Falobi et al. 40 th IAEE International Conference Marina Bay Sands, Singapore. June 18 21, 2017

Transcription

1 ROLE OF RENEWABLES IN THE FUTURE ENERGY MIX POTENTIALS OF THE SOUTHEAST ASIAN NATIONS (ASEAN-10) Presented to the 40th IAEE International Conference Marina Bay Sands Convention Center, Singapore June 18 21, 2017 Emmanuel O. Falobi, CPEEL, University of Ibadan. Nigeria. Prof. Adeola F. Adenikinju, CPEEL, University of Ibadan. Nigeria. Dr. Olugbenga A. Falode, Dept. of Petroleum Engineering. Unibadan. Nigeria. By Falobi et al. 40 th IAEE International Conference Marina Bay Sands, Singapore. June 18 21, 2017

2 Presentation Outline 2 Overview Methodology Results and Discussions Conclusions

3 Presentation Outline 3 Overview Methodology Results and Discussions Conclusions

4 Economic Outlook for the Emerging Asia (i.e. ASEAN-10, China & India) 4 Growth rates and trends vary across the region...with Infrastructure contributing to growth... Growth prospects expected to remain robust over the medium term despite global economic uncertainty. Real GDP in Emerging Asia keeps dropping step-wise from 6.7% (2014) 6.4% (2017), & projected to remain steady at 6.2% per year over period. Economic Activity in ASEAN-10 countries is growing moderately with average growth of 4.6% (2014) 4.9% (2017) & projected at 5.1% per year over period. China s economy gradually slows down; whilst Indian s growth remains strong, exceeding 7% per year In ASEAN-5 countries, Philippines & Viet Nam expected to lead whilst Indonesia & Thailand should witness growth Decline growth expected in Malaysia in the near term In CLM, expected continued high rates of growth with >8% in Myanmar Country (average) (average) ASEAN-5 countries Indonesia Malaysia Philippines Thailand Viet Nam Brunei Darussalam and Singapore Brunei Darussalam Singapore CLM Cambodia Lao PDR Myanmar Two large Economies in the Region China India Average of ASEAN-10 countries Average of Emerging Asia Source: IRENA ACE, 2016

5 Energy Outlook for ASEAN-10, China and India Southeast Asia (Asia Pacific) is witnessing rapid economic growth... Share of global demand growth stands at 65% - the largest in the world Global Energy Demand: share projected to rise to 47% by 2035 (BP, 2016) Net Imports: Projected to increase by 80% (BP, 2016) Energy Consumption: Rises by 54%., share of global energy consumption will be 47% by 2035 (BP, 2016) Energy Production: Grows by 46%., share of global energy production will be 35% by 2035 (BP, 2016) Population 5% CAGR p. a. It is expected to hit over 715 million by 2025 from about 615 m in 2014 (IRENA, 2016) Growth to fuel a 4% CAGR in energy demand to raise region s energy share to over 7.5% of world s total. GDP Growth: % p. a. 5 GDP per capita: $2,250 with high disparity within the region Coal & Lignite Reserves: 23bn tonnes (over 4.1% of world s coal reserves & 3.4% of World s Natural Gas reserves) Electricity Consumption: 1477KWh/cap ~ half of world s average) Sources: BP Energy Outlook (2016), ASEAN Center for Energy/IRENA (2016), Enerdata, World Bank Source: Area: 4,480,106km 2 Energy Intensity: 0.435koe/USD05 (~ half of world s average)

6 1 ASEAN Key Macroeconomic Figures (2014)

7 Population and GDP Growth in ASEAN Member States ( ) GDP growth at ~5% CAGR implies 4% annual growth in energy demand amounting to a rise of 50% over 2014 figures. 1 ASEAN in the Global Economies (2015)

