The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank

Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of
the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with
ADB official terms.

Towards Energy Security in ASEAN:

Impact of Regional Trade, Renewables and Energy Efficiency

Liu Yang, Zhong Sheng & Dina Azhgaliyeva

Energy Studies Institute
National University of Singapore

Baku, March 12, 2018

 Changing dynamics of global energy demand
Primary energy demand and GDP by selected region in IEA New Policies Scenario (1990-2040)

Source: IEA World Energy Outlook (2015)

 Changing dynamics of global demand
 Global energy demand increases by one-third over the period to 2035. Countries from the OECD make only a marginal
contribution to this growth – only 4%.

Primary energy demand, 2035 Share of global growth

(Mtoe) 2012-2035

Eurasia OECD
Eurasia Latin
Europe America 5% 4%
1 370 8%
1 710 China Africa
8%
United 4 060 Japan
2 240 440
States Middle 1 050 Middle 10%
East East
Southeast 65%
Brazil 1 000
1 540 Asia
480 1 030
Africa India
Non-OECD
Asia
Source: IEA,2013
2nd Asian Energy Modelling Workshop on Climate Change and Sustainable Development
Singapore, July 2015 3
 4

• ASEAN is 9 times population intensive than Central Asia

• But the latter has much richer energy endowment, in particular natural
gas.
Central Asia ASEAN
Countries Kazakhstan, Kyrgyzstan, Thailand, Indonesia,
Tajikistan, Turkmenistan, & Vietnam, Philippines,
Uzbekistan, Malaysia, Singapore,
Myanmar (Burma),
Cambodia, Laos, Brunei
Population (2016, million) 70 639
GDP, billion USD (2016) 306.8 2595
Reserves (2016)
Crude oil, billion bbl 31.25 13.39
Natural gas,tln cubic feet 415.4 200.24
 5

Energy productivity in ASEAN over 1971-2015

▫ Increase in energy use by a factor of 4.5

▫ Increase in GDP by a factor of 10.36
▫ Double energy productivity
▫ Increase in GDP per capita by a factor of 4.2
 6

Energy productivity and GDP per capita in ASEAN

6000 4500 • Energy productivity
growth
Enery productivity (1000 US$ / ktoe)

4000
5000 ▫ 105% during 1971 –
3500
2015

GDP per capita (US$)

4000 3000 • Growth of GDP per
2500 capita:
3000
2000 ▫ 421% during 1971 –
2015
2000 1500

1000
1000
500

0 0
1960 1970 1980 1990 2000 2010
Energy productivity GDP per capita (constant 2010 US$)
 7

Total final energy use in ASEAN, 1971 – 2015

• Growth of total
500000
energy use
450000
▫ 454% during 1971 –
400000 2015
350000
300000
Ktoe

250000
200000
150000
100000
50000
0
1970 1980 1990 2000 2010
 8

However, challenges remain

 Energy consumption structure
 High dependence on fossil fuels
 Limited shares of geothermal, hydro, solar and wind energy

 Energy trade
9
 10

Share of renewable energy in total energy use in ASEAN

45
• Renewable energy
structure
40
▫ Geothermal: around 5%
35
▫ Hydro, solar and wind
30 energy: below 5%
25 ▫ Biofuels:
%

20
 Provided directly by
forestry and
15
agriculture e.g.,
10 firewood, wood chips
5
0
1995 2000 2005 2010 2015
Biofuels Geothermal Hydro Solar and wind
 11

Example: Cumulative net capacity of solar power plants in

ASEAN • Major active countries in
2500
renewable energy
production in ASEAN
Vietnam
▫ Geothermal energy:
2000 Thailand Philippines and
Indonesia
Singapore ▫ Hydro energy: Viet
1500
Nam, Indonesia and
MW

Philippines Malaysia
1000 ▫ Biofuels energy:
Myanmar
Indonesia, Thailand
Malaysia and Viet Nam
500 ▫ Solar and wind energy:
Indonesia Thailand and
0 Philippines
Cambodia
 12

