Issue 18 Politics of The Future Energy Apr 2012 by Noviscape Consulting Group

18 ISSUE

Politics of The Future Energy The Future of Energy Governance The Rise of Renewable Energy and NIMBY-ism Southeast Asia Energy towards 2020: A Supply Side Reflection Interview with Mr. Paopong Temsumrit Infographic: Scenarios for ASEAN Energy Consumption in 2030

EDITORIAL

BY MR. KAN YUENYONG

Founder, Siam Intelligence Unit

BY MR. KAN YUENYONG Founder, Siam Intelligence Unit

KEYWORDS: With my other senior colleagues from King Prajadhipok’s Institute, I attended a meeting with Tarmizi A Karim, the acting governor of Aceh province, during my trip to Indonesia earlier this year.1 I saw a map of Aceh on the meeting room wall. It was an energy concession map of Aceh. I had been told that the tsunami caused from the 8.7-magnitude earthquake in 2004, which took the lives of 170,000 people was one of the critical factors that caused the cessation of the long and bloody insurgency movement in Aceh. Under the peace agreement in 2005, Aceh would receive special autonomy under the Republic of Indonesia, and would retain 70 percent of its natural resource revenues, and Aceh’s most valuable resources are natural gas and oil. Energy resource itself plays an important role in reshaping our history, whether it is either tragic or epic. The history is made by making a choice, especially a choice on energy. Like Darnial Yergin wrote in his book, the Prize; Churchill decided to choose oil rather than coal for his Navy in order to gain more speed and more efficient use of manpower. It meant that the British Navy needed to rely on insecure oil supplies from Persia, or Iran nowadays, rather than secure Welsh coal. It was the oil fields in Indonesia that triggered Japan decision to launch their strike on America’s Pearl Harbor. In this issue, “The Future of Energy Governance” will draw an attempt by Southeast Asian nations to transform their bureaucratic-capitalist energy sector to become one of energy governance. Although the regulatory body was created, the hybridization of the two will happen instead. However, the degree of governance will be defined by alternative energy: nuclear energy versus renewable energy, and the more the renewable energy, the more the governance scenario. “The Rise of Renewable Energy and Nimby-ism” displays the NIMBY (Not In My Back Yard) phenomena against fossil fuels and nuclear power in the region, thus creating a brighter opportunity for renewable energy, while “Southeast Asia Energy towards 2020: A Supply Side Reflection” points toward the emergence of energy supply side technology development in algae and battery technology. However, a more concrete, implementation level in policy innovation will be needed to achieve the target. In this issue, we interview Mr. Paopong Temsumrit, the director of the project community relations division from the Electricity Generating Authority of Thailand (EGAT). He provides us with his insight on corporate energy demand and supply resolution, and the big picture of electricity connectivity within the region. Infographic illustrates a wrap-up of information for energy consumption and the ASEAN power grid in 2030. Today, as we live in the modern world, we use a different rationale to justify our portfolio of energy resources. Technology, fairness, environment, and security concerns, and more stakeholders will play more important roles in public decision making for energy procurement. Trendnovation Issue 18 has come up with information and articles that try to explain these phenomena.

IDEA An anti-privatization movement in Thailand recently heated up and received critical momentum, especially when there was an announcement earlier this year of the holding back of new concession rights to oil and gas companies, both off-shore explorations. There has been an on-going debate on these issues for decades by pro- and anti-privatization factions. Over the next decade the energy sector in Southeast Asia will be very much in chaos and too complicated for general public understanding. Parts of this development result from a juggling between the main actors in the sector, i.e. various state enterprises, multinational corporations (MNCs), states, public sectors, etc. This process is pushing the region towards a new era of energy governance.

SCENARIOS The scenarios will take their departure from Thailand as the prime example of Southeast Asia’s energy phenomena. They will conform to other ASEAN5 nations (Malaysia, Singapore, Indonesia, Philippines, and Thailand), while the CMLV (Cambodia, Myanmar, Laos, and Vietnam) will follow as the next wave after liberalizing their own economies. Brunei will act uniquely, because it is characteristic of a small net energy exporter country. Meanwhile, Myanmar Oil and Gas Enterprise (MOGE), a 100% State Owned Enterprise (SOE), will be responsible for cooperating with foreign oil companies on Production Sharing Contract (PSC) basis for both on-land and offshore blocks for early monetization of the petroleum resources of Myanmar.

The Bureau-capitalist: Thailand is the most obvious example in this category. After its successful exploration and domestic commercialization of natural gas reserves in 1981, the Petroleum Authority of Thailand (PTT) was established. Net energy exporter countries or emerging and high growth economy countries typically will establish this kind of energy state enterprise. Cambodia hopes to commercialize its Overlapping Claims Area (OCA), and is dreaming of building an energy state enterprise following the model of PTT and Petronas of Malaysia. Normally, the energy sector is only for technocrats

1 http://aceh.tribunnews.com/2012/02/23/raja-thailand-kirim-tim-ke-aceh

1 Source : http://www.energy.gov.mm/moge.pdf

2 ASEAN Energy Corporation : http://www.ifri.org/downloads/fnicolas.pdf

Governance; nuclear power plants; renewal energy; regulator; Overlapping Claims Area; fossil fuel

and politicians. But as the sector has evolved over time, the corporate world has played a more important role in the sector, such as Small Power Producers (SPP) and Independent Power Producers (IPPs) as new electricity producers. The public policy decision also tends to be made without consulting people who are living in the area being developed. Although the authority may hire some marketing or public relation firms Union of Myanmar blocks map1 to make an advertisement to promote the positive aspects of the project, there has not been a serious adoption of the public hearing process. Finally, there is likely to be “structural corruption” in which the energy-technocrats and politicians gain personal benefit from the project.

