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Asian growth changing global energy landscape
by Staff Writers
Daegu, South Korea (AFP) Oct 15, 2013

Asia-Pacific energy demand to increase 67 percent
Daegu, South Korea (UPI) Oct 15, 2013 - The 48 nations comprising the Asia Pacific region will collectively increase their energy demand by 67 percent between 2010 and 2035, says a new report by the Asian Development Bank.

That demand -- fueled by the region's economic growth and rising affluence -- will represent more than half of the world's consumption, says the report, released Monday at the World Energy Congress in Daegu, South Korea.

"Countries cannot meet these huge power requirements all on their own, so the region must accelerate cross-border interconnection of electricity and gas grids to improve efficiencies, cut costs, and take advantage of surplus energy," S. Chander, special senior adviser, Infrastructure and Public-Private Partnerships at ADB, said in a release.

Demand for coal in the region is on course to rise by more than 50 percent in the period between 2010 and 2035, or almost 2 percent a year, led mostly by China and a pickup in use in Southeast Asia as countries look for low cost options to diversify existing supply sources, the report says.

"Some members in Southeast Asia (such as Indonesia, the Philippines, and Vietnam) will encourage the use of coal, particularly in the power sector, to diversify the energy supply structure and to enhance energy security," the report states.

The bank also projects oil demand to grow by 2 percent a year, led by the transport sector as newly affluent South Asians increasingly purchase cars.

In India alone, ADB predicts that 118 million vehicles will be on the road in 2035, up from just 17 million in 2010.

Natural gas is expected to expand at a rate of 4 percent in that period.

But ADB warns the continued reliance on fossil fuels "presents major pricing, energy security, and environmental challenges," with Asia and the Pacific's carbon dioxide emissions expected to double by 2035, accounting for more than half the world's total output.

"Without reducing its heavy reliance on oil imports, using power more efficiently, and adopting more green energy options, the region will see a growing energy divide between the rich and poor, and increasing threats from climate change," the report states.

Peter Voser, chief executive officer of Royal Dutch Shell, speaking at the congress Tuesday, pointed to Asia's energy demand over the next 50 years and the "historic phase" of industrialization and urbanization in the emerging economies of the region.

"The pace of change is almost inconceivable," Voser said, referring to the region. The Chinese economy, for example, is changing at 10 times the speed and 100 times the scale of Britain during the industrial revolution, he said, citing a McKinsey study.

China and India will account for the majority of global energy demand in the next two decades, Voser said.

From oil to nuclear power, via gas, coal and renewables, Asia's economic growth is increasingly steering the forward path of the global energy industry.

"It's clear that Asia's emerging economies have entered a historic phase of industrialisation and urbanisation," Peter Voser, the chief executive of energy giant Shell, said at the ongoing World Energy Congress in Daegu, South Korea.

"The pace of change is almost inconceivable," Voser said.

Shell estimates that energy demand across the Asia region will double over the next 50 years, with China and India the main growth drivers for at least the next two decades.

"This is not only transforming Asia's energy system, but also the world's," Voser said.

The geographical shift in global energy consumption is already becoming clear.

China passed the United States in September as the world's biggest net oil importer, driven by faster economic growth and strong auto sales, according to data released last week by the US Energy Information Administration.

In August, energy consultancy Wood Mackenzie predicted that China would be spending $500 billion a year on crude oil imports by 2020 to meet rising demand.

As a result, members of the Organisation of Petroleum Exporting Countries (OPEC) would be "compelled to shift their focus" from the United States towards China, Woodmac said.

Increasing Asian demand for natural gas is also resulting in profound sectoral changes, with suppliers boosting production of liquified natural gas which can be transported by boat to markets not served by pipelines.

"In the gas sector, we have shifted our focus from the Atlantic basin to Asia-Pacific, through agreements with a number of major Asian players," Gerard Mestrallet, the chairman of France's GDF Suez, told AFP in Daegu.

The French giant is engaged in a number of energy infrastructure projects in the region -- particularly India and China -- and is a partner in a liquified natural gas export terminal being built in the United States to supply Asian markets via Panama.

Surging Asian demand for coal is also redrawing the energy landscape.

China already consumes more than half of the global coal supply and Woodmac estimates that coal will surpass oil as the world's major fuel by the end of the decade.

China will account for two-thirds of that growth in consumption, with half of China's new power generation capacity to be coal-fired.

Asia also looks set to drive the nuclear power sector, despite safety concerns and significant public opposition in the wake of the Fukushima disaster in Japan.

China and India are currently building 30 and seven reactors respectively and dozens more are in the pipeline across the region.

And Asia's search for energy sources extends to renewables, with increasing investment especially in wind and solar power to complement the existing energy mix.

Although the cost of alternative energies, especially in relation to coal, will inevitably restrict their roles, an Asia Development Bank study released in Daegu suggested that renewables would account for 7.1 percent of energy produced in Asia by 2035 -- compared to just 1.9 percent in 2010.






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