Emergence of Southeast Asia as energy giant carries risks, opportunities: IEA report sees continued shift to coal and increasing dependence on oil and gas imports

1. © OECD/IEA 2015
Keisuke Sadamori
Director, Energy Markets and Security
International Energy Agency
Kuala Lumpur, 8 October

2. © OECD/IEA 2015
The context
 Southeast Asia is a key pillar of Asia’s growth
 A mix of countries with disparate energy and economic backgrounds
but sharing a set of common challenges
 120 million people lack access to electricity and almost 280 million without
clean cooking facilities
 Energy efficiency remains a large unexploited resource across the region
 Rising imports sharpen focus on economic & security aspects
of energy use
 Domestic oil, gas & coal production facing a more challenging environment
 Continued development will hinge on the strategic direction
of the region’s and individual country’s energy policies

3. © OECD/IEA 2015
Fossil fuels remain dominant
in Southeast Asia’s energy mix
Growth in ASEAN primary energy demand
Southeast Asia’s energy demand increases by 80% in the period to 2040,
with coal becoming the single largest energy source of region’s energy mix
Renewables
Nuclear
Gas
Oil
Coal
Share from fossil-fuels
(right axis)
Mtoe
200
400
600
800
1 000
1 200
2000 2013 2020 2025 2030 2035 2040
40%
50%
60%
70%
80%
90%
100%

4. © OECD/IEA 2015
Electricity demand triples,
with shift towards coal set to continue
Electricity generation by fuel Installed coal-fired capacity
TWh
10%
20%
30%
40%
50%
Efficiency
Power capacity expands by 400 GW, equal to current size of Japan and Korea
power systems, with increasingly deployment of more efficient coal-fired plants
500
1 000
1 500
2 000
2 500
1970 2000 2020 2040
Geothermal
Solar & wind
Bioenergy
Hydro
Nuclear
Oil
Gas
Coal
IGCCUltrasupercritical
Supercritical
Subcritical
50
100
150
200
250
2014 2020 2030 2040
GW
Efficiency
(right axis)
& efficiency

5. © OECD/IEA 2015
A more challenging environment
for oil, gas & coal production
ASEAN fossil fuel production and trade
While oil output continues to decline, rising coal and natural gas
production is increasingly earmarked for domestic markets
Production Net tradeDemand
Oil (mb/d)
- 8
- 6
- 4
- 2
0
2
4
6
8
2000 2013 2025 2040
Gas (bcm)
- 50
0
50
100
150
200
250
300
2000 2013 2025 2040
Coal (Mtce)
100
200
300
400
500
600
700
2000 2013 2025 2040

6. © OECD/IEA 2015
Growing import needs raise
economic and security concerns
ASEAN value of fossil-fuels net trade
Southeast Asia oil import dependency reaches almost 80% in 2040 and the region
turns into a net gas importer; spending on fossil fuel imports reaches $300 billion
Gas
Oil
Oil and gas
import bills
Billion dollars (2014)
2040
2025
2013
2000
-350 -300 -250 -200 -150 -100 -50 0 50

7. © OECD/IEA 2015
IEA strategy to raise climate ambition
GHG emissions savings
1.4
1.6
1.8
2.0
2.2
2.4
2014 2020 2025 2030
GtCO2-eq
Bridge
Scenario
New Policies
Scenario
Fossil-fuel subsidy reform
Upstream methane
Renewables investment
Reducing inefficient coal
Energy efficiency
Change in energy demand
-80
-60
-40
-20
0
20
40
Coal Oil Gas Low-carbon
sources
MtoeFive measures shaping the Bridge Scenario slow the rise in region’s energy demand
and emissions, using only proven technologies & without harming economic growth

8. © OECD/IEA 2015
Greater integration of the power
network can deliver strong benefits
Potential implications and benefits of enhanced power grid interconnection
(Based on ERIA study 2014, “Investing in Power Grid Interconnection in East Asia”)
Enhanced cross-border integrations can facilitate efficient use
of the region’s resources and enhance energy security

9. © OECD/IEA 2015
Attracting sufficient investment is vital
for securing regional energy needs
Average annual investment in energy supply
Annual average investment needs to increase steadily to exceed $100 billion,
driven by expansion in power sector
Biofuels
Transmission
and distribution
Power plants
Coal
Gas
Oil
2000
20
40
60
80
100
120
2005 2013 2015-
2020
2021-
2030
2031-
2040
Billiondollars(2014)

10. © OECD/IEA 2015
Significant progress has been made
towards phasing out fossil-fuel subsidies
Value of fossil-fuel subsidies in Southeast Asia, 2010-2015
After a peak in 2012, fossil-fuel subsidies are following a decreasing trend
– a result of notable reforms efforts and lower oil prices
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015e
Billiondollars(nominal)
20
40
60
80
100
120 Coal
Electricity
Gas
Other oil
Diesel
Gasoline
IEA average crude
oil import
Dollarsperbarrel(nominal)

11. © OECD/IEA 2015
Looking forward
 Southeast Asia consolidates its status as an emerging giant
in global energy markets
 The energy landscape in Southeast Asia continues to shift
but dominance of fossil fuels remains unquestioned
 Increasing reliance on oil & gas imports will come at a large cost
and will push energy security higher on the region’s energy agenda
 Progress in energy access, fossil-fuel subsidies and energy efficiency
is unfinished business in Southeast Asia
 A stable policy landscape and greater regional co-operation is critical
for balancing energy, economic and environmental policy objectives