The Governance: Although some countries in Southeast Asia such as Brunei Darussalam, Indonesia, Malaysia, and Vietnam, are currently net energy exporters of natural gas, coal and oil, with rising demand they will soon all become net energy importers. Whereas Indonesia traditionally was a net exporter, it has already started to become a net importer of crude oil as well as oil products. These countries will soon adopt a liberalization of their energy markets in order to promote alternatives energy and efficiency in using energy.2 These countries already established energy regulatory agencies since the beginning of this millennium namely; the Energy Commission of Malaysia (Suruhanjaya Tenaga) and the Energy Regulatory Commission (ERC) in the Philippines, and the Energy Market Authority

4 (EMA) in Singapore, while the Electricity Regulatory Authority of Vietnam (ERAV) were established in 1999 and the Energy Regulatory Commission in Thailand in 2007.3 This is an ideal platform for all stakeholders to bid their interest base on a rational approach. However, there has been a criticism that some of these commission are not a true independent body.4

them will be at least 4,000 MW of electricity, which is about 1.96 percent of the projected electricity demand in 2025, which is predicted to be between 200,000 and 350,000 MW. Meanwhile Vietnam will build 8 nuclear power plants in Ninh Thuan province. Its first nuclear power plants will be operational in 2020. In Thailand, the new PDP2010 Revision 38 will delay its first nuclear power plant from the earlier PDP 2010 Revision 2 for three years (a change from 2023 to 2026), and decreasing total usage from 7% to 5%9 because of the public unpopularity of nuclear power resulting from the Fukushima nuclear disaster. The project was canceled many times, but EGAT has never abandoned it. The rationale behind nuclear energy is its cheaper costing and energy security, including a decreasing of CO2 emissions when compared to other renewal energy.

Comparing to governance situation in Telecom sector, although there have been strong attempts to alter National Broadcasting and Telecommunications Commission (NBTC)’s membership, due to the politically polarized situation in Thailand, NBTC still seems to be independent from the current government. This characteristic will create a manner of checks and balances in the system.5 However, with regards to national security, NBTC is having difficulty pulling radio frequencies, a valuable public resource, from the state agencies.6 ERC will face a similar problem but to a higher degree, due to the character of energy sectors which will be heavily dependent on the international situation, and highly connected to security issues, such as the strategic reserve fuel issue, and any major conflict over sea lines of communication (SLOC).

According to Burns & Roe Enterprises’ study, the planned locations for nuclear power plants in Thailand are Nakhon Si Thammarat, Surat Thani, Trat, Nakhon Sawan, and Ubon Ratchathani. There were various anti-nuclear protests against the Electricity Generating Authority of Thailand’s (EGAT) plan to build a nuclear plant in related provinces, however. The protest group argued that EGAT has provided inflated peak load estimates, and a “hidden” cost of nuclear energy comes from the related infrastructure building costs and nuclear waste management cost.

The Hybrid: During the energy sector governance transformation, the public sector may likely demonstrate their interest, such as with a protest of dam building in Laos and Vietnam, or oil price protests in both Malaysia and Indonesia. Resistance to change will occur, while the authorities will not easily release their grip on national energy policy. Thus, this scenario should be most likely. The regulatory body ERC was created. Some of the state enterprises, such as the Electricity Generating Authority of Thailand (EGAT), will be fully capitalized and registered on the Stock Exchange of Thailand (SET). EGAT will be one electricity provider among other Independent Power Producers (IPP). The electricity market structure will change from pure monopoly to oligopoly market, but in reality the most influenced decision makers will still be the so called technocrats and the politicians. However, NGOs and Public Sectors will play a more important role in placing their own energy policy on the table as well. The authority will be reluctant to adopt and alter their plan in order to reconcile with the alternative plan, such as revising of PDP 2010 revision 3 from EGAT versus PDP 2012 from the Palang Thai Group7, an alternative energy advocate NGO.

- The Renewal Energy: The policies to support renewable power generation already exist, since it still cannot compete with other conventional power generations. Supporting policy instruments have been implemented, such as a feed-in-tariff and a renewable portfolio standard (RPS). The difference between these two policies is that one sets cost/price (feed-in tariff), while the other sets the quantity (RPS). Also, it can be supported through the clean development mechanism (CDM) where the qualified renewable energy project earns additional money from selling carbon credits.

Although the primary energy resource based on fossil fuels, such as natural gas, coal and oil, will remain, it will have smaller ratios than expected. The energy provider may choose to invest in these energy resources abroad, and import back to the country in order to avoid public conflict with local people. However, the fighting arena will be at the alternative (non-fossil) fuel arena. This arena will be a place for the real governance. It will need to be considered as between energy security versus environment friendly approaches. It will be presented in two alternative modes as follows: - Nuclear Energy: Indonesia will build four nuclear power plants by 2025. The total combined capacity of

Beyond those policies, an adding of externality costs in the production cost will help leverage the renewable energy platform. But, in the real world, it is very difficult to internalize externality into the price of goods and services. One problem is to assess an externality in terms of economic value. However, there have been measures to mitigate externality that have already been implemented, such as standards, pollution charges and an emissions market. The power generation process from renewable energy imposes a lower impact on the environment than fossil fuels, but in many countries this externality is not included in the cost of production. For example, if the carbon price is imposed on the electricity price, low carbon technology that initially has high cost can compete with conventional technology. However, externality is not the only thing to consider if we need to calculate the exact cost of electricity generation. In my opinion, we also need to consider many factors and evaluate as the example shown in

3 Source : (1) Suruhanjava Tenega http://www.st.gov.my/v4/ , (2) Energy Regulatory Commission in Phillipines http://www.erc.gov.ph/, (3) Energy Market Authority in Singapore

http://www.ema.gov.sg/, (4) Electricity Regulatory Authority of Vietnam http://www.erav.vn, and (5) Energy Regulatory Commission in Thailand http://www.erc.or.th/

4 See for example : http://www.palangthai.org/docs/electricitygovernance.pdf 5 See http://www.nationmultimedia.com/2011/09/06/business/Strong-military-role-in-NBTC-30164583.html

and http://www.manager.co.th/mgrWeekly/ViewNews.aspx?NewsID=9540000117312 (in Thai) 6 http://www.nationmultimedia.com/business/Gear-for-change-NBTC-tells-industry-30171808.html 7 Source : http://www.palangthai.org/docs/PDP2012-Eng.pdf

the table. Note that the list is not an exhaustive list; there are more things to be considered. Cost should also be evaluated through the life cycle assessment (LCA) to cover the whole supply chain. Ideally, if we can evaluate the monetary cost of each item, we can derive the exact cost of power generation.

