East Asia’s Energy Outlook and Challenges
Hidetoshi NishimuraPresident, Economic Research Institute for ASEAN and East Asia
Outline
2
Current Energy Situation in East Asia
Triple Challenges in Securing Energy Future
Economics of Energy Policy Options
Implications for Japan – ASEAN Cooperation
3
Current Energy Situation in East Asia
Triple Challenges in Securing Energy Future
Economics of Energy Policy Options
Implications for Japan – ASEAN Cooperation
East Asia Today: Economic and Energy Landscape
4
GDP
(Billion
2005US$)
Share of
Industry In
GDP, %1
Share of
Services in
GDP, %1
Share of
Agriculture
in GDP, %1
Primary
Energy
Consumption
(Mtoe)
Energy
Consumption
per Capita
(toe/person)
Australia 818.3 28.5 69.0 2.5 135.8 6.1
Brunei Darussalam 10.1 71.7 27.7 0.6 3.4 8.3
Cambodia 9.3 23.5 39.8 36.7 5.3 0.4
China 4,194.9 46.6 43.4 10.0 2,727.7 2.0
India 1,326.2 27.2 54.9 17.9 749.5 0.6
Indonesia 402.4 47.1 38.2 14.7 227.5 0.9
Japan 4,622.0 26.2 72.7 1.2 461.5 3.6
Korea, Rep. 1,056.6 39.3 58.0 2.7 260.4 5.2
Lao PDR 4.3 34.8 35.7 29.5 2.4 0.4
Malaysia 187.8 40.4 47.8 11.8 64.3 2.2
Myanmar 21.5 40.1 37.5 39.8 14.1 0.3
New Zealand 122.2 24.1 69.3 6.6 18.2 4.1
Philippines 135.9 31.3 55.9 12.7 40.5 0.4
Singapore 178.2 26.7 73.3 0.0 29.8 5.7
Thailand 210.3 43.0 43.7 13.3 115.9 1.7
Vietnam 83.2 37.9 42.0 20.1 53.5 0.6
Source: ERIA, 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 2011 2035
Industry Transport Others N-Energy
0
1000
2000
3000
4000
5000
6000
1990 2011 2035
Coal Oil Natura Gas Electricity Heat Others
5
East Asia in 2035: Final Energy Demand
2.0 times(3.5% P.A.)
1.8 times(2.4% P.A.)
(MTOE)
Source: ERIA, 2014
Source: ERIA (2014); ADB (2013); IEA (2013), UN (2012)
ASEAN in 2035: Economy and Energy Landscape
7
Current Energy Situation in East Asia
Triple Challenges in Securing Energy Future
Economics of Energy Policy Options
Implications for Japan – ASEAN Cooperation
Challenge #1: Meeting the Human Developmental Needs
Australia
Cambodia
China, Peoples Republic
Japan
Lao PDR
Malyasia
Myanmar
Indonesia
New Zealand
Philippines
Singapore
India
Thailand
Viet Nam
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
Pro
po
rtio
n o
f p
op
ula
tio
n w
ith
a
cce
ss t
o e
lect
rici
ty (
%)
GDP US$ per capita
Challenge # 2: Achieving Energy Security
9
China India Brunei Indonesia Malaysia Singapore Philippines Thailand Viet Nam
Dependence on imported oil
74.75 86.60 0.00 60.50 44.70 100.00 100.00 72.50 72.80
Dependence on imported gas
72.47 31.40 0.00 0.00 0.00 100.00 91.50 100.00 1.30
Dependence on imported coal
21.42 32.40 NA 0.00 95.70 NA 73.90 82.03 0.00
Energy self-sufficiency
62.70 49.70 270.60 148.10 86.30 1.70 34.90 26.80 75.60
Dependency on Imported energy = Energy net import/energy consumptionEnergy self-sufficiency = Domestic production/total consumption
ERIA, 2012
Challenge # 3: Tackling climate Change and INDCs
© OECD/IEA 2014 10
Country Voluntary Pledges to cut carbon emissions
China Cut in carbon emissions/GDP by 40–45% below 2005 levels by 2020
India Cut in emission intensity by 20–25% below 2005 levels by 2020
Indonesia 26% below BAU projection for 2020
1,340
1,876
3,683
6,492
4,855
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
BAU APS
1990 2000 2011 2035
CO
2E
mis
sio
n (
Mt-
C)
-1,637 Mt-C, -25.2%
Carbon Abatement Option
Potential (%)
Energy Efficiency 57Renewables 20Biofuels 3Nuclear 10Carbon Capturing 10
11
Current Energy Situation in East Asia
Triple Challenges in Securing Energy Future
Economics of Energy Policy Options
Implications for Japan – ASEAN Cooperation
ERIA is working on Sustainable Energy Pathways
12
Energy Efficiency and Conservation • Energy Security Index and Saving potential • Smart Urban Traffic• Demand side management
Renewables and New Energy Sources • Standardization of biodiesel specification• Sustainable Geothermal Use• New Financing renewable energy
Sustainable Fossil Fuel Use• Clean Coal Technology • Natural Gas Market development• Special country studies
Regional Cooperation and Integration• Power grid integration and low carbon energy
systems • Oil stockpiling and operatialization of APSA• Nuclear safety management
Energy Outlook on East Asia
13
Potentials of Energy Efficiency Improvement in East Asia
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
TFEC TPES CO2
1990 2010 2035 BAU 2035 APS
18.5%
14.0%28.0%
}
}
}
(Mto
e, M
t-C
)
Estimated Energy Saving Potential in 2035 (Source: ERIA, 2014)
• Under Alternative Policy Scenario (APS) that include the voluntary energy saving targets, the region can reduce 1,581 Mtoe in 2035 or 28.0% of carbon emissions.
