump replacement tion has access to clean drinking water. Domestic program is strongly recommended for Surabaya. wastewater is mostly treated with septic tanks and absorption technology. Industrial wastewater is Leak Reduction Program often discharged directly into the Surabaya River The city should implement a leak reduction pro- without treatment. However, a small number of gram and hire a long-term partner to deliver a per- companies install and manage their own facilities formance-based contract. to treat their wastewater discharge. The Surabaya Water Awareness Program River is a primary source for the city’s drinking A public water awareness program would also be a water, so coordination and action on upstream productive complement to the water use reduction industrial sites is particularly necessary. efforts in Surabaya. Raw water is gravity fed to the two potable water treatment facilities by the Surabaya River; Power thus, the energy intensity of potable water is fairly Surabaya is primarily an importer of electricity, low because no energy is required for transmission with only one 57 megawatt power plant in Perak pumping or groundwater pumping. Because the (in northern Surabaya), which is fueled by natu- water consumption rate in Surabaya is relatively ral gas. PLN Distribution East Java is the state- high at 290 liters/person/day, reflecting both actual owned enterprise that provides electricity to meet consumption and loss, water leakage reduction Surabaya’s needs. Hence, although Surabaya can programs and water conservation will be effective. make recommendations and ask for improvements Surabaya has no citywide wastewater infrastruc- to the electrical network, the city government can- ture and wastewater is currently managed through not make direct decisions or even allocate funding household, or clusters of household, septic tanks. for improvements in this sector. Seventeen private wastewater treatment companies With respect to transmission and distribution, run treatment facilities for large buildings or cam- Surabaya has relatively low losses (1.8 percent for puses. For this reason, Surabaya’s energy use for transmission and 6.7 percent for distribution). PLN wastewater is very low. However, in the interest of has implemented energy efficiency programs and public health, it is expected that a more comprehen- performs ongoing maintenance on transformers in sive system will eventually be developed. substations and seems to have a good program for Appendix 2: Surabaya Background | 103 addressing transmission and distribution losses. Despite the above, there is scope for improving Because the PLN network is performing relatively public lighting in Surabaya (see below). well, any improvements would be incremental. Public Lighting Assessment Program JICA recently provided technical assistance to The first recommendation for public lighting is PLN for the study of “smart metering” in Jakarta. to improve data collection processes and data This concept would be beneficial to Surabaya as availability through a public lighting assessment well. program so that future programs and funding allo- Distributed Generation Program cations can be adequately informed with accurate In light of the city government’s limited influence data. in the power generation sector, the SUEEP team Lighting Timing and Dimming Program recommends that a distributed generation pro- There is an opportunity to create a lighting timing gram, which would use the capacity of the natural and dimming program that would test and install gas network and the nearby natural gas fields to new technologies for new street light installations generate low-cost, local electricity within the city, and replacement lamps. be developed. A distributed generation program Public Lighting Research and Development would produce additional benefits, such as the use Program of waste heat for hot water heating, generation of Because DKP does not have the capacity or fund- chilled water with waste heat, and reductions of ing to test new technologies, the most important distribution losses in the electrical grid. recommendation in this sector is the public lighting research and development program, which Public Lighting could accept demonstration poles and lamps from Public lighting in Surabaya is in the remit of manufacturers and measure their performance and the Cleansing and Parks Department (DKP). test their lighting output to satisfy decision mak- Responsibility for street lights on most city streets ers that new low-energy technologies can perform is under DKP, whereas small roads in residential satisfactorily. areas are maintained by the kampung or by the local developer. Surabaya has good street lighting City Buildings The city buildings category covers all buildings coverage at 79 percent, but its implementation of a owned by the city, including government offices, program to achieve 100 percent coverage does not city schools, and city hospitals. The city building suggest that it is a top priority. The SUEEP team stock is generally characterized by the use of natu- noted that the program did not appear to have sig- ral daylight, fans and natural ventilation, compact nificant funding. fluorescent lighting fittings, and limited meeting Surabaya has 40,000 street lights, 95 percent rooms and offices augmented by air conditioning of which use high pressure sodium lamps, which is on a timed basis. Hallways, lobbies, and open-plan good practice today, although not the most energy offices are generally open air and naturally venti- efficient lamp on the market. The lighting levels do lated. Very few buildings in Surabaya have cen- not meet international standards, hence electricity tral air conditioning, and the SUEEP team did not consumed per km of road lit is low. A bulb replace- identify any city buildings with chillers or central ment program to ensure all street lights use high ventilation. These are excellent examples of sus- pressure sodium lamps was nearly complete. tainable design—on the sea coast, where natural Only 12 maintenance vehicles were identified ventilation is quite good, not every facility should for street lighting repair and lamp replacement be fully enclosed with sealed windows and air con- for the entire city. The team of people assigned ditioning. The city buildings in Surabaya consume to maintenance was also quite small for a city of very little energy, and the opportunities to further close to 3 million people. Construction costs for enhance energy efficiency seem to be very limited. new street lamps can be high, and fitting new wir- No new construction projects were under way ing and poles into already crowded streets filled for city buildings during the time of the SUEEP with old existing pipes and wires can be difficult. mission, and no new building construction projects 104 | energizing green cities in southeast asia: three City Synthesis report

