Energy And Environment In Asean

ARTICLE IN PRESS

Energy Policy 33 (2005) 499–509

Energy and environment in the ASEAN: challenges and opportunities Shankar K. Karki, Michael D. Mann*, Hossein Salehfar School of Engineering and Mines, University of North Dakota, P.O. Box 7101, Grand Forks, ND 58202-7101, USA

Abstract The Association of Southeast Asian Nations (ASEAN) is one of the most dynamic economic regions of the world. Its economy is linked with its diverse energy resources, high-level urbanization, and rapid industrialization. ASEAN’s growing economy in the last two decades has increased the concern of sustainable development in the face of deteriorating energy security, environmental pollution, and economic hardship in energy investment. However, opportunities exist to tackle these issues. Increasing energy efficiency (both supply and demand side), exploitation of renewable energy resources (mostly hydro), and an integrated approach on energy resource management are some of the important approaches toward the sustainable energy path. Because the options are capital-intensive, cooperation and development of appropriate institutional structures and decision mechanism across the region are urgently needed. r 2003 Elsevier Ltd. All rights reserved. Keywords: ASEAN energy policy; Sustainable energy; Resource development

1. What is ASEAN? The Association of Southeast Asian Nations (ASEAN) includes almost all of the southeast Asian countries. Its key position in the Asian Pacific proclaims dedication toward peace and stability in the region, providing significant economic input through integrated energy management. ASEAN was first officially established in 1967 in Bangkok, Thailand, with the signing of the Bangkok declaration by the five original member nations: Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam, Vietnam, Lao People’s Republic, Burma/Myanmar, and Cambodia joined, making the ASEAN a group of 10. The ASEAN is one of the most dynamic economic regions of the world. Over the period from 1980 to 1999, its economy grew by nearly 5 percent a year and energy consumption by 7.5 percent. The economy is expected to continue to grow at this rate over the period from 2000 to 2020, and it is estimated that annual energy supply must increase by 4.2 percent a year to sustain this growth (Balce et al., 2001). The ASEAN makes up one of the largest regional *Corresponding author. Department of Chemical Engineering, University of North Dakota, P.O. Box 7101, Grand Forks, ND 58202-7101, USA. Tel.: +1-7017773852; fax: +1-7017773773. E-mail addresses: [email protected] (S.K. Karki), mike [email protected] (M.D. Mann), hossein salehfar@ mail.und.nodak.edu (H. Salehfar). 0301-4215/$ - see front matter r 2003 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2003.08.014

markets in the world, contributing a combined gross domestic product (GDP) of US$5781 billion in 2000 (ACE, 2002). The region hosts approximately US$53 billion in direct US investment, and it is the third largest overseas market for US exports with two-way ASEAN– US trade totaling US$120 billion in 2001. Hence, the environmental, social, and economic issues in the region are very significant and widespread for the rest of the world.

2. Energy management objective After the severe oil crisis in 1973, Asian countries thought of forming a smaller energy cooperative network to make strategies for energy management in crisis situations. In this regard, the heads of the ASEAN countries formed an association called ASEAN Council on Petroleum (ASCOPE) on October 15, 1975. The aim of this association is to establish cooperation among the member countries to navigate the energy problems and issues in times of emergencies due to shortage or oversupply of petroleum. Because of this principal, the ‘‘Emergency Petroleum Sharing Scheme in Circumstances of Shortage and Oversupply’’ was adopted in July 1977 by the member countries (Balce et al., 1999). 1

Current price.

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In continuation with these agreements, the heads of government passed a resolution, the Hanoi Plan, at their 1998 ASEAN Summit, which included two main action items for energy cooperation during 1999–2004 (Balce et al., 1999): a. Ensure security and sustainability of energy supply, efficient utilization of natural energy resources in the region and the rational management of energy demand with due consideration of the environment. b. Institute the policy framework and implementation modalities by 2004 for the early realization of the trans-ASEAN energy networks covering the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects as a more focused continuation of the Medium-Term Programme of Action (1995– 1999). The ASEAN Plan of Action for Energy Cooperation 1999–2004 was formulated and is being implemented under the leadership of the ASEAN Center for Energy, located in Jakarta, Indonesia, as a response to this action plan.

