Paving Way to ASEAN Energy Sovereignty November 4, 2019 | by

Paving way to ASEAN energy sovereignty_img

Energy demand in ASEAN member states (AMS) has increased twice as fast as in other countries since the 2000s. AMS together are currently the sixth-largest energy consumer and will be the fourth-largest by 2030, with more than 54 percent of the energy need expected to be covered by oil imports by 2035.

Fossil fuel subsidies have significantly increased, rising from US$20 billion in 2017 to $50 billion in 2018. The current growth rate of conventional energy sup- ply would not only lead to energy security issues but also exacerbate climate change — if renewable sources are not taken into account.

During the recent ASEAN Ministers on Energy Meeting (AMEM) in Bangkok, Indonesian then-deputy minister of energy and mineral resources Arcandra Tahar noted the importance of biofuel. In a separate discussion, he said biofuel could not only alleviate countries’ dependency on fossil fuel but would also help reduce poverty. Biomass is abundant in Southeast Asia.

Opportunities for using biofuels are wide open. While Thailand has struggled to increase its biodiesel blend from B20 to B30 due to limited resources, Indonesia and Malaysia have the potential to increase their biodiesel blend up to B100, owing to the abundance of resources. Yet, European Union restrictions on the use of biofuel from palm oil and biofuel produced from food crops over issues related to indirect land use change (ILUC) have led to reduced production in some AMS.

The biomass potential is still enormous in ASEAN, both in terms of supply and demand, but there are also still challenges related to costs and appropriate technology. The biomass road map should be implemented with strong support from the AMS and collaboration among research and academic institutions in the region. An increase in the share of biomass in the final energy supply can be realized, such as by revisiting policies in each country regarding biomass utilization and whether the region has identified the by-products. University curriculums should have already been aligned with the strategy to support the region’s vast human resource demand.

Biorefining, which is converting any biomass resource into energy and other beneficial by-products such as chemicals, is also worth developing in the region, due to the wide range of by-products that can be developed from biorefining. The identification of biofuel and bio products from biorefineries is not yet agreed among industries, academics and policy makers. Demands for bio products has increased substantially during the last decades, with some European universities that previously had study programs focusing on oil and gas having lately shifted to biochemicals and biotechnology.

Another opportunity pertaining to the use of biomass in the region is energy trading. Cost differences among AMS may become a sensitive issue; thus, leveling prices and trading scenarios must be developed and agreed by the AMS.

It was noted during the parallel ASEAN Energy Business Forum (AEBF) that the governments’ basic energy plans should be subject to major overhauls. The target of increasing renewable energy to 30 gigawatt hours requires substantial efforts, given that its share has increased less than 5 GWh by 2018 in the ASEAN region. The 23 percent share set for clean coal-fired thermal power plants in the energy mix target should also be revisited. The key challenge is the access to grids and integration with existing power systems of distributed and independently operated power sources (International Energy Agency, 2019).

This year, the AMS succeeded in exceeding their target for energy intensity from 20 percent in 2020 to 24.4 percent this year, which implies that the energy use is getting more efficient. Conversely, increasing the share of renewable energy (RE) to achieve 23 percent in 2025 requires more hard work down the line.

So far, the region has only achieved an RE share of 14.3 percent; adding 8.7 percentage points to reach the target needs substantial efforts within the next 5 to 6 years. Optimizing the potential of renewable energy both for electricity and direct use is crucial, as the geographic advantages ASEAN has is an abundance of RE sources. The current rate of progress suggests that the region will fail to reach the 23 percent target by 2025. The gap needs to be further analyzed, and substantial capital investment is needed.

The utilization of biomass as a fuel source to reduce the dependence on imported oil also has strategic implications. Oil ac- counts for more than 70 percent of the fossil fuel imports, and it is predicted that oil demand will drastically increase in the next 30 years with transportation as the most oil-consuming sector. The region will be importing vast amounts of oil and is predicted to spend over $300 billion per annum for energy import bill 30 years from now. The ASEAN region is expected to be a net importer of natural gas around 2027 and of coal around 2035. These figures are alarming and have prompted AMS to seek ways to prevent the energy issue from impacting economic growth, since the growth of energy imports is higher than the gross domestic product growth.

Three AMS (Laos, Thailand and Malaysia) have agreed to be connected to the ASEAN Power Grid (APG), a distributed power system that would contribute to sustainable development goals. However, increasing the RE share in the grid is an issue, as the grid connectivity should at least also consider intermittency issues as well as cost. The region should consider grid parity, reliable grid integration and possible a storage system. The digitalization of grid-connected power lines and a smart grid is inevitable, since supply and demand figures may differ from each country’s grid figures.

Connectivity that may offer economic benefits, cost efficiency and stability for the region’s security would also provide a wide range of opportunities for the power sector to be more professional in providing competitive supply and stable voltage. Political will and the sharing of code standardization shall be resolved during the initial stage of collaboration, whereas other technical issues would be relatively easy to tackle. Technologies to inter- connect different frequencies are widely available in the global market.

Improved connectivity, which is gaining traction in the ASEAN energy sector, would not only produce economic benefits by effectively utilizing the available resources in the region, but also contribute to the energy sovereignty and sustainability of ASEAN through effective integration of RE into the power system.