Cross-border
power exchanges can play a central role in helping Asia and the Pacific meet
its booming demand for power, which is set to sharply outpace the rest of the
world’s over the next two decades, according to a comprehensive new report from
the Asian Development Bank (ADB).
“Our
projections show the region will consume more than half the world’s energy
supply by 2035, with electricity consumption more than doubling as economic
growth and rising affluence drive demand,” special senior advisor of the Infrastructure
and Public-Private Partnerships at ADB said S Chander.
“Countries
cannot meet these huge power requirements all on their own, so the region must
accelerate cross-border interconnection of electricity and gas grids to improve
efficiencies, cut costs, and take advantage of surplus energy,” he added.
The ‘Energy Outlook for Asia
and the Pacific’ report provides in-depth data and projections on energy use at
the sub-region, country, and sector levels until 2035, along with an analysis
of the impacts of a ‘business as usual’ approach to power, and an alternative
approach in which countries scale up efficiencies and low carbon technologies.
Fossil fuels will continue to
dominate the energy mix in the coming decades, with the demand for coal set to
rise by more than 50 per cent over the outlook period, or nearly two per cent a
year, led by consumption in the People’s Republic of China and a pickup in use
in Southeast Asia as countries look for low cost options to diversify existing
supply sources.
Oil demand will also grow by two per cent a year, led by the transport sector, with newly affluent South Asians buying an increasing number of motor vehicles. Natural gas demand will expand at the fastest annual pace of four per cent because of the lower environmental burden and ease of use.
Oil demand will also grow by two per cent a year, led by the transport sector, with newly affluent South Asians buying an increasing number of motor vehicles. Natural gas demand will expand at the fastest annual pace of four per cent because of the lower environmental burden and ease of use.
The reliance on fossil fuels
presents major pricing, energy security, and environmental challenges, with
Asia and the Pacific’s carbon dioxide emissions set to double by 2035, making
up more than half the world’s total output. Without reducing its heavy reliance
on oil imports, using power more efficiently, and adopting more green energy
options, the region will see a growing energy divide between the rich and poor,
and increasing threats from climate change.
Using a mix of efficiency
measures, advanced generation technologies, and greater use of renewable power
could almost halve the projected annual rise in energy demand through to 2035.
More efficient oil refining and gas processing, along with a reduction in
demand for electricity, offer the bulk of the energy savings potential.
There are big opportunities
for building on existing cross-border power exchange initiatives in Southeast
Asia, South Asia, and Central Asia, with the ultimate goal of establishing a
pan-Asia energy market by 2030. Closer cooperation will have other positive
spinoffs including new economic opportunities and warmer relations.
Meeting
the region’s energy needs will come at a hefty cost with estimates the sector
will require new investments of about $11.7 trillion through to 2035, based on business-as-usual
power use patterns.
The investments swell to about $19.9 trillion under the alternative approach because of the adoption of pricey advanced coal and natural gas fired generation technologies, and low carbon options like wind and solar energy. Finding ways of removing current regulatory barriers are crucial for the broader use of renewable energy.
The investments swell to about $19.9 trillion under the alternative approach because of the adoption of pricey advanced coal and natural gas fired generation technologies, and low carbon options like wind and solar energy. Finding ways of removing current regulatory barriers are crucial for the broader use of renewable energy.
The
report was prepared by a team from the Asia Pacific Energy Research Center of
the Institute of Energy Economics, Japan, under an ADB regional technical
assistance project.
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