East Asia Summit - 7th ECTF Meeting

Energy Outlook in East Asia:Asia:

Focus on Energy Saving Potential

International SeminarInternational Seminar‘Energy Future: Turning Challenge into Opportunity’

June 27th, 2008Hotel Riviera Seoul, Seoul, Korea

Shigeru KIMURAThe Institute of Energy Economics, Japan

BackgroundPrimary energy supply in East Asia will increase 3% per annum, from 2,425 MTOE in 2000 to 5,931 MTOE in 2030 according to the rough forecast by MTOE in 2030 according to the rough forecast by IEEJ. The growth rates by each energy are:

Coal: 3.0%, Oil: 2.8%, Gas: 3.9%Nuclear: 3.4%, Hydro: 3.2%, Others: 2.9%

6 000

7,000

3,000

4,000

5,000

6,000

MTO

E

0

1,000

2,000

3,000

1980 1990 2000 2010 2020 2030

C oal O il Nat ur al gas Nuclear Hydr o Ot her r enewables

Source: ASEAN and IEEJ Energy Outlook

BackgroundFinal energy consumption in East Asia will also increase 2.8% per annum, from 1,554 MTOE in 2000 to 3 571 MTOE in 2030 The growth rates by 2000 to 3,571 MTOE in 2030. The growth rates by each sector are:

Industry: 2.2%, Transport: 3.6%, Others: 2.9% y , p ,

3 000

3,500

4,000

1,500

2,000

2,500

3,000

MTO

E

0

500

1,000

1980 1990 2000 2010 2020 2030

Indust ry Transpor tat ion Others Non-energy Use

Source: ASEAN and IEEJ Energy Outlook

Background

90% f F il E Sh i 2030

Importance of Energy Saving

90% of Fossil Energy Share in 2030

Energy Security Climate Change

Necessary ActionsSaving Energy ConsumptionUse of Low or Carbon Free EnergyUse of Low or Carbon Free Energy

Policy Process on Energy Security

At the 2nd EAS in 2007 in Cebu, Leaders resolved “Cebu Declaration on East Asian Energy Security”.To show ERIA’s value-added to Leaders through policy-oriented recommendations, ERIA will contribute to the implementation of the Declaration.

Cebu Declaration on Cebu Declaration on ERIA’s ContributionERIA’s Contribution

Set individual goals and formulate action plans l il f i i ffi i

East Asian Energy SecurityEast Asian Energy Security

Working Group for Analysis on Energy

ERIA s Contribution ERIA s Contribution through Energy Projectthrough Energy Project

voluntarily for improving energy efficiency,Encourage collective efforts in intensifying the search for new and renewable energy resources and technologies, including research

Working Group for Analysis on Energy Saving Potential in East Asia Region

Working Group for Sustainable Biomassresources and technologies, including research and development in biofuels Encourage the use of biofuels and work towards a standard on biofuels used in engine and motor

hi l W ki G f S d di i f

Working Group for Sustainable Biomass Utilisation Vision in East Asia

vehicles,…

Working Group for Standardization of Biodiesel Fuel for Vehicles in East Asia

ERIA(E i R h I tit t f ASEAN d E t A i )

For the sustainable economic growth in East Asia, we have to address not only Trade/Investment liberalization through FTA/EPAs but also wide range of policy

ERIA(Economic Research Institute for ASEAN and East Asia)

Trade/Investment liberalization through FTA/EPAs but also wide range of policy issues

Economic Integration in East AsiaEconomic Integration in East Asia

Trade/InvestmentTrade/InvestmentFacilitationFacilitation

Narrowing the Narrowing the Development GapDevelopment Gap

Sustainable Sustainable DevelopmentDevelopment

For example,

•Trade/Investment Promotion

•Trade facilitation,

•FTA/EPA strategy

For example,

•Infrastructure developments,

•Human Resources,

•Small and Medium Enterprise

For example,

•Energy, Environment,

•Poverty reduction•FTA/EPA strategy,

•Intellectual Property,

•Standard Conformity,

•Small and Medium Enterprise,

•Economic development in CLMV countries,

•Information Security

Basic Researches Basic Researches on current and prospective economic situations on current and prospective economic situations of the region as a whole and individual countriesof the region as a whole and individual countries

Working Group for Analysis on Energy Working Group for Analysis on Energy Saving Potential in East Asia Region

Methodology for assessing the energy saving potential

Establishment of the working groupwith 16 members and IEEJ experts

Model AssumptionsPopulation and GDPCar ownershipP iPower generationEnergy saving goals

and action plansBAUMacro data

APSBAU+Energy Macro data,

othersBAU+Energy saving goals

IEEJ Asia/World Energy Outlook Model (Econometrics Approach)

