Energy Situation in Asia and the Pacific: Emerging and Persistent issues Antonio Della Pelle UNESCAP, Bangkok 26 November 2014
Outline Contents 1. Introduction 2. Historical Trends in Asia-Pacific 3. Future Trends and Emerging Issues 4. Conclusion
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Antonio Della Pelle Enerdata Managing Director Antonio is a chartered chemical engineer working in the oil, gas, coal, electricity, renewables and emissions sectors. A recognised energy professional with worldwide experience particularly in Refinery, Petrochemical, Power, Gas and LNG, most recently in South East Asia, North Asia and Oceania. Antonio has advised major Oil & Gas companies about Energy Security, Energy Management, Energy Planning and Emission Reductions. Left Europe in 2003 to live in Japan first and China after before relocating to Singapore where he has been living since November 2005 Additional qualifications, Antonio has a certificate in Coaching and got the INSEAD Supply Chain Manamagent certificate.
Outline Contents 1. Introduction 2. Historical Trends in Asia-Pacific 3. Future Trends and Emerging Issues 4. Conclusion
Energy Consumption Growth Trends Economic growth in Asia led the growth of energy consumption 12.00 Energy Consumption Growth 10.00 8.00 6.00 Growth in % 4.00 2.00 0.00-2.00-4.00-6.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Europe United States Asia Source : Enerdata Global Energy and CO2 database
Energy Mix of Asia 2000 2013 23% 31% 8% 38% 24% 16% 10% 50% Coal Gas Oil Others Coal Gas Oil Others Others include nuclear and renewables Source : Enerdata Global Energy and CO2 database
Renewables in Asia Electricity and Renewable Trends Renewable energies support schemes in Asia in 2013 12.00 30.00 10.00 25.00 Electricity Growth % 8.00 6.00 4.00 2.00 20.00 15.00 10.00 5.00 Share of Renewables in Electricity Feed-in tariffs (FiTs) Renewable Obligations (ROs) FiTs + ROs 0.00 2000200120022003200420052006200720082009201020112012 0.00 Electricity Consumption Growth Share of Renewables in Electricty Capacity Source : Enerdata Global Energy and CO2 database Source : Enerdata Power Plant Tracker
Trends in 2013 for Selected Asian Countries 9 8 Trends for Key Asian Countries China: Coal (+3.7%) remains by far the top fuel (75% of Power mix), Renewables and Gas investments Growth in % 7 6 5 4 3 2 1 0-1 GDP Energy Consumption CO2 emissions China India Japan Source : Enerdata Global Energy and CO2 database India: Coal (+6.7%) major contribution; Gas decrease Japan: Coal and Gas have replaced Nuclear (0 since 2012), zero growth in emissions Investment in Renewables + Nuclear return planned in 2015
Outline Contents 1. Introduction 2. Historical Trends in Asia-Pacific 3. Future Trends and Emerging Issues 4. Conclusion
Some Definitions Description of the EnerFuture scenarios BALANCE EMERGENCE RENAISSANCE Balance provides an outlook of the energy system up to 2035 based on current policies and trends. Sustained growth of China and other emerging countries is a powerful driver of global energy demand, but confirmed energy policy commitments in several regions play a key role in controlling the pace of growth. However, non-coordinated policies result in soaring CO 2 emissions across the world and energy prices rise. This scenario explores the implications of more stringent climate policies, with more ambitious efforts on energy efficiency, initiatives to phase out fossil fuel subsidies and a real emergence of renewable technologies. Europe goes beyond its -20% targets by 2020, and the OECD and emerging countries meet their Copenhagen objectives. Following this, a new green deal is launched to reduce world emissions by a factor of 2 by 2050. With strong efforts in the exploitation and production of unconventional oil and gas resources, the world encounters a fossil fuels renaissance with the appearance of new key actors and ultimately new geopolitical configurations changing the energy independence of several countries. For climate efforts, this new paradigm leads to progressively weaker policies.
Total Energy Consumption in Asia-Pacific Region Mtoe 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Total Energy Consumption Forecast for Asia Balance Scenario 2010 2011 2012 2013 2014 2015 2020 2025 2030 2035 Other(nuclear and renewables) Coal Gas Oil % of World Source : Enerdata POLES model; EnerFuture 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Coal will continue to play a major role in Asia-Pacific. In 2035, it will account for 38% of total energy consumption in Asia. This is in contrast to global figures : oil market share was more than coal in 2013 at world level. Gas will be the fastest growing fuel: 200% growth by 2035 as compared to 2013 Nuclear and renewable surpass oil in energy consumption share by 2025. The share of Asia in world total consumption will increase to 48% in 2035 as compared to 40% in 2013
Effect of Low Oil Price In the long term, Oil Demand from Asian Countries will rise if surplus production and lower oil prices continue $05/bbl 160 140 120 100 80 60 40 20 Oil Price Forecast 0 2000 2005 2010 2015 2020 2025 2030 2035 Balance Renaissance Source : Enerdata POLES model; EnerFuture Mtoe 500 450 400 350 300 250 200 150 100 50 0 Increase in Oil Demand (Renaissance Balance) 2015 2020 2025 2030 2035 India Indonesia South Asia China Japan South East Asia South Korea Source : Enerdata POLES model; EnerFuture For a 25% decrease in long term oil price, total oil demand in Asia will increase by around 450 mtoe from 2013 levels. China will contribute to 50% of the increase in oil demand, followed by India (14%) and Japan (9%)
Natural Gas in Power Mix Capacity additions for gas will surpass coal by 2030 GW 350 300 250 200 150 100 50 0-50 Capacity Additions (5 year period) Balance Scenario 2015-2020 2021-2025 2026-2030 2031-2035 Coal Gas Oil Fossil Fuel as % of total capacity Source : Enerdata POLES model; EnerFuture 80% 70% 60% 50% 40% 30% 20% 10% 0% As of November 2014, 694 GW of power plant capacity is under- construction/approved in Asia with fossil fuels accounting for a 53% share Coal power plants installations will exceed those of gas till 2025 after which gas will surpass coal Net capacity of oil based power plants will decrease for all the time intervals The share of fossil fuel based capacity will decrease to 54% by 2035 as compared to 73% in 2013 for Asia
Nuclear is set for a fast growth 400000 350000 300000 250000 Nuclear Capacity Addition - Balance Scenario MW 200000 150000 100000 50000 0 2020 2025 2030 2035 India Japan South Korea South Asia Indonesia South-East Asia China Source : Enerdata POLES model; EnerFuture Enerdata expects the total increase in electricity capacity of Asia to be 3.2 TW by 2035. Out of this Nuclear will account for 10% increase, which is same as that of increase in hydro or solar power China will play a key role in growth of Nuclear in Asia. Out of a total increase of 370 GW of nuclear capacity in Asia by 2035, China will account for 210 GW of nuclear.