• Power sector has the highest potential for energy efficiency improvement followed by industry, residential & commercial and transport sectors.
• Additional US$ 12.7 trillion will be needed to achieve this potential.
Renewable Energy Uptake in ASEAN has Potentials and Barriers
100
200
300
400
2000 2010 2020 2030 2035
TWh
5%
10%
15%
20%
25% Solar PV
Wind
Geothermal
Bioenergy
Hydro
Share of total generation(right axis)
Source: IEA -ERIA, 2013
Estimated RE uptake in 2035
15
Clean Coal Technologies Offer Energy Security and Carbon Reduction Options
Operational Status of Coal Powered Plants
1.08 1.06 0.990.71 0.72 0.72
3.06 3.14 3.380.26 0.27 0.29
0.15 0.150.172.02 1.99 1.88
1.50 1.47 1.380.73 0.75 0.80
0
2
4
6
8
10
12
14
EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC CO2
US
Dce
nts/
kWh
1.08 1.06 0.990.71 0.72 0.72
2.55 2.62 2.810.26 0.27 0.29
0.15 0.15 0.172.01 1.98 1.86
0.73 0.75 0.801.50 1.47 1.39
0
2
4
6
8
10
12
14
EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC Co2 EPC O&M Fuel deSOxdeNOx
FC CO2
US
Dce
nts/
kWh
1.08 1.06 0.990.71 0.72 0.72
2.04 2.09 2.250.26 0.27 0.29
0.15 0.15 0.172.00 1.97 1.84
1.50 1.47 1.390.73 0.75 0.80
0
2
4
6
8
10
12
14
EPC O&M Fuelcost
deSOx deNOx
Financingcost
CO2 EPC O&M Fuelcost
deSOxdeNOx
Financingcost
CO2 EPC O&M Fuelcost
deSOx deNOx
Financecost
CO2
US
Dce
nts/
kWh
US
D 6
0/to
nU
SD
50/
ton
US
D 4
0/to
n
USC SC Subcritical
5.27 5.34 5.55
4.76 4.81 5.17
4.25 4.29 4.43
8.79 8.80 8.81
8.27 8.26 8.24
7.75 7.73 7.66
9.52 9.55 9.61
9.00 9.01 9.04
8.48 8.48 8.46
21 3
21 3
21 3
21 3
23 1
23 1
21 1
21 3
11 2
7.29
6.77
6.25
7.33
6.79
6.26
7.43
6.85
6.27
21 3
21 3
21 3
Natural Gas Supply Calls for Market Flexibility
16
Need to source 546 bcm of natural gas from outside in 2035.
A majority of the imports will be in the form of LNG.
How to secure the supply through sufficient infrastructure investment?
What “price discovery mechanism” could deliver proper price signals to incentivize investment and ensure affordable supply to this region?
0
200
400
600
800
1,000
1,200
1,400
1,600
2010 2015 2020 2025 2030 2035
Other ERIA
Australia
ASEAN
India
China
Demand
bcm
Source: ERIA
The Gap between Projected Demand vs. Supply from within the Region
546 bcm
ASEAN Power Grid Interconnection• Grid interconnection seems to provide enough
economic benefit, energy security and carbon reductions to rationalize large investment amount for interconnection.
• Challenge: Create a regionally coordinated investment mechanism that optimizes the future investment plan of power station and grid.