5 DRIVERS & INHIBITORS -

A development in Overlapping Claims Area (OCA): Chevron identified a possible “couple hundred million” barrels of oil and six to eight trillion cubic feet of natural gas within a block in the Overlapping Claims Area (OCA), an area of disputed sovereignty between Thailand and Cambodia.10 If the dispute can be settled and the rights are granted to oil exploration firms it will change the scenario to more of the Bureaucapitalist scheme.

- South China Sea disputed: China tries to use both soft and hard power in the South China Sea area. The area is claimed to have abundant oil and gas resources. ASEAN countries have no consensus on the issue, and China is thirsty for energy to satisfy the growth of its economy. The possible conflict may trigger a high rise in oil prices.

IMPLICATIONS -

While technocrats tend to abandon the public hearing, NGOs and public sectors tend to underestimate the importance of energy security and international affairs; it will be better for both sides to change their position rather than fighting each other. Scenariostyled meetings organized by neutral think-tanks or academics may help to reach consensus. People can provide support for local information to support the decision making process. Information exchange among the communities may help better understanding for the overall situation and can support the small local renewal project.

- Developing a smart power grid system: the participants on both demand and supply sides can get the information and communicate to result in action that stabilizes the system operation. Demand resource is the one that has the potential to adjust quickly in response to a change in the supply side. The system with a smarter grid that can integrate high demand resource can bring in more renewable power generation while maintaining the security and reliability of the power system. This grid will help gain better acceptance for the sustainability of renewable energy. -

Developing an assessment of total cost of electricity generation including Environmental Externality Costs to compare exact cost of electricity generation.

Instead of using the oil fund for subsidizing carbonbased energy, it should be used as a pricing stabilizer instead, in order to guarantee a non- inflationary impact on people’s daily life.

- Prepare a poverty database for providing better energy welfare, i.e. a subsidized scheme for household electricity consumption.

- A readiness of energy station and vehicle: The preparation of a compatible energy station and vehicle is vital for a successful energy policy. The inadequacy of the NGV station to provide efficient service will limit usage of NGV vehicles, while the slow development of Plug-in Hybrid Electric Vehicles (PHEVs) will prevent people from changing their minds from using old style oil usage cars. An efficient mass transit system will also help decrease reliance on personal vehicles. - Environmental & Climate change: an increasing awareness of climate change and a carbon credit campaign will force policymakers to try to avoid CO2 emission fuels. It will thus promote more non-fossil fuel usage. - A new development of oil and gas exploration techniques and gas transportation: A recent boom on shale gas production in the US was caused directly from a new development of exploration techniques. But because the gas is a high-volume low-value commodity, it is very expensive to transport or known as ‘tyranny of distance’. This characteristic of gas will not pose any significance global change to energy situation, but regional change instead. But whenever there is a revolution in gas transportation it may make a high impact on global energy market.11

ABOUT THE AUTHOR

Kan Yuenyong is a co-founder and executive director of Siam Intelligence Unit (SIU), a private think tank and research service on various social, environment, business and economic issues in Thailand. He studied Computer Science and Economics, and has graduated with a Master of Public Administration (MPA) from Chulalongkorn University. His strength is in the ability to synthesize multidisciplinary backgrounds together. He is now studying in the advanced certificate course on Promotion of Peaceful Society (class 3) at King Prajadhipok’s Institute.

8 Published on June 2012, see http://www.eppo.go.th/power/PDP2010-r3/PDP2010-Rev3-Cab19Jun2012-E.pdf 9 The first PDP 2010 will launch the first nuclear power plant in 2020 and expected of total output to 11% of overall power production. 10 http://www.cablegatesearch.net/cable.php?id=08PHNOMPENH128&q=chevron

11 http://www.chathamhouse.org/publications/papers/view/178865

pend the construction of a planned 5 MW solar-powered project at Thap Sakae district.11 Their main concern is not about the project itself; but they suspect that EGAT is using this project as a pre-cursor, or a Trojan Horse so to speak, to build a 4,000 MW coal-fired power plant – an agenda which had been openly insisted upon by EGAT, and repeatedly rejected by the locals over the past 5 years.12

BY DR. APIWAT RATANAWARAHA

Department of Urban and Regional Planning, Chulalongkorn University

AND MR. WITCHAYA PRUECKSAMARS

Department of Urban and Regional Planning, Chulalongkorn University

IDEA As a proxy for economic growth, energy demand in Southeast Asia is growing inexorably. In the coming decade, the region’s demand for power is projected to increase by almost 80 per cent, and the bulk of this demand will continue to be met by fossil fuels. More Southeast Asian countries will become net energy importers, particularly due to the rapid expansion of their middle class. As a way out of the dependency on fossil fuels, much hope is thus being placed on renewable energy, especially in the postFukushima world wherein the idea of a nuclear renaissance seems far-fetched. However, whether the exploitation of renewable sources will help ease the pressure on energy security is yet to be seen. Problems and discontent have recently emerged from the sector; for better or worse, they are giving rise to NIMBY (Not In My Back Yard) activism. Though NIMBY-ism against fossil fuels and nuclear has been around for awhile, NIMBY-ism in the renewable energy sector is relatively new. Such activism hints that, despite the current optimism surrounding the sector, the future of renewable energy as our main source of energy may not be so easily attainable.

