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Secure, Affordable, Clean – Can You Really Pick All Three?
Published: 19 April 2023
by Elizabeth Cannon, Portfolio Manager – APAC, Energy Council
The Importance Of Energy Sustainability In Asia’s Energy Trilemma
Approximately 150 million people across the Asia Pacific region do not have access to electricity & a further 350 million only have limited access*. With a rapidly increasing population with a higher life expectancy & no change to the supply of energy resources, this statistic will only worsen. In addition, due to increased global competition following Russia’s invasion of Ukraine, sources of oil & gas are dwindling. This highly competitive market means that, on top of the limited supply, the inflated prices of gas in particular have become unaffordable for many.
Asia has an immediate obligation to their population, businesses & economies to rectify this issue & provide secure & affordable energy. Without this, the region risks entering a vicious cycle where without power, countries will see stunted economic growth & increased poverty. Arguably, the priority should be securing affordable & reliable energy sources for the Asia-Pacific region.
However, 85% of the Asia’s energy currently originates from fossil fuels & almost half of that comes from coal**. If the region was to solely focus on energy security & equity, then it would only be forced to increase the use of coal & other ‘dirty’ energy sources to meet demand.
Asia’s responsibility to its people extends beyond immediate access to energy. The region has already seen the severe socioeconomic impacts of climate change in pollution, extreme weather & climate-related disasters. It is essential for the future of the planet & the industry to diversify the region’s energy mix with low-carbon energy sources & invest in carbon reduction & removal technologies, CCUS & future energy sources.
As the highest emitting region in the world, Asia has a fantastic opportunity to lead the global energy transition, but the path to clean energy is not straightforward. We have already seen a delay in Asia’s energy transition following the increased global competition for LNG, which was previously used as a stepping stone to cleaner energy. So what pragmatic steps can be taken in the short to near term to ensure the Asia-Pacific region is on the road to long-term sustainability?
Some examples include:
- Operating in established markets & employing existing technologies like wind & solar
- Utilising carbon offsetting & CCUS to combat the increased use of coal & other hydrocarbons
- Sourcing high-quality carbon credits & develop a strong carbon market across Asia
- Investing in future low-carbon projects such as investigating greener sources of LNG, the revival of nuclear energy & the case for hydrogen
The global energy crisis has highlighted the delicate nature of relying on a small range of energy sources. As well as furthering sustainability targets, by diversifying the energy mix, Asia will secure reliable energy & demand spread would reduce prices & increase affordability in the long-term.
The Impact of China’s Reopening & Growth Phase
Since China finally reopened its borders, energy industry experts & economists are predicting what the return of the Asian superpower will have on the region’s energy trilemma.
At first glance, as China is historically one of the world’s largest LNG importers & buyers of 1/5 of the world’s oil***, this surge in demand will only exacerbate Asia’s energy trilemma. However, China’s key economic drivers may be energy-intensive, but the increased travel, domestic demand, imports & business within Asia will boost GDP across the region, improving energy security. Additionally, if China continues to follow India in exploiting discounted oil & gas from Russia, then how much will prices be impacted anyway if it’s not stimulating competition in the global market?
In short, 2023 is likely to see an increase in demand & consumer spending from China & therefore economic growth across the Asia-Pacific region. But will the increase in Asia’s GDP be enough to improve Asia’s energy trilemma or will we see even higher inflation rates for power & electricity?
What Can The Energy Council Do?
It is clear that in the long term, Asia cannot entirely compromise on the energy transition in order to provide affordable energy in the immediate future. Undoubtedly, it will require a collective effort, with regional collaboration & cooperation to find the delicate balance between energy security, equity & sustainability.
At the Asia Pacific Energy Capital Assembly, The Energy Council gathers 250+ of the region’s key players including C-level speakers & attendees from Asia’s NOC’s, E&P leaders, international investors & financiers. Investment in the future of the energy industry in Asia is needed today. Take this opportunity to attest the crucial role the oil & gas industry plays in the global energy transition.
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