3. Socioeconomic profile of the region All 10 ASEAN member countries lie in southeast Asia. The Philippines and Indonesia are two bigger countries geographically isolated from other member countries (Fig. 1). The rich natural resources and highly liberalized economic policies in the region have attracted many foreign investors, and as a result, this is one of the

fastest growing economies in the world (Yu, 2003). Table 1 gives an overview of the economic profile of the ASEAN. The region is one of the more dynamic regions in the world. The energy consumption scenarios are mostly driven by a high industrialization pattern and evolution toward export-oriented technologies. Some of the member countries, i.e., Singapore, Malaysia, and Thailand, are highly involved in electronics and information technology export business, whereas Brunei, Indonesia, and Malaysia export crude oil and liquid natural gas (LNG). From 1980 to 1999, the average national output (GDP) of the region increased by 4.9 percent a year and population by 1.9 percent. While the national output is likely to continue to grow at 4.9 percent a year over the period from 2000 to 2020, the population growth is expected to decline to 1.2 percent per year over this period. The ensuing growth in per capita income will undoubtedly create additional demand for energy in the region (Balce et al., 2001). Increasing energy demand in the region is mainly driven by a rapid level of urbanization and industrialization. The region has one of the fastest urbanization trends in the world. It is predicted that, by the year 2025, more than 50 percent of the region’s population will reside in urban areas, as compared with 39 percent in 2000. The rapid urbanization process is creating giant urban regions, called extended metropolitan regions (EMR). Emergence of such urban regions accelerates economic growth and industrialization, requiring extra infrastructures to meet the demand of the high urban population. However, this rapid growth is causing major problems in urban infrastructure provision, land use

Fig. 1. Geographic distribution of the region.

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Table 1 ASEAN: economic and social indicators Countries

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam ASEAN

Economic growtha

Population growtha

Urban populationb

Per capita income growtha

GDP at current market pricec

GDP/ capita at current market priced

1980–1999 2000–2020 1980–1999 2000–2020 2000

2025

1980–1999 1999–2020 2000

2000

2.9 4.8 5.4 5.1 5.8 3.4 2.1 7.4 6.1 6.4 4.9

81 29 61 39 71 43 72 100 36 30 53

— — 3.0 2.9 4.5 0.6 2.5 12.0 9.6 8.8 5.7

12,751 274 740 328 3870 142 981 23,071 1968 403 1126

— — 3.8 — 5.8 6.0 4.6 4.5 4.6 5.6 4.9

— — 1.8 — 2.7 1.9 2.3 2.4 1.5 2.0 1.9

— — 1.2 — 1.3 0.8 1.6 0.7 0.7 1.4 1.2

72 16 41 24 57 28 59 100 31 24 39

— — 3.1 — 4.9 6.3 3.6 3.5 4.5 5.4 3.9

4.3 3.3 150.6 1.7 90.0 6.9 74.8 92.7 122.8 31.3 578.6

Source: Balce et al. (2001) and ACE (2002). a Average annual growth rates (percentage). b Percentage shares. c Billion US$. d US$.

conflicts, and environmental deterioration. Moreover, rapid economic growth with export oriented industrialization has caused increasing environmental degradation and excessive depletion of natural resources (Elliot, 2000). Despite significant regional economic growth, poverty is still a major barrier in some of the member countries. For example, per capita GDP is about a $1/day in some of the member countries (Yu, 2003). The economic growth was quite impressive before the financial crisis of 1997–1998. The percentage of population below the national poverty line is as low as 40 percent in the Philippines in 2000–38.6 percent in Laos in 1997. Because of the economic crisis after 1997, unemployment figures are soaring. The unemployment rate has increased from 0.6 percent in 1997 to 3.7 percent in 2000 in Thailand. Unemployment is as high as 10.1 percent in 2000 in the Philippines.

4. The energy supply–demand outlook Oil is the main commercial energy resource in the region and will be dominant for the next several years. About 45 percent of the total commercial primary energy supply will be filled by oil for the 10-year period from 2000 to 2010, whereas natural gas will increase to about 30 percent (Table 4). Renewable energy makes about 8 percent of the total commercial primary energy supply in the ASEAN (Luukkanen and Kaivo-oja, 2002). However, the contribution from renewable energy will nearly double during the next 10 years (Balce, 2001b). Driven by the strong economy, the use of commercial energy (coal, oil, gas, electricity) has increased substan-

