Aligning climate change and sustainable energy development in

Thailand

Ram M. Shrestha

Asian Institute of TechnologySchool of Environment, Resources and Development Thailand

15 June 2006

Developing Visions for LCS through Sustainable Development, 13-16 June 2006, Tokyo, Japan.

2

Contents

I. Overview of Thailand’s energy and environmental situation

II. Potential for energy efficiency improvements

III. Climate-friendly energy strategies/policies

A. Road transport and biofuel program

B. Implications of CO2 reduction target

IV. Concluding remarks

3

Overview of Thailand’s energy and environment situation

4

Fast increasing of GDP, energy consumption and CO2 emissions

• Growing energy demand

• Per capita CO2 emission doubled in 2004 compared to 1990.

AAGR (1990-2004):

CO2 emissions: 6.6 %

Energy use: 6.4 %

GDP: 4.8%

Population: 1.1%

1.0

1.4

1.8

2.2

2.6

1990 1992 1994 1996 1998 2000 2002 2004

Ind

ex

(1

99

0=

1)

CO2

Energy useGDP

Population

5

Energy use per unit of GDP (“energy intensity”)

Primary energy intensity has been increasing (AAGR: 2.3%) in Thailand during 1994-2002.

=>Potential for energy efficiency improvements and reduction in the use of fossil energy and CO2 emissions.

Source: IEA (2004)

1.02-6.246China

1.28-2.485Vietnam

1.04-1.979India

0.64-1.064Asia excluding China

0.29-0.974World

0.19-0.840OECD total

0.090.004Japan

0.700.247Indonesia

0.300.857South Korea

0.430.906Philippines

0.451.135Thailand

Energy intensity(kgoe/US$ at 1995 prices)

AAGR (%)(1990-2002)

Country/region

6

Increasing share of fossil-fuels

0

20000

40000

60000

80000

100000

1990 1992 1994 1996 1998 2000 2002 2004

Oil

Natural gasNew and renewables

Coal

Electricity

Unit: ktoe

� Primary energy supply: 1990: 45 Mtoe 2004: 99 Mtoe

� Share of fossil fuels: 1990: 65% 2004: 83%

AAGR (1990-2004):

Coal: 8% ; Oil: 4.6% ; Natural gas: 11.1%

Electricity: 4.8% and New and renewable energy: 0.1%

7

Increasing energy import dependency

Source: IEA (2004) and DEDE (2005)

• In 2004 alone, energy import accounted for 8.6% of the total GDP (US$14 billion).

51.9%

55.6%55.1% 55.5%

57.4%

45%

50%

55%

60%

2000 2001 2002 2003 2004

8

Growth of CO2 emission per unit of GDP(“carbon intensity”)

0.4

0.8

1.2

1.6

2

1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Indonesia

Thailand

World

Asia (excluding China)

Japan

OECD

CO2 emission intensity (Index: 1972=1)

Increasing CO2 emission intensity (AAGR: 2.6%) in Thailand during 1990-2002.

Source: IEA (2004)

0.44OECD

1.37Indonesia

1.22Asia (ex. China)

0.68World

0.97Thailand

0.66South Korea

0.21Japan

2002Country/region

Carbon intensity in 2002(kg of CO2/US$ at 1995 prices)

9

Trends of local air pollutant emissions

0

500

1000

1500

2000

2500

3000

3500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Unit: thousand tons

CO

NOx

SO2

SPM

29.1SPM*

0.5CO

5.4NOx

-8.4SO2

AAGR (1993-2004)

* AAGR (1993-1999)

Source: DEDE (2000-2004)

10

Potential for energy efficiency improvements

11

Potential to improve energy efficiency in coal-fired power plants.

26.8 28.0 29.1 30.0

33.134.8 35.9 36.6 36.7 36.9

41.9

0

5

10

15

20

25

30

35

40

45

Indi

aV

ietn

am Asi

aIn

dones

ia

Chin

a

World

US

AG

erm

any

OE

CD

Thaila

nd

Japa

n

Eff

icie

ncy (

%)

Sources: IEA (2004) based on public electricity plants. For Japan, Germany and USA data are from ECOFYS (2005)

5%

Potential efficiency improvement of 5% (compared to Japan) corresponds to about 12% reduction in coal requirements in power sector. This implies CO2 emission reduction of over 12%.

