'Fastest-growing fossil fuel’ in Asia-Pacific will be gas – ADB

Comments: 0

Demand for natural gas in the Asia-Pacific region is forecast to grow at 3.8%/year between 2010 and 2035 – more quickly than either coal or oil – in an energy supply and demand outlook published this month by the Asian Development Bank (ADB). Growth at that rate – almost double the growth rate that the bank forecasts for primary energy in the region – would see gas consumption rising from 567 million tonnes of oil equivalent (Mtoe) in 2010 to 1,463 Mtoe by 2035.

Key factors in this rapid growth, says the ADB, will be “the lower environmental burden and the ease of use” of natural gas. Nearly half (52%) of the growth in gas demand in the region over the period in question is forecast to come from China, followed by India (13%), Indonesia (6%), and Japan (5%).

The ADB sees the transformation sector – power generation, gas processing, refineries, and other transformation processes – contributing the most to incremental growth between 2010 and 2035, accounting for 56%, followed by “other” sectors (mainly the residential and commercial sectors) at 24%, and the industry sector at 15%.

Interdependence “will enhance supply security”: The bank notes that the Asia and the Pacific region includes a number of natural gas resource-rich countries – including Australia, Azerbaijan, Turkmenistan and Uzbekistan – and concludes that:

“The regional members’ interdependence will enhance the security of energy supplies in Asia and the Pacific. However, bringing the natural gas supply from land-locked locations to the demand centres via pipeline may present difficulties, particularly in central and western Asia. Financing such supply projects will require strong commitment from both exporters and importers to guarantee long-term demand for, and supply of, natural gas.”

Increasing reliance on LNG: Several countries in the region – China, South Korea, Taiwan, Japan, Singapore and Thailand – may increasingly depend on LNG imports, says the ADB. As the construction of LNG facilities requires large amounts of capital, the bank believes that LNG will continue to be traded under long-term contracts, “which often involve arduous contract negotiation”.

The bank goes on to suggest that member governments could work together “to facilitate upstream investment and ensure the long-term commitment of exporters and importers”.

infographic showing continued demand for fossil fuels

RISING RAPIDLY – Energy demand in the Asia-Pacific is forecast by the Asian Development Bank to grow by 2.1%/year through to 2030, which compares with a growth rate of 1.5%/year for the world as a whole. (Source: ADB)

Electricity supply challenge: Turning to electricity generation, the ADB says that “cross-border power exchanges can play a central role in helping Asia and the Pacific meet its booming demand for power, which is set to sharply outpace the rest of the world’s over the next two decades”.

“Our projections show the region will consume more than half the world’s energy supply by 2035, with electricity consumption more than doubling as economic growth and rising affluence drive demand,” said S. Chander, Special Senior Advisor, Infrastructure and Public-Private Partnerships at ADB.

“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.”

The “Energy Outlook for Asia and the Pacific” report provides in-depth data and projections on energy use at the sub-region, country, and sector levels up to 2035, along with an analysis of the impacts of a “business as usual” approach to power, and an alternative approach in which countries scale up efficiencies and low-carbon technologies.

Fossil fossils will dominate: Fossil fuels will continue to dominate the energy mix, forecasts the bank, echoing the views of the IEA, which recently released an energy outlook for South-east Asia

Demand for coal is set to rise by more than 50% over the outlook period, or nearly 2% a year, led by consumption in China and a pickup in use in South-east Asia, as countries look for low-cost options to diversify existing supply sources. Oil demand is forecast to grow by 2% a year, led by the transport sector, with newly affluent south Asians buying an increasing number of motor vehicles.

The reliance on fossil fuels presents major pricing, energy security, and environmental challenges, with Asia and the Pacific’s carbon dioxide emissions set to double by 2035, making up 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,” says the bank.

Using a mix of efficiency measures, advanced generation technologies, and greater use of renewable power could almost halve the projected annual rise in energy demand through to 2035. More efficient oil refining and gas processing, along with a reduction in demand for electricity, offer the bulk of the energy savings potential.

Hefty investment needed: “Meeting the region’s energy needs will come at a hefty cost,” says the ADB, “with estimates the sector will require new investments of about $11.7 trillion through to 2035, based on business-as-usual power use patterns.

“The investments swell to about $19.9 trillion under the alternative approach because of the adoption of pricey advanced coal and natural gas-fired generation technologies, and low-carbon options like wind and solar energy. Finding ways of removing current regulatory barriers will be crucial for the broader use of renewable energy.”