The 40 th Annual IAEE International Conference Singapore, 18-21 June 2017 Energy Outlook and Energy Saving Potential in East Asia Dr. HAN, Phoumin Energy Economist
OUTLINE OF PRESENTATION I. INTRODUCTION II. III. IV. METHODOLOGY AND ASSUMPTIONS THE OUTLOOK RESULTS IN EAS OIL & GAS DEMAND OUTLOOK IN EAS V. ENERGY SAVING POTENTIAL IN EAST ASIA VI. VII. VIII. C02 EMISSION REDUCTION UNDER APS NECESSARY INVESTMENT COST FOR POWER GENERATION CONCLUSIONS & POLICY IMPLICATIONS 2
I. INTRODUCTION Sustained economic growth and increasing population in the East Asia Summit (EAS) region are the two major drivers responsible for the doubling energy demand in 2013 2040. The increase of energy demand threatens energy security and the effort to curb carbon dioxide (CO2) emissions. These common energy challenges will need to be addressed through concerted efforts, including: collective measures and actions to rapidly develop and deploy energy efficiency and saving, high-efficient and low-emission coal-fired power plant technology, and nuclear safety, and to double the share of renewable energy to the overall energy mix for inclusive and sustainable development. The energy outlook and energy saving potential present the balance of energy best-mix based on each country s policy and targets, and predict the pattern of future energy consumption 3
THE EAST ASIA SUMMIT The EAS is a collection of diverse countries. It is composed of the 10 ASEAN member countries Brunei Darussalam, Cambodia, Indonesia, Lao People s Democratic Republic (Lao PDR), Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam, and six other countries Australia, China, India, Japan, Republic of Korea (henceforth, Korea), and New Zealand; EAS countries are diverse in terms of per capita income, standards of living, population density, energy resource endowments, climate, and energy consumption per capita; Some EAS countries have what might be called mature economies, the majority have developing economies. Several countries have a per capita gross domestic product (GDP) of less than US$1,000 (in 2005 prices), and a large percentage of the people still meet their energy needs mainly with traditional biomass fuels; Despite the differences amongst the 16 countries, the EAS leaders agreed that the EAS could play a significant role in community building, which could be an important cornerstone for the development of regional cooperation in the years to come. 4
THE OBJECTIVE AND RATIONALE The objective of this study is to analyse the potential impacts of proposed additional energy saving goals, action plans, and policies in the EAS region on energy consumption by fuel and sector and greenhouse gas emissions; The study also provides a platform for energy collaboration and capacity building between EAS countries on energy modelling and policy development; The study supports the Cebu Declaration, which highlighted a number of goals including the following: improving the efficiency and environmental performance of fossil fuel use; reducing the dependence on conventional fuels through intensified energy efficiency and conservation programmes, increase the share of hydropower, expansion of renewable energy systems and biofuel production/utilisation, and for interested parties, civilian nuclear power; and mitigating greenhouse gas emissions through effective policies and measures, thus contributing to global climate change abatement. 5
II. METHODOLOGY AND ASSUMPTIONS ASEAN countries: The energy models of ASEAN countries were developed using the Longrange Energy Alternative Planning System (LEAP) software. Final energy consumption is forecasted using energy demand equations by energy and sector and future macroeconomic assumptions. Other countries: Other countries used the IEEJ model, which has a macro-economic module that calculates coefficients for various explanatory variables based on exogenously specified GDP growth rates. The macro-economic module also projects prices for natural gas and coal based on exogenously specified oil price assumptions. The Working Group members were asked to specify assumptions about the future electricity generation mix in their respective countries by energy source. These assumptions were used to determine the future electricity generation mix. Many assumptions were used to make prediction based on each country s situation of data availability. 6
Population Assumptions Assumed Population in the EAS Region, 2013 and 2040 Assumed Average Annual Growth in Population, 2013 to 2040 The population in the EAS region is projected to increase at an average annual rate of about 0.6 percent, reaching about 4 billion in 2040. The population growth is assumed to be fastest in developing countries. Only Japan will experience negative growth by 2040 7
