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IEA Sees Risks And Opportunities For Southeast Asia

A new report from the International Energy Agency sees risks and opportunities for Southeast Asia energy growth.

The International Energy Agency (IEA) published the World Energy Outlook Special Report on Southeast Asia on Thursday, highlighting concerns over a continued shift to coal and an increasing dependence on oil and gas imports throughout the Southeast Asia region. The authors of the report point to rising demand, constrained domestic production, and energy security concerns as the leading factors driving the region towards greater dependence on coal and oil imports.

“As Southeast Asia flourishes, it is moving to the centre of the global energy stage,” IEA Executive Director Fatih Birol said. “Countries in the region now have much in common with IEA members. We must all work together to build more secure and sustainable energy supplies and markets, as platforms for promoting economic development.”

“The ten countries that make up the Association of Southeast Asian Nations (ASEAN) are exerting an increasingly important influence on world energy trends,” write the authors of the report, pointing to a 50% increase in energy demand across the region between 2000 and 2013. The authors of the report therefore have examined the regional situation, and hope to make suggestions for the growth of a renewable energy industry.

According to the IEA, Southeast Asia’s energy demand will grow by 80% between 2015 and 2040 to sit at just under 1,100 MToe, alongside a regional economy that is set to more than triple in size and a population that will rise by almost a quarter to 760 million.

Similarly, despite policies that are currently aiming to scale up the deployment of renewable energy throughout Southeast Asia, IEA predicts the region’s share of fossil fuels will increase to around 80% by 2040. Net oil imports are expected to more than double to 6.7 mb/d, a level equivalent to China’s current oil imports, with an import bill of $300 billion by 2040, up from today’s $120 billion. IEA also predicts that Southeast Asia will turn into a net gas importer of around 10 bcm by 2040, compared to a net exporter of 54 bcm in 2013.

Given all this, the IEA concludes with four key issues it believes will be vital to the region’s energy system: energy investment, power grid interconnection, energy access and fossil-fuel subsidies.

“The reliability and sustainability of Southeast Asia’s energy system depends on investment,” said IEA Director of Energy Markets and Security Keisuke Sadamori. “To secure its energy needs, the region requires $2.5 trillion of investment in energy-supply infrastructure in the period to 2040, but for this to materialise we need to see more progress with reforms to domestic energy markets and the establishment of improved policy frameworks.”

The report also notes that “greater integration of the region’s energy markets could help catalyse development of energy resources, facilitate more efficient use of the region’s resources and enhance energy security.” Further action will also be needed on top of the already impressive expansion of energy access, with 120 million people still without access to electricity, while almost 280 million lack clean cooking facilities.

 
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