8 1 Energy Consumption & CO 2 Emissions in the ASEAN Consequences of rapid economic growth using fossil fuels will result in environmental pollution Rapid economic growth and rising energy demands will lead to high GDP growth (~70% increase), high consumption & fast growth in CO 2 emissions in most States IRENA projects an estimated 60% rise in CO 2 emissions by 2025 under the Reference Case (one of the fastest rates in the world!) CO 2 will be restrained to 47% with additional RE potentials to meet the RE Target Air pollution associated with increase use of fossil fuel, health & environmental costs could rise to an average of US$225 billion per year (IRENA ACE, 2016) ASEAN region produces about 2.2 Gt/yr energy-related CO 2 i.e. ~5% of all global emissions (IRENA ACE, 2016) Energy efficiency can help to mitigate CO 2 emissions in ASEAN member States Rising imports of oil & gas will definitely contribute largely to CO 2 & GHG emissions in this region (IRENA ACE, 2016)

9 9 ASEAN S 23% Aspirational Renewable Energy Target by fall-out of the ASEAN Plan of Action for Energy Cooperation at AMEM meeting Myanmar (October 2015) Meeting growing energy demand in a sustainable fashion... Sets 23% share of its total primary energy supply (TPES) to be supplied from Renewable Energy (RE) sources by 2025 ASEAN Center for Energy Outlook (2015) Base RE share of 9.4% in 2014 Projects 10% on Business As Usual (BAU) scenario by 2025 Projects 15.4% on Advanced Policy Scenario (APS) IRENA s Remap analysis Reference case: APS (15.4%) + Country updates (1.5%) 16.9% ~ 17% ~ 6% point short of the 23.2% target in 2025! REmap Option focuses mainly on modern bioenergy, Solar PV, Solar Thermal and Wind Source: IRENA ACE, 2016 REmap Options to close the 6% point Gap RE share needs to increase 2½ fold by % Solar PV 20% Bio-Power (including biogas) 12% Wind

10 1 Renewable Energy Share by Country ( ) Renewables share ranged from 4% - 59% under TPES... Large variations exist in the distribution of RE use amongst the ASEAN countries ranging from 4% in Brunei Darussalam to 59% in Lao PDR. Across the ASEAN, share of RE use by Sector shows: Power sector (34%), has the largest share, followed by Buildings (26%), Industry (23%) and Transport (9%) in that order. Source: IRENA ACE, 2016

11 11 Renewable Energy Share by Sector ( ) Marked increase in RE shares in all sectors especially in the End-use Sectors... Highest share of RE is in the Power Sector (34%). The largest increase in renewable power is through Solar PV Buildings (26%) has largest increase in RE share in the end-use Sector due to substitution of traditional use of bioenergy Industry Sector (23%) has large untapped potential compared to the Reference Case Transport (9%) records the largest growth in RE use with respect to the Reference Case Additional potential for renewable deployment exists in all sectors. Source: IRENA ACE, 2016

12 Energy Demand in the ASEAN Region ( )... Increase Energy Demand in ASEAN-10 over the period ( ) 1 Source: IRENA ACE, 2016

13 Main Drivers for Renewable Revolution in ASEAN Region Renewable Energy drives economic activity and generates employment Region is well endowed with some of the best RE resources in the world Has some of the best untapped hydropower in the world (e.g. Myanmar & Lao PDR) Strong Solar irradiance averaging over 1,500 2,000 kwh per sq. m. annually Renewable Energy is fast becoming costcompetitive nowadays due to: Reduced costs of RE Technologies world-wide Increasing costs from import price volatility globally Derived benefits in rural areas Medical health, Income distribution & green job creation. Source: IRENA analysis and forecasts based on IRENA (2015b, 2016a, 2016d)

14 Presentation Outline 14 Overview Methodology Results and Discussions Conclusions

15 1 Methodology... GTAP CGE Model Approach to examine the economy-wide & country-wide Policy implications for implementing RE targets across ASEAN region Employs a recursive dynamic CGE model embedded in a GTAP framework GTAP is a fully documented, publicly available global database & contains complete bilateral trade information, transport and protection linkages amongst multi-regions within a nation as obtains in ASEAN-10 Using a GTAP-CGE approach for a multi-sector, multi-regional analysis of this nature has several advantages, some of which are: Analysis of the impact of global policies trade, environmental, policy shocks, etc. Incorporation of all economic interactions in an economy Ability to capture the interdependencies amongst economic sectors, economic agents and economic markets Provision of a laboratory for quantitative assessments of total effects (direct & indirect) of policy changes, and Ability to capture feedbacks amongst production block, income block, expenditure block and trade blocks. The GTAP Data Base is built on the Social Accounting Matrix (SAM) which is a traditional double accounting economic square matrix. SAM ensures data coherency and consistency SAM isolates economic effects of specific policy shocks SAM s Accounts are grouped Endogenous (Injections) or Exogenous (Leakages)

