• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Russia Says Europe Will Struggle To Replace Its Oil Products
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 15 hours Reality catching up with EV forecasts
  • 5 hours Famous author Michael Crichton talks about the "Climate Change Religion" aka Feudalism 2.0
  • 6 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 11 days A Somewhat Realistic View of the Near Future for Electric Vehicles Worldwide
  • 12 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

More Info

Premium Content

Asia Set For Rapid Renewable Energy Expansion In 2023

  • Regional rollback of pandemic restrictions fuelled growth in early 2022.
  • External demand remains elevated despite increased inflation and high commodity prices.
  • Renewable energy growth set to propel manufacturing expansion and diversification.
  • Climate disasters led countries to prioritise climate funding and emissions reductions.

An easing of Covid-19-related restrictions and shifting supply chains have bolstered growth in Asia, even as inflation and climate change generate significant headwinds.

While South-east Asian countries such as Thailand and Vietnam had lifted restrictions in 2021, the last quarter of this year saw Japan reopen its borders to foreign travellers and China begin to roll back Covid-19-contaiment policies, signalling a gradual return to economic normalcy in the Asia-Pacific region. 

 The same issues stalling economic growth across the globe – inflation, supply chain bottlenecks and high commodity prices stemming from Russia’s ongoing invasion of Ukraine – have impacted Asian economies; however, the region continues to outperform the rest of the world. 

As high commodity prices continue to impact supply chains, East Asia was the only region to see trade growth in the third quarter of the year, even as global trade volumes sagged.  

Much of the downgrade in regional growth forecasts is due to China’s slowdown, with the IMF expecting the country’s growth to dip to 3.2% in 2022 due in part to the economic barriers imposed by its stringent zero-Covid-19 policy.

The rest of the region, however, is expected to grow by 5.3%, putting China behind its neighbours for the first time since 1990, thanks in part to robust performance in South Asia and ASEAN economies such as Vietnam. 

Bridging the gap

Since 2020 several governments and businesses have pursued a so-called China+1 strategy, diversifying production capacity by setting up in other countries while maintaining operations in China. 

Vietnam in particular has stood out as a regional manufacturing and supply chain alternative to China, with increased exports to the US and others helping to boost 2022 GDP growth to 8%, its fastest pace of expansion since 2011. 

Bangladesh, India, Malaysia and Thailand have also benefitted from the shifting of global supply chains away from China, attracting industries ranging from textiles and auto parts, to higher-end electronics such as smartphones.

The recent spike in demand for electric vehicles (EVs) has also prompted various emerging markets in the region to invest in EV manufacturing. 

Already South-east Asia’s top auto-manufacturing centre, Thailand has engineered new policies to attract EV manufacturers from more mature markets and boost production, including a cash subsidy for passenger EVs.

The country aims for EV production to account for 30% of total automobile output by 2030. 

Meanwhile, Indonesia is set to become a major EV player in the region, with the world’s two-largest EV battery producers preparing to invest in mines-to-manufacturing EV projects in the country, which holds around one-quarter of the world’s supply of nickel, a key component in EV batteries.

The country is also targeting a slice of the growing solar panel market. In late January the Indonesian government announced plans to establish a $4bn polysilicon industry after prices for the material – a key component in the production of solar panels – reached 10-year highs in 2021. 

ADVERTISEMENT

Climate solutions

Natural disasters in 2022 highlighted