As global leaders descend on Bangkok for the
World Economic Forum on East Asia, the focus will be squarely on "Shaping
the Region's Future through Connectivity".
With
Asean countries gearing up for the formation of an Economic Community in 2015,
an important part of this agenda will be driving greater energy integration.
The
Asean Plan of Action for Energy Cooperation (APAEC) 2010-15 covers the energy
component of the Economic Community Blueprint 2015. At its heart is creating a
solution for the energy "trilemma" _ delivering on energy security,
and economic growth and development, in an environmentally sustainable way.
This
will not be a straightforward task. By 2020 Asean will be the world's
eighth-largest economy and have the world's third-largest population, next only
to China and India. This will bring with it bumper energy demand, and create a
fundamental challenge in securing supplies. According to the Institute of
Energy Economics Japan, Asean's final energy consumption will grow at a 4.4%
average annual rate from 375 million tonnes of oil equivalent (MTOE) to 1,018
MTOE.
This
near tripling of demand will require huge investments to expand the region's
energy infrastructure _ everything from power generation, to pipelines and
grids. The International Energy Agency estimates this investment will need to
reach US$1.1 trillion by 2030.
This
expansion of energy supply infrastructure will not only come at an economic
cost, but an environmental one. If current trends continue by 2030 Asean's
share of global energy-related, carbon-dioxide emissions reaches 5%, up from
3.5% today. Without drastic reductions in global CO2 emissions, the earth's
temperature could rise by as much as six degrees Celsius by the end of the
century. While Copenhagen recognised the case for keeping global temperature
rises below 2 degrees, it failed to produce a binding agreement. This means
that solutions to tackling climate change will need to come at the regional
level, highlighting the importance for Asean countries to pursue a more
sustainable path.
By
tackling energy challenges at a regional level, as opposed to unilaterally, the
Asean countries will be able to draw on one another's strengths, in order to
overcome their own indigenous weaknesses. The planned components of the APAEC
will therefore play an important role in tackling the energy
"trilemma" and the challenges highlighted above.
The
Trans-Asean Gas Pipeline will boost prospects for gas exploration and
production, improving market access for otherwise stranded resources. By
linking suppliers and customers in long-term relationships it will reduce
political risks, contributing to a more consistent supply. In the oil sector,
it is assumed that moves to reduce legal and regulatory uncertainties and to
improve the tax environment will boost prospects for investment. For additional
sources, negotiating with international oil and gas suppliers from the Middle
East and elsewhere, on a regional basis, will also put in the region in a
position of strength.
The
formation of an Asean Power Grid will offer a variety of geographic
predisposition, and therefore a diverse area of high potential for renewable
sources _ while Laos and Myanmar can provide sustainable sources of hydro, the
Philippines, which has high levels of solar radiation, can provide renewable
fuels for the power generation sector. Combining regional demand curves in
electricity markets will help reduce volatility. This will facilitate peak
demand shaving, reducing requirements for base-load power generation, and therefore
enabling a more efficient and economic power generation sector. Equally,
nations with a large agricultural base, such as Thailand, can supply the region
with low-carbon, second-generation biofuels for the transportation sector.
The
pace of implementation will hinge on the willingness of individual nations to
reform and liberalise their energy sectors. This involves action on
cost-reflective fossil fuel pricing, and opening energy-supply industries to
greater market competition. A multi-country market will require harmonised
standards, common policies and pricing regulation. To facilitate this requires
collaborative partnerships to be built across the region. This applies to both
the public and private sectors, and between the two.
The
World Economic Forum, through its work with the Ministry of Energy, is helping
to build these multi-stakeholder partnerships, bringing together industry,
government and civil society to help shape a New Energy Architecture for the
Asean region. It is our hope that by building a united Asean, we can create a
more secure, affordable and sustainable Asean energy supply.
Busba
Wongnapapisan
Business & Investment Opportunities
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