16 Overview of a Typical ASEAN SAM... a multi-country and inter-regional framework need to be constructed 16 ASEAN-10 has no single or uniform SAM and benchmark years varies from one member state to the other, hence a multi-country SAM is desirable (see opposite Fig) The multi-country SAM will consider the peculiarities of each member State to arrive at a balanced individual macroeconomic SAM GTAP is to assist in calibrating the SAM of each nation to the most recently referenced benchmarked year The individual macroeconomic SAMs will now be combined into a single macroeconomic SAM (Resosudarmo et al., 2009) Involves conversion into single currency vide exchange rates & trade flows and deducting same from the respective Rest Of the World (ROW) accounts (Reinert & Roland-Holst, 1997) Factor-service flows & Capital flows including inter-institutional transfers amongst member States could be added with relevant deductions from their respective ROW accounts In constructing this multi-country SAM, international (bilateral) trade provides the main inter-country link. Source: Adapted from Nurdianto, 2010

17 Typical GTAP-E Production Structure 17 Standard GTAP model is amenable to modifications to accommodate RE policy analysis Taheripour et al (2007) made the pioneering effort to disaggregate bioenergy sectors from the SAM on introducing RE (Liquid Biofuels) into the GTAP Data Base. Banse et al (2008) developed an implicit approach to modeling bioenergy. Capital Energy substitution was introduced into an extended version of the GTAP-E model The non-coal element in GTAP-E s Capital- Energy composite was transformed into a multilevel nesting structure to model RE as an intermediate input into the petroleum industry Typical GTAP-E Production Structure Capital Energy Composite of GTAP-E Source: Burniaux & Truong, 2002

18 Presentation Outline 18 Overview Methodology Results and Discussions Conclusions

19 Bridging the 6-point Gap: RE Shares by Country... differentiated approach adopted to expand renewables 19 ASEAN-10 exhibit significant variation in population, economy and energy demand REmap s mixed approach covers energy supply and demand About 80% of the renewable energy share is contributed by Indonesia, Vietnam, Malaysia & Thailand Modern RE Share in TPES % Reference Case % Indonesia 1.70% Vietnam 1.30% Malaysia 1.00% Thailand 1.00% Philippines 0.40% Myanmar 0.40% Lao PDR 0.20% Singapore 0.10% Cambodia 0.10% Bunei Darussalam 0.02% REmap % Source: IRENA REmap Analysis, 2016

20 Source: IRENA ACE Preliminary Release, 2016 RE Investments Required to Meet the 23% Target % of ASEAN s GDP is required to be invested annually into RE capacity 1% of ASEAN s GDP investment annually means: Average Annual total Investment of US $ 27 billion equally split between the Reference Case and REmap Options

21 RE Investments in Emerging Asia... Investment in RE is on the increase 1 Emerging Asia will be experiencing a significant growth in TPES, increasing from 4,406 mtoe (2013) to 6,998 mtoe (2040) (IEA Policy Scenario, ) Major Challenges arise of achieving & balancing energy policy objectives in the region, includes: Energy security, Sustainable development, Energy access, and Energy affordability Rapid deployment of Solar power & Wind power expected in the region (OECD, 2017, IEA Sources) China RE investment in 2015 was US $102.9bn (i.e. 36% of global RE Investments) India (2 nd largest Investor) invested US $10.2bn in 2015 Thailand the only other State to hit US $1bn in asset Finance for RE in 2015 ASEAN TPES is projected to rise significantly from 594 mtoe (2013) to 1,070 mtoe in 2040 (IEA Policy Scenario, 2016) In ASEAN Large-scale Hydro followed by Solar PV constitute vast share of new installed RE capacity in 2015 (OECD, 2017) In China & India Wind was the major source of new installed RE capacity in 2015 (OECD, 2017)