tially in the ASEAN region in the last 25 years (Luukkanen and Kaivo-oja, 2002). During the 1980s, energy consumption more than doubled, with an annual average growth rate of 7 percent. The average annual growth rate of energy consumption in the region during 1980–1999 was 7.5 percent. The annual energy requirement of the region is expected to increase by 4.2 percent over the next 20 years, whereas the figure is just 1.7 percent for the world. Because of its large population, Indonesia is responsible for about half of the primary energy consumption in the region (Table 2). The ASEAN region is endowed with about 8 percent of the fossil fuel resources in the world. The available fuel diversity in the region has been a very promising criterion for enlisting regional energy cooperation. For instance, nearly all of the coal reserves are located in Indonesia (83 percent) and Vietnam (10 percent); natural gas and oil are found in Brunei, Indonesia, Malaysia, and Vietnam (ACE, 2002); and Indonesia and Philippines possess substantial reserves of geothermal energy (2), ranking them as the second and fourth geothermal power producers in the world (ACE, 2002). Brunei, Indonesia, and Malaysia are significant crude oil and LNG exporters in the region. Hydropower is abundant in most of the member countries except Brunei and Singapore. Singapore is the only country which does not have any energy resources, but it possesses refinery capacity. Most ASEAN member countries are also well endowed with wood fuels, a common non-commercial energy source for cooking and heating. Biomass (Table 3) also contributes a significant proportion to energy use in the region because most of the rural people are still dependent upon biomass for energy. In 2000, 26 percent of the total primary energy mix was contributed

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502 Table 2 ASEAN energy resources and reserves Country

Oil reserve (billion barrels)

Natural gas reserve (trilion cubic feet)

Coal reserve (million MT)

Hydropower resource (GW)

Wood fuels (MT)

Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar The Philippines Singapore Thailand Vietnam

6.0 — 10 — 3.4 3.1 0.26 0.0 0.2 3.2

34.8 9.9 169.5 3.6 84.4 12.1 4.6 0.0 12.2 21.8

— — 38,000 600 1025 — 346 0 1240 45,000

— 10 75 26 25 108 9 — 10 69

— 81 439 46 137 129 89 — 67 49

Source: ACE (2002).

Table 3 Biomass as percentage of total energy mix of the ASEAN countries

Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam Total ASEAN

Table 4 Commercial primary energy mix in the ASEAN region (percentage)

1990

1995

2000

Fuel type 1990

0.0 89.9 33 72.6 16.7 78.1 35.1 0.0 32.7 74.5 37.5

0.0 82.1 25.3 69.5 9.3 78.2 31.7 0.0 21.9 66.8 30.0

0.0 73.8 20.3 54.2 5.8 65.4 27.2 0.0 19.9 60.0 26.2

Natural gas Coal Oil Hydro Others Total

Source: ACE (2002).

from biomass. The share of biomass is as high as 73.8 percent in Cambodia followed by Myanmar (64.5 percent), Vietnam (60 percent), and Lao PDR (54.2 percent) (ACE, 2002). But the share of biomass is decreasing in the total energy consumption; its share in the region is expected to decrease to 20 percent in 2020. According to the fuel-type consumption in total primary commercial energy, oil is dominant, with about 54 percent of the energy mix, followed by natural gas (26 percent), and coal (11 percent) (Table 4). The transportation sector is the major oil consumer. It is estimated that approximately 20 percent of primary commercial energy will be required for electricity generation alone in the next 10 years. Electricity also constitutes a major part (B10 percent) of final commercial energy consumption (Balce, 2001a).

1995

2000

2005

2010

18.8

22.3

26.5

30.9

32.0

9.2 65.5 5.6 1.0 100.0

9.9 60.6 6.1 1.1 100.0

11.2 54.1 7.0 1.2 100.0

12.4 48.9 6.9 1.0 100.0

14.5 44.4 8.3 0.8 100.0

Source: ACE (2002).

region have taken measures to protect the environment and to control the rate of exploitation of resources, they continue to face difficulties such as institutional and technological limitations. Some of the member countries are not able to finance infrastructure development with their poor economy. Although ASEAN has adopted general integrated policies to launch energy and environmental programs throughout the region, they lack appropriate legislation and specific policies for significant energy sector reform (Yu, 2003). Primary energy resources in the ASEAN region being fossil fuels, economic and environmental policies are expected to play a main role in long-term sustainable energy development in the region. In this section, the economic and environmental status of the member countries and the possibility of economic and environmental benefits through an integrated approach in energy management issues are discussed. 5.1. Energy investment (energy–economy)

5. ASEAN energy situation: challenges for sustainable development ASEAN’s growing economy in the last two decades has raised the concern of sustainable energy development into a higher plane. Although countries in the