were identified. Only minor renovation projects Computer Power Save Program were under way to improve city buildings. First, based on the walk-throughs of more than No green building codes or ordinances were a dozen city buildings, the computer power save identified, nor were any building energy code revi- program was deemed to have the most potential sions. National-level green building guidelines because of the large number of desktop computers have not been set up in Indonesia. in evidence. Surabaya’s city buildings are low energy users, Energy Efficient Building Code so maintaining this low consumption while increas- Second, because of the growing stock of higher- ing the quality of buildings and services will be a quality and higher-energy-using buildings, the challenge. For example, the SUEEP team’s walk- SUEEP team recommends development of an throughs of the hospitals in Surabaya showed that energy efficient building code to appropriately the old hospital was open to the air in all hallways address the construction industry in Surabaya and and had minimal air conditioning and lighting, mitigate the trend of increasing energy consump- whereas the new hospital was fully air conditioned tion in new buildings. The city government can and overlit through all lobbies, hallways, and use future new building projects to demonstrate spaces. This trend presents both a challenge and the techniques and benefits of energy efficient an opportunity. buildings. Each department has control over the buildings it uses. There is no central facilities management Conclusion group within the Surabaya government. Neither Robust energy planning and management will help is there a formalized refurbishment cycle for gov- shape Surabaya’s future. Without a formal energy ernment buildings, which poses a significant chal- and emissions strategy, Surabaya’s economy and lenge for achieving energy efficient performance quality of life will not reach their full potential. A in the existing building stock. In addition, energy- comprehensive and strategic approach to energy now efficiency-oriented capital investment planning will pay dividends by future proofing the city’s infra- and life-cycle costing are not used, hindering the structure against increases in energy use, a growing uptake of those energy efficiency initiatives that population, and the pitfalls of energy-intensive devel- require higher upfront investment but yield long- opment that have hindered so many other cities. term savings. Surabaya’s government has recognized the need Any new city building design and construc- for a sound energy and emissions strategy through tion projects would be good opportunities for the the many existing excellent energy initiatives city to show leadership in energy efficient build- reviewed above. ing design practices. The city has the power to In the future, energy governance should be pri- pass ordinances for building codes, which will oritized by the city government because it will help be advantageous for any agency that wishes to strengthen the city’s internal energy management mandate compliance with green building codes. practices as well as engage other key stakeholders The current mayor has been a vocal proponent of who have not played a significant role in the city’s energy efficiency and it has been through her lead- energy planning efforts to date. Better governance ership that the existing energy efficiency projects practices include not just enhanced oversight and have been implemented. data tracking, but also improved procurement Because of the low energy use by city buildings practices and a willingness to “lead by example” in Surabaya, only two recommendations are put by showcasing best practices for the benefit of local forward for this sector. businesses and households. Appendix 3 Da Nang Background

Da Nang is a major harbor city and the largest urban center in central Vietnam. The city is spread Figure A3.1. Map of Da Nang, Vietnam over 1,283 square kilometers, with 911,890 people and a population density of 711 inhabitants per square kilometer. With the fourth largest seaport in the country, Da Nang is an important gateway city to the Central Highlands of Vietnam, the Lao People’s Democratic Republic, Cambodia, Thailand, and Myanmar (figure A3.1). After relatively slow population growth (1.7 percent annually) between 2000 and 2007, Da Nang appears poised for a significant increase in the next 10 years, primarily due to migration from rural areas. By 2020, Da Nang hopes to become one of the country’s major urban centers with a population of about 1.65 million. Da Nang is in a tropical monsoon zone with high temperatures and a stable climate. There are two seasons, with the wet season lasting from August through December and the dry season from January through July. Winter cold spells tend to be short and not severe. The annual average temperature is 25.9°C, with average humidity of 83.4 percent. On average, the city receives 2.5 millimeters of rainfall per year, and enjoys 2,156 hours of sunshine annually. Da Nang has recorded remarkable changes in economic development. Its GDP growth rate has been higher than the country’s average rate. Between 2000 and 2007, Da Nang’s regional GDP grew 12.3 percent annually, totaling US$1.48 billion in 2009. The production of industrial, agricultural, and aquatic products has increased, as has export value. Promising growth in tourism, commerce, and services has also occurred. Da Nang’s economy has historically been dominated by the industry and construction sectors, but this is slowly changing. In 2006, the services sector became the largest economic sector in the city as

105 106 | energizing green cities in southeast asia: three City Synthesis report

measured by gross output. This shift is in keeping Energy Efficiency Initiatives with local policy targets, which seek to develop the city as a rail, road, and seaport hub, in addition to National Level other services-oriented industries (financing, bank- The Vietnamese government has acknowledged ing, insurance, telecommunications, and consult- that increasing energy efficiency is a national pri- ing). The tourism sector is also expected to grow, ority. The National Energy Efficiency Program (2006–15), which is run by the Department of as the city strives to become a major national tour- Industry and Trade, comprises a set of activities ist sector that capitalizes on the city’s beaches and to encourage, promote, and propagate energy effi- proximity to the old capital, Hue; Hoi An Ancient ciency and conservation to the public. Elements of Town; and the ruins at My Son. the program include the following: Da Nang became a centrally governed city in

1997. The central Vietnamese government and Da n a targeted reduction in national energy usage Nang City People’s Committee are the focal points of 3–5 percent between 2006 and 2010, and of for policy making, but a strong base of local entities 5–8 percent between 2011 and 2015; is involved in energy planning matters and energy n coverage across sectors including organizations, systems operations in Da Nang. The main depart- households, and individuals using energy; ments, committees, and external agencies respon- n prescription of energy efficiency and conserva- sible for the planning, development, and operation tion measures, for example, product labeling of energy-consuming sectors are represented in the to encourage energy efficiency technology and city government structure as shown in figure A3.2. phasing out of inefficient equipment;

Figure A3.2. Da Nang Government Structure for Energy-Consuming Agencies

Da Nang People’s Committee

Department of Department of Industry and Trade Finance

Direct inﬂuence or control

Consultation Da Nang Power Oversight

Department of Department of Department of Department of Department of Natural Science and Planning and Construction Transportation Resources and Technology Investment Environment

Da Nang Drainage and Wastewater Treatment Company

Source: Phase I pilot study . Appendix 3: Da Nang Background | 107

n promotion of energy efficiency and conservation n a study on Wastewater Management Strategy through incentives, scientific and technological in Da Nang City with Addendum produced for development, education, and engagement of the Priority Infrastructure Investment Project, consultants by the city government; and 2009; n engagement of consultancy support for energy n a study on Integrated Development Strategy for efficiency measures in enterprises and buildings Da Nang City and Its Neighboring Area; in Da Nang in 2010, for example, provision of n a city energy efficiency and conservation pro- training to companies on energy auditing. gram covering six energy efficiency projects to City Level be cofinanced by the National Target Program The City People’s Committee Decision on on Energy Efficiency and Conservation, the city “Promulgation of the Plan for Developing Da budget, private investors, and other sources; Nang – The Environmental City” lays the founda- n a city priority infrastructure investment project; tion for city planning in the context of sustainabil- n the Da Nang Master Plan for Water Supply ity and encourages resource efficiency. In addition, Systems for 2020, which lays out the city water a number of relevant energy efficiency initiatives supply company’s strategy for expanding Da and studies have already been enacted by the local Nang’s current potable water system; Da Nang city government, including the following: n a program for public lighting;

Figure A3.3. Da Nang Energy Flows (2010)