22 Investment Potentials & Plans in some Selected ASEAN States 1 Country Potentials & Investment Plans Thailand The undisputed Solar Energy leader in ASEAN (due to lower costs in solar-components & Subsidized energy tariffs) Solar capacity projected to increase between 2,500 MW & 2,800 MW in 2015 (6 times higher than previous year) Expects to increase its solar capacity to 6,000 MW by 2036 (accounting for 9% of total electricity generation to meet 3 million households energy demand) The Philippines Dependent on imports of coal, oil & gas for most of its energy needs Growing energy needs incentivized government to consider RE alternatives such as Solar Power The Philippine Solar Power Alliance wants government to quadruple size of its tariff from 500 MW to 2 GW Considering investment of about US$4 billion in solar projects now Viet Nam Rapid industrialization leading to growing demand for electricity with renewables (Hydro & Solar energy) as possible panacea Has high annual solar irradiance of between 2,000 2,500 hours of sunlight (equivalent of 43.9 million tons of oil annually if fully harnessed) Committed US$36.12 million to construct 1 st solar power plant in August 2015 with the potential to produce 28 million kwh/yr. Another project in the pipeline will involve an investment of US$650 million by a South Korean firm to generate 300MW of electricity. Plans an installed Power capacity of 75,000 MW by 2020 (with RE making just 4.5%) to meet rising energy demands Malaysia Witnessed increasing growth in the solar market Solar PV panels generating 67% of the RE production Recently opened solar farm with capacity to produce 10,120MWh and generate RM 8 million a year Source:

23 Roles of Renewables & RE Target Setting Widespread adoption of RE Targets now by China, India and 9 ASEAN Member States 1 Fossil fuel continues to dominate the TPES in ASEAN s energy mix in the period Emerging Asia is highly exposed to climate change risks hence Concerted inter-regional reform is urgently required to mitigate climate change impacts and facilitate seamless low-carbon economy in the region China & India are at the forefront in setting RE Targets on large scales, for instance, according to OECD/SAEO preliminary report, 2017: India government is set to increase its Solar capacity from 3GW to 100GW by 2022; thereby increasing overall RE capacity to 175GW ASEAN Energy Ministers met in 2015 & set an aspirational target to increase the share of renewables in TPES to 23% by 2025 Except Cambodia, all ASEAN Member States have implemented some RE Targets of varying degrees in terms of technology, time horizon, measurement Unit & level of ambition Effectiveness of Targets can be improved upon thru Well coordinated National Action Plans, and Establishing a roadmap to 2025 for ASEAN Member States to achieve their aspirational target Regulatory Support for RE Targets in China, Indonesia, Malaysia & The Philippines is enhancing the Investment environment & strengthening commitments towards RE development.

24 Policy Commitment to RE Targets 1 Need to backup the RE Aspirational Targets with dedicated policies for implementation Strong structural reform to open up the economy for private sector investment in RE to mitigate investment risks & encourage fund mobilization thru private partnership Provide enabling institutional framework with well defined roles & responsibilities, transparent & streamlined procedures so that RE investments are more attractive Exploit cross-cutting impact of RE on the Sustainable Development Goals (SDGs) Regional engagements and international cooperation on RE development should be encouraged

25 Presentation Outline 25 Overview Methodology Results and Discussions Conclusions

26 Concluding Thoughts... 1 Most ASEAN Member States adopted specific targets to implement RE capacities IEA/IRENA projects large increase in energy consumption due to increasing population, sustained economic growth &increasing access to electricity Policy mechanisms are being put in place for the development of RE technologies in the region Deployment of RE helps to decarbonize the energy mix globally providing clean and secure energy supply a key mitigating strategy Deployment of RE leads to emission savings With the right policy & regulatory framework in place, RE deployment will generate more jobs across emerging Asia in general and the ASEAN region in particular Fianally, encouraging regional cooperation & integration in focused policy areas of green growth &RE as well as private sector deployment in the ASEAN Plan of Action for energy cooperation are very much desirable for promoting regional growth in RE Technologies across the region. In Conclusion...

27 1 Thank you all for your kind Attention

28 Backup Slides 28

29 1 ASEAN Population in the Global Economy (2015)

30 1

31 31 Linkages between RE and SDGs

32 32 RE Share in the ASEAN Region to 2030

33 33