The energy sector is highly capital-intensive. It is anticipated that more than US$140 billion of capital investment will be required in the energy sector of the region during 2006–2010 (Balce et al., 2001). Of this, approximately US$88 billion will be required for the power sector alone (ACE, 2002). This amount

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represents about 3% of the region’s GDP. ASEAN is determined to invest significant amounts (i.e., about US$48 billion) on energy efficiency improvement during the period. It is also expected that a large portion of this investment will be externally financed. For example, the external financing proportions for centrally planned Asia and South Asia projects for the period 1999–2020 are 51 and 44 percent, respectively (WEC, 1993; Balce et al., 2001). This clearly will place enormous economic burden on the regional economies. The member countries are also determined to improve the energy efficiency of the energy conversion system, transmission, and distribution since there are still efficiency gaps in the respective sectors in the region. The energy efficiency improvement activities are also capital-intensive and pose additional economic challenges in the region. Hence, economic challenges are enormous for the region’s energy management. 5.2. Energy security Most of the ASEAN commercial energy requirement is contributed by oil. But ASEAN imports about 60 percent of its oil requirement from non-ASEAN countries (especially from the Middle East). This import level is expected to increase more by 2020, placing energy stability in ASEAN at greater risk. For sustainable economic development, the rate of energy consumption growth should be large enough to sustain economic growth. Concerns over energy security probably reached their peak during the 1970s when the world economy struggled to overcome the damaging effects of the oil crises of 1973–1974 and 1979–1980. These were triggered by inflation, which ultimately led to economic recessions involving substantial losses of GDP and high unemployment throughout the world (Bielecki, 2002). The self-sufficiency figures for the member countries have decreased from 1993 to 1997, and the trend is expected to continue in the near future (Table 5). The

Table 5 ASEAN energy self-sufficiency Countries

Brunei Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam Asia

Self-sufficiency (energy production/total primary energy supply) 1983

1987

1993

1997

9.63 1.86 1.01 1.01 0.57 0.00 0.53 0.94 1.04

7.26 1.75 1.00 1.00 0.58 0.00 0.65 0.93 1.01

10.14 1.66 0.99 0.99 0.53 0.00 0.59 1.12 0.95

8.35 1.60 0.94 0.94 0.43 0.00 0.58 1.11 0.90

Source: IEA (2000) and Balce et al. (2001).

503

decreasing trend of self-sufficiency or the inability of production to meet its rapidly increasing energy needs is creating concerns about regional energy security. A common measure of self-sufficiency is the Herfindahl index. This is measured simply by the sum of the squares of fuel supply fractions, giving a measure of fuel diversification (Neff, 1997). The lower the index is, the greater will be the diversifications of primary energy supply, meaning higher energy security. The Herfindahl index for primary commercial energy supply in the ASEAN is 0.36; the corresponding values for Asia (excluding China), the United States, and the world are 0.34, 0.29, and 0.29, respectively (Balce et al., 2001). The reason for the higher than average value of index is the strong dependence of the ASEAN energy supply on fossil fuels. Nearly two-thirds of the power in the region is generated from thermal sources (coal, oil, gas). Moreover, there has been a declining trend in the share of hydropower generation in the region, except in Vietnam and Malaysia. Lack of fuel diversification can have adverse implications in the production sectors (i.e., the ASEAN grid is suffering with frequent blackouts and brownouts and poor diversification in terms of resource availability in the electricity sector). In the case of the Philippines, during the 1990s, the economy lost US$2.2 billion, which represents nearly 3 percent of its GDP, due to power shortages (Balce et al., 2001).

6. Environmental status in the region Climate change is causing environmental concern all over the world, even in ASEAN countries, where about 90 percent of the total commercial primary energy requirement is fulfilled by fossil fuel resources. The combustion of fossil fuels and biomass in transport, industry, agriculture, and households releases huge amounts of environmental pollutants. Air quality in most cities in the region is seriously degraded because of low-efficiency motor vehicles. Traffic congestion is another concern in the metro areas in the region. For example, the average speed during rush hour in the inner city area is 10–12 km/h whereas it is 15–19 km/h, in the outer area in Bangkok (Ichinose et al., 1993). Threewheeled passenger vehicles and two-stroke motorcycles are mainly responsible for excessive air pollution in the city areas. Total suspended materials (TSP) released in some of the city areas are already above the World Health Organization (WHO) standard level. For example, metropolitan cities (i.e., Jakarta, Indonesia; Bangkok, Thailand) have already crossed the TSP level set by WHO guidelines (see Table 6). But other pollutants such as lead, sulfur dioxide, and nitrogen dioxide are well below WHO guidelines (UNEP, 2000). Most of the member countries have already introduced unleaded gasoline; after that, the level of lead in