Difference of energy consumption between BAU and APS

Working Group for Analysis on Energy Working Group for Analysis on Energy Saving Potential in East Asia

Sector Wide Energy Consumptionby Scenario in 2030

1200

1400MTOE Energy Savings Potential

} } }800

1000

}

}} }

400

600

0

200

Industry Transport Others Electr icityIndustry Transport Others Electr icity

BAU APS

Outline of IEEJ Asia/World Energy Outlook Model

Geographical Coverage and Energy Balance Basis E B l T blBalance Basis Geographical CoverageAsia: 13 countries and 1 region

Energy Balance TableFinal Energy Consumption

Forecast energy demand by energy and Asia: 13 countries and 1 region

Oceania: 2 countriesEurope: 4 countries and 3 regionsAfrica: 1 regionN th A i 2 t i

demand by energy and sector in FEC sector using estimated demand functions

E f(Y P E )North America: 2 countriesLatin America: 2countries and 1 regionTotal: 30 countries and regions

TransformationForecast fuel input and

output in

E=f(Y,Pe,E-1)

Total: 30 countries and regions output in transformation sector

Primary Energy SupplyTarget Year: 2030Forecast energy supply

in PES sector making balance at trade

Target Year: 2030

Macro Assumptions for BAU d APSand APS

GDP growth rate (2005-2030)GDP per capita will increase 3,000 US$/person in 2005 to 6 800 US$/person in 20306,800 US$/person in 2030

9.8%10%

12%

7.0%6 2%

8.0%

6.5%

7.5%

9.8%

6.8%

8.3%8%

10%

ate (%

/year

)

3.8%

6.2% 6.5%

3.8%

5.5%

4.0%

5.2%

4.2%4%

6%

al GD

P Gr

owth

Ra

2.6%

1.5%2.1%

2%

Rea

0%AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM Total

(Based on the report of each WG member)

Macro Assumptions for BAU d APSand APSPopulation (average growth rate is 0.8%P.A.)

Population will increase from 3.15 billion persons in 2005 t 3 86 billi i 20302005 to 3.86 billion in 2030

(Based on the return of each WG member)

Macro Assumptions for BAU and APS

Crude oil priceJapan's Import Oil Price (CIF base)Japan s Import Oil Price (CIF base)

100

120

Nominal

40

60

80

$/bb

l

Real

0

20

40

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Macro Assumptions for BAU pand APS

N b f h ldNumber of car holdCar ownership will increase from 0.06

hi l / i 2005 t 0 18 i 2030vehicles/person in 2005 to 0.18 in 2030

250.002005

15000

200.00

mill

io

20052030

100.00

150.00

Car

hold

s (m

0.00

50.00

AUS BRN CHN IND IDN J PN KOR MYS NZL PHL SGP THA VNM

Note: Australia, Brunei, China, Singapore and Vietnam are estimated by IEEJ

Energy Saving and Action Plans

Action Plans

D t il dDetailedAustraliaJapanNew ZealandChina

None

New ZealandPhilippinesSingapore Saving Goals

Detailed

BruneiIndiaTh il d

IndonesiaKorea

N

BruneiCambodiaMyanmar

ThailandVietnam

KoreaLao PDRMalaysia

None

M d l O t tModel OutputsOverall

MTOE,Mt-C

6000

7000

8000

}-20%

4000

5000

6000

}-17%

}-29%

1000

2000

3000

0

1000

TPES TFEC CO2

2005 BAU in 2030 APS in 2030

M d l O t tModel OutputsTPES b t iTPES by countries

10

3,500APS

2,475

3,110

2,500

3,000

nd (M

toe)

APSBAU

1,3751,4

94

1,876

1,500

2,000

ry En

ergy

Dem

an

40

430 492

319

203 422 81

379

8521 530 536

214378

2 1 227 69

500

1,000

Total

Prim

ar

140

5 6 5

99 27 22 97 50

20 142122 181

3 5 1 6

128 21

0 5 58 122

4 27 17 25 34 12130 53 84

22

27169

0

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

'05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM

M d l O t tModel OutputsFEC by sectors

1,8742,000APS-11%

1,600

1,3311,400

1,600

1,800

ector

s (Mt

oe)

