The ten members of the Association of Southeast Asian Nations (ASEAN) are – along with China and India – shifting the centre of gravity of the global energy system to Asia
Since 1990, the region’s energy demand has expanded two-and-a-half times.
The fundamentals suggest that considerable further growth in demand can be expected, especially considering that per-capita energy use of its 600million inhabitants is very low . . . just half the global average.
According to the International Energy Agency, Southeast Asia’s energy demand will likely leap over 80% between today and 2035, a rise equivalent to current demand in Japan.
This would fuel a near tripling of the region’s economy and a population that is predicted to expand almost one-quarter.
According to IEA scenario research, oil demand would rise from 4.4million barrels per day today to 6.8million bpd in 2035, which is almost 20% of projected world growth.
Coal demand will likely triple over 2011-2035, accounting for nearly 30% of global growth and natural gas demand is predicted to climb 80%.
Indeed both plentiful and relatively cheap coal will emerge as the fuel of choice, despite mounting concern regarding its carbon footprint. The IEA predicts that power generation between 2011 and 2035 will rise more than the current power output of India.
The shift away from oil and gas is already under way; some three-quarters of the thermal capacity now under construction is coal-fired, albeit more efficient and less polluting than existing plant.
Driving the increased dependency on coal is the already high cost of oil imports with Southeast Asia predicted to become the world’s fourth-largest oil importer, behind China, India and the European Union.
There will likely also be a reduced surplus of natural gas and coal for export as production is increasingly diverted to domestic markets.
Subsidising the development of green energy in Europe is much criticised, however, it pales when compared to the fossil-fuel subsidies that are applied in Southeast Asia.
Fossil-fuel subsidies amounted to $51billion in the region last year and the IEA warns that, despite recent reform efforts, notably in Indonesia, Malaysia and Thailand, subsidies remain a significant factor distorting energy markets.
“They encourage wasteful energy use, burden government budgets, and deter investment in energy infrastructure and efficient technologies,” says the agency.
Meanwhile, more than 130million people in Southeast Asia, or over one-fifth of the population, still lack access to electricity.
And almost half of the region’s population still relies on traditional use of biomass for cooking, which poses a serious risk of premature deaths from indoor air pollution.
The IEA says that developing policies to attract investment will be vital for enhancing energy security, affordability and sustainability for Southeast Asia.
Around $1.7trillion of cumulative investment in energy-supply infrastructure to 2035 will be needed with almost 60% of the total in the power sector.
But the agency warns: “Mobilising this will be challenging unless existing barriers are overcome: subsidised energy prices; under-developed energy transport networks; and the need for greater stability and consistency in the application of energy-related policies.”
Current ASEAN members are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
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