MECON

Effective energy efficiency policy implementation targeting “new Modern Energy CONsumers” in the Greater Mekong Sub-region

MECON was a two year research project, which ran from 2013 to 2015. The MECON project investigated the potential for increased energy efficiency amongst ‘new Modern Energy CONsumers’ (MECON) households. These were defined as households that were connected to the electricity grid, and which have a daily income of US$ 2-5. A continuous rise in average incomes and an increasing middle class in Asia have elevated the importance of energy efficiency in the residential sector. The emerging middle class is a critical factor in economic and social development, and also leads to an increase in sales of household appliances, as well as domestic energy consumption.

Why MECON? There are two main reasons why we should focus on the new modern energy consumers. First of all, they are expected to have more income level, and thus consume more energy, in the near and medium term future. Energy projections from many international agencies show that household energy use will dramatically increase in developing countries; by 2050 it will be responsible for 25% of total final energy consumption.Therefore, the project aims to be proactive by studying this target group and designing policies to encourage their uses of EE products and raise their awareness before they start consuming more energy.

The other reason is the path dependence of buying household appliances. Typically, the most energy consuming appliances in household are, for example, air-conditioner, refrigerator and instant water heater. Not only these items have long lifetimes, but also the ones with higher EE usually have higher initial costs. Therefore, it is more likely that a low income household would buy the non-EE appliances, and will continue using them for a long time until they can afford a new one, even though they want to be more energy efficient. Therefore, some sorts of financial scheme or policy should be implemented to help them with this.

The results of the MECON project can be used by policy makers in order to develop locally appropriate policy instruments targeted at increased investment in energy efficiency measures. Since policy recommendations are addressing low income households, a reduction in energy consumption of this part of the population is expected. But, more importantly, the expectation is that these low income households will soon transition to become middle income households, firstly in countries such as Thailand and Vietnam and later in the other GMS countries. By targeting these low income households with information about energy efficiency and possibly financial incentives, the expectation is that increasing energy demand in the GMS can be curbed in the long term.

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