An article by Anthony Rowley, Business Times.
THE International Energy Agency yesterday urged countries in South-east Asia to take “serious action” to improve energy efficiency as the region’s fast-growing energy use leads to a sharp rise in dependence on oil imports and a reduction in surplus natural gas and coal for export.
“South-east Asia, along with China and India, is shifting the centre of gravity of the global energy system to Asia,” IEA executive director Maria van der Hoeven said at the Bangkok launch of a World Energy Outlook special report on South-east Asia’s energy outlook.
The report projects the region’s energy demand to increase by more than 80 per cent in the period to 2035, equivalent to current demand in Japan. Currently, the region’s per-capita energy use is still very low, in part because 134 million people, or over one-fifth of the population, lack access to electricity.
Increasing reliance on oil imports will impose high costs on South-east Asian economies and leave them vulnerable to potential disruptions.
The IEA report projects that by 2035, the region’s oil imports will rise to over 5 million barrels per day, making it the world’s fourth-largest oil importer after China, India and the European Union.
South-east Asia’s annual spending on oil imports is seen rising to US$240 billion in 2035, equivalent to almost 4 per cent of its GDP. Import bills of Thailand and Indonesia are projected to be the highest in the region, tripling to nearly $70 billion each in 2035.
According to the report, South-east Asia will see a reduction in the surplus of natural gas and coal for export, as production is increasingly diverted to domestic markets.
Its net gas exports will be cut by more than three-quarters to 14 billion cubic metres in 2035. The region’s net coal exports also will decline after 2020 as regional demand surges and demand in the wider Asia-Pacific market slackens. Indonesia’s coal production will rise by almost 90 per cent as it remains the world’s top exporter of steam coal.
The IEA report highlights that the power sector is fundamental to the energy outlook for South-east Asia, and that within it, coal is emerging as the fuel of choice because of its relative abundance and affordability in the region.
Electricity generation is projected to increase by more than the current power output of India, with coal accounting for almost 60 per cent of the growth.
“The rising share of coal in power generation underscores the urgent need to deploy more efficient coal-fired power plants,” Ms Van der Hoeven said. Currently the average efficiency of these facilities is very low, at just 34 per cent, owing to the almost exclusive use of subcritical technologies.
Developing policies to attract investment is vital. Around $1.7 trillion of investment in energy-supply infrastructure is required in the period to 2035.
The report notes underdeveloped energy transport networks, the need for greater stability and consistency in the application of energy-related policies and subsidised energy prices as key challenges that must be overcome to mobilise this level of investment.
The IEA noted that fossil fuel subsidies in South-east Asia amounted to US$51 billion in 2012.
The report highlighted the gains possible in South-east Asia simply by adopting energy efficiency measures. They would cut projected energy demand by almost 15 per cent in 2035, an amount that exceeds Thailand’s current energy demand.
Net oil imports would fall by around 700 kb/d, comparable with Malaysia’s current production. And regional GDP would rise by about 2 per cent in 2035, as reduced spending on energy increases disposable income and stimulates economic activity.