The ten countries of the Association of Southeast Asian Nations (ASEAN) are set to play an increasingly important role in global energy markets in the decades ahead.
Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam collectively make up one of the world’s most dynamic and diverse regions, with an economy as large as Canada and Mexico combined, and a population that exceeds that of the European Union. Their energy consumption is already comparable to that of the Middle East and is set to continue to grow rapidly from a comparatively low per-capita level, fuelled by rapid economic and population growth, and by continuing urbanisation and industrialisation. In the Reference Scenario, ASEAN primary energy demand expands by 76% between 2007 and 2030, an average annual rate of growth of 2.5% — much faster than the average rate in the rest of the world. Reflecting the current economic weakness, demand is projected to grow modestly in the near term, before quickening. Even in the 450 Scenario, demand grows at 2.1% per year. Coupled with the emergence of China and India on the global energy scene, these trends point to a refocusing of global energy activity towards Asia. Many hurdles will need to be overcome if Southeast Asia is to secure access to the energy required to meet its growing needs at affordable prices and in a sustainable manner. The energy sector in most parts of the region is struggling to keep pace with the rapid growth in demand experienced since the region’s recovery from the Asian Financial Crisis of 1997/1998. With only about 1% of the world’s proven reserves of oil, the region is heavily dependent on imports and is set to become even more so in the future. It also faces possible natural gas-supply shortages in the decades ahead, despite rapidly growing reliance on coal-fired power generation. While parts of Southeast Asia have relatively abundant renewable sources of energy, various physical and economic factors have left a significant share of it untapped. A total of $1.1 trillion needs to be invested in energy infrastructure in the ASEAN region in 2008-2030 in the Reference Scenario, more than half in the power sector. In the 450 Scenario, total investment needs are $390 billion higher. Financing is a major challenge, exacerbated by the recent global financial crisis, which has forced energy companies to cut back on capital spending and delay or cancel projects. At the same time, access to modern energy services still remains limited in some pockets of the region: it is estimated that 160 million people have no access to electricity today, though this number drops to 63 million by 2030 in the Reference Scenario.