2002

12

There is also a potential to improve energy efficiency in gas-fired power plants.

31.2

39.5 40.4 40.9 41.0 41.8 41.943.8 44.2

47.5

52.1

0

10

20

30

40

50

60

Vietn

am

Ger

man

y

Thai

land

Wor

ldIn

done

sia Asia

USA

OEC

D

Japa

n

Chi

na

Indi

a

Sources: IEA (2004) based on public electricity plants. For Japan, Germany and USA data are from ECOFYS (2005)

Potential efficiency improvement of 3.8% (compared to Japan) corresponds to about 8.6% reduction in natural gas requirements in power sector.

13

Specific thermal energy consumption of cement production

Note: * Best available technology (BAT) is based on dry-6 stage pre-heater twin stream pre-calcinator pyro-step cooler technology.

The reduction in specific energy consumption by 18.5% could reduce total industry sector energy use by 2% (438 ktoe) in 2004.

788

665

770

690

600

650

700

750

800

Thailand BAT* India Japan

Th

erm

al

co

ns

um

pti

on

(k

ca

l/k

g o

f c

lin

ke

r)

Source: Siam Cement Group Sustainability report (2005); NCCBM (2004); Worrell and Galitsky (2004)

18.5%

14

3.34

2.91

2.6

2.7

2.8

2.9

3

3.1

3.2

3.3

3.4

Thailand BAT*

Gcal/ton of paper production

14.8%

Note: * Best available technology (BAT) is based on Modern Kraft Market Pulp Mill. Source: SCG (2005); NRC (2002)

Specific energy consumption of paper production

This 14.8% translate to reduction of 0.2% (i.e., 40 ktoe) of total energy use in industry sector in 2004.

15

Energy cost reduction in commercial sector:An example

Source: http://www.rrcap.unep.org/ecohouse/

� About 20 million Baht (0.5 million US$) per year could be saved.(About 15 US$ saving per sq. m. per year)

� About 82.6% reduction in electricity requirement. � Energy use for air conditioning is growing rapidly.

-

0.0050

0.0100

0.0150

0.0200

0.0250

0.0300

0.0350

1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

Commercial and public services

Electricity intensity

(kWh per Baht at 1988 price)

16

Climate-friendly energy strategies/policies:More a response to economic and energy

security concerns

17

Five energy strategies of Thai government

� Enhancing efficiency in the transport sector;

� Enhancing efficiency in the industry sector;� ENCON fund

� Enhancing national energy security;

� Enhancing overall capability in energy management and integration; and

� Becoming a regional energy hub.

18

� Establishment of 1992 Energy Conservation Promotion Act

� Establishment of ENCON Fund�to support activities related to energy efficiency

and energy conservation

Specific national energy targets/“strategies”:

� to reduce oil consumption by 20% by 2009;

� To increase the share of new and renewable energy use to 8% by 2011.

� Renewable Portfolio Standard (RPS): to increase the share of RE based power generation capacity to 6% of total capacity by 2011

Energy strategies (contd.)

19

Thailand’s ambitious renewable energy policy

Strategies

RE

8%

RE

0.5%

Heat(Incentive)

3,910 KTOE

Biofuels (Incentive)3,100 ktoe

Ethanol 3.0 M liters/dayBio diesel 4.0 M liters/day

Heat~ 0.00 ktoe

Biofuels~ 0.00 ktoe

2002 2011

R & D

RPSINCENTIVE

Electricity

Facilitator

RPS 140 MW- Solar- Wind- MSW- Biomass- Hydro

Incentive

1,425 MW

ElectricitySolar 6 MWWind 0.2 MWBiomass 560 MW

TargetTarget52,939 ktoe 81,763 ktoeTotal demand

20

Biofuels program in Transport sector

21

Key characteristics of transport sector

� Transport accounts for 37% of total final energy demand in 2004.

� High share of road transport in transport energy demand (78% in 2004)

� Low share of public transport

� Low share of MRT/rail transport

Note: * 1998 data. Source: World Bank Railway database 2001

1901

1105906 884

655458 412

323164 76

0200400600800

100012001400160018002000

Jap

an

Fra

nce

Net

herla

nds

Ger

man

ySou

th K

orea

*

Spa

in

Indi

a*

Chi

na T

haila

nd In

done

sia*

Rail passenger-km per capita in 1999

22

� Utilization of 3.0 million liters of ethanol per day by 2011;

� Utilization 8.5 million liters of bio-diesel per day by

2011;

� Subsidy of 1.5 Baht per liter of gasohol.