Mil. USD US¢/kWh Mil. USD US¢/kWh
THA-LAO 1,400 0.25 19,881 3.51 14.2
VNM-LAO-THA 1,950 0.29 22,610 3.36 11.6
LAO-THA-MYS-SGP 1,860 0.26 25,490 3.60 13.7
Route
Interconnection line
construction cost
Net benefit
(gross benefit - line cost) Benefit/Cost
ratio
Philippines
Indonesia
Singapore
BruneiMalaysia
Thailand
Myanmar
Vietnam
Lao PDR
Cambodia
Possible Power Infrastructure interconnections
Cooperation Framework for Oil Stockpiling
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Country
Specific and
Common
Challenges in
oil stockpiling
Potential
cooperative
items by
Partnering
Countries
Cooperation items should be designed to “fit” the needs of each ASEAN countries
United StatesJapan Korea
• Concept development for
emergency response
measures
• Organizational design
development
• Administration experience to
introduce stockpiling system
• Bilateral emergency response
cooperative agreement
• Ticket stockpiling system
• Expertise and experience of
“dynamic stockpiling”
• Utilization of Northeast Asian
Oil Hub
Developing
accurate and
timely statistics
Enhancing
regional
cooperation
(APSA)
Securing
finance
Expanding
stockpiling
capability and
volume
Developing oil
stockpiling plan
Conducting
emergency
exercise
Arranging
interim
measures
Cambodia ✅ ✅ ✅ ✅ ✅ ✅ ✅
Indonesia ✅ ✅ ✅ ✅ ✅
Lao ✅ ✅ ✅ ✅ ✅ ✅ ✅
Myanmar ✅ ✅ ✅ ✅ ✅ ✅
Philippines ✅ ✅ ✅ ✅ ✅ ✅ ✅
Thailamd ✅ ✅ ✅ ✅ ✅
Vietnam ✅ ✅ ✅ ✅ ✅ ✅
*Net exporters
Brunei
Malaysia
**Large storage capacity and inventory
Singapore N/A
N/A
N/A
Country specific challengesCommon challenge
ASEAN Petroleum Security Agreement (APSA)
19
Cooperation in Nuclear Safety - Guidelines
20
Membership
Language
Information and communication tool in emergency
Timing to inform
Maintenance of 24-hour contact system
What kind of information to be shared in usual situation
Information exchange by using data server or email
Frequency of training and drills
Resources
Revision and update of the “guideline”
Ad hoc groups and etc.
Sample Structure from the Nordic ManualKey Issues of a Regional Cooperative Framework
Estimated Investment Needs: Case of Myanmar
Off-grid Zone
Parameter Key Findings
Electricity Demand (Off-Grid)
By 2030, “127MW~926MW” of off-grid power is required where grid supply may not be extended
Cost to Developmini-grids
1.006bUSD~8.859 bUSD
Bottom-up Approach: Fieldwork, Zoning (Off-grid zone and Boarder zone), HRD
Border Zone
Case Cross-border IPPs (eg. Salween)
Stakeholder-meeting
With ERI (ChulalongkornUniversity,), risk perceptions among Thai investors are examined
Barrier “Public Acceptance” is one of the critical aspects.
“National Energy Management Committee” has already been formed under the Vice President. Through HRD activities toward the officers, we will conduct “scenario-making” and prepare policy recommendations for an “integrated longer-term energy strategy” of Myanmar.
Integrated Energy Strategy HRD/Capacity Building
Evolving Role of Energy Research Institutes Networks (ERIN)
Policy CommunityM. Education
M. Energy
Universities
Matc
hin
g f
un
ds
Incen
tives
Dis
incen
tives
IEA EAS & ASEAN
Summit
ERIA
Key Stakeholders
Private Sector
Communities
Policy Research
Institute Network
Co
re f
un
ds
ASEAN+6countries
ERIN
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Current Energy Situation in East Asia
Triple Challenges in Securing Energy Future
Economics of Energy Policy Options
Implications for Japan – ASEAN Cooperation
• Challenges of East Asia
– Wiser use of fossil fuel energy
• Oil stockpiling, natural gas market, clean coal technology
– Investment in regional energy infrastructure
• ASEAN Power Grid (APG), Tran ASEAN Grid Pipeline (TAGP), Petroleum fefinery, LNG plants, Efficient Power Generation Plants
– Deployment of energy efficiency technologies and renewable energy sources
• Challenges of Japan
– Best energy mix including nuclear power generation
– Reforms in FIT policy
– Matured gas market in Asia
– Diffusion of high quality energy efficient technologies and infrastructure
– There is significant potential between East Asia especially ASEAN and Japan in term of win-win energy cooperation.
Securing East Asia’s Energy Future
Thank You for Your Kind Attention!
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