By 2040 China will be by far the leading country in nuclear power generation 2040 0 75 150 225 300 GW Source: Enerdata POLES Model
Renewable will be 1/3 of the total electricity capacity by 2035 MW 2000000 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 Renewable Capacity Balance Scenario 2010 2011 2012 2013 2020 2025 2030 2035 Wind will become the largest source of renewable energy by 2035. Share of wind power in the total renewable capacity will increase to 37% by 2035 as compared to 17 in 2013. Around 70 GW of renewable capacity was installed in 2013 with the biggest contribution from Hydro (38GW) Solar will see the largest growth: from 5% of the total renewable capacity in 2013 to 18% by 2035 Hydro Wind Solar fsct Hydro fsct Wind fsct Solar Source : Enerdata POLES model; EnerFuture
Energy Efficiency 300 250 200 150 100 50 0 Energy Intensity Balance Scenario 2010 2015 2020 2025 2030 2035 China USA EU-27 Non-OECD OECD Source : Enerdata POLES model; EnerFuture toe/ms$05 30 20 10 0-10 -20-30 -40-50 -60-70 -80 Increase in Energy Intensity of Asia Relative to Balance Scenario 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Emergence Renaissance Source : Enerdata POLES model; EnerFuture In China, energy intensity is more than halved over 2010-2035, reflecting substantial adoption of energy efficiency practices and technologies. Higher supply of fossil fuel with relatively lower prices (Renaissance Scenario) will increase the energy intensity of Asia by 10% in 2035. However, if countries agree to cooperate on policies to reach the UN goals of emission reductions (Emergence Scenario), energy intensity will decrease by 35% in 2035.
CO 2 reduction potential for Asia 5 Decrease in CO2 emissions (Emergence-Balance Scenario) Rest of Asia -17% India -16% 0 Gt CO2 eq -5-10 -15-20 -25-30 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 China -67% India China Rest of Asia Source : Enerdata POLES model; EnerFuture Asia Europe North America Rest of the World If Climate Change policies are implemented (Enerdata Emergence Scenario), Asia holds the highest potential for CO2 reduction. China and India together can contribute around 80% of the total possible reduction from Asia
Energy Prices and Fossil Fuel Subsidies Indonesia Malaysia 57% 14% 86% 29% 58% 42% Others Fuel Others (Incl Food, Fertilizer) Fuel Subsidies Electricity Source : Ministry of Energy and Mineral Resources, Indonesia Source : Ministry of Finance, Malaysia The electricity and fuel subsidies in Indonesia reached 300,000 Trillian Rupiah which is 11% of GDP in 2013 Total fuel Subsidies is Malaysia were around MYR 28 bn which is around 2.8% of the GDP in 2013
Electricity prices in Selected Asian Countries 18.00 16.00 14.00 Electricity Prices for Households USc05/kWh 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 Axis Title Malaysia Indonesia India Philippines Singapore Thailand 2013 Data not available for Thailand Source : Enerdata Global Energy and CO2 database Electricity prices differ by a wide range between different countries in the region due to subsidy policies and price controls Singapore and Philippines have higher electricity prices and reflect the supply and demand fundamentals Price controls also affect the adoption of energy efficiency policies
Rationalization of Energy Prices is top priority of Asian Countries Country Indonesia Malaysia China India Examples of Recent Measures On 19 November, 2014, Indonesian government announced hike in gasoline and diesel prices by more than 30% which is expected to save US$8bn in 2015 In October 2014, price for petrol and diesel were increased by 0.2 MYR to reduce subsidy burden In China, government increased the price of gas in September 2014 to bring the price levels to the international market. India removed control from diesel price and gas prices in October 2014. Diesel prices are now deregulated and gas prices will be reviewed every six months Source : Enerdata Key Energy News
Conclusions The dynamics and structure of the energy market in Asia is different as compared to other regions like U.S. and Europe In the light of the emerging trends, Enerdata has identified a number of issues including low oil prices, growth of gas and nuclear, energy efficiency, climate change policies and energy prices that will play a key role on the final energy consumption Energy policy of various countries will need to have fundamentals right to ensure balance between developing their economy in a sustainable manner and with security of supply
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