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504 Table 6 Urban air quality in the ASEAN region Urban air quality

WHO guidelines

ASEAN range (mg/m3)

TSP SO2 NO2 Leaded gasoline Lead in ambient air Malaysia and Thailand Singapore

100 mg/m3 50 mg/m3 50 mg/m3 Phased out in much of ASEAN; planned for the rest by 2001–2005 Before implementing unleaded gas 1.4–1.5 mg/m3 0.5–0.6 mg/m3

95–270 o50 o50 After implementing leaded gas 0.1 mg/m3 0.1 mg/m3

Source: UNEP (2000).

Table 7 Introduction of unleaded gasoline in the ASEAN Countries

Unleaded introduced

Completely unleaded

Brunei Cambodia Indonesia Lao PDR Malaysia

Jan. 1993 N/A 1997/1998 N/A 1991 N/A 1993 Jan. 1991 May 1991 May 2000

March 2000 N/A 1999/2000 N/A N/A N/A 2001 July 1998 Jan. 1996 Jan. 2005

Myanmar Philippines Singapore Thailand Vietnam

It should be noted that indoor air pollution in some rural (and urban) areas of ASEAN may be a worse health hazard than outdoor pollution for those who depend on wood, charcoal, and other biomass fuels. When the fuels are burnt using inefficient stoves with poor ventilation, concentrations of particulates may exceed WHO guidelines by ten times or more (UNEP, 2000). Over time, there is a high risk of emphysema, other lung problems, and serious eye irritations, mainly affecting women. 6.2. Environmental emissions

Source: UNEP (2000).

ambient air quality has improved considerably (see Table 7). Most of the countries have implemented the air quality standards adopted by the Environmental Protection Agency in the US Environmental Protection Agency (EPA). 6.1. Indoor air pollution In ASEAN member countries, considerable indoor air pollution is caused by incomplete burning of biomass and coal while the people cook in traditional cook stoves. As much as 90% of the biomass is consumed in the household sector in Philippines (Bhattacharya, 2000). The study done by Bhattacharya (2000) shows that 29.1 Mt of CO2 was emitted from biomass combustion, whereas 50.2 Mt was emitted from fossil fuel combustion in the Philippines in 1995. The figures are 569 and 2660 Mt for China, respectively. The high emissions from the cook stoves are due to low efficiency and high emission factors (see Table 8). The average efficiency of the most widely available cook stoves is about 16 percent, using charcoal as fuel. A typical cook stove used in Thailand has an efficiency around 14 percent and emission factors (g/kg of fuel used) of 26.4 CO, 1596 CO2, 10 CH4, and 0.120 NOx (Bhattacharya et al., 2002). Not only is the heat from the burning wasted, but because of poorly designed chimneys, the indoor air pollution is more severe.

The environmental degradation is primarily due to emissions from fossil fuel combustion in the region. The main sources of environmental emissions are power generation plants, cement factories, oil refineries, agribased industries such as palm oil and rubber processing, chemical plants, and wood-based industries. About 90% of the ASEANs primary commercial energy requirement is fulfilled by fossil fuels (coal, oil, and gas). Renewable energy contributed only 8.2 percent in 2000. The CO2 emissions in the region are increasing; however, because of the small economies compared to the developed countries, CO2 emissions per capita are still quite low compared to industrialized countries like the United States (Luukanen and Kaivo-oja, 2002). Table 9 shows the trend of CO2 emissions from fossil fuel combustion in various countries in the region over the last decade. The high share of thermal electrical generation is responsible for approximately one-third of the total environmental emissions (CO2, SO2, and NOx) in Asia. Table 10 shows emissions of CO2, SO2 and NOx for selected ASEAN countries. CO2 emissions are expected to increase from 40 Mt in 1993 to 355 Mt in 2020 in the case of Thailand. SO2 emissions are expected to increase from 141,000 tons in 1993 to 1,474,000 tons in 2020 and NOx emissions from 146,000 to 1,332,000 tons in this period. Overall, it is estimated that, during 2000–2010, the use of coal for electrical generation in the region will increase by 235 percent (ACE, 2002). The environmental problems associated with this increased share of thermal

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Table 8 Efficiencies and emission factors of selected stoves using charcoal as a fuel Emission factors (g/kg fuel used)a

