ASEAN is one of the most dynamic and fastest-growing regions in the world, with a remarkable economic growth of 5.1% per year from 1990 to 2013. During the same period, its total final energy demand had increased about 2.5 times from 176 to 437 Mtoe, or an average growth of 4.0% per year¾more than twice the world’s growth rate. Under the Advancing Policy Scenario of the 4^th ASEAN Energy Outlook, energy demand is expected to continue growing at least 3.5% per year until 2035 (ACE, 2015). With this regard, it is obligated to investigate the reasons behind the increased energy demand during the last two decades.

The study conducted at the ASEAN Centre for Energy (ACE) aims to provide an understanding of the relation between economic activity and the change in energy consumptions, as well as to identify the contributing factors in the region and in each ASEAN Member State (AMS). The study adopted a decomposition method to quantify the underlying drivers of changing energy consumption. With this methodology, the changes in energy consumptions are classified into 3 (three) types of factor; activity effect, structural effect, and intensity effect. Activity effect relates to the expansion of economy which also attributes to the increase of goods and services produced. The structural effect quantifies the contribution of economic structure adjustment to the energy consumptions. The intensity effect measures the improvement of efficiency relating to applied technology to produce the goods and service.

Figure 1. Decomposition of Energy Consumption Change in ASEAN,1990-2013

Figure 1 shows the results of the decomposition of energy consumption changes in ASEAN. The key findings of the study are as follows:

• Over the period of 1990-2013, energy consumption in ASEAN grew 261 Mtoe. It is observed that almost 90% of the change is contributed by only four Member States (i.e. Indonesia, Thailand, Vietnam and Malaysia) as shown in Figure 1.
• The activity effect is by far the largest contributor to energy consumption in AMS and ASEAN. It contributes about 465 Mtoe (178% of total consumption change in ASEAN). That means the growth in energy consumption is mainly driven by the expansion of the economy. In addition, as ASEAN continues showing robust economic growth, the potential of increasing production to contribute to future growth in energy consumption is significant.
• The contribution of the structural effect reaches 21 Mtoe or about 8.2% of total consumption change. Although the structural effect contributes less, it suggests that in aggregate, ASEAN is moving to a more energy-intensive economy. In terms of AMS, the structural effect shows mixed results. The Member States that are moving to a more energy-intensive economy are Cambodia, Lao PDR, Myanmar, Malaysia, Singapore and Vietnam. On the other hand, Brunei Darussalam, Indonesia, the Philippines and Thailand are moving to a less energy-intensive economy.
• The intensity effect shows the relative contribution of energy intensity change to the aggregate energy consumption change. Energy intensity is used as a common indicator to measure the performance of energy efficiency. In ASEAN, energy intensity accounts for 226 Mtoe reduction of energy consumption (-87% of total consumption change in ASEAN). In the ASEAN level, all Member States (except Brunei Darussalam) show an improvement in terms of energy efficiency, by showing the negative intensity effect.

Reference

ACE (2015). The 4th ASEAN Energy Outlook 2013-2035, Jakarta.

The study was conducted by ACE’s former intern (August 2016), Mr Fahman Fathurrahman, as part of his studies as a PhD candidate in Earth System Science Graduate Program, Middle East Technical University in Turkey.

The views, opinions, and information expressed in this article were compiled from sources believed to be reliable for information and sharing purposes only, and are solely those of the writer/s. They do not necessarily reflect the views and opinions of the ASEAN Centre for Energy (ACE) and/or the ASEAN Member States. Any use of this article’s content should be by ACE’s permission.