APSBAU

-11%

-21%

-20%

9251,086

934

1,185

800

1,000

1,200

nsum

ption

by S

e -21%

165

400498

82165200

400

600

800

Final

Ener

gy C

o

82

0

200

BAU

APS

BAU

APS

BAU

APS

BAU

APS

'05 '30 '05 '30 '05 '30 '05 '30

F

Industry Transport Others Non-Energy

M d l O t tModel OutputsCO2 emission by energy

5000

3,5263500

4000

4500

(Mt-C

)

-1,227 Mt-C-35%

389 Mt C

1,696

2,299

1 5712000

2500

3000

Tons

of C

arbo

n -389 Mt-C-25%

-66 Mt-C-10%

,

769

1,5711,182

186

663 597500

1000

1500

Millio

n T

186

0BAU APS BAU APS BAU APS

'05 '30 '05 '30 '05 '30

Coal Oil Gas

M d l O t tModel OutputsEnergy Intensity

350

250

300

350 -14%

-31%

150

200

250

50

100

150

02005 2030 BAU 2030 APS

TPES/GDP

Model OutputsConclusion

The existing energy saving goals could reduce 20% of TPES and 29% of CO emission i 2030 of TPES and 29% of CO2 emission in year 2030 compared to BAU.The energy saving results from highly efficient The energy saving results from highly efficient vehicles and appliances as well as improved thermal efficiency for coal and gas fired power l tplants.

The energy saving amount is significant but not enough to contribute to energy security and enough to contribute to energy security and climate change mitigation in EAS region.

Policy Implications (1)Policy Implications (1)The analysis in this report indicates that there issignificant potential for countries in the EAS region toreduce growth in energy consumption and carbonreduce growth in energy consumption and carbondioxide emissions by implementing policies across allsectors of the economy that encourage improvements iny g penergy efficiency and conservation and increase the use oflower emission technologies and fuels.It is clear that many EAS countries already have a varietyof policies aimed at achieving energy saving goals.H it i d d th t d t il d ti lHowever, it is recommended that detailed action plansshould also be developed which outline in a broad sensehow these energy savings will be achievedhow these energy savings will be achieved.

Policy Implications (2)A range of policy options are available which could driveimprovements in energy efficiency or the enhanceduptake of low emissions technologies. These policiesinclude: communication campaigns, performance andemission standards, renewable energy targets,enhanced research and development funding, and

li it i i i i i t t h t dexplicit emission pricing instruments such as taxes andemissions trading. The choice of policies used inindividual countries will depend on a range of countryindividual countries will depend on a range of countryspecific factors and other competing policy objectives.

Policy Implications (3)A range of more energy efficient and lower emissiontechnologies were identified for EAS countries. In

ti l th f ffi i t hi l dparticular, the use of more energy efficient vehicles anddemand management strategies in the transportation,residential, and commercial sectors were key toresidential, and commercial sectors were key toachieving potential energy savings. Improvement in theefficiency of thermal electricity generation was alsoidentified as being key to achieving energy savings.International collaboration on technologydevelopment and transfer was identified as andevelopment and transfer was identified as anopportunity for achieving future gains.

Policy Implications (4)This study indicates that if all of the currently proposedenergy saving and lower emission fuel policies werei l t d i EAS t i t t l iimplemented in EAS countries, total primary energydemand could be reduced by about 20 per cent in 2030,relative to the business as usual case Carbon dioxiderelative to the business as usual case. Carbon dioxideemissions from energy consumption are also projected tobe reduced by about 29 per cent below business as usuallevels at 2030. Enhanced energy efficiency and anincrease in the share of lower emission and renewablefuels in the energy mix may also have other benefitsfuels in the energy mix may also have other benefitssuch as increasing energy supply diversity andenhancing energy security.g gy y

Policy Implications (5)Although the projected level of energy savings and reductions inCO2 emissions could be considered significant, it is not enough to

iti t ll f th h ll d b li t h Mmitigate all of the challenges posed by climate change. Moreaggressive energy saving goals, advanced technologies to reduceCO2 emissions directly, such as carbon capture and storage2 y p gtechnologies, and enhanced uptake of lower emission fuels arerecommended.It t d th t dditi l f t t b i t d ithIt was noted that additional upfront costs may be associated withimplementing more energy efficient technologies and increasing theshare of renewable energy sources. However, financial andgy ,economic analysis was outside the scope of this study. It shouldbe assessed in the near future.

Work in year 2008Reassessment on the impact of the preliminary energy saving goals and p y gy g gaction plans of EAS countries to be reported to EMM2 early August 2008Discussion on appropriate energy efficiency indicators to contribute to ypromotion of technology transfer among EAS regionDiscussion on preparation of workable energy saving action plansgy g p

Thank YouThank You