Economic Assumptions Assumed Economic Activity in the EAS Region, 2013 and 2040 Assumed Average Annual Growth in GDP, 2013 to 2040 The GDP annual growth rate is predicted to be 4.0 percent from 2013 to 2040. The growth rates are assumed to be quite high in the developing countries, with the highest growth rates in India, Lao PDR, Myanmar, Cambodia, Viet Nam, and Philippines. 8
1990 2000 2014 2020 2030 2040 Real Oil, LNG, and Coal Price Assumptions (Real prices are in 2014 US$) 140 120 100 USD/bbl Historical Forecast Crude oil USD/t 2000 1500 80 60 40 20 0 LNG (right) Steam coal (right) 1000 500 0 LNG = liquefied natural gas; bbl = billion barrels; t = ton. Note: Solid line: Reference, Dashed line: Lower Price. Source: IEEJ s oil price assumptions, 2016. 9
Assumptions- Primary Electricity Plan in 2015 Study 10
III. ENERGY OUTLOOK RESULTS IN EAS Final Energy Consumption by Sector (1990 to 2040), BAU Final Energy Consumption-BAU Share of Final Energy Consumption by energy source (1990 2040) 100% 28 23 15 13 11 9 2 2 2 2 80% 2 10 14 20 21 24 25 1 60% 3 4 7 9 10 11 40% 31 37 32 34 35 35 20% 0% 27 20 23 21 18 16 1990 2000 2013 2020 2030 2040 Coal Oil Natural gas Electricity Heat Others TFEC is projected to increase from 3,347 Mtoe in 2013 to 6,129 Mtoe in 2040, with an average annual growth rate of 2.3 % By sector, transport is the most rapidly increasing by 3.3 percent per year, as a result of motorisation driven by disposable income. By energy sources, natural gas demand in the BAU is projected to show the fastest growth, increasing by 4 percent per year, from 243 Mtoe in 2013 to 704 Mtoe in 2040. Although oil will retain the largest share of total final energy consumption, it is projected to grow at a lower rate of 2.6 percent per year from 2013 2040, reaching 2,164 Mtoe in 2040 11
Primary Energy Supply-BAU Primary Energy Supply in EAS (1990 to 2040) Share of Primary Energy Supply by energy source (1990 2040) 100% 80% 60% 40% 20% 0% 1990 2000 2013 2020 2030 2040 Coal Oil Natural gas Nuclear Hydro Geothermal Others Biomass Solar, Wind, Ocean The Primary energy supply in EAS region is projected to grow at a little slower pace, of 2.2 percent per year, as final energy consumption grows at 2.3 percent per year. EAS primary energy supply is projected to increase from 5,257 Mtoe in 2013 to 9,517 Mtoe in 2040. Coal remain a dominant energy source, although its share is forecasted to decline from 52 percent in 2013 to 44.8 percent in 2040; Oil remain a second largest share after coal, Although gas has a annual growth rate around 3.7%, but its share is just about 13% by 2040. 12
TWh Power Generation in EAS (1990 2040) Power Generation Share of Power Generation Mix in EAS (1990 2040) 25,000.00 20,000.00 15,000.00 10,000.00 100% 90% 80% 70% 60% 50% 40% 01 1 04 16 12 0 5 7 9 1 14 1 14 12 11 12 3 12 8 8 8 12 11 14 3 10 12 14 1 1 8 1 18 5,000.00 30% 20% 42 53 64 61 60 58-1990 2000 2013 2020 2030 2040 10% 0% 1990 2000 2013 2020 2030 2040 Coal Oil Natural gas Nuclear Hydro Geothermal Others Coal Oil Natural gas Nuclear Hydro Geothermal Others Total EAS Power generation is projected to grow at 3.1 percent per year on average, from 2013 (equivalent to 9,282 TWh) to 2040 (equivalent to 21,015 TWh); The share of coal-fired generation is projected to continue to be the largest and will be about 58.4 percent in 2040, a little drop from the 64 percent share in 2013. The share of natural gas is projected to increase from 12.0 percent in 2013 to 14 percent in 2040. The nuclear share (3.2 percent in 2013) is forecast to increase to 7.6 percent in 2040 13
IV. OIL & GAS DEMAND OUTLOOK ASEAN-BAU Final Energy Consumption Share by Fuel-BAU, 2013 and 2040 Final Energy Consumption- Oil & Natural Gas, 2013 to 2040 Oil demand will grow more than double from 188 Mtoe in 2013 to 520 Mtoe in 2040, representing an average growth rate of 3.8% per year; Oil remains the highest share 44% of TFEC by 2040 Natural gas will grow almost fourfold from 49 Mtoe in 2013, to 185 Mtoe in 2040, representing an average growth rate of 5.1% per year; Gas share will be 15.5% of TFEC by 2040. Natural gas is the 2 nd largest share (37%) for power generation, after coal (42%) Power Generation share by fuel, 2013 to 2040 14
Oil and Gas Demand Outlook, EAS-BAU Final Energy Consumption share by Fuel-BAU, 2013 and 2040 Final Energy Consumption- Oil & Natural Gas, 2013 to 2040 Oil demand will grow more than double from 1,070 Mtoe in 2013 to 2,164 Mtoe in 2040, representing an average growth rate of 2.6% per year; Oil remains the highest share 35.3% of TFEC by 2040 in EAS; Natural gas will grow from 243 Mtoe in 2013, to 704 Mtoe in 2040, representing an average growth rate of 4% per year; Gas share will be 11% of TFEC by 2040. Natural gas is the 2 nd largest share (14%) for power generation, after coal (58%) in EAS region. Power Generation share by fuel, 2013 to 2040 15