Share of energy use to energy production in ASEAN

1.8 • Energy use > energy
1.6 production
1.4 ▫ Cambodia
1.2 ▫ Thailand
1 ▫ Philippines
0.8 • Energy use < energy
0.6 production
0.4 ▫ Brunei Darussalam
0.2
▫ Indonesia
0
1995 2000 2005 2010 2015 ▫ Laos
Brunei Darussalam Cambodia ▫ Malaysia
Indonesia Lao People's Dem. Rep. ▫ Myanmar
Malaysia Myanmar ▫ Viet Nam
Philippines Thailand
Viet Nam
 13

Singapore: share of energy use to energy production • Example of Singapore:

45 ▫ Energy use is more
40 than 20 times energy
35 production
30
25
20
15
10
5
0
1995 2000 2005 2010 2015
 14

• What drives growth in Global energy use decomposition between 2000 and
energy use? 2015
• With latest data from IEA 1.8
1.64
and ADB Input-Output 1.6
tables, we decompose 1.41
1.4
increase in global energy
1.2
use into three factors: 1.20
1
▫ Activity effect : 64% 0.8 0.72

▫ Economic structural 0.6

change effect: 20% 2000 2005 2010 2015
▫ Energy efficiency effect: Energy use
28% Activity effect
Economic structural change effect
Energy efficiency effect
 15

• Example of Indonesia Indonesia: energy use decomposition between 2000

and 2015
2.5
2.40
2.3
2.1
1.9
1.7 1.64
1.5
1.3
1.1 1.11
0.9 0.61
0.7
0.5
2000 2005 2010 2015
Energy use
Activity effect
Economic structural change effect
Energy efficiency effect
 16

What drives growth in energy use?

• Decompositions of energy Economic
use in selected economies Energy structural
Activity efficiency change
between 2000 and 2015 Energy use effect effect effect

Philippines 1.41 1.98 0.65 1.10

Thailand 1.69 1.67 0.79 1.28
Malaysia 1.67 2.41 0.90 0.77

Indonesia 1.64 2.40 0.61 1.11

Viet Nam 2.83 2.06 1.03 1.34

Russia 1.06 1.57 0.71 0.94

Mongolia 2.07 4.39 0.52 0.90
China 3.23 4.86 0.64 1.05
India 2.33 2.67 0.65 1.33
 17

Energy trade
• Data: UNCTAD
• Trade of mineral fuels, lubricants and related materials (SITC 3) in thousands of US dollars,
including:
▫ Coal, coke and briquettes
▫ Petroleum, petroleum products and related materials
▫ Gas, natural and manufactured
▫ Electric current
• Regional concentration of energy trade
▫ Destinations of energy exports from ASEAN: mostly Asia-Pacific region
▫ Home economies of energy exports to ASEAN: Middle East & Asia-Pacific region
 18

Energy trade
• Who buys energy
products from
ASEAN?
▫ Japan
▫ China
▫ Australia
▫ South Korea
▫ Hong Kong
▫ India
▫ Taiwan
▫ United States
▫ New Zealand
▫ Bangladesh
 19

• Who sells energy

products to ASEAN?
▫ United Arab
Emirates
▫ Saudi Arabia
▫ South Korea
▫ Qatar
▫ Taiwan
▫ Kuwait
▫ China
▫ India
▫ Australia
▫ Oman
▫ United States
▫ Iran
▫ Russia
 20

Determinants of energy trade 1995 – 2016

• Findings based on trade gravity model:
▫ Distance matters: Longer distance lowers energy exports
▫ Economic size
 Larger GDP producer tends to have more energy trade
▫ Energy intensity
 Higher energy intensity in an exporter tends to reduce its energy exports
 Higher energy intensity in an importer tends to increase its energy imports
▫ Share of renewables in energy mix
 Economies with larger share of renewables tend to import more energy
▫ Regional trade agreement: correlated with increasing energy trade
▫ Oil reserves
 Exporters with more oil reserves tend to export more energy
 Importers with more oil reserves tend to import less energy
• Energy trade within Central Asia is 2 times larger than the trade within ASEAN
 21
Determinants of energy trade (* p<.05, ** p<.01, *** p<.001)
Model 1 Model 2 Model 3 Model 4 Model 5
Distance -1.501*** -1.629*** -1.717*** -2.083*** -2.012***
(0.0308) (0.0388) (0.0409) (0.0609) (0.0602)
GDP of exporters 0.947*** 1.075*** 1.086*** 0.874*** 0.879***
(0.0147) (0.0228) (0.0228) (0.0397) (0.0396)
GDP of importers 0.764*** 1.025*** 0.935*** 1.348*** 1.353***
(0.0136) (0.0226) (0.0227) (0.0379) (0.0378)
Energy intensity of exporters -0.0673 -0.0863 -0.345*** -0.375***
(0.0569) (0.0581) (0.0948) (0.0945)
Energy intensity of importers -0.0213 -0.167** 0.210* 0.181*
(0.0515) (0.0523) (0.0847) (0.0845)
Regional trade agreement 0.481*** 0.450*** 0.403*** 0.375***
(0.052) (0.0564) (0.0865) (0.0869)
Share of renewables in 0.0202 -0.0359 -0.0434
exporters (0.0151) (0.0241) (0.0238)
Share of renewables in 0.0795*** 0.186*** 0.178***
importers (0.0157) (0.0263) (0.0261)
Oil reserves of exporters 0.308*** 0.305***
(0.0194) (0.0193)
Oil reserves of importers -0.0635** -0.0669***
(0.0201) (0.0201)
Exporters and importers 5.538***
within Central Asia (0.451)
Exporters and importers 2.073***
within ASEAN (0.417)
Constant -25.41*** -35.98*** -35.60*** -35.46*** -37.36***
(0.571) (1.06) (1.165) (1.81) (1.81)
Number of observations 162943 125827 103133 51711 51711
 22

Renewable energy production in Central Asia

5000
• Renewable energy
4500
structure
▫ Hydro energy is the
4000
major renewable source
3500
in Central Asia, in
3000 particular Tajikistan.
ktoe

2500
2000
1500
1000
500
0
1995 2000 2005 2010 2015
Biofuels Geothermal Hydro Solar and wind
 23

Share of energy use to energy production in Central

Asia
• Energy use> energy
2.5
production
2
▫ Kyrgyzstan
▫ Tajikistan
1.5 • Energy use< energy
production
1 ▫ Kazakhstan
▫ Turkmenistan
0.5 ▫ Uzbekistan

0
1995 2000 2005 2010 2015
Kazakhstan Kyrgyzstan Tajikistan
Turkmenistan Uzbekistan
 24

Energy trade
• Who buys energy
products from
Central Asia?
▫ Italy
▫ China
▫ Ukraine
▫ Switzerland
▫ Netherlands
▫ France
▫ Russia
▫ Romania
▫ Austria
▫ Canada
▫ Israel
▫ Spain
 25

• Who sells energy

products to Central Selected home economies of energy exports to Central Asia,
1995 – 2016
Asia?
▫ Most from Russia
Russian Federation
China
Algeria
Finland
Turkey
Germany
Belarus
Azerbaijan
Lithuania
Iran
Ukraine
 26

Conclusions
• Development in renewables has not significantly contributed to improving
energy security so far

• Progress in energy intensity tends to reduce reliance on energy imports

• Energy efficiency progress contributed to reducing energy demand, but

largely offset by economic structural change in part of ASEAN countries

• Regional economic integration has a significant role in promoting energy

trade
 27

Policy implications

• Countries need to enhance the role of renewables in long term energy strategy

• Energy saving gains must be enabled by technological change and economic

structure change

• Regional trade help improve energy security

• Central Asia faces serious infrastructure bottleneck to realize energy bonus due to
lack of maritime transport facilities
 Thank you!

Contact:
Dr. Liu Yang esiyl@nus.edu.sg
Dr. Zhong Sheng esizs@nus.edu.sg
Dr. Dina Azhgaliyeva esida@nus.edu.sg