Cook stove types

Cambodian traditional Thai-bucket cook stove Philippines charcoal/firewood Lao improved Vietnamese improved Malaysian improved

Efficiencyb (%)

CO

CO2

CH4

NOx

34:273.2 35:773.9 15577 13474 87.275.7 155716

2352713 2155726 2567767 2451713 2233761 2576759

7.770.8 6.870.4 7.870.4 9.870.3 10.870.8 8.270.3

0.07070.001 0.03070.001 0.1470.02 0.1970.01 0.370.09 0.4370.04

14.5 16.2 21.5 16.5 25.0 18.0

Source: Bhattacharya et al. (2002). a Mean7standard deviation of the mean (standard error of the mean) for five experimental runs. b Average value for three tests.

Table 9 CO2 Emissions from fuel combustion 1990–1998, (million tons)

6.3. Energy efficiency

Countries

1990

1998

%CO2 increase (1990–1998)

Brunei Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam ASEAN

3.2 141.5 47.4 3.9 36.0 34.9 80.2 18.0 365.1

4.9 226.5 92.4 7.8 62.0 43.5 148.1 32.9 618.1

53 60 95 99 72 25 85 83 69

Energy intensity measures the level of energy efficiency. Table 11 shows that energy intensities in the region have increased over the period 1983–1997. It is expected that a similar trend will continue in the future. Studies have shown that poor energy efficiency is a major contributor to the increasing trend in energy intensities in the region (Balce et al., 2001). It is also expected that the energy efficiency in generation, transmission, and distribution will not improve significantly in the near future. If we look at the efficiency status of the electricity sector in the region, there are considerable efficiency gaps. In the case of the electricity cycle, energy can be lost during conversion of primary energy into electrical energy (i.e., generation), transmission and distribution of electricity, and conversion of electricity into useful energy (end use efficiency). The fossil fuel power plants used in the ASEAN region suffer technical problems because of low maintenance practices, poor efficiency of the combustion boiler, and poor design of the generation plants. The efficiency of such plants range between 21 and 34 percent. These efficiencies are, however, 18–40 percent lower than corresponding efficiencies in the OECD countries (Balce et al., 2001). Data also show that the average efficiency of the oil-fired plants in Singapore is comparable to OECD countries, whereas the rest of the countries still have many efficiency gaps that can be filled or corrected. Transmission and distribution (T&D) in the electricity sector is also generally low in the ASEAN countries. For example, T&D losses in Myanmar, Laos, and Cambodia were 35 (1997), 30 (1995) and 34 (1995) percent, respectively (World Bank, 2000). More generally, T&D losses in the developing countries are two to four times higher than in the OECD countries (World Bank, 1997). Fig. 2 shows T&D losses in ASEAN countries and, for comparison, in Japan. Low-efficiency electrical appliances and industrial motors are still used in the member countries. For

Source: IEA (2000).

generation in the region is, therefore, likely to be a source of major concern. Other environmental problems such as inundations of forests and their associated ecosystems due to damming of large hydro plants and loss of fertility in the soil because of the rapid deforestation are causing direct social and economic impacts. In addition to these, large hydropower plants emit significant amount of environmental emissions (CO2 and CH4) due to decomposition of submerged biomass in the reservoir and other energy intensive activities such as moving large amounts of earth or creating large concrete structures (Gagnon and Vate, 1997). However, these environmental emissions are 30–40 times less than that of fossil-fuel generation. Developing appropriate size of hydropower projects will offset significant amount of environmental emissions. Hydropower development being capital intensive, major investments are necessary to develop hydropower projects. Smaller sized hydropower projects may be financed through the Clean Development Mechanism (CDM) under the Kyoto Protocol of the United Nations Framework Convention for Climate Change (UNFCCC). In this mechanism, developed countries could invest in such projects in the developing countries to claim emissions credits.