Hydro Power Electrical Power 1.6 PJ Generation Losses 5.2 PJ

Electrical Power Distribution Losses Gas Turbine 5.7 PJ 0.2 PJ Commercial Electrical Power 0.4 PJ LPG 0.1 PJ Electrical Power Oil 0.4 PJ Delivered to Substations 4.9 PJ Residential Coal 2.5 PJ Electrical Power 1.6 PJ LPG 0.5 PJ Kerosene 0.1 PJ LPG Losses 0.2 PJ LPG 1.0 PJ Industrial Kerosene 0.1 PJ Kerosene Losses Electrical Power 2.2 PJ 0.02 PJ LPG 0.1 PJ Fuel Oil 0.9 PJ Gasoline and Diesel 0.03 PJ Fuel Oil 1.2 PJ Fuel Oil Losses 0.3 PJ Public Electrical Power 0.2 PJ Gasoline and Diesel 0.01 PJ Gasoline and Diesel Combustion Losses 7.9 PJ Other Electrical Power 0.2 PJ Diesel 0.8 PJ Gasoline and Diesel 10.7 PJ Transport LPG 0.01 PJ Gasoline 0.8 PJ Diesel 1.2 PJ

Primary Electrical Power Energy Supplied Electrical Power Fuel Combustion Productive Energy Used Energy Delivered to to the City Distribution Losses Losses by Customers Substations 0.2 PJ 8.4 PJ 23.1 PJ 4.9 PJ 17.9 PJ 9.2 PJ

does enjoy significant solar energy potential and Figure A3.4. Da Nang Energy may be able to benefit from local wind resources, Consumption by End Use but because no renewable power technology is Others installed in Da Nang, no power is harvested from 16% Transportation 45% these resources. Two sectors (transportation and industry) dominate energy use and emissions, and energy demand is increasing rapidly, with electricity demand alone Residential 13% likely to double between 2011 and 2015. In 2010, the city used roughly 17.9 petajoules of energy in various forms. Transportation was responsible for 45 percent of the city’s energy use, followed by 21 Industry 21% percent by the industrial sector. The residential sec- Commercial 3% tor consumes 13 percent of the city’s energy (figure Public Services A3.4). Commercial uses (3 percent) and public ser- 2% vices (that is, the government sector, at 2 percent) lag far behind these other sectors. Some 16 percent Source: Phase 1 pilot study . of energy is consumed in other sectors. Of the energy imported, 73 percent is in the form of petroleum products, out of which 61 per- n a program for public agencies and utilities; cent is used in the transportation sector. This 61 n a school lighting program; and percent comprises mainly diesel fuel and gasoline, n Renewable Energy Research and Development in equal shares. Some 11 percent of the city’s petro- and Renewable Energy Application in the city. leum use is attributable to the industrial sector, of Da Nang has already deployed and assigned dif- which 83 percent is fuel oil, which presumably is ferent agencies, districts, and enterprises to employ used to create process heat in boilers. Electricity and follow the Government Guidelines on the accounts for 27 percent of energy imported into National Target Program on Energy Efficiency. The the city. In the residential sector, electricity is the city has also set targets for public agencies to save primary form of energy used, although a sizable energy in office buildings, and encouraged energy percentage of liquid petroleum gas is used for conservation through lighting turn-off times and cooking and hot water. Current peak electricity air conditioning use guidelines. The city has also demand in Da Nang is approximately 250 mega- considered such initiatives as using nanotech- watts, which is a significant increase from 2007, nologies for lighting on bridges and solar energy when peak demand totaled just 176 megawatts. for traffic signal lighting. Figure A3.2 provides Electricity usage in Da Nang steadily increased an overview of Da Nang’s institutional structure between 2007 and 2010 (an increase of 44 per- and the relationships involved in the city’s energy cent in that period), and is expected to double in management. six years. The industrial and residential sectors dominate electricity use. Although the commer- Energy Use and Carbon cial sector accounts for a small share of electric- Emissions Profile of Da Nang ity consumption, it has seen the most rapid growth Da Nang’s energy flows and profile are sum- from 2007 to 2010, with demand increasing 44 marized in the Sankey diagram in figure A3.3, percent. Industrial demand has kept pace with the illustrating citywide energy supply and demand overall increase, at 41 percent for that time period, characteristics by sector. Da Nang currently has whereas residential demand has grown at a slightly no significant energy resource base of its own (for slower pace of 39 percent. example, indigenous coal, natural gas deposits, or Greenhouse gas (GHG) emissions tell a similar hydropower facilities), so virtually 100 percent story. A total of 1.54 million tons of carbon dioxide equivalent (CO e) were emitted by all sectors of the city’s energy supply is imported. The city 2 Appendix 3: Da Nang Background | 109

Figure A3.5. GHG Emissions by End Use and Fuel Source

2.0 2.0

1.8 1.8

1.6 1.6

Grid based Other sources 1.4 1.4 Solid waste Wastewater gas emissions Water and wastewater 1.2 1.2 Solid waste gas

equivalent Commercial emissions 2 Electricity 1.0 Transportation 1.0 LPG Residential Natural gas 0.8 Industry 0.8 Diesel Gasoline

Million tons of CO 0.6 0.6 Oil Coal

0.4 0.4

0.2 0.2

0 0 End Use Fuel Source

in Da Nang in 2010 (figure A3.5), and the city’s far outpacing the commercial sector’s share of the carbon intensity (0.89 kilograms of CO2 per unit emissions load (3.4 percent). of GDP) is more than twice the national carbon- intensity estimate for Vietnam. Da Nang’s carbon Sector Review and intensity is quite high even in comparison with Prioritization other developing or highly industrial countries. Da Nang’s interest in pursuing the Tool for Rapid Transportation fuels are responsible for 46 percent Assessment of City Energy (TRACE) underscores of citywide GHG emissions. Of the total citywide its commitment to achieving optimal energy effi-

