Energy Efficiency in the ACI (ASEAN-China-India) Countries: Is There Room for Regional Policy Coordination?

Energy efficiency and conservation are the major tools in the reduction of environmental impact and ecological footprints of the energy sector, particularly with regard to climate change. Energy efficiency also contributes to reducing external dependence and vulnerabilities of nations to shocks in the energy markets. At the global level, for arresting the global environmental degradation and costs of climate change, energy efficiency is of utmost importance for the emerging economies of Asia since the centre of gravity of the global economy has been continually tilting towards the Northern Indian Ocean close to the geographic proximity of ASEAN-China-India known as ACI nations. With a combined population of 3.15 billion and intraregional annual trade amounting to $1 trillion, the ACI nations are and will remain a major user of energy. These (ACI) nations will be an important piece in the jigsaw puzzle of the sustainability of the global economy, as these nations can pose a serious risk for creating and exaggerating the vulnerabilities of the global economy to climate shocks. In this paper we develop a quantitative technique, for the very first time to the best of our understanding, to examine the impacts of macroeconomic factors on energy efficiency and apply the method to understand the determinants of energy efficiency in the regional economy of the ACI nations. The cross-country dataset is constructed on the basis of secondary data on energy uses and several macroeconomic variables for China, India and nine (9) ASEAN countries over the period of 19892010. From the empirical findings we highlight the most appropriate policies for improving energy efficiency in the region that will be the home of one half of the global population by 2030. Although not all public policies seem effective, yet we are able to home in on a specific mix of policies and their coordination for promoting energy efficiency for and sustainability of the ACI nations.