KEYWORDS:

Renewable energy; energy planning; energy injustice; NIMBY; urbanization

country funded 195 MW of new capacity through nine deals, all but one of which were large-scale solar photovoltaic projects.3 Although Southeast Asia’s potential for exploiting renewable energy sources is enormous, deployment of renewable energy technologies at a large scale is still not cost-competitive. Hence, decision makers are trying to foster the sector through a set of financial and non-financial incentives, backed by targets, institutional establishments and rearrangements, and implementation of policies. Thailand’s Strategic Plan for Renewable Energy Development, for example, calls for 20% of total final energy consumption to be supplied by 2020 from renewable sources.4 Regarding the financial support, in early 2010, Indonesia introduced feed-in tariffs (FITs) for geothermal electricity5; early last year, Malaysia’s parliament approved a sophisticated system of FITs6; this year, the Philippines is fast-tracking its FITs system to spur investment in its solar energy.7 Other financial incentives include tax exemptions for certain technologies in Malaysia, the Philippines, and Indonesia; capital costs grants in Thailand; and R&D incentives in Singapore.8

In addition to the incentives mentioned above, non-financial support mechanisms have also been introduced in Malaysia, Indonesia and Thailand. These include standard power purchase agreements, preferential trade arrangements for small producers, and information support. These initiatives help independent power producers enter the market more The prospect of renewable energy: easily and help reduce trade and administrative barriers, such as protectionism and bureaucracy that are often found Approaching the tipping point in non-liberalized or centralized energy markets.9 Such systems of financial and non-financial incentives, along To begin with, it may be useful to point out that large hydropower should not be considered as renewable energy, with genuine commitments by the governments, will ensure the realization of appropriate conditions for exploiting rebecause of its mature technology, and actual and potential newables’ potential – and thus move us closer towards the adverse impacts. Globally, hydropower accounts for more than 90% of the total installed capacity of all “renewable “tipping point” of renewable energy, i.e. when it becomes our predominant source of energy. energy”. This means that it is a whole different creature compared to other renewables and is thus excluded in our definition of renewable energy.1 Renewable energy and its discontents

SCENARIOS AND EARLY INDICATORS

In terms of power-generating capacity, renewable energy still has a long way to go until it can match conventional fossil fuels, but at the global level the investment gap between conventional fossil fuels and renewable energy is decreasing fast. Total investment in renewable energy, excluding large-scale hydropower, was $187 billion in 2010 whereas the total investment in building new fossil fuel power plants was $219 billion. The gap has more than halved in the period of 2009-2010, decreasing from $74 billion to $32 billion. At the regional level, investment in renewable energy is also taking off.2 For example, from 2009 to 2010, investment in Thailand’s renewable energy industry rose more than fourfold to $700 million, as the

Against the backdrop of decades-long history of advocacy and campaign for the “democratization of energy planning” and struggle against the so-called “energy injustice,” the region’s civil society and local communities are continuing to voice their distrust and skepticism. Nowadays, it seems that they may even block out new power-generating projects that are mandated by the authority, even if it is renewable energy – something that is often considered as undisputedly good in the Western world.10 For instance, local villagers and community-based organizations in the South of Thailand have recently requested the Electricity Generating Authority of Thailand (EGAT) to sus-

1 Renewable energy includes small hydropower, biomass and waste, onshore and offshore wind, geothermal, solar photovoltaic (PV), tidal and wave, and biofuels.

2 3 4 5 6 7

IEA, 2010, “Deploying Renewables Southeast Asia: Trends and Potentials”, p93. UNEP and Bloomberg New Energy Finance, 2011, “Global Trends in Renewable Energy Investment 2011: Analysis of Trends and Issues in the Financing of Renewable Energy” UNEP and Bloomberg New Energy Finance, 2011, “Global Trends in Renewable Energy Investment 2011: Analysis of Trends and Issues in the Financing of Renewable Energy,” p23 Under a feed-in tariff, power producers are eligible for a guaranteed payment for feeding electricity to the grid. http://www.renewableenergyworld.com/rea/news/article/2011/04/malaysia-adopts-sophisticated-system-of-feed-in-tariffs http://business.inquirer.net/tag/feed-in-tariff

A local resident of Thap Sakae questioning the renewable project13

Similarly, there are concerns over bio-mass power plants in Thailand. Many such plants are haphazardly close to residential areas, sometimes just less than 10 meters away from dwellings. This is because under Thai regulations very small power producers (VSPP), defined as producers with less than 10 MW generating capacity, are not required to undertake site-specific environmental impact assessment (EIA) studies. Unsurprisingly, there exist more than a hundred bio-mass power plants with the capacity of 9.9 MW!14 It should also be pointed out that policy making in renewable energy has neither been evidence-based nor responsive. Thailand’s government has been strongly encouraging taxis and car owners to convert their cars to be able to use NGV (natural gas for vehicles).15 But as it turns out, there are not enough filling stations nor fuel to meet demand. Furthermore, data regarding biofuels’ cost-effectiveness and their “well-to-wheel” energy use and emissions are relatively unknown to decision makers. The emergence of socio-environmental problems and discontent from the production of renewable energy should prompt policy makers to be more evidence-based and more responsive to realities happening on the ground, as opposed to drawing conclusions on gut feelings or giving in to vested interests or short-term political imperatives. Catalyzed by advocacy efforts of the civil society networks, this will bring us closer to a more democratized system of energy planning and management.

IMPLICATIONS NIMBY-ism on the rise? NIMBY-ism refers to the opposition by local residents to a new development project close to them. It can be interpreted as a sign of an empowered society; or more

accurately for this context, a more democratized approach for the production of energy, because it implies giving higher importance to public opinion, especially to the ones affected by the project, rather than to that of the energy producer or the government. However, there is a slight risk of the NIMBY mentality becoming BANANA – which is a synonym for “Build Absolutely Nothing Anywhere Near Anything (or Anyone),” a comical phrase used to describe unreasonable or “selfish” opposition to land development by locals and advocacy groups. Discontent, such as the demonstration against the solarpowered project, the news regarding bio-mass VSPP, and mono-cropping practice for biofuels in general, will only serve to reinforce NIMBY-ism. Similarly, NIMBY-ism and the BANANA attitude may also block other projects that are more reasonable and needed by the society. Furthermore, strong NIMBY-ism in one country may only serve to encourage the production of energy to be relocated to places outside its native borders. This means that negative externalities associated with the production are only exported, not mitigated or reduced. Bilateral energy deals such as the one between Laos and Thailand are indicative of this trend, i.e. the producer-seller of energy will have to bear adverse social and environmental impacts that entail the production. Another important implication is the risk of social unrest. Although subsidies for fossil fuels are a heavy burden to governments, suddenly pulling them out would certainly result in severe political consequences, such as social unrest, as was seen recently in Indonesia over a hike in fuel prices. Such a risk would become embedded if the lack of alternatives continues.16 All of these issues make the paradigmatic dilemma of cheap-versus-clean energy much more difficult to solve.

