Energy security: one of Asia's top priorities

Seoul, South Korea

ASIA'S HYPER-GROWTH economic pace is at risk should the region not cope with the huge energy challenge it faces in the coming decades, writes the Asia Development Bank (ADB) in a recent report.

According to ADB, Asia will account for 44% of global GDP by 2035 but the region’s share of global energy use is projected to increase to 51% . This means that the greatest challenge for Asia countries will not be posed by keeping a high economic growth, rather it will come from the ability to create a sustainable energy mix.

The ADB report sets out concrete measures that states necessarily need to undertake to cope with the imperative of energy security. Those states that will not fully understand what is at stake are doomed to reconsider their future economic prosperity.

Assuring energy independence. As the mix of primary sources (coal, conventional natural gas and nuclear) will not satisfy Asia’s growing thirst for energy, imports of oil will increase esponentially -  with volumes tripling by 2035. This will leave the region even more vulnerable to external energy shocks.

Assuring environmental sustainability. In 2010 the World Health Organization found 34 of the world’s 57 most polluted cities in Asia. Now, with Asian economies growing at consistent pace but failing to overhaul their energy mix oil, gas and highly toxic coal consumptions will skyrocket and will make Asia the world's largest polluter by 2035 – contributing to nearly half of global carbon dioxide (CO2) emissions.

Ensuring accessible and affordable energy. Today 628 million Asians do not have access to  electricity – nearly half of the world’s people without electricity. Inclusive growth means delivering broader access to electricity and cooking fuels to the poor so to reduce health and environmental risks and enable the delivery of social services.

Eliminating consumer subsidies. Most Asian countries provide some form of subsidy to offset harm to welfare – they account more than 2 % of GDP in India, Indonesia and Vietnam and more than 4% in Pakistan and Bangladesh. However, the very same consumer subsidies end up artificially reducing the price of energy and thus encouraging overconsumption. The problem is, subsidies in developing Asia are on the rise.

Investing on smart urbanization. Smart cities – cities which combine clever planning and design - can deliver significant environmental and energy savings. Rapid transportation systems like bus mass transit systems in continental China and subways in India help lower energy use and improve the environment and quality of life whereas well-designed communication and control systems can help consumers to maximize their efficient use.

Expanding sustainable energy. The energy mix must include a much higher share of renewables. Tough renewable sources find it hard to be cost-competitive with the fuels they seek to replace, in the long run economic benefits garnered from a large-scale use is believed to outweigh short-term costs.

Creating a pan-Asian energy market. The promotion of regional sinergies would provoke two meaningful results. One the one hand, it would be a driver for regional co-operation, on the other it would have a multiplier effect on energy savings. Let's take the Mekong region - it is estimated that the implementation of  cooperative programs could bring up to $ 14 billion of savings in 20 years.

Developing intellectual capital. As the report rightly points out, a modern energy sector will come about only if the knowledge base is there to support it. It is of paramount importance for Asia to broaden its intellectual capital to better support its physical investments in energy.  

References

- Asian Development Outlook 2013, Asia's Energy Challenge, Asia Development Bank (2013)

Article previously published on Asian Century Institute