CO2 emissions that originate from the transporta- ciency. The analysis was carried out across six city tion sector, two-thirds are derived from the use of sectors: passenger transportation, city buildings, diesel fuel vehicles. Gasoline use (primarily from water and wastewater, public lighting, solid waste, local motorbikes) accounts for roughly 16 percent and power. These were, in turn, assessed against of total citywide emissions. The industrial sector is the performance of a range of peer cities through the second largest contributor to GHG emissions a benchmarking process. This review provided a in Da Nang. The city’s wastewater treatment and number of significant findings contributing to the water supply operations account for 6.8 percent definition of priority sectors. of the city’s emissions, and the solid waste system Key findings of the Da Nang diagnostics in accounts for 6.7 percent, adding another 13.5 per- comparison with other cities in the TRACE data- cent to the total. The residential sector is respon- base are the following: sible for roughly 14.6 percent of total emissions, 110 | energizing green cities in southeast asia: three City Synthesis report

n low electricity use per capita but high level of these sectors. The savings potential is calculated by energy use per unit of GDP; multiplying the three factors. The outcome of the n relatively low energy use in transportation due TRACE analysis is a playbook of 58 energy effi- to a low level of automobile use and high usage ciency recommendations applicable across all the of relatively fuel-efficient motorcycles; analyzed sectors.1 The recommendations are not n very low use of public transportation coupled meant to be exhaustive or normative. They simply with growing ownership and use of private outline a number of policies and investments that motor vehicles, which is increasing energy could help local authorities in Da Nang achieve intensity for the transportation sector; higher energy efficiency standards. n low per capita water consumption and rela- Table A3.1 shows priorities with respect both to tively high water losses from the distribution sectors over which the city authority has maximum system; influence, and to citywide issues over which the n midrange energy density of potable water authority has limited influence. The ranking sug- production; gests that Da Nang city government should priori- n low electricity consumption per light pole tize street lighting, followed by city buildings, solid (although there is room for improvement in waste, and the water treatment system. In relation public lighting); to the buildings sector, the results demonstrate a n low but rising energy consumption in city wide range of opportunity for all residential and buildings; commercial buildings in Da Nang although the n very low level of recycling due to the absence of TRACE analysis in the buildings sector focused on a formal recycling solid waste program; and city buildings. n low levels of transmission and distribution On a citywide basis, the power supply system is losses. a clear area of focus, followed by both private and public transportation. Incorporating this informa- The TRACE analysis identifies priority areas in tion into a sector-by-sector analysis filters and nar- which significant energy savings are possible. Table rows the recommendations to ensure that they are A3.1 indicates the amount of energy spending in both viable and practical for Da Nang. each of these sectors, the relative energy intensity (the percentage of energy that can be saved in each sector, based on the TRACE benchmarking), and the level of influence the city government has over 1. For further details on TRACE, see chapter 4.

Table A3.1. Da Nang sector prioritization results

Savings Priority 2010 energy Relative energy Level of city potential ranking Sector spending (US$) intensity (%) authority control* (US$)** City authority sector ranking 1 Street lighting 1,200,000 78 .2 1 .00 939,141 2 City buildings 2,069,047 15 .1 1 .00 312,426 3 Solid waste 452,380 48 .8 0 .97 214,277 4 Potable water 564,349 26 .4 0 .96 143,163 5 Wastewater 95,000 11 .1 0 .96 10,133 Citywide sector ranking 1 Power 54,285,714 33 .8 0 .38 6,973,725 2 Private vehicles 44,665,149 10 .0 0 .14 669,977 3 Public transportation 361,773 65 .8 0 .90 214,416

Source: Phase 1 pilot study . *0 = no influence; 1 = maximum influence . **Based on TRACE benchmarking; these figures are indicative of the quantum of savings that may be possible, not necessarily practicable . Appendix 3: Da Nang Background | 111

Recommendations because of its ability to move large volumes of rid- The recommendations presented in this appendix ers at a cost much lower than light and heavy rail focus on areas over which the city has direct influ- systems. Da Nang would like to see a BRT system ence and are, for the most part, derived from the deployed in one or more parts of the city by 2016. TRACE. The recommendations were shared with One of the SUEEP team’s most notable obser- the Da Nang City People’s Committee and relevant vations in the city is the need for an integrated agencies. It is expected that the recommendations land-use and transportation planning approach to will be further refined by the city and study team ensure that plans for BRT, land use, street signals, as further analysis and discussions are completed. parking policies, vehicle registration pricing, and Although the energy balance and GHG data dis- sidewalk policies are coordinated and that there is cussed earlier are good indicators of the energy and an effective means for turning plan into practice. emissions profile of Da Nang, additional analysis For example, Da Nang’s central business district beyond the public sector is required to develop a does not have a pedestrian-friendly environment— sustainable urban energy and emissions plan that most sidewalks serve as motorbike parking lots or includes sectors outside the direct control of the spots for food vendors to set up their operations. city. Similarly, encouraging the use of regular and electric bicycles alongside the development of a robust Transportation public transportation system will help to ease traf- Although TRACE identified private vehicles and fic flow in Da Nang, given increasing use of pri- public transportation, as the second and third private cars. For such benefits to materialize, the Da orities, respectively, on a citywide scale for imme- Nang City Department of Transportation and City diate energy savings potential, the transportation Vehicle Registration and Control Office would sector has the highest potential of guiding future need to work together, through city planning, to city growth in a sustainable manner. Public infra- encourage the use of public transportation and structure investments are one of the main tools nonmotorized modes of transportation. local authorities can use to encourage compact Bicycle Use development (for example, development around Although it bucks the current local trend to aban- transit hubs), encourage alternative modes of trans- don bicycles and take up motorized transportation, portation (walking, biking, public transportation), the lowest energy and carbon mobility path the and decrease local energy inputs (transportation is city can pursue is to promote high rates of walk- one of the most energy-intensive sectors). Da Nang ing and cycling around the city. Such a strategy has to be proactive in its thinking and must strate- requires careful attention to the way in which new gically use infrastructure to guide city growth from real estate development or neighborhood redevel- the current 0.9 million to the estimated 1.65 mil- opment takes place around the city to ensure a lion in 2020. In its planning, it should move away mixture of land uses that promotes relatively short from a static model, and focus on a dynamic model travel distances between where people work, live, to accommodate the quickly changing characteris- shop, attend school, relax, and so on. Da Nang’s tics of the city. To this end, integrated planning is current land-use master plan emphasizes a mixture especially important for transportation. of land uses for development and redevelopment, Public Transportation Development thus facilitating low-energy, low-carbon mobility Public transportation results in lower operating in those areas. Close coordination will be needed energy intensity and lower emissions per capita between the Departments of Natural Resources and than private cars, and has the potential to provide Environment, Construction, and Transportation a more efficient transportation network. A reduc- to ensure the development of high density, mixed- tion in the number of private vehicles in circulation use areas, with space appropriately allocated for can lower emissions and improve air quality. Bus pedestrians and bicycles on local roadways and rapid transit (BRT) has attracted a great deal of sidewalks. One alternative is dedicated pedestrian attention in cities around the world in recent years malls or other areas in which motorized vehicles 112 | energizing green cities in southeast asia: three City Synthesis report

are banned or restricted. Sufficient space for bicy- and business density along the route will have cle parking must also be provided, in locations that increased to levels likely to support high ridership.