Urbanization as an opportunity The 2011 World Energy Outlook report estimates that 90 per cent of energy demand growth between 2010 and 2035 will come from non-OECD countries. Meanwhile, the trend of urbanization in the next few decades will also largely occur in non-OECD developing and emerging countries. The level of urbanization is a rough indicator of energy consumption. The more urbanized a country is, the more energy it consumes per capita. In terms of urbanization, the “tipping point” for the region, i.e., when there is more urban population than rural, is around the year 2013, which coincides well with the region’s shift to becoming a net energy importer.17 More innovative renewable energy and energy efficiency solutions are being experimented with and scaled-up in urban areas and communities. In this region, Singapore is becoming a key leading test-bed for R&D and businesses in low-carbon energy and energy efficiency. Notable projects include the Experimental Power Grid Centre, the Floating Solar PV project, electric vehicles and charging infrastructure, and Zero Energy Buildings.18 Moreover, there are the “Smart Community” projects being implemented across Southeast Asia by Japanese companies and agencies from the EU. In Vietnam, there are the biological-environmental management systems and water treatment projects; in Malaysia, “Smart City – Smart Village” initiatives; and in Indonesia, solar PV for homes and industrial parks, energy storage systems, and gas cogeneration.19 And as decentralization deepens, lower levels of government are becoming the focal point for policy-making and engagement. In particular, as a governing entity, municipalities

8 International Energy Agency (IEA), 2010, “Deploying Renewables Southeast Asia: Trends and Potentials”, p8

9 ibid. 10 For references, please search for Thailand’s Pak Mun Dam and the Xayaburi Dam in Laos. 11 http://prachatai.com/journal/2012/03/39758 12 http://www.bangkokpost.com/lite/topstories/259246/anti-coal-activists-fight-for-ecology-democracy 13 http://www.youtube.com/watch?v=AsBQIkC61zE 14 http://www.prachatai3.info/journal/2012/04/39981

15 Asian NGV Communications, April 2011, “Bangkok taxi replacement program and Thai’s CNG station target” 16 http://www.straitstimes.com/BreakingNews/SEAsia/Story/STIStory_783071.html 17 http://www.unhabitat.org/documents/SOWC10/R7.pdf 18 Singapore International Energy Week, 2012, “Securing Out Energy Future”, a supplementary booklet of Financial Times newspaper, April 2012. 19 http://www.pikeresearch.com/blog/japans-smart-community-program-spreads-globally

and cities could potentially act more rapidly and be more hands-on than the national or regional authorities.

DRIVERS & INHIBITORS Drivers: • “Bottom-up” EIA – Current Environmental Impact Assessment (EIA) procedures are usually prescribed from the top and they provide limited scope for inputs of interested and affected parties. Experts are hired to do the assessment, but due to the region’s often weak, fragmented and outdated regulatory framework, their EIAs are quite often incomprehensive and biased. As a result, these studies are deemed by many, especially the civil society, as being ineffective in achieving environmental protection and sustainable development. Hence, bottom-up and cumulative approaches to EIA are beneficial. Examples of these include the “Ngan Wijai Thai Baann” or “Thai villagers’ research”.20 Recognition of such an approach will facilitate a more evidence-based dialogue among stakeholders, and as power-generating projects become more transparent and accountable, propensity for NIMBY-ism and BANANA-ism should lessen. • Intra- and inter-regional co-operation and networking – Policy makers at all levels of the government can play a big part in negotiating with NIMBY-ism, as well as advancing the renewable energy sector. They could bring different stakeholders together to have an evidence-based dialogue on how to best incentivize the local communities, i.e. make them say “Yes, in my front yard!”21 International co-operations such as the “Smart Cities and Communities” initiatives and “smart grid” projects, and networking events such as the annual Singapore International Energy Week are of crucial importance.

Inhibitors: • Centralized and monopolistic energy systems are dimming the prospect of renewable energy – Electricity authorities of Thailand and Vietnam have long been accused of systematically over-projecting demands. 22 Allegedly, this is partly due to an organizational incentive structure that rewards investment for the sake of investing, which leads to a vicious cycle of over-projection and over-investment.23, 24 Moreover, stories of alleged abuses emerge every now and then. Residents of the Philippines’ Island of Mindanao have accused the energy authority and state-owned distributors of manipulating the energy supply and deliberately causing power blackouts – so they can claim that there exists a power crisis, prompting the need to build more conventional power plants such as coal-fired plants and dams.25, 26 It is not surprising that skepticism and questions abound over the need for new power-generation capacity. • Inadequacies in urban planning – One of the fundamental flaws in urban planning in Southeast Asia is that it is generally limited to urban areas. In particular, measures for the planning and management of natural resources tend to be spread too thin

or stretched to the point of becoming impractical or simply absent from the policy frameworks. From a survey done by the International Energy Agency, “unclear land ownership and permit procedure (risk)” are perceived as two of the most critical deterrents to the deployment of renewable energy projects in the region, especially for Indonesia and the Philippines.27 Furthermore, because power plants are often built outside of towns, they affect only those in the rural area. Rural populations tend to not benefit from the production of energy, yet they are faced with the negative and unintended consequences of the production. Therefore, without an effective urban planning framework and enforcement, and more importantly an equitable compensation system, convincing the locals to welcome energy producing plants with open arms will be difficult. • Lack of institutional and professional capacity – Although there is much room for introducing greater energy efficiency and innovative solutions in urban communities, there seems to be a lack of professional and institutional capacity to overcome some of the more deep-rooted barriers, and thereby carry out innovative solutions.

REFERENCES

ABOUT THE AUTHORS Apiwat Ratanawaraha is an Assistant Professor at the Department of Urban and Regional Planning, Chulalongkorn University in Bangkok, Thailand, where he teaches infrastructure planning and finance, urban management, and economic development. His current research includes projects on city innovations in Southeast Asian megacities, infrastructure justice, and inequality in access to basic services in Thailand. He has been a Visiting Assistant Professor at the Department of Urban Studies and Planning at MIT, teaching infrastructure finance and energy security. He was a Doctoral Fellow at the Belfer Center for Science and International Affairs, Kennedy School of Government, Harvard University, conducting research on infrastructure, technological development and innovation policy. Witchaya Pruecksamars holds a BSc in Urban Planning, Design and Management and an MSc in Development Administration and Planning, both from University College London. He is now working as a project coordinator and researcher at the Department of Urban and Regional Planning, Chulalongkorn University. His major research interests are in urban and planning history in Thailand, geo-spatial technologies, and geo-politics of hydropower development in the Lower Mekong Basin.