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506 Table 10 Fossil fuel emissions: 1993–2020 Countries

Cambodia Lao PDR Myanmar Thailand Vietnam

CO2 emissions (thousand tons)

SO2 emissions (thousand tons)

NOx emissions (thousand tons)

1993

2020

1993

2020

1993

2020

440 770 856 39,692 4722

3406 770 3348 355,576 57,344

2.8 0.01 0.48 141 20

14.6 0.01 0.2 1474 229

1.5 0.01 3.1 146 18.1

13.2 0.01 12.1 1332 221

Source: ADB (1995). Table 11 Evolution of ASEAN energy intensities Countries

Brunei Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam

Energy intensity (toea/1990 US$thousand) 1983

1988

1993

1997

0.08 0.32 0.28 0.06 0.19 0.15 0.22 0.72

0.10 0.30 0.28 0.05 0.21 0.17 0.23 0.70

0.15 0.30 0.34 0.04 0.26 0.15 0.27 0.71

0.19 0.32 0.34 0.06 0.29 0.16 0.31 1.28

Source: IEA (2000). a Tons of oil equivalent.

member countries like Laos, Cambodia, and Myanmar, incandescent bulbs still represent a large share of lighting in the household sector. Air conditioners (AC), used widely in Thailand, consume about 45 percent more energy than energy-efficient ACs. The standard motors in the member countries consume about 8 percent more energy than energy-efficient motors (EEMs). Energy-efficiency improvement (EEI) on the demand side is a promising option for mitigation of greenhouse gases in the electricity sector.

7. Potential opportunities in the energy economy and environmental improvement for sustainable development Energy sources and their associated environmental improvement management factors must be integrated into developmental efforts to achieve sustainable development for the economy. On the case of ASEAN, the region’s enormous hydropower development, improvement in energy efficiency in energy conversion, transportation and utilization, and regional cooperation in energy development and management are promising factors in the successful pursuit of sustainable development in the region. 7.1. Hydropower exploitation The low level of energy security and environmental degradation because of fossil fuel power plants could be

improved through increasing the share of hydropower generation in the region, for which significant potential already exists. Currently, only 9 percent of the region’s hydropower potential is developed so far (see Table 12). To avoid the major environmental degradation due to large hydropower plants, the combined development of run-of-the-river mainstream projects and storage projects should be optimized, for which there is already a promising feasibility study (Yu, 2003). This also contributes to the improvement in the diversification index in the commercial energy supply. Even with the endowment of enormous hydropower resources, costeffective resources are not utilized because of economic constraints in the region. 7.2. Utilization of biomass, geothermal and solar energy in power generation Southeast Asia possesses diverse renewable energy sources (RES), from biomass to geothermal. Biomass resources in the form of wood and agricultural residues are abundant in the region. In 2000, biomass accounted for about 9 percent of renewable electricity generation and the use of biomass in power generation is expected to increase substantially during the next decades (Balce et al., 2003). Geothermal energy is another abundant energy resource (available mainly in Indonesia and Philippines) for power generation. About 2300 MW of geothermal based power generation has been developed so far in these two countries. Indonesia and the Philippines rank second and fourth in terms of global potential. However, lack of mature technologies and sound economic policies limit development of these geothermal resources. The trend of solar energy utilization through solar home systems has been increasing in rural areas, where there is no grid access. About 19 MW of solar power plants are in operation throughout the region. The ASEAN member countries have agreed to cooperate in the development of renewable energy as per the agreement signed in 1986. As a result, the development of renewable energy is expected to accelerate in the near future. Despite the evolution of such renewable energy sources in the power generation, the

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Fig. 2. Transmission and distribution losses (1997). (Source: World Bank, 2000; Note: Figures for Lao PDR and Cambodia represent from 1995.)

Table 12 Hydropower potential in the ASEAN region (MW) Countries

Energy and power demand scenario Total installed Installed hydro Hydro potential capacity in 2000 capacity in 2000

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam ASEAN

705 145 36133 636 13651 1173 11000 6950 20057 5469 95919

0 0 5420 636 2184 457 1650 0 2808 4758 17913

0 8600 76625 20042 25000 5600 9150 0 7000 15600 202417

Source: IEA (2000) and ESCAP (2000).

contribution of wind energy has been very negligible (less than 1 MW in the entire region). Hence, there needs to be a greater research and development efforts from government and non-government organizations working towards sustainable energy development. Once the effective environmental and economic policy instruments are set up in the member countries, greater utilization of these renewable energy resources will not only provide environmental benefits but will strengthen the energy security in the region. 7.3. Energy-efficiency improvement Energy-efficiency improvement is another area which offers significant opportunities for sustainable energy management. For example, significant opportunities exist, both in existing and new power stations, to improve generation efficiencies. The efficiency of exist-

