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50 years of ASEAN: Meeting the energy challenges
ASEAN marks its 50th anniversary this year
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SEAN marks its 50th anniversary this year. The grouping, with a population of about 630 million people and a combined gross domestic product (GDP) of US$2.4 trillion, is one of the fastest-growing regions in the world.
Its economy, the third-largest in Asia and sixth-largest in the world in 2015, is projected to ascend to fourth position by 2040. With an average annual GDP growth rate of 5.3 percent over the last eight years, ASEAN has consistently outperformed global growth. In time for its golden anniversary, ASEAN has evolved into a vibrant economic community and global trade hub.
ASEAN’s fast-expanding economies and growing populations mean rising consumption of energy resources, especially fossil fuels. Like many other regions, ASEAN has been struggling with what is known as the energy
trilemma.
The energy trilemma — a term introduced by the World Energy Council — sums up the difficulty in finding secure energy supplies and meeting rising energy demand without prices becoming unaffordable, all the while reducing greenhouse gas emissions.
This trilemma has been addressed in ASEAN’s current energy blue print, the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025, a document produced every 5 years as an energy policy guideline for the region.
APAEC Phase I: 2016-2020 focuses on enhancing energy connectivity and market integration in ASEAN to achieve energy security, accessibility, affordability and sustainability for all.
Indeed, energy is one of the key elements in the realization of the ASEAN Economic Community (AEC), which calls for a well-connected ASEAN to drive an integrated, competitive and resilient region.
Established in late 2015, the AEC offers opportunities as well as challenges to meet primary energy demand that has grown at an average of 3.6 percent annually in the period of 2007-2015 and is projected to grow at about 3.9 percent over the 2016-2025 period, according to the recent AEC report 5th ASEAN Energy Outlook (AEO5).
The AEO5 projects the energy landscape along with its challenges until 2040. The publication was launched during the 35th ASEAN Ministers on Energy Meeting (AMEM) in Manila by the Philippine Secretary of Energy, Alfonso G. Cusi.
The findings of AEO5 highlight the need for the region to focus on energy security, as energy demand is expected to grow 2.3 times over the long-term projection to 2040, in the business-as-usual scenario. ASEAN’s energy demand continues to surpass global growth, driven mainly by economic development.
While sustainability concerns call for cleaner energy sources, the region is prioritizing the use of affordable and locally available resources at present.
This has led the region to continue to rely heavily on fossil fuels, with coal outstripping natural gas as the main fossil fuel to meet electricity demand starting in 2020.
Oil continues to be the main source of fuel for the transportation sector, accounting for about 45 percent of total final energy consumption during the AEO5 projection period (2015-2040).
The aim for clean energy has to be weighed against the increased use of fossil fuels to sustain economic growth.
This challenge is addressed in AEO5 by outlining the feasibility of substantial energy savings through significant energy efficiency (EE) and renewable energy (RE) injection, as demonstrated in the advanced scenario, which assumes greater ambition regarding EE and RE.
Renewables could replace fossil fuels to dominate in the power sector by 2035, with hydro and solar power as the biggest sources. Solar PV and wind, due to significant cost reductions, are projected to experience the highest growth among RE sources.
The ASEAN region is blessed with huge RE potential; thus, the role of RE will become more important in a diversified energy mix. Indonesia and the Philippines have tremendous geothermal potential, while lots of potential also exists in Indonesia, Malaysia and Thailand with biomass as well as in Cambodia, Lao PDR, Myanmar and Vietnam with hydropower.
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ASEAN has been struggling with what is known as the energy trilemma.
Most importantly, the potential of solar power is huge throughout the region. Several ASEAN member states, such as Indonesia, the Philippines, Thailand and Vietnam, have identified significant wind power potential and have begun its deployment.
It is important for ASEAN to address its energy challenges as well as to achieve its targeted 23 percent RE share in the primary energy mix by 2025 and to reduce energy intensity (EI) by 20 percent by 2020. The AEO5 also contains recommendations for ASEAN to address these challenges.
First, ASEAN needs to enhance synergy between RE and EE targets. Improving RE and reducing EI will lead to lower requirements for power capacity and generation. AEO5’s findings show that ASEAN is well on track to reach its EI target, but stronger efforts are required to achieve the RE target. ASEAN should consider tightening the EI target component and thereby help to reach the RE target.
Second, ASEAN needs to implement stronger policies on both RE and EE. The EE policies shall include massive public transportation, a harmonisation of labelling and minimum energy performance standards for EE. Regarding RE, the region needs to impose carbon pricing, consider electricity market reforms, rationalise electricity tariff subsidies and RE auctions.
Third, ASEAN should focus on deploying RE in the end-use sector, such as modern biomass, biogas, biofuels, as well as solar thermal applications.
The region needs to continue to strengthen and improve the availability and reliability of data as it is key for
policy and planning development. Improving data availability in ASEAN member states should be a continuous effort for long-term policy formulation.
During the 35th ASEAN Ministers on Energy Meeting last September, the member states expressed their commitment to monitoring improvements in technology while capitalizing on the global trend of rapidly decreasing costs of variable RE sources.
The governments also acknowledged that robust policies and investment were still very much needed to transform the energy landscape in ASEAN.
The ASEAN community can look back at its achievements of the past 50 years with pride, but it is equally important that we look forward with determination and commitment to walking the path toward greater regional integration and the realization of the AEC.
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The writer is the manager of the ASEAN-German Energy Programme at the ASEAN Center for Energy (ACE), an intergovernmental organization within the ASEAN structure that represents the 10 ASEAN member states’ interests in the energy sector.