20 http://www.livingriversiam.org/work/tb/meeting2010.html 21 http://www.iea.org/w/bookshop/add.aspx?id=380 22 Permpongsacharoen, W., 2011, “Presentation on faults in energy planning in Mekong”, a presentation made for the Seminar on Energy Democracy in Mekong Region and in Finland, Mekong Energy and Ecology Network (MEE Net), Thailand 23 Return on Invested Capital (ROIC) incentive structure means that the more you invest, the more profits. 24 http://www.meenet.org/images/power/81329884374_file.pdf 25 http://bulatlat.com/main/2012/03/29/mindanao-power-crisis-ploy-to-justify-coal-plants-environmental-groups/ 26 http://www.asia360news.com/article/southeast-asia/philippines/outage-outrage 27 IEA, 2010, Op.Cit. p120.

BY DR. PUN-ARJ CHAIRATANA Managing Director, Noviscape Consulting Group A

Dr. Srichattra Chaivongvilan

Policy Researcher, National Science Technology and Innovation Policy Office (STI) Ministry of Science and Technology, Thailand

IDEA By 2020, Southeast Asia will be the eighth-largest economy and the third-largest populated region in the world, after China and India (ASEAN Secretary, 2007). Many targets and goals are projected to be achieved by the beginning of next decade. These will be a gigantic challenge for local researchers and policy makers. From a supply side perspective, there have been series of effort in delivering an integrated and robust regional policy and comprehensive technological solutions generated from the local Research and Technology Organizations (RTOs) to facilitate an expansion of Southeast Asia energy infrastructure in favor to the end-user – particularly for the new middle-class and the poor, economic and environmental system.

TRENDS / SCENARIOS ASEAN Economic Community (AEC) as the turning point of a local energy technology research The 2005 scenarios for fuel technology in Asia-Pacific1 perfectly described the current situation and forthcoming regional energy evolution. Conflicts over energy resources are steadily increased, while a severed impacts of climate change due to increasing emissions of greenhouse gases from fossil fuels, particularly coal, becomes one of major drivers for change in sources of energy structure. Paradigm shift for energy security and global warming lead to a regional energy system transformation. Starting from an acceptance of new technologies by society step-by-step in moving to a completely new energy paradigm toward clean energy era. For example, a combination of fuel technologies have already applied to cope with an increased demand, along with more research and development of vehicles using local alternative fuels. These scenarios suggest that significant turning points

KEYWORDS:

Energy foresight; 2020;fuel challenge; new generation biofuel; algae; battery; off-grid technology; low-carbon society; energy policy

in energy technology will occur between 2015 and 2025. According to an on-going development and the more updated figures, ASEAN Economic Community (AEC), which will be started in 2015 will accelerate a pace of regional economic integration. Also by 2020, energy demands in Southeast Asia will almost triple up the current consumption.2 The International Energy Agency (IEA) estimated a cost to build-up new energy infrastructure in Southeast Asia to reach US$1.1 trillion by 2030. One way to reduce such a burden is to reduce a technological royalty fee from foreign technologies. As a result, technological independence on energy will be a hot issue for a green and clean Southeast Asia.

Algae – As a new potential source for the next generation renewable energy Biomass is likely to play the major roles as a main source of a global alternative energy with an estimation to reach nearly doubled amount target by 2020 (Hart Energy’s Global Biofuels Outlook, 2011). For Southeast Asia, biomass will be the dominant source for the future generation while wind and solar are likely to take into account to be supported to achieving the targets. In the 2000s, most of the leading ASEAN member countries started to conduct a research on alternative energy technology and introduce financial incentives and subsidiary schemes for major energy enterprises to establish market for renewable energy produced from the local crops, e.g. oil palm for biodiesel, and cassava, sweet sorghum, and sugarcane for ethanol. It marks the beginning of the first generation biofuel research and consumption in the region, particularly for Indonesia, Malaysia, and Thailand - the major players in Southeast Asia economic development and renewable energy sector. Their accumulated economic size dominates more than half of a regional share of gross domestic product (GDP).The countries are an agro-industrializing nations and enjoy the world top energy crop exporter for decades. Indonesia3 and Malaysia are already the major ethanol & biodiesel consumers4, while Thailand5 is the biodiesel-dominated nation in Southeast Asia.

1 The scenarios and technology roadmaps were developed between December 2004 and November 2005. There are three major scenarios: 1) Dynamic transition to renewables,

2) Volatile, Competitive, Alternative Technologies, and 3) Sustainable, adaptive, diverse hydrocarbons. 2 ASEAN’s final energy consumption will grow at a 4.4% average annual rate from 375 million tons of oil equivalent (MTOE) to 1,018 MTOE (Institute of Energy Economics Japan). 3 Recently, Indonesia replaced Malaysia as the world biggest provider for oil palm. 4 Majority of global biofuels consumption is mainly dominated by a mix between ethanol & biodiesel, while India, Ethiopia, Peru, and Paraguay are mainly relied on ethanol. 5 Thailand is among biggest exporters of cassava and sugarcane.

