East Asia’s Energy Outlook · Clean Coal Technologies Offer Energy Security and Carbon Reduction...

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





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





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





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

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

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

18

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

23





• 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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East Asia’s Energy Outlook · Clean Coal Technologies Offer Energy Security and Carbon Reduction...

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