Million Tons of Oil Equivalent V. ENERGY SAVING POTENTIAL IN EAST ASIA Total Final Energy Consumption, BAU vs APS Final Energy Consumption by Sector, BAU vs APS 12000 10000 8000 779.29Mtoe,-12.7 percent 6000 4000 2000 0 BAU 1990 2013 2040 APS In the APS case, final energy consumption is projected to be 5,349 Mtoe, 779 Mtoe or 12.7 percent lower than in the BAU case in 2040; By sector APSvs BAU, the reduction is largest in other sector (14.8 percent), followed by transport sector (13.8 percent), and the industry sector (13.4 percent), and non-energy demand will not be significantly different from the BAU 16
Energy Saving in Primary Energy Supply Million Tons of Oil Equivalent Total Primary energy supply, BAU vs APS Primary energy supply by energy source, BAU vs APS 4500 4000 3500 3000 2500 2000 1500 1000 500 0-29.8% -13.0% 21.4% -20.6% BAU APS BAU APS BAU APS BAU APS '13 '40 '13 '40 '13 '40 '13 '40 Coal Oil Gas Others For the primary energy supply, the total saving potential is about 1,491 Mtoe; the largest reduction will be in coal demand, at 1,268 Mtoe or 29.8 percent from the BAU s 4,261 Mtoe to 2,993 Mtoe in the APS; The saving potentials for other fuels are projected to be 306 Mtoe for oil (equivalent to a 13 percent reduction from BAU), and 275 Mtoe for gas (equivalent to a 20.6 percent reduction from the BAU) 17
V. CO2 EMISSION REDUCTION-BAU VS APS Million Tons of Carbon Total CO 2 Emissions BAU and APS (Using primary energy supply) 8000 1787.26Mt-C,-25.5 percent 7000 6000 5000 4000 3000 2000 1000 0 BAU 1990 2013 2040 APS In the adopted version of the Paris Agreement, the parties will also pursue efforts to limit the temperature increase to 1.5 C, which will require zero emissions sometime between 2030 and 2050, according to the scientists. However, this study shows that even in the APS, the emission will be about 4,870 Mt-C. It is supposed to be at zero emission for the efforts to limit the temperature increase to 1.5 C to be successful. 18
VI. NECESSARY INVESTMENT COST FOR POWER GENERATION BAU APS PV/Wind/Bio mass 21% Coal 41% PV/Wind/Biom ass 38% Coal 12% Gas 3% Hydro/Geoth ermal 13% Nuclear 31% Nuclear 19% Gas 6% Hydro/Geother mal 16% About US$4 trillion investment cost for power generation would be needed to meet the growing electricity demand in the EAS region; ASEAN alone would need about $US 600 billion investment cost for power generation. It is clear that investment in power generation under the APS could shift to low-carbon power generation sources such as nuclear and PV/wind/biomass 19
VII. CONCLUSIONS & POLICY IMPLICATIONS Sustained population and economic growth in the EAS region will lead to significant increases in energy demand to almost double from 2013-2040; Coal will remain the significant fuel source. Coal s share of the total primary energy mix is forecast to decline from around 52 percent in 2013 to 45 percent in 2040. On the other hand, the share of gas is projected to increase to 14 percent from 9.5 percent over the same period. Electricity demand will increase more than double from 2013-2040. nuclear will increase 5.4 times and new and renewable energy (NRE) 2.5 times during this period, coal will still have the largest share in power generation, at 58.4 percent, in 2040; Industry remains a major consumer of energy, but the transport sector s consumption continues to increase rapidly. These two sectors are challenging sectors in terms of improving energy efficiency and reducing CO 2 emissions; Under COP21, to limit the temperature increase to 1.5 C, it will require zero emissions sometime between 2030 and 2050. However, this study shows that even in the APS, the emission will be about 4,870 Mt-C. To meet growing electricity demand by 2040, the EAS region will need about $US 4.0 trillion for power generation investment. ASEAN alone will need about $US 600 billion. 20
POLICY IMPLICATIONS It should be noted that appropriate policies will differ between countries based on differences in country circumstances, policy objectives, and market structures and that not all members necessarily agreed to all recommendations Energy Efficiency Action Plans in Final Consumption Sectors: The industry sector would be a major source of energy savings because it will still be the largest energy-consuming sector by 2040. There are several EEC action plans to be implemented, which include building design and replacement of existing facilities and equipment with more efficient ones; Renewable energy policies: There is a need to shift from fossil to non-fossil fuels. This could be attained by increasing the share of new and renewable energy as well as nuclear energy in the energy mix of each country; Technology development policies: To curb the increasing CO 2 emissions, environmental technologies will need to be considered (CCS, CCT, Hydrogen fuel and others); Energy supply security policies: The region is largely depending on imported oil and gas. Thus, measures to secure the supply of energy will be very important for the region. 21