Biofuels utilization target and policy

23

Effects of biofuels on CO2 emissions: An

AIM/Enduse Model Analysis

No limit on biofuels production and no subsidy II

Doubling the blend of biofuels + Scenario IIIII

Base case with limited production of biofuels(Government plan)

I

DescriptionScenario

24

Reduction in CO2 emissions with biofuel program in 2035

About 5% of total CO2 emissions from road transportation could be reduced with the government plan.

Without any limits on domestic production of biofuels, 9%of total CO2 emissions could be reduced.

5

9

18

-

2

4

6

8

10

12

14

16

18

20

I II III

Scenario

Pe

rce

nt R

ed

uctio

n w

rt n

o b

iofu

els

in 2

03

5

25

Reduction in oil imports with biofuels promotion (2035)

95

91

82

74

76

78

80

82

84

86

88

90

92

94

96

I II III

Perc

enta

ge o

f Im

po

rted F

uels

in R

oad

Tra

nsport

Secto

r

With the government plan, about 5% of the fuel import in road transport could be reduced in 2035.

As high as 18% of the fuel imports could be reduced if the blend of biofuels is doubled.

26

Implications of a CO2 emissions reduction target:

An AIM/Enduse Model Analysis

27

What changes in primary energy mix are needed to

attain 10% CO2 emission reduction during 2010-2030?

� With a 10% CO2 emissions reduction target,

� coal share to decrease by 22%

� natural gas to share increase by 8%

� Biomass share to increase by 3%

(25)

(20)

(15)

(10)

(5)

-

5

10

15

Coal Oil Natural gas BiomassPercentage change with base case

28

Sectoral shares in cumulative CO2 emissions reduction during 2011-2030 (reduction target: 10%)

Power sector will have the highest share (58%), followed by transport (28%) and industry (15%) sectors.

58

15

28

0

10

20

30

40

50

60

70

Power Industrial Transport

Contribution of each sector to

cumulative CO2 emissions reduction (%

)

29

Co-benefits: Reduction of SO2 and NOx emissions during 2011-2030

6

27

0

5

10

15

20

25

30

NOx SO2

Percentage reduction in ER10

compared to base case

30

Role of energy from biomass including waste in future?

2 7.4

2 4 .3

19 .9

17.7

16 .4

16 .3

1.4

1.4

Indonesia

Brazil

Finland

China

Thailand

Sweden

Korea

JapanShare of biomass including waste

in total TPES in 2002 (%)

31

Regional energy development

� Hydropower in Thailand almost fully exploited

� Low fossil energy reserve, negligible wind power and geothermal potential

� Regional cooperation on cleaner energy (e.g., hydropower in Laos and Myanmar, natural gas in Myanmar, Malaysia, Indonesia) an option

32

Effects of Carbon tax:

An AIM/CGE Analysis

33

Percentage change in CO2 emissions from industry and transport sectors with carbon tax compared to base case

-0.52

-2.11

-2.96

-4.52

-1.48

-2.84

-0.32

-0.06

-8 -7 -6 -5 -4 -3 -2 -1 0

CT5

CT25

CT100

CT200

Industry Transport

• In industry sector, the range of CO2 emission reduction varies from about 0.5% (3

million tons) with CT5 to 4.5% (26 million tons) with CT200.

• Reduction in CO2 emissions mainly comes from fuel switching and reduction in energy

consumption in the industry sector through structure change.

34

Concluding remarks

� There exists large potential for energy efficiency improvements in Thailand which can promote climate friendly sustainable energy development.

� Renewable energy (biomass) is already playing a significant role in the energy system and may have limited role in the long term. Wind, hydro and geo-thermal have limited potential in the country.

� Shift towards biofuels in road transportation and increased share of public transportation (MRT): potential climate friendly sustainable options in the long run.

� Besides energy efficiency improvements, new and renewable technologies will have to be considered for GHG reduction.

� Regional clean energy development an option.

35

THANK YOU.

ram@ait.ac.th

www.ait.ac.th