The economy of the Lao PDR is growing at more than 7% yearly and is expected to grow more rapidly over the next decade. The final energy consumption is increasing even faster, driven by the pace of industrialization, and urbanization. The country has extensive amount of hydropower and coal resources, however it highly depends on diesel and gasoline imports for the transportations. Therefore, the energy efficiency and conservation in this sector is a significant importance. The National Energy Efficiency Policy 2016 has defined a target to reduce TFEC by 10% in 2030 and the energy consumption level by 1% for each year on average Business as Usual (BAU) scenario. The Ministry of Energy and Mines targets to raise the electrification rate to 95% until 2020 through the strengthening of grid and hydropower.
Lao PDR is at an early stage of development and implementation of an EE&C strategy. So far, the country has managed to issue EE guidelines for the residential, building, and industry sectors. The National Socio-Economic Development Plan (2006-2010) published in October 2006 stated the policy to promote clean and highly energy efficient technologies and industrial development in industry and construction sectors among others. The Demand-Side Management and Energy Efficiency Program (DSM/EE) in Lao PDR was first implemented in 2007. The program focuses on public sector consumption to develop an energy use database, conduct energy audits in selected public buildings, implement energy efficiency measures in pilot sites (but eventually was not continued anymore since there was a reorganization and EE&C review was removed to other department), facilitate appliances energy standards and labelling program, and launch public awareness campaign on energy efficiency by Institute of Renewable Energy Promotion (IREP), (formerly Department of Energy Management. The second phase of the program, conducted in 2015, included the residential and commercial sectors within the activities, in addition to the public sector.
There are no dedicated EE&C financing schemes in Lao PDR as of now. However, the Investment Law (2004) includes some incentives that are applicable for EE&C investments including corporate tax holidays of up to 7 years, exemption from import duties and taxes on raw materials and capital equipment, exemption from export duty, 10% personal income tax for expatriate employees and additional tax holidays and reduced tax rates for large projects, with special concessions to be negotiated. According to data obtained from Lao PDR delegation presentation in the annual meeting of Renewable Energy Sub-Sector Network (RE-SSN) Meeting of the ASEAN Energy Cooperation (2017), official actions plan for EE&C is as following:
In addition, as reported by ERIA on sectorial analysis of the energy consumption in Cambodia that more than half of savings (about 680 ktoe) will be biomass based, about 330 ktoe are electricity savings generated from heavy fuel oil, and 180 ktoe are diesel savings.