11 Battery - Accelerate demand for efficiency and eco-friendly Off-Grid technologies: Apart from leading Southeast Asian nations, low rural electrification levels still be a big problem. According to IEA, an electrification rate in the region in 2009 is around 60.2% and there are around 160.3 million people in Southeast Asia live without an access to electricity services, and majority of them are in rural and remote areas of the CMLV countries. For example, Myanmar has the very low rate of 13%, Cambodia at 24% and surprisingly, Indonesia alone has more than 80 million people without access to electricity. In contrast, a penetration of mobile communication among the CMLV is very high. For example, in 2011, mobile devices have already reached the majority of population in Cambodia (87%), Laos (80%), and Vietnam (183%), except Myanmar (only 1.4% in 2010).7

A budgeted personal solar power supply

A juggling for arable land between food and fuel crops have reached an alarming stage (See Issue 1). Urbanization and industrialization are also continuously fetched more land from an agriculture sector. It seems that an-inland harvesting of the first and second generation of renewable energy sources will be unlikely an option for the near future. Micro-Algae received more attention from private and public RTOs in the regions because of its capacity to be cultivated in a non-arable land and non-portable water. It also has a potential high yield (2 – 10 times of oil palm yield) with many applications. Apart from being a high potential third generation renewable energy, Micro-Algae can treat waste water in an industrial area, chemicals and bioactive compound, aquaculture and animal feed, and etc. Since 2011, there have been more technological innovation programs and co-operations between private RTOs from energy sector and universities in region, especially in Indonesia, Malaysia, the Philippines, and Thailand. With a strong link between private and public RTOs, Thailand is the most active country in this region. For example, THINK ALGAE Consortium was established at the end of 2010, including other groups of private-public research programs in wastewater treatment, cement/chemical, and shrimp/feed industry.6 In the near future, it will be likely that Micro-algae can be the potential new generation renewable energy, while the uncertainty will be on the off-shore algae farming – an alternative solution for in-land energy harvesting conflict. 6 7

With these figures and combination of labor migration and communication demand in the region, people in the rural areas will require more energy with different application than a farm tool operations or livelihood. Off-grid electricity in the developing economies has shifted its co-existence with the rural people from a limitation of electricity supply and service into a new need to power their mobile phones and other lifestyle gadgets. Meaning that the individual and household power consumption in remote areas of Southeast Asia will rise from a gigantic demand to communicate and production. In 2012, Thailand already gave the first grade student a free tablet, meaning that an individual energy consumption standard in both urban and rural areas will be increased. More batteries and various kinds of remote energy storage tools will be in a high demand. Rising mobility and communication demands will accelerate more research on affordable power storage and small-scale or micro-power generation to serve the emerging digitized rural people in Southeast Asia.

With a push from demand side, series of energy research projects and targeted figures are needed to be realized by 2020. This policy innovation is required to translate into an implementable level, particularly for energy researchers and community leaders for more continual collaboration. -

- In a national level, the International Energy Agency (IEA) reviews that among major Southeast Asian energy players, Thailand has the most inclusive policy and infrastructure for energy. This can be reflected from the recognition of the momentous issue of policy implication and importance of local technology development among Ministry of Energy and the Ministry of Science and Technology. The Ministry of Energy then developed a renewable energy master plan called ‘Alternative Energy Development Plan’ or ‘AEDP’, which balance economic and environmental dimensions. Lesson can be learned through horizon engagement of policy making bodies. The development of renewable policy is widely acknowledged to be the influential approach for addressing the energy scarcity situation. Nevertheless, does it provide sustainable solutions to meet the energy challenges? Is it the best-suited solution for the long-term energy system? The supply side management is unlikely to be the solitary compound to meet the energy challenges but it is a need for the demand side management, such as Energy Efficiency policy, for the sustainable future.

- Global warming and shift toward environmental friendly lifestyle in SEA megacities. - Unsustain fresh water supply and scarcity and land use for 4F (Food/Fuel/Feed/ and Fiber).

Policy innovation - Narrow down a regional energy policy, increase policy execution:

- The renewables have potentials to expand its generations more than a thousand MW, particularly on biomass. For example, wind, solar, small hydro, and biomass, have the targets to reach 1,200 MW, 2,000 MW, 1,608 MW, and 3,630 MW, respectively. - Diffusion of mobile telephony in a village drives the growth of a new micro-generation industry8 in the developing world -based on renewable energy (Mobile Experts, 2011).

Inhibitors: - An individual energy demand increases from an expanding middle class in the SEA. - Uncertainty and mismatches between energy demand and supply.

Indigenous energy resource is varied greatly from country to country, but it is clear that the region offers large potentials for renewable energy sources, most still untapped. The alternative energy policy in Southeast Asia weights the priority into a local capability development and deployment of “renewable energy technologies”.

PTT Research & Technology (a subsidiary unit of the biggest energy enterprise in Thailand), Thailand Institute of Scientific and Technological Research (TISTR), National Center for Genetic Engineering and Biotechnology (BIOTEC), Chulalongkorn University, Mahidol University, and King Monkut University of Thonburi (KMUTT). Source: BuddeComm

Thailand Collaborative Network on Microalgae Energy

REFERENCES ASEAN Secretary (2007), ASEAN Plan of Action for Energy Cooperation 2010 – 2015.http://www.aseansec.org/22675.pdf Chaivongvilan, S., Sharma, D. &Sandu, S. (2008), Energy Challenges for Thailand: An Overview, GMSARN International Journal, vol.2, p.53-60. Retrieved from http://www.gmsarn.com/sitegmsarn2009/document/journal/vol5no1.pdf Damrongchai, N. and Tegart, G. (2006). Future Fuel Technology Scenario and Roadmapping for Asia-Pacific, paper presented at the Second International Seville Seminar on Future-Oriented Technology Analysis: Impact of FTA Approaches on Policy and Decision-Making, Seville, September 28-29, 2006. Retrieved from http://forera.jrc.ec.europa.eu/documents/papers/FF%20full%20 paper%20for%20IPTS%20-%20Nares.pdf DEDE (2012), Annual reports: Thailand’s Energy Situation 2010, Department of Alternative Energy Development and Efficiency, Bangkok, Thailand. Retrieved from http://www.dede.go.th/dede/fileadmin/upload/nov50/nov52/ener_2551.pdf IEA (2012), Key World Energy Statistics 2011, International Energy Agency, (IEA), Retrieved from http://www.iea.org Inochanon, R. (2010), Algal Biofuel Technology R&D Activity in Thailand, PTT Research Institute, PTT Public Company Limited, December 13-14, 2010.

REFERENCES

Drivers:

IMPLICATIONS

Societal concern on a severe environmental impact of climate change originated from fossil fuel consumption and increasing energy price pressure a consumer to reduce a dependency on the carbon-based energy by blending in a renewable energy as alternative solution (IEA, 2010). The main focus of Southeast Asia energy policies has been to reduce the country’s dependence on energy imports along with the response to climate change-debated issues.

