Enhancing ASEAN's Connectivity

9. Integration of Energy Infrastructure Towards ASEAN's Connectivity

9 IntegratIon of energy Infrastructure towards asean’s connectIvIty Nguyen Manh Hung and Beni Suryadi asean’s energy situation ASEAN is one of the fastest growing economic regions in the world and has a fast growing energy demand driven by economic and demo­ graphic growth. In 2010, its combined nominal GDP had grown to US$1.8 trillion. If ASEAN were a single entity, it would rank as the ninth largest economy in the world. The region’s population of approximately 600 million people is 8.8 per cent of the world’s population. The region’s economic and population growth had a consequential increase in primary energy consumption, which was registered at an average 3.6 per cent per annum from 1995 to 2007. Total primary energy consumption increased from 339 MTOE (million tonnes of oil equivalent) in 1995 to 511 MTOE in 2007. Among the energy sources 122 Nguyen Manh Hung and Beni Suryadi consumed in the region, coal had the fastest growth rate increasing at an annual rate of 13.0 per cent mostly due to the installation of coal­ fired power plants in the region. This is followed by natural gas which grew by 6.5 per cent per annum, increasing its share from 16.4 per cent in 1995 to 21.4 per cent in 2007. Oil remains as the major energy source in ASEAN but its growth was relatively slower than other sources of energy at 2.2 per cent per annum. Electricity production increased from 157 TWh (Terawatt­hour) in 1990 to 504 TWh in 2005 and 571 TWh in 2007. This is equivalent to an average annual growth rate of 7.9 per cent over the 1990 to 2007 period. The region as a whole is a net energy exporter while five of the member states are large energy importers. Although from 1990 to 2007 the region still has substantial net exports on coal and natural gas, in terms of oil, however, it has become a net importer since 1995 as the rapid increase in oil demand was not matched by oil production. With the assumed GDP growth rate of 5.2 per cent per annum from 2007 to 2030, final energy consumption in ASEAN will grow at an average annual rate of 4.4 per cent from 375 MTOE to 1,018 MTOE in the business­as­usual scenario during the same period (ACE and IEEJ February 2011). This is very much higher than the world’s average growth rate of 1.4 per cent per year in primary energy demand for 2008–2035 (IEA 2010). For ASEAN, which has demonstrated a high economic growth and a high need for energy supply, the challenge to ensure a secure supply is an overriding concern. Energy is crucial to the transformation of ASEAN into a stable, secure, prosperous, rules­based, competitive, resilient, and integrated economic community by 2015 — ASEAN Economic Community (AEC) 2015. One way to face this challenge is by the integration of energy infrastructure in the region. asean economic community (aec) 2015 The AEC is the realization of the end goal of economic integration as espoused in the ASEAN Vision 2020, which is based on a convergence of interests of ASEAN member countries to deepen and broaden economic integration through existing and new initiatives with clear Integration of Energy Infrastructure towards ASEAN’s Connectivity 123 timelines. The AEC will establish ASEAN as a single market and production base, making ASEAN more dynamic and competitive with new mechanisms and measures to strengthen the implementation of its existing economic initiatives; accelerating regional integration in the priority sectors, facilitating movement of business persons, skilled labour and talents, and strengthening the institutional mechanisms of ASEAN. The AEC envisages the following key characteristics: a) a single market and production base, b) a highly competitive economic region, c) a region of equitable economic development, and d) a region fully integrated into the global economy. These characteristics are inter­ related and mutually reinforcing. Incorporating the required elements of each characteristic in one Blueprint shall ensure the consistency and coherence of these elements as well as their implementation and proper coordination among relevant stakeholders. Energy cooperation is named under point B — Competitive Economic Region, B4. Infrastructure Development — of the AEC Blueprint that was declared by ASEAN SOE Leaders on the occasion of the 40th Anniversary of ASEAN and the 13th ASEAN Summit in Singapore. Regional collaboration, through...