© OECD/IEA 2017 © OECD/IEA 2017

Tim GouldToshiyuki ShiraiAli Al-Saffar

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Southeast Asia: the energy context

Southeast Asia is emerging as major global energy player

Strong economic & population growth, urbanisation & industrialisation

Demand increased by 60% since 2000, strong potential for further growth

A region with multiple energy challenges

65 million lacking access to electricity, 250 million reliant on solid fuels for cooking

Dwindling position as a gas exporter, and a rising dependency on imported oil

Poor air quality, vulnerability to effects of climate change

Opportunities for a cleaner energy future

Paris Agreement ratified by all, increasing attention to renewables & efficiency

Fossil fuel subsidy reforms making progress

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A shift in the global centre of gravity for energy

Change in primary energy demand to 2040 in the New Policies Scenario (Mtoe)

Southeast Asia, India and China are the engine of future energy demand growth, together accounting for almost 60% of the global increase to 2040

Share of global growth 2016-2040

1 005

India 420

SoutheastAsia

790China

United States-30

Japan-50

Europe-280

320Latin

America

485

Africa

135

Eurasia

485MiddleEast

11%

21%

26%

13%

13%

8%

3%5%

Southeast Asia

China

IndiaMiddle

East

Africa

Latin America

EurasiaOther

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-20

0

20

40

60

80

100Mtoe

Electricity leads demand growth

Change in total final energy consumption 2016-2040 in the New Policies Scenario

A growing middle class proves a formidable factor behind both the increase in electricity (in households) and oil (for transport)

Bioenergy Coal Gas Oil Electricity

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200 400 600 800 1 000

Renewables

Nuclear

Oil

Gas

Coal

TWh

The power mix becomes more diversified

Power generation by fuel in the New Policies Scenario

Renewables account for the largest share of installed capacity in 2040,but coal plays a major role in the projected generation mix

2016

Change to 2040

Hydro

Solar PV

Wind

Other

Of which:

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20%

40%

60%

80%

100%

2000 2016 2030 2040

The road to universal electricity access

Access to electricity

All countries in the region achieve universal access to electricity by the early 2030s, deploying a range of technologies depending on circumstance

Access by type of connection, 2030

On-grid43%

Off-grid24%

Mini-grid33%

Philippines

Myanmar

CambodiaLao PDR

Viet NamThailand

Indonesia

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100

200

300

400

500

2000 2016 2025 2040

Coal (Mtce)

A growing need for imports

Fossil fuel production and demand to 2040 in the New Policies Scenario

By 2040, Southeast Asia is a net importer of all fossil fuels,and the import bill exceeds $300 billion

Production Demand

50

100

150

200

250

300

2000 2016 2025 2040

Gas (bcm)Oil (mb/d)

2000 2016 2025 2040

2

4

6

10

8

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The future is not set in stone

Key indicators for New Policies (NPS) and Sustainable Development (SDS) Scenarios

A different pattern of investment could put Southeast Asia on a different, more sustainable pathway, bringing multiple benefits

200

400

600

NPS SDS

Premature deaths from air pollution(Thousand people)

Supply investment

Efficiency investment

Cumulative investment(Trillion dollars)

1

2

3

NPS SDS

100

200

300

400

NPS SDS

Fossil fuel import bill(Billion dollars)

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A greener pathway for Southeast Asia

Primary energy demand in 2040 in the New Policies Scenario and the Sustainable Development Scenario

Coal use is hit hard in the Sustainable Development Scenario, as efficiency and renewables become the watchwords of a clean energy transition

26%

29%21%

0.4%3%

13%

8%

Coal

Oil

Gas

Nuclear

Hydro

Bioenergy

Other renewables

NPS1 062 Mtoe

9%

28%

22%1%

5%

11%

24%

SDS891 Mtoe

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Energy investment profiles to 2040

Annual average energy investment to 2040 in the New Policies Scenario and the Sustainable Development Scenario

The clean energy transition needs a ramp-up & reorientation of energy investment to 2040

20 40 60 80 100 120 140

SDS

NPS

Billion dollars (2016)

T&D

Power generation (fossil fuel)Power generation (non-fossil fuel)

Power sector

End-use sectorFossil-fuel supply

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Mobilising efficiency investment in end-use sectors

Average annual additional investment to 2040 in end-use sectors in the Sustainable Development Scenario

Efficiency investment requires effective regulatory frameworks & incentives

0%

10%

20%

30%

40%

World Southeast Asia

Share of final consumption covered by mandatory efficiency regulation

0 2 4 6

Transport

Buildings

IndustryEnergy-intensive industry

Non energy-intensiveindustry

Efficiency

Fuel switch

Appliances

Other residential

Billion dollars (2016)

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SDS

Investment in power generation plants

Annual average investment to 2040 in power generation plants

The power sector is in the front line of the energy transition, with a major increase in capital flows towards renewables and a sharp reduction in carbon intensity

0

20

40

60

80

100

0

10

20

30

40

50

NPS

Bill

ion

do

llars

(2

01

6) Coal

Gas

Oil

Nuclear

Hydro

Solar PV & wind

Other renewables

Carbon intensity in 2040 (Right hand axis, 2015=100)

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Conclusions

Robust economic growth and fast-paced demographic change mean that Southeast Asia’s role in global energy is set to expand

The region faces myriad energy challenges, but there are accessible technologies and proven policies that can help to meet them

Energy efficiency, subsidy reform and enhanced regional integration play vital roles in the region’s policy mix

Significant participation from the private sector and co-operation with international institutions are needed to meet the vast investment requirements

With a small increase in overall investment, but a major reallocation of flows, Southeast Asia can achieve a more sustainable pathway, with multiple benefits

With international engagement on energy more important than ever, the IEA stands ready to be a strong partner for the region