In a regional level, the ASEAN Plan of Action for Energy Cooperation (APAEC) 2010-15, as a part of the ASEAN Economic Community Blueprint 2015 with three specific focuses on energy security, and economic growth and development, in an environmentally sustainable way will need to be realized by all stakeholders and should realistically be implemented – particularly on local knowledge generation and diffusion of energy innovations.

- Off-shore energy harvesting may negatively be affected by an increasing threat to regional energy security, particularly from, terrorist and pirate attacks, and rise of seasonal natural disaster. 8

ABOUT THE AUTHORS Dr. Pun-Arj Chairatana is the Managing Director of NOVISCAPE CONSULTING GROUP and the Principal Investigator of TRENDNOVATION SOUTHEAST NEWSLETTER. He has been involved with various regional scenario buildings and future exercises since 2000. As a policymaker, he was Director of Policy Entrepreneur and Foreign Affairs Department at the Public Policy Development Office (PPDO), the Office of Cabinet Secretariat. He has a background in economics of technological change, innovation management, health and nuclear physics. His expertise is in the areas of strategic foresight, technology and innovation management, public policy, trend analysis and political economy. Dr. Srichattra Chaivongvilan is an energy planning and policy researcher with high experiences in energy policy projects in both developed and developing countries- such Australia and Thailand. Dr. Srichattra holds a Ph.D. majoring in Energy Planning and Policy from University of Technology, Sydney (UTS). While working in Australia, she experienced to work in internationally working environment with professional organizations, such as IAEA and ADB. In her recent experiences, she serves as a policy researcher with the National Science Technology and Innovation Policy Office with interests on the energy economic, energy and innovation policy, and wider impacts from energy policy.

Micro-generation is the small-scale generation of heat and/or electricity on a small scale from a low carbon source (solar, wind, biomass, and etc.) by individuals, small businesses and communities to meet their own needs, as alternatives or supplements to traditional centralized grid-connected power.

INTERVIEW W

BY MR. KAN YUENYONG

Founder, Siam Intelligence Unit

What is the status of the ASEAN power grid?

“At present, interconnection of the transmission system between ASEAN members is expanding under the ASEAN Power Grid master plan. Some interconnections are in services such as the Thai-Laos PDR interconnection, the Thai-Malaysia 300 kV DC interconnection, and the Laos PDR-Vietnam interconnection. The linkage of power flow in the region is also expanding through Malaysia-Singapore and Malaysia-Indonesia.”

What’s the role of Electricity Generating Authority of Thailand (EGAT) in maintaining electricity stability?

Mr. Paopong Temsumrit

What’s your concern regarding Thailand’s electricity stability?

“There has been a continuously occurring breaking of the historical records in electricity peak load consumption throughout this summer.”

“As of 31 May 2012, installed capacity of Thailand’s power system reached 31,450 MW, of which 16,440 MW, or 52 %, is owned by the private sector in the form of Independent Power Producers (IPPs), Small Power Producers (SPPs), Very Small Power Producers (VSPPs) and some power sources in neighboring countries, while the remaining 15,010 MW or 48 % of power capacity is owned by EGAT.” “In general, IPPs generate supplies for base load, while the generation by EGAT will fulfill the surplus demand and maintain system reserve margin.” “Besides the role of major player in the power generation sector, EGAT also owns and operates the transmission system in Thailand. Importantly, EGAT is the system operator of the Thai power system, which is responsible for daily demand forecast, daily generation planning and power dispatching, and for adequate power supply with reliability and stability.”

from Myanmar, these pipelines require routine maintenance for 10 – 15 days annually, and this leads to 2-3 million liters of fuel oil reservation for electricity production daily. To maintain the system power supply with stability, it needs not only prudent system management in the short term, but also security supply in the long term, to ensure that Thailand’s power supply will cover demand in a stable condition. Thailand’s Power Development Plan (PDP) has been formulated with concern for both adequate capacity and security of supply. That means appropriate energy mix is considered. The PDP 2010 report (3rd revision, revised in 2012) concerning diversification of energy sources, mentioned that by the year 2030, the portion of electricity supply from natural gas will decrease to 50%, while renewable energy will get a larger role and nuclear power generation, as a new supply source, will take a 5% share.”

“Energy resources for Thailand’s power generation are from natural gas, lignite and imported coal, fuel oil, and renewable energy (in terms of hydropower, solar energy, wind and biomass). Thailand currently uses natural gas as its main source of electricity production, for 70% of its overall energy sources. Depending on only one single source for electricity production can be considered as a high risk. Although there are 2 natural gas pipelines from the Gulf of Thailand and a pipeline

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group or the Rockefeller Foundation. Copyright © Trendsoutheast 2009 - 2012. All Rights Reserved.

Is there any environmental concern over the coal power plant? “Environmental concern is one of major factors to be considered for new power capacity. In case of the coal power plant, we are looking for effective measures for all generation processes. This means, at the input process we will use high quality coal for less pollution impacts, and during process, the state-of-the-art steam generation, a supercritical boiler will be installed for high efficient fuel burning, while during the output process we will apply clean coal technology, for example, the Electrostatic Precipitator and Flue Gas Desulfurization System. Of course, a continuous emission monitoring system will be installed to ensure that our power plant is being operated in an environmentally friendly manner.”

ABOUT MR. PAOPONG TEMSUMRIT Mr. Paopong Temsumrit is currently the Director of the Project Community Relations Division of the Electricity Generating Authority of Thailand (EGAT). He obtained his Bachelor of Industrial Technology in Material Handling Engineering from King Mongkut’s University of Technology North Bangkok.

Dr. Pun-Arj Chairatana Dr. Apiwat Ratanawaraha Mr. Kan Yuenyong

Co- Principal Investigator

Dr. Donald Arthur Johnson

Editor

Mr. Preeda Chaiyanajit

Project Co-ordinator

Mr. Passapong Boonlueng

Graphic Designer

Regional Horizon / Environment Scanning (HS/ES) and trend monitoring for issues relevant to people. life, and regional transformation across the Sotheast Asian region. Mr. Kan Yuenyong Dr. Apiwat Ratanawaraha Mr. Witchaya Pruecksamars Dr. Pun-Arj Chairatana Dr.Â Srichattra Chaivongvilan

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Mr. Paopong Temsumrit

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