UQ, IEA, SEA & us

Most of us, I know, are suffering from energy report fatigue at the moment but I have to tell you there is yet another substantial tome just published that should be of more than passing interest to Australian industry and policymakers.

It deals with energy developments in our neighborhood and is the third in a biennial series of reviews of the 10 ASEAN states.

On Thursday evening in Brisbane, its publisher, the International Energy Agency, unveiled it to an audience assembled by the University of Queensland at the latest iteration of UQ’s excellent “The Energy Exchange” series, presented in association with the Energy Policy Institute of Australia.

The economic health and social stability of the ASEAN countries is of considerable importance to Australia, not least because of our rivalry or co-operation, depending on the nation, in energy trade. How these countries source their energy needs is also going to play an increasingly significant role in global management of carbon emissions management — and this will play back in to one of the central issues of our local policy management, and of who governs Australia, out to 2030.

Two of the three critical issues for the ASEAN 10 are shared with us: access to reliable and affordable electricity, using it to fuel economic development, and emissions reductions. The third, which thankfully does not challenge Australia in the same way that it does China, India and the ASEAN countries, is air pollution, especially in big cities. As was pointed out at the UQ forum, this is a major health issue for our neighbors and one their governments are under rising pressure from their communities to manage far better.

The ASEAN nations’ urban population alone is projected to grow by 150 million — 30 Sydneys — in the next quarter century and their overall energy demand is expected to rise by two-thirds, representing a tenth of the total global increase. The impact of this on what we can sell abroad (not just volumes but values) — eg coal and LNG — and what we import (eg petroleum products) is not to be sneezed at.

Scenarios, of course, are just that — models of what might be, given cherry-picking by modelers of a raft of factors — and they are not (or shouldn’t be seen as) forecasts of what is going to happen, although they far to often get treated as such.

How such international scenarios are treated here as part of our endless local bickering about energy policy (eg over new coal mines) is not unimportant. The “death of coal” schtick, for example, looks decidedly odd when seen against the IEA’s main scenario in this new publication for a more than doubling of ASEAN production of power from the fuel between 2015 and 2040 — a rise of some 500 terawatt hours annually (for context the total New South Wales demand is about 70 terawatt hours a year).

Just to demonstrate the complexity of the debate, as noted by IEA energy analyst Ali Al-Saffar at the UQ forum, this rise is somewhat less than was anticipated by the agency back in 2015, but to portray the coal scene as plunging in to the abyss (a line peddled almost daily in our media) hardly makes sense when one sees such data.

The agency believes 100 gigawatts of new coal generation will be brought in to ASEAN operation (that’s about 80 Hazelwoods or Liddells), taking the region’s coal-burning capacity to some 160 GW as these countries more than double their total power output to around 2,220 TWh a year in 2040, riding a rise in coal-based generation of almost 600 TWh.

The IEA model also reckons on ASEAN power production from renewable energy rising by about 375 TWh annually but it needs to be pointed out that roughly half this increase is from a large conventional source, hydro power (a form of electricity supply the Greens & Co rail against, too).

Every time reports such as this latest IEA one appear, we have a deluge of media ooh-ing and ah-ing about green capacity developments. In this case, wind capacity does indeed shoot up 22-fold between now and 2040 and solar PV more than 12-fold, a massive investment — but the numbers that really matter are for production.

In its main scenario, the IEA now projects 2040 output by ASEAN coal plants at almost 900 TWh and gas plants at 630 TWh with hydro systems at almost 350 TWh — while wind farms deliver 55 TWh and solar 85 TWh. (One of the region’s real big spurts in green power production, apart from hydro, is geothermal — it is projected to more than treble to 75 TWh.)

One of the points the IEA makes in this report is that “coal maintains a strong foothold in (South-east Asia’s) projected consumption, not only because it is markedly cheaper than natural gas, but also because coal projects are in many cases easier to pursue as they do not require the capital-intensive infrastructure associated with gas.”

From a self-centred Australian perspective, it is interesting to see the agency also relying on a model where South-east Asia’s position as a net gas exporter is called in to question in an environment of flattening ASEAN production and rising demand. Being, as we are, a country that can make a substantial contribution to the neighborhood’s energy security is hardly a bad place to be — assuming we can get our own act together better than we have been demonstrating lately.

Something that should not be lost in looking at this review is the point the IEA makes about a strong approach to energy efficiency. The core scenario canvassed in this post sees the 10 countries needing to spend $US2.7 trillion between now and 2040 — and the agency points out that a commitment to pursuing efficiency could add just $US200 billion to this bill but halve the foreshadowed ASEAN level of carbon emissions, slash $US175 billion from the 10 nations’ energy import costs and contribute substantially to pursuit of better air quality, especially in their cities.

My point, really, is that, given where we live, this IEA report is not just about 10 other countries but also, to potentially quite a considerable extent, about us and, therefore, is deserving of some close attention here.

One of the considerable values I see in the UQ “Energy Exchange” events is the way the university keeps picking really worthwhile topics for attention and the way knowledgeable people demonstrate at these forums that Australians can talk without heat about energy trends and issues, a sharp contrast with the routine big fusses in our public debate with an over-supply of ranting and rhetorical flourishes.




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