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Southeast Asia Has A $2.7 Trillion Choice To Make

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For many years Southeast Asia has been a cautionary tale for what not to do in terms of energy sector economics. Once one of the world’s most active energy markets, Southeast Asia was hit with wave after wave of economic and political hardships that arrested its energy growth, from political instability in Thailand to growing nationalization paired with devastating natural disasters in Indonesia, not to mention myriad offshore territorial disputes throughout the region. This all dovetailed with historically low oil prices around the globe, making Southeast Asia woefully undesirable to investors.

Now, as Southeast Asia continues to urbanize at a breakneck speed, the developing region is projected to see a massive growth in energy demand over the next 20 years. Demographic changes are to produce a staggering 100-150 million new middle-class consumers in the region. Vietnam will match China as a 50 percent urban country by 2030, with the Philippines and Indonesia, each home to mega-metropolises and massive populations, not far behind.

Expected to increase by a whopping two thirds by the year 2040, Southeast Asia’s energy demand will require enormous investment and infrastructure in the energy generation and transmission sectors. The surging demand begs the question: will Southeast Asia lean harder into coal and carbon or move ahead with more sustainable resources like renewables and natural gas?

By just 2030, it is anticipated that the Association of Southeast Asian Nations (ASEAN) region will become the fourth largest energy consumer in the world. The installed energy capacity in the region will more than double, from 240 gigawatts to 565 gigawatts, meaning that Southeast Asia will be adding a larger quantity of energy capacity in the next 20 years than the current capacity of entire nation of Japan.

ASEAN–which is made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam–is home to a number of poor and developing countries that will be hit particularly hard by skyrocketing energy demand over the next two decades. Projections show that Indonesia, the Philippines and Vietnam will grow by 6-10 percent annually, while Myanmar, Cambodia and Laos will likely see growth in the double digits each year, meaning great economic pressure to come for these developing nations. The International Energy Agency has estimated that US$2.7 trillion will be necessary to meet the growing needs in Southeast Asia for energy supply, transmission and efficiency measures.

Currently, the Southeast Asian energy industry is dominated by coal. According to findings from a 2018 report published by CoalSwarm, a research institute based in San Francisco, California, ASEAN nations make up a quarter of the world’s top 20 investors in new coal capacity. Half of all the ASEAN nations made the top 20: Vietnam, Indonesia, the Philippines, Thailand and Cambodia

By Haley Zaremba

Full Article : https://oilprice.com/Energy/Energy-General/Southeast-Asia-Has-A-27-Trillion-Choice-To-Make.html