do not impede pedestrian traffic. Consideration Parking Policies must also be given to effectively linking bike use BRT is predicated on riders walking to and from the with public transportation, by creating large bike system to another destination. To support a BRT parking areas near bus stops. system, Da Nang should begin to reclaim the side- Electric Bicycles walks around the city so they become more usable Motorbikes already have achieved strong market by pedestrians. Establishing designated motorbike penetration in Da Nang (and Vietnam as a whole), parking areas and strictly enforcing their use will so it may be difficult to shift large numbers of help accomplish this objective. Da Nang could also users “backward” to nonmotorized bicycles. This take a cue from other cities, where food vendors is particularly true for motorbike users traveling must apply for permission to occupy public side- long distances between home, work, school or walks to ensure they are not located in areas that university, and shopping. Therefore, the city may would obstruct pedestrians. wish to consider policies and programs aimed at Car-Minimization Strategies alternative-powered motorbikes such as electri- The city should continue its program of car-mini- fied bicycles. This technology, which is extremely mization strategies. Limits on street parking, high popular in China, could result in a shift away vehicle registration fees, promotion of car-sharing from gasoline to different forms of electric power programs, congestion pricing, and other strategies generation. Large solar charging stations could that discourage private vehicle use in certain areas be set up in different locations around the city to or at certain times of the day or week can help provide low- or no-cost battery charging. Battery- make private vehicle use a less attractive option swap businesses could also be established around in Da Nang, potentially leading to higher rates of the city to allow riders to replace the batteries on public transportation and BRT use. their bikes quickly and continue on with their trips, rather than waiting for the battery to fully Bus System Design recharge. Electric bike owners could also recharge Many elements of bus system design must be con- their batteries at home. sidered during the implementation planning process to encourage ridership. These include issues Land-Use Planning associated with ticket pricing and the availability People will generally walk a limited distance to a of free transfers from one bus route to another. The bus stop; anything farther is considered inconve- city must also work with new BRT system opera- nient, which will lead people to turn to alternative tors to ensure high levels of rider comfort, longer forms of transportation such as cars or motorbikes. operating hours, and an increase in the frequency To ensure high levels of bus ridership, it is impor- of bus service along designated routes. All of these tant to increase the density of land development issues have been cited by the public as reasons for within this acceptable walk zone, thus increasing their limited use or overall dissatisfaction with the the likelihood of large numbers of bus users. To city’s current bus system. the extent possible, routes should be designated, and land use in appropriate areas along the routes Solid Waste “upzoned,” as soon as possible to allow for denser Residential, commercial, and industrial solid development. Taking this step well in advance of waste collection and management services in Da the deployment of the BRT system would allow a Nang are operated by Hanoi Urban Environment landowner to assess whether to increase the size of Company (URENCO), a state-owned enterprise. the building or sell it to other developers interested Waste collection is a massive endeavor for a city in some type of speculative development. Advance of this scale. The landfill in Da Nang is not cur- planning and zoning can help to ensure that by rently set up to capture methane gas (thus missing the time a BRT system is launched, residential an opportunity to make use of this resource), and Appendix 3: Da Nang Background | 113 is expected to reach capacity by 2025 to 2030. The available on the current fuel efficiency of the fleet, capacity problem is further exacerbated by low fees but before any new vehicle purchases are made, for residential waste collection, which provide no Da Nang should work with URENCO to analyze incentive for waste reduction. The following areas waste collection vehicles available in the market- are identified for action by the city government or place and then establish minimum fuel economy URENCO officials. requirements for any vehicles purchased. Da Nang Waste Combustion for Power Generation may wish to require that any purchases be subject Approximately 64 percent of Da Nang’s waste is to a life-cycle analysis that compares the upfront kitchen waste, which means it has a high mois- purchase cost, fuel purchases over the life of the ture content that is unsuitable for most mass-burn vehicle, and maintenance expenditures to deter- type facilities, even those with energy recovery mine which vehicles are most appropriate or meet in mind. Some 28 percent of the waste stream is any desired cost-effectiveness threshold conditions. composed of highly combustible materials, while Progressive Tariff Structure the remaining 8 percent is composed of inert, non- Da Nang’s current waste collection tariff structure combustible materials. Both of the latter catego- is volume based for business customers, but resi- ries include materials that should be prioritized dential customers pay a flat fee. In other sectors, for recycling. High-moisture-content material can such as water, fees are structured to discourage result in incomplete combustion, reducing the burn excess consumption; in the case of waste, resi- temperature and resulting power output. To the dential fees should be similarly structured to dis- extent that nonrecyclable waste materials can be courage excess waste generation. The Da Nang presorted into wet and dry streams, a more suitable People’s Committee should thus explore alter- mix of dry combustible materials may result. native rate structures when rates are next up for Landfill Gas Capture review in 2013. Should the city want to promote Da Nang has proposed a Clean Development source separation of different materials to facilitate Mechanism (CDM) project aimed at generating recycling, it could set rates to provide incentives electricity from methane captured at the landfill at for this practice. For example, the rate for clean Khanh Son. A successful landfill gas capture proj- organic waste could be very low (or even free), while rates for nonorganic, nonrecyclable materi- ect would remove 140,000 tons of CO2e per year from Da Nang’s GHG emissions profile, and if als could be much higher, encouraging households used to generate electricity, contribute to satisfying to reduce waste generation. Of course, in such the city’s electricity requirements. The initial analy- systems, the city must take steps to ensure that sis suggests the potential for 1 megawatt of power households do not illegally dump waste materials generation at the landfill given current methane to avoid payment. gas levels. The Da Nang People’s Committee could Water request information on anticipated gas availabil- In Da Nang, water losses from the system were ity levels over time from this facility. Most landfills approximately 25 percent in 2011, a decline from experience peak gas availability 5–10 years after 2007 when losses were 40 percent. Da Nang Water the facility is closed and capped; gas levels then Supply Company (DAWACo) indicated that old decline until the quantity of gas that can be recov- pipes are a primary cause of system losses and ered is too low to support power generation or the noted they are working to replace these pipes over quality of gas deteriorates and begins to degrade time. DAWACo has also installed (and would like the power generation equipment. to install more) variable speed drive pumps, which Truck Procurement Guidelines adjust the pressure in relation to demand on the URENCO hopes to upgrade its waste collection system. Pumps that consistently maintain high fleet in the next several years because most of its pressure when demand is low can result in leakage vehicles are 5–10 years old. No information was across the system. 114 | energizing green cities in southeast asia: three City Synthesis report

