The Impact of Prolonged Low Energy Prices on APEC’s Transition to a Low-Carbon Energy Mix

The Impact of Prolonged Low Energy Prices on APEC's Transition to a Low-Carbon Energy Mix

by Cecilia Tam and Muhamad Izham Abd. Shukor
December 12, 2016

This essay explores the drivers of the transition to a low-carbon energy system and assesses how prolonged low energy prices could affect this shift.



The energy choices made in the Asia-Pacific Economic Cooperation (APEC) will have global impacts on energy security and environmental sustainability. APEC governments have implemented and announced major changes to energy policy, which will shape the region’s energy future. Although most APEC economies now have set either firm or aspirational targets for energy efficiency and renewable energy, the stated goals are encouraging but still insufficient. The need to affordably meet the growing energy demand associated with population growth and rising incomes will put pressure on both energy security and environmental sustainability.

  • Energy efficiency and conservation efforts can help curb growing energy demand, but in an environment of low energy prices tougher regulation will be required to encourage consumers to make the right choices. While most APEC economies have introduced policies to support energy efficiency, these policies vary greatly in effectiveness and will need to be strengthened.
  • Renewables represent the fastest-growing energy source. However, if APEC is to achieve its goal of doubling the share of renewables between 2010 and 2030, governments will need to introduce additional incentives or implement policies to limit or discourage the use of fossil fuels. Achieving the longer-term climate ambitions agreed on at the 21st Conference of the Parties in Paris will require even higher shares of renewables use.
  • Technology development continues to play a major role in shaping the energy sector. Dramatically declining costs are making wind and solar photovoltaic (PV) energy increasingly competitive with fossil fuels in power generation, while more efficient end-use technologies are helping lower energy demand. Accelerating energy technology development and deployment is central to establishing more secure and environmentally sustainable energy systems.