CHINA / National

China, India 'could slash energy use'
Updated: 2006-05-30 09:21

China, India and Brazil could reduce energy use by a quarter with simple efficiency schemes but banks have been sluggish to lend to such projects, an international study suggests.

The three-nation report, led by the World Bank and the UN Environment Program, said many banks had overlooked chances to boost their profits by lending to help businesses cut energy waste while oil prices hover at around $US70 a barrel.

"Cutting energy waste is the cheapest, easiest, fastest way to solve many energy problems, improve the environment and enhance both energy security and economic development," said Robert Taylor, a World Bank energy specialist who led the study.

Cost-effective retrofits in buildings and factories could reduce energy use by at least 25 per cent in China, India and Brazil, it said of the four-year study. The conclusions were likely also to be true of other developing nations.

Cutting energy waste would save hundreds of millions of dollars, cut noxious air pollution and reduce emissions of greenhouse gases released by burning fossil fuels such as oil, coal and natural gas.

China, India and Brazil are home to almost 2.6 billion people, about 40 per cent of the world's population. Their energy use and emissions from fossil fuels, widely blamed for global warming, are set to double by 2030.

Many scientists say that rising temperatures could wreak havoc with the climate, bringing more heatwaves, floods, desertification and a gradual rise in world sea levels.

Measures to offset waste include retrofits for buildings and factories, such as higher efficiency lighting or air conditioning systems, better boilers or waste heat recovery systems.

"The key source of financing is the local banking sector," said Jeremy Levin, one of the authors from the World Bank, adding that banks have yet to realise the potential for lending to unglamorous-sounding energy efficiency schemes.

"Energy efficiency may not have the same sizzle as alternative solutions such as renewable energy," he told Reuters. Still, cutting waste would be the most important path to improving energy efficiency until about 2030.

Among successes, a unit of India's Pragati Paper invested $US91,000 ($A120,000) in energy efficiency for a pulp plant, giving estimated annual savings of $US139,000 ($A184,000).

"The payback period was less than one year," Levin said.

In India, five major banks were now lending to help stop energy waste. Projects in China sometimes faced hurdles because of the state grip on the banking sector while in Brazil, high interest rates had discouraged lending.

Apart from curbing energy waste "this is about getting the banks to realise that this is a profitable business area that they have overlooked for too long," said Mark Radka, head of UNEP's Paris-based energy branch.

Greater energy efficiency will improve businesses' profits and so make them more solvent clients for the banks.