Active Leak Detection and Pressure In addition to developing a sludge beneficial Management System reuse program, several actions could positively Despite continuous improvements in the system, influence energy consumption levels across the DAWACo has reported 25 percent physical water DAWACo system: loss in the system, and the water that does even- Increasing Connections tually get to consumers requires energy-intensive Increasing the number of buildings connected to pumping. An active leak detection and pressure the DAWACo wastewater treatment system would management program could address both of these be important. Amending local policies and build- issues at once. Because the Da Nang water network ing codes to require any new development projects falls under the authority of the Metro Da Nang to connect to the system would reduce the amount Water District, technical interventions can only be of energy used per unit of wastewater treated. leveraged by the city government’s use of the plan- Increasing the volume of material in the system ning system, for example, making land available would provide important co-benefits by improv- for water reservoirs and distribution infrastruc- ing the biological oxygen demand concentrations ture to improve the network’s pressure and energy at the treatment facilities, helping them to operate performance. more efficiently and subsequently improving the DAWACo also mentioned that it would like to quality of water released to local waterways. install Supervisory Control and Data Acquisition technology throughout its system to improve its Demand-Side Measures real-time monitoring capability over the entire dis- It is further recommended that Da Nang require tribution network, but this is costly and would likely water-harvesting or low-flow devices to be used in not be pursued without outside assistance from an new construction projects. Cities are increasingly international development aid organization. incorporating demand-side measures into their Da Nang was the first city in Vietnam to have a building codes, aiming to reduce the amount of wastewater management strategy. Currently, fewer material entering the wastewater treatment system than 20 percent of all residences are connected to from new construction projects. It does not appear the DAWACo system. The Da Nang Department as if Da Nang has any requirements for the use of Construction established the policy that allows of low-flow toilets, showerheads, or other fixtures some buildings to have their own septic systems that reduce water flow, and thus, wastewater discharge levels. The cost impact of such measures is and requires others to connect to the citywide quite small, but they provide long-term cost savings wastewater treatment system. Connected house- for households on both their water and wastewa- holds pay for service according to a progressive ter bills. Systemwide benefits—particularly reduc- rate schedule, whereby rates increase as usage of ing water demand in the supply network—would wastewater treatment services increases. This sys- also occur. tem provides an incentive to households to reduce wastewater levels, but may discourage connection Power to the system. Therefore, a progressive water tar- Da Nang Power has been charged with the imple- iff may be more effective at reducing wastewater mentation of the central government’s Directive although the rates charged are still quite modest. 171 requiring a 10 percent savings in overall elec- From a more technical perspective, the current tricity use, with a 1 percent savings from major design of the wastewater treatment network does industrial users. Da Nang Power has reportedly not allow for the capture and combustion of meth- implemented several measures to meet the gov- ane gas generated during the anaerobic phase of ernment targets, including (i) demand-reduction processing. If new facilities are constructed or any programs for factories, (ii) end-use monitoring existing facilities are expanded, Da Nang may wish programs for the largest end users, (iii) the use of to encourage the inclusion of some type of electric compact fluorescent lighting, and (iv) imposition power production technology that combusts the of restrictions on when air conditioning units and methane gas generated onsite. building lighting systems can be used. In addition, Appendix 3: Da Nang Background | 115 a tariff structure that encourages energy use dur- polycrystalline photovoltaic cells are installed on ing off-peak hours has been established to reduce the fish market’s roof, the SUEEP team’s prelimi- peak demand, and efforts have been put into more nary calculations indicate that all of the facility’s effective metering of the manufacturing sector. energy needs could be met by the power gener- Although Da Nang Power already enjoys very low ated over the greatest part of the year, with the levels (4.2 percent) of transmission and distribu- exception of the monsoon months of September to tion losses, the company plans to ground distribu- November. It is unclear, however, whether the roof tion lines, which will reduce nontechnical losses to could support the weight of such a large installa- an absolute minimum, in addition to improving tion, and thus it is more likely that lighter (but less safety and reliability. efficient) thin film photovoltaics would be used. In Distribution and supply-side management are this case, a significant portion, but not all, of the outside the remit of this study, so the SUEEP team’s market’s power requirements could be satisfied. recommendations focus on the diversification of the city’s power supply, particularly through local Public Lighting deployment of renewables. Demand manage- Da Nang has relatively low electricity consumption ment is primarily tackled through the buildings per light pole in comparison with other cities in the sector, and therefore is not explored in detail in TRACE benchmark database, probably because this section. Da Nang Power and city leadership the city uses low-energy fixtures, and various dim- both highlighted the need for a master plan to ming regimes have been implemented throughout enhance the reliability of electricity supply as well the city. There is still room for improvement in the as a renewables master plan; this acknowledg- public lighting sector, including the mass roll out ment of the need for a renewables master plan is a of light-emitting diodes (LEDs) and development very important development. In many cases, local of procurement codes with more stringent energy officials do not have the clout to enact prorenew- efficiency requirements. It is also important to con- ables policies similar to those put into place at the sider the speed at which Da Nang is growing and national level, such as feed-in tariffs, but Da Nang its citizens’ quality of life is improving. Lighting government officials have a number of opportu- preferences could change in the future, putting nities for leveraging their authority, including (i) more demand on the system to provide higher lev- propagating buildings codes that include structural els of lighting in more areas. Da Nang can prepare requirements to enable renewables retrofits, such for this shift by continuing its excellent efficiency as requirements that buildings be constructed to programs and pushing them even further. physically support the weight of renewables instal- Da Nang Bridge and Road Management lations; (ii) imposing green building codes or stan- Company (under the Department of Transporta- dards that encourage or require on-site renewables tion) has already begun extensive measures to deployment; (iii) introducing a green building rat- reduce energy consumption in public lighting, ing system that rewards developers for incorporat- including installing LED traffic signals, replacing ing renewables into their developments; and (iv) embarking on pilot projects to demonstrate that many of the existing mercury street lights with renewables can be successful in practice. high pressure sodium luminaires, and replacing The new Da Nang Wholesale Fish Market decorative halides with compact fluorescents. The is an example of how the imposition of building agency is also piloting two lighting regimes to opti- codes can encourage the use of renewables. The mize street lighting and save energy. Forty of Da fish market is a potential host of an on-site pho- Nang’s main streets operate under Regime 1, in tovoltaic system to supply energy for ice making, which every third light is kept off from 6:30 pm to water treatment, and lighting. The building is 11:00 pm, and every third light is kept on (with the attractive for this purpose because of its large size other two off) from 11:00 pm to 5:00 am. Regime (approximately 7,000 m2) and unobstructed roof 2 is used for all other streets and all lights are on design. If the highest efficiency monocrystalline or during night hours. These measures have reduced 116 | energizing green cities in southeast asia: three City Synthesis report