ing power stations could be improved through the adoption of better maintenance and operating practices. The efficiency of new plants can be improved with efficient technologies, for instance, integrated gasification combined cycle (IGCC) and pressurized fluidizedbed combustion (PFBC). These technologies have efficiencies of the order of 45 percent. Not only will such efficiency improvements help to narrow the electricity demand and supply gap, it will also be beneficial for the environment. For example, it is estimated that an increase in efficiency of a standard coal-fired power plant from 35 to 45 percent (typical efficiency of supercritical technology) could lead to a reduction in overall emissions by 29 percent in the region (Balce et al., 2001). Significant potential for energy savings in T&D in the ASEAN also exists. A study by the World Bank shows that cutting T&D losses by merely one-tenth in Asia will reduce investment requirements for new installed capacity by US$8 billion, which is enough to pay for control technologies to reduce particulate emissions for every new power plant built in the entire developing world during the 1990s (World Bank, 1992). End use energy efficiency improvement is yet another area that creates significant benefits in the region. As explained earlier, the Thai industrial sector consists of a significant portion of standard motors. Replacement of such standard motors by efficient ones could result in a 7 percent savings in electricity. Similarly, in Malaysia, efficient air conditioners consume 44 percent less electricity than conventional ones. It is estimated that more than 100 million kWh (0.1 percent) of energy and more than 58,000 tons of CO2 could be saved annually by implementing the minimum energy-efficiency standardization program for air conditioners alone in Malaysia (Mahila et al., 2000).

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Table 13 Fuel and economic saving potential through efficiency improvement Countries Savings in Mtoea

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam ASEAN

Value of savings (US$thousand)

2000

2005

2010

2000–2005 2005–2010

0.04 — 3.13 — 2.25 — 0.52 1.08 2.2 — 8.7

0.13 — 6 — 3.75 — 2.38 2.16 8.78 — 23.2

0.17 — 9.81 — 3.75 — 2.62 0.54 10.98 — 27.87

158 — 8491 — 5580 — 2697 3013 10,212 — 30,151

279 — 14704 — 6975 — 4650 2511 18,378 — 47, 497

Source: ACE (2002). a Million tons of oil equivalent.

Similarly, there are still opportunities to improve energy efficiency through high-efficiency motors, highefficiency transformers, variable-speed controls, the automatic power factor control, and demand control. It is estimated that 15–30 percent of the energy used in cement factories can be saved with improvements in efficiency. Economic saving potential due to energyefficiency improvement is very promising; altogether US$47.5 million could be realized in the region during the period 2005–2010, excluding Cambodia, Laos, Myanmar and Vietnam (see Table 13). These efficiency improvement options are cost-effective also, and this could lessen the foreign debt, creating extra money for investment in the energy sector of the region.

kWh; whereas it ranges from 2.91 to 7.38 cents/kWh for the fossil fuel-based Thailand electrical system (ACE, 2002). Moreover, there is a huge variation in per unit electricity prices throughout the region (minimum being 0.55 cents/kWh in Laos to 17 cents/kWh in Cambodia in 2002). Thus the price variation in electricity could be minimized with an integrated approach in the planning, operation, and management of a power system.

8. Conclusion ASEAN has diverse natural resources. However, many of these resources are minimally or not exploited because of various reasons. Economic diversification, lack of institutional infrastructures, and political conflicts are the major barriers to sustainable energy development. Lack of appropriate legislation and policies for energy sector reform are other barriers. The realization of a sustainable energy path could be greatly assisted by common interests and adoption of regional approaches on addressing energy issues. Such approaches could include developing trans-ASEAN gas pipelines and electricity grids, creating regional energy markets, and adopting common efficiency standards. These are in the implementation stage to some extent. Efficiency improvement both in the supply and demandside and energy diversification through the development of non-fossil fuel resources (i.e., hydropower, solar, biomass and geothermal) are the key to economic and environmental benefits. Because both options are capital-intensive, there is strong need for cooperation and developing the appropriate institutional structures and decision mechanism across the region.

7.4. Cooperation in energy and environmental management Significant opportunities exist in the region with the integrated approach to energy development and management. Some of the initiatives currently being made to the common electricity grid and natural gas pipelines reflect a great hope for mutual cooperation. A common electricity transmission grid will link the northern ASEAN network, which is mostly hydro-based, to the southern ASEAN’s networks, which operate on coal and oil. The common electricity transmission network will reduce costs significantly, because the low-cost marginal electricity of one country in any particular instance can replace the high-cost marginal electricity of another country. For example, available low-cost hydro energy in Laos will avoid the operation of high-cost thermal plants in Thailand, thus bringing significant operation and maintenance costs down for the Thai electrical system. For example, the per unit electricity price in hydro-based Laos varies from 0.55 to 5.22 cents/

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