How Can Asia Attain Energy Security Without Affecting Climate Change Due to Rapid Population and Economic Growth?

Why is this problem unsolvable?

In the era when Asia’s economic will grow up faster in the next decade, the energy demand undoubtedly will also increase to cover it. But, until now, many Asian countries still don’t have good established system to attain their energy security without gives harmful effect to the environment, due to the inbalance of economic growth and technology increase.

Problem identification

• The future of energy in Asia, it is predicted, will be very critical in the coming decades. This is because Asia’s energy demand will grow more rapidly than other regions, reflecting its high economic growth. Total primary energy demand in Asia will reach 9.0 Btoe in 2035, a 2.1-fold increase from 2008. Specifically, oil demand in Asia will increase from 1.4 Btoe in 2008 to 2.6 Btoe in 2035, showing a 1.9-fold increase from 2008. Gas demand in Asia will increase from 0.7 Btoe in 2008 to 1.9 Btoe in 2035, showing a 2.8-fold increase from 2008. Coal demand in Asia will increase from 2.0 Btoe in 2008 to 3.6 Btoe in 2035, exhibiting a price increase of 1.8 times from 2008. The world’s total primary energy demand will reach 17.8 billion tons of oil equivalent in 2035, a 1.6-fold increase from 2008. Totally, its share in the world primary energy demand will be 50% in 2035. It means, Asia will represent 72% of incremental growth of global energy demand toward 2035. At this rate, coal and oil will continue to maintain the dominant share in Asian energy demand toward 2035. But in fact, the outlook of energy supply in Asia is showing a great decline.

Figure 1. Outlook of Energy Supply in Some Countries
Source : Summary of Asian Energy Outlook (2011)

Due to this energy scarcity, it will also affect to the price of energy. From the outlook, we can see that the price will raise so much, so it will be a serious problem for Asia.

Figure 2. Outlook of Future Energy Prices
Source : Summary of Asian Energy outlook (2011)

• In some regional members, the options for energy efficiency improvement have not been well exploited, due to a variety of reasons. Some members are faced with financial constraints in attempting to apply advanced technologies, while other members provide energy at low prices due to resource availability or social considerations—and thus the public does not recognize the need for energy efficiency improvement.

• Beside the energy scarcity, the environmental problems will also emerge. At that rate, the world’s energy-related CO2 emission will reach 45 Gt in 2035, a 1.5-fold increase from 2008, and the share of Asia in the world’s CO2 emission will rise from 45% in 2008 to 56% in 2035. So it will be more than 75% of the CO2 emission increase from 2008 to 2035 will take place in Asia.

Problem Analysis

• The increase in energy demand in Asia emerges from the rapid economic growth in Asia. This growth is driven in part by population growth which will be high in the coming decades.

Figure 3. The Energy Demand in Some Countries
Source : Summary of Asian Energy Outlook (2011)

• The dependency of most of Asian countries to oil is very high. This is because the development of renewable energy in Asia is still slow. Asian countries still depend on their natural resources, while the eagerness to implement renewable energy is still low.

Regarding renewable energy implementation, here we can say that one of the problem root of this unsolvable problem is the slow progress in applying advanced energy technology, especially renewable energy technology and energy-efficient technology in Asia region. Energy efficiency is one of the most important things to maintain the energy security. One major barrier is low domestic energy prices. In some developing nations, prices for electricity, natural gas, gasoline, liquefied petroleum gas, and other energy products are maintained at low levels to ensure supply for low-income consumers. As a result, there is little incentive to improve energy advanced technology. Due to this financial constraint, developing members in Asia have had rather slow progress in applying advanced energy-efficient technologies. The knowledge transfer problem is also another other cause of this.

• Despite diversity, there is a general trend that the energy intensity inversely correlates with GDP per capita. Energy intensity of highly developed members tends to be lower than that of developing members. This implies that energy requirements to produce the same amount of GDP are lower for the developed members than the developing ones. In the developed members, the share of nonenergy-intensive sectors such as the commercial and service sectors may account for a larger part of GDP. Also, in these members, more money would be put into the development of advanced energy efficiency technologies on both the supply and demand sides. People in these members have a wider prevalence of energy efficiency appliances.

• Related to the statement above, GDP of some developing members is undervalued due to the weak national currencies of developing members relative to the US dollar. As a result, the calculated energy requirements per unit of GDP in some developing members are higher than those of developed members.

Case Study: China

With the PRC’s rapidly growing energy consumption in recent years, energy has become an important strategic issue concerning the PRC’s economic growth, social stability, and national security. Energy conservation and energy efficiency improvement are taken as effective measures to deal with the energy security issue as well as the worsening environmental problems. In the 11th Five-Year Plan started in 2006, sustainable development was made a high priority by the PRC government. In the 11th Five-Year Plan, the government has set the target of reducing energy consumption per unit of GDP by 20% from the 2005 level through 2010. However, according to a recent government announcement, the energy intensity had dropped by only 10.1% at the end of 2008 (1.79% in 2006, 4.04% in 2007, and 4.59% in 2008), which is less the expected improvement. The failure could be explained by the slow industrial restructuring and overheating growth of heavy industry as well as the ineffective implementation of energy conservation policies in some of the local governments.

Case Study: Southeast Asian Nations

The average energy intensity of ASEAN dropped by only 6.2% from 1990 to 2005. Over this period, the energy intensity of Southeast Asia stood at between 0.6 and 0.7, higher than the Asian Development Bank (ADB) average value of 0.3–0.4. The energy intensity of this sub-region is expected to be reduced to 0.4 by 2030. Due to low domestic energy prices, the improvement of energy efficiency has not achieved much progress in the Southeast Asian nations. However, faced with expanding domestic energy demand coupled with increasing international energy prices, ensuring energy security poses challenges to the members in Southeast Asia. In this regard, improving energy efficiency has recently become one of the primary issues for both the government and the private energy companies.

Figure 4. Energy Strategy in ASEAN Countries
Source : Energy Outlook of Asia & The Pacific (2009)

Reference

[1] Matassan, Zainal. A (2007) . ‘The ASEAN Energy Outlook with A Focus on Oil’ . Bangkok, Thailand : ASEAN Council on Petroleum

[2] The Institute of Energy Economics, Japan (2009) . ‘Energy Outlook for Asia and the Pacific’ . Mandaluyong City, Philippines: Asian Development Bank