the electricity power requirement for public light- goal of promoting green building around the coun- ing by 28 percent across the city, according to city try. Work has begun on LOTUS, a Vietnam-specific officials. green building rating system that drew inspira- The Da Nang Public Lighting Operations and tion from other building certification programs, Management Company’s goal is to reduce electric- including Leadership in Energy and Environmental ity power consumption by 40–50 percent for main Design in the United States, Building Research streets. The city must continue its existing audit and Establishment Environmental Assessment Method retrofit program for public lighting. The city might in the United Kingdom, and Green Star in like to reconsider the use of metal halides because Australia. Developed with voluntary contributions these bulbs have high maintenance requirements, from experts in and outside Vietnam, a first set of shorter life spans, and higher electricity demand guidelines for nonresidential facilities was released than high pressure sodium bulbs or LEDs. It is in late 2010. Six buildings have applied for certifi- noted that Da Nang is conducting a pilot test for cation thus far. There are nine categories in which the installation of LEDs on Tran Hung Dao Street points can be awarded for a project: energy, water, and in Son Tra district, which will enable city offi- materials use, ecology, waste and pollution, health cials to test their impact, technology, and aesthetics and well-being, adaptation and mitigation, com- before the final decision is made. munity, and management. Given the population and income growth antic- City Buildings ipated in Da Nang over the next several decades, it Energy consumption in Da Nang’s city buildings is is important that the Da Nang People’s Committee relatively low, most likely due to the limited funds begin work to address building-related energy con- available for energy expenditures. However, elec- sumption, both in city government buildings and tricity use in city buildings is on the rise. A num- in other buildings around the city. This is one of ber of efforts in the city buildings sector have been the few areas for which the city does not yet appear undertaken to improve energy performance, such to have a comprehensive strategy, or to have con- as lighting replacement programs and the imple- ducted significant research on different policy or mentation of air conditioning schedules. However, technology options. Taking action now can help replacing old air conditioning units and other the city lock in a lower energy use trajectory than inefficient appliances, and improving the design will otherwise occur. There are several opportuni- and construction of building envelopes, provide ties the city may wish to consider, discussed below. additional opportunities for energy performance Lead by Example improvement. It is recommended that existing The Da Nang People’s Committee is reportedly efforts be continued and a retrofit program be planning to build a tall office tower that would implemented through a city buildings energy effi- bring together into a single building the local gov- ciency task force. ernment departments currently dispersed across City Building Audit and Retrofit Program the city. By constructing a model green building To set a good example for other buildings in the that achieves LOTUS or other preeminent building city, local authorities should develop an audit and performance standards, the People’s Committee retrofit program for all the buildings the city owns. would send a powerful message to others of the Such programs can help reduce energy bills and the importance of this type of design and its viability carbon footprint of the city, and they offer a good in Da Nang’s economic climate and climatic zone. knowledge basis for upgrading and updating city Work on such a high-profile project could provide building codes. training opportunities for businesses and individu- The Da Nang city government could also ben- als in the city, helping to jumpstart the creation efit from the work of the Vietnam Green Building of a local green building marketplace. When the Council, which was launched in 2008 with the Vietnam Green Building Council completes the Appendix 3: Da Nang Background | 117

LOTUS guidelines, the People’s Committee should on the greening of that sector could have sizable consider pursuing LOTUS Existing Buildings and long-lasting benefits for the city. By partner- Operations and Maintenance certification for any ing with the hospitality sector on these issues, the government buildings that remain after completion city could even turn this initiative into a market- of the new office tower. ing virtue, eventually allowing the city to promote itself as having the greenest hotels and resorts in Voluntary or Mandatory Green Building Guidelines Southeast Asia. The Department of Construction encourages Sectoral strategies may require some tailoring of investors to install energy efficient equipment and the LOTUS system or other best practice guidance appliances when it issues construction licenses. A to address the city’s unique climate and waterfront more aggressive approach could be used in advanc- location. This tailoring could be done directly by ing energy efficiency in the buildings sector. The local government experts in Da Nang, in collabo- fact that the LOTUS system now exists means ration with the Vietnam Green Building Council. the Department of Construction (DOC), the local Alternatively, it could become a civil society initia- agency with primary responsibility for enforcing tive involving local university and business experts compliance with all building codes, has a new tool from around Da Nang, along with other technol- in its green building education arsenal. The guide- ogy, design, and engineering experts from Vietnam lines should prove very helpful in educating project or the Southeast Asia region. developers and building operators about the full Operational Efficiencies range of steps they can take to create a greener The city building energy efficiency task force building. However, DOC’s capacity to proffer its should be responsible for implementing and over- recommendations to enhance energy efficiency of seeing the appropriate energy efficiency initia- building projects is limited, which has resulted in tives in city buildings. The Da Nang Community an uneven distribution of green features across Da Relations Department and DOC are well-placed Nang. The city may need to adopt a more aggres- to take on responsibility for energy efficiency in sive tact, requiring compliance with LOTUS (or building design and refurbishment. The buildings other guidelines) as a condition of construction sector recommendations sheets in the TRACE pro- permit approval. The city could even consider vide further detail on implementation of individual imposing local building codes that are more strin- measures. gent than national codes. Computer Power Save Program Da Nang need not impose these conditions on Although several good measures have been initi- all buildings. In many cities, similar requirements ated in local government buildings, old computer are applied only to buildings exceeding a certain workstations abound. These old computers use size. The bigger buildings play an iconic role and high levels of energy compared with newer mod- also tend to use the greatest amounts of energy. els. Therefore, a computer power save program Targeting them can have an important effect in is deemed to be an effective recommendation for reducing local energy demand, improving local reducing energy consumption in city buildings. environmental quality, and creating new markets Da Nang city government has already under- for green building products and services. taken an impressive amount of work on energy The city might also consider imposing such matters, serving as a foundation for future efforts. requirements sectorally, such as on the hospitality This work has likely slowed the rate of energy sector. Because Da Nang hopes to expand the local demand growth; however, the anticipated popula- tourism industry dramatically, and because hotels tion changes in the next 10–20 years require that and resorts tend to use relatively more energy to much more action be taken. Utility stakeholders in provide numerous amenities and to ensure the the water, waste, and power sectors have done an comfort of their international clientele, focusing excellent job at identifying opportunities for energy 118 | energizing green cities in southeast asia: three City Synthesis report

efficiency improvements, in addition to exploring showcasing best practice strategies for the benefit ways to potentially capture energy from different of local businesses and households. Therefore, it renewable sources. These efforts clearly show the is important that Da Nang establish a citywide considerable talent the city can bring to bear on energy task force to improve coordination and future energy policy and planning initiatives. establish a streamlined approach to energy. In keeping with Da Nang’s current policy structure, Conclusion this task force should operate under the auspices In the future, energy governance should be pri- of the Department of Industry and Trade. The oritized because it will help strengthen the city’s citywide task force should not limit its focus to internal energy management practices as well government operations, nor should its member- as engage other key stakeholders who have not ship be restricted to government officials. Business played a significant role in the city’s energy plan- and real estate professionals, along with other ning efforts to date. Better governance practices members of industry, can provide valuable input include not just enhanced oversight and data and offer a fresh perspective on the energy chal- tracking, but also improved procurement prac- lenges and opportunities facing Da Nang. tices, and a willingness to “lead by example” by Appendix 4 Approach and Methodology

The Sustainable Urban Energy and Emissions In 2011, the World Bank developed an energy Planning (SUEEP) project team applied new tech- balance assessment technique that breaks down niques for the data collection and analysis that information by the type of fuel source, the sector were used to identify and inform priority energy consuming the energy, and the way energy is con- system interventions in each city. This report pres- sumed within that sector. Notably, the breakdown ents the findings of the project, which was struc- is limited to the sector level and all data and cal- tured in three phases: culations are contained within a single, practical worksheet. Data for the energy balance studies n four weeks of preliminary data gathering by a were compiled from published data, local electric local consultant, utility companies, and officials from different gov- n a two-week mission to each city involv- ernment departments in each city. ing international consultants from Happold In most cases, data were collected before and Consulting, and during the two-week mission. The energy bal- n a six-week follow-up period for final data gath- ance study contributes to the compilation of ering and report writing. background information for the Tool for Rapid A discussion of the methodological frame- Assessment of City Energy (TRACE), although the works applied during each mission and the result- TRACE model also requires specialized data that ing outputs follows. go beyond that collected in a traditional energy balance study. Energy Balance Study The energy balance study maps primary and sec- Greenhouse Gas (GHG) ondary energy supply and use in each city. Energy Emissions Inventory balance studies highlight the relative importance The GHG emissions inventory establishes the prin- of different fuel supplies through their contribu- cipal sources of GHG emissions and may identify tion to the city’s economy; demonstrate the effi- policy or program initiatives not highlighted by a ciency of different energy conversion technologies; purely energy-based analysis. The GHG emissions establish benchmarks that allow a city to assess inventory may result in, for example, a heightened the effectiveness of different policies; and poten- focus on renewable power or steps to reduce fugi- tially highlight the sectors to which energy effi- tive landfill gas emissions. This analysis provides ciency, security, and conservation efforts can be the basis for emissions information that may help targeted by clearly showing how energy is used in local government agencies or utilities obtain car- a city. Energy balance studies are further used as a bon finance funding for different renewable or check on the completeness of the available data, as energy efficiency projects. a high level check on data accuracy, and as a start- The GHG inventories were compiled using the ing point for construction of various indicators of Urban Greenhouse Gas Emissions Inventory Data energy consumption and energy efficiency. Collection Tool, developed by the World Bank in

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2011. The tool covers emissions from transporta- of more detailed, international standards would tion, solid waste management, water and wastewa- have required further data gathering and analysis, ter treatment, and stationary combustion (power and was not considered necessary to provide the generation, building energy usage, industry, and macro-level insights afforded by the methodologi- the like). (Urban forestry considerations may be cal frameworks used. included in the tool in the future.) The tool aims to provide a simple, user-friendly, and easily rep- Data Validity licable approach, and places significant emphasis Data used in the study were provided by local on providing descriptions of data sources, years, sources, either city government office records or implied boundaries, and quality of the data. other agencies such as utility companies. The accuracy, reliability, and completeness of the data were Analysis Using the TRACE examined, and queried where necessary, but were The TRACE is the project component that most not verified by the consultant team because of the directly links local energy use data with the identi- rapid nature of the study. Happold Consulting does fication of policy alternatives city authorities may not, therefore, assure or guarantee these aspects use to reduce energy use. Developed by Happold of the study, or acknowledge any liability arising Consulting for the World Bank’s ESMAP team in from their future reliance or use by others. 2010, the TRACE was specifically designed for application at the city government level, and was Mission Activities piloted in Quezon City, the Philippines, and in The major activities undertaken during the premis- Gaziantep, Turkey. sion and mission phases of the project included the The TRACE is a decision-support diagnostic following: that compares one city’s energy performance with n training of local consultants on the logic and that of other cities through a custom benchmark- techniques used in the TRACE; ing system. Benchmarking results are used to iden- n World Bank–initiated contact between the con- tify priority sectors to which a city should target its sultancy team and pilot city governments and energy efficiency efforts. Policy recommendations other key local utilities (water, electricity) to built into the TRACE are linked to each sector, introduce the project, establish high-level proj- triggering field interviews and further data gath- ect engagement and support for the release of ering by the TRACE project consultant to assess relevant data, and obtain agreement to follow which recommendations are most appropriate the proposed mission schedule; for the local city context. In some cases, the city n initial data collection by local consultants may have already implemented or begun work on through a literature review and telephone and these policy options, whereas in other cases local in-person contact with relevant agency and util- political, policy, or market circumstances make a ity staff; recommendation unviable. Ultimately, the TRACE n data review and data input into the TRACE by model is designed to produce tailored, actionable the consulting firm; recommendations that will guide or support local n meetings between the mission team and pilot policy efforts and ideally be of interest to develop- city government and utility officials; ment banks and other project funders. n final presentation on TRACE findings to pilot The energy balance and GHG emissions com- city government officials; ponents of the study were carried out using frame- n TRACE training for relevant pilot city govern- works created by the World Bank to quickly assess ment officials; and these two issues, with emphasis on city government n follow-up data collection and preparation of a services provision and citywide energy-consum- final report. ing or GHG-creating activities. The application References and Other Resources

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