OPINION
CAMILLE LEVY
How Asia can get its energy transition right
W
hen I arrived in Singapore to look into the growth opportunities in the energy landscape in the Asian Region, I was aware of some of the well-trodden discussions on the challenges that this region faces: “Asia will continue to lag behind Europe and the US in embracing newer forms of energy, especially clean energy”; “policy bottlenecks will make energy transition painfully slow and dependence on oil and gas inevitable.” Yet, what I find fundamentally different here from my time in Europe is the potential for Asia to borrow from the world’s energy transition lessons—and more importantly its pacing—to set an agenda that balances affordability, reliability and environment. Before delving into the details on how countries can tailor their transition to renewables efforts to meet their development goals; I would like to give way to some background about the region. The region consists of various economies, ranging from developed to least-dev eloped ones; and not surprisingly, fossil fuels including coal, oil and natural gas, are primary energy resources, occupying 85.2% of regional energy mix in 2014. Rapid urbanisation, industrialisation, and economic growth have led to an increasing regional demand for electricity. Without any doubt, how the region tackles and balances its energy demands, vi-a-vis their sustainable energy targets under the United Nations’ sustainable development goals, will re-shape the vision, production and consumption of energy across Asia Pacific. Though electrification has made progress in previous years, the reality is that rural areas still have difficulty accessing reliable electricity at affordable prices. The pressing challenge is to ensure a steady energy supply whilst, at the same time, spur regional economic growth whilst maintaining checks on the environmental impact of the existing and future energy infrastructures. To further illustrate the point, in 2018, 99 out of the 100 most polluted cities in the world were located in Asia. Extremely high pollution in many Asian cities have raised public concerns about the overall impact to human wellbeing. Therefore, it is essential to take into account environmental and social risks during planning, construction, and operation of energy power plants. Government budgets, especially in developing countries, are often insufficient to address the challenge due to paramount costs of building and maintaining energy infrastructure. Various countries have introduced new energy policy mechanisms supported by initiatives such as public-private partnerships to incorporate the latest technologies to enhance power plants. These partnerships have proven to be the most cost-effective approach to enhance electricity access with more efficiency and lower emissions. There has also been an increasing investment in renewable energy with most investment pouring in developing and emerging economies in recent years. Yet, the current outlook of the energy infrastructure indicates that the region continues to lag behind in terms of achieving energy efficiency. According to the World Bank, on average, Asia Pacific requires annual investment of $221b to achieve the 2030 SDG 7 on efficiency. Whilst there is an increased need to reach the sustainable targets, we learned as children that “slow and steady wins the race,” and this adage now seems particularly true for Asian leaders running in what appears to be an ambitious energy race and relentless pressure to achieve sustainable development goals. Australia is an illustrative example where its fast switch to renewables led to a series of blackouts and grid instabilities. Australia’s experience shows how the path to renewable energy is not so straightforward and likely requires a more balanced approach in line with countries’ available energy sources. The challenge is making sure that we are progressing in the right direction, maintaining our responsibilities to our planet but also not compromising grid stability. This is a conversation I have every day with decision makers across Asia. It often means understanding the total 30 ASIAN POWER
Regional Leader GE Steam Power APAC
cost of electricity against systems costs, and the quality of power—and finding harmony between the two. If there is one thing that I have seen leaders in Asia do well, it’s building consensus. Here, more than any other region I have worked in, making sure a potential solution is well accepted is mission critical and building consensus is how that happens. I recently visited the Manjung 4 power plant in Malaysia. Manjung 4, which was the first unit in South East Asia to use ultra-supercritical (USC) technology, produces stable electricity for nearly two million households up to 10% more efficiently than the global average. And each additional percentage point in efficiency reduces carbon dioxide emissions by 2%. Many outside of our industry are surprised to hear that this is a coal-fired plant because of the negative associations with coal and environment. But leveraging advanced air quality control technology has allowed the facility to become part of Malaysia’s solution in reducing SO2 and NOx emissions up to 70% compared to earlier Manjung units. Across the region, leaders are trying to find the right balance. In the Philippines, the debate on how to negotiate existing contracting structures and to continue adoption of cleaner energy technologies while maintaining low electricity prices to fuel economic growth is raging. On the other hand, continued media reports that delays from Japan nuclear restart – or not – may bring 20% to 22% setbacks to its energy mix by 2031 are putting increasing pressure on energy security. Such debates mirror those that I have heard over and over again in Europe, where hasty energy policies have led to unintended consequences. Germany for example has spent 160 billion euros on the shift to renewables in the last five years alone, and CO2 emissions have remained stagnant at 2009 levels for many years. In the meantime, German consumers have seen their bills soar, as Germany’s electricity price has risen to be the second most expensive in the European Union. A recent study suggests that CO2 emissions have dropped in 2019, but also saying that they may rise again as factors like wind conditions are not predictable and renewable capacity isn’t growing as fast as needed. Some argue, Germany has failed in its “Energiewende”, because its targets were so ambitious. As I take part in Asia’s energy transition, I am inspired by the pragmatic conversations I continue to hear on striking that right balance of energy sources with a mindfulness of the long game of affordability, reliability, and sustainability. What others might call ‘painfully slow’, I see as a region being deliberate in its energy transition and learning from the global experience. I look forward to seeing what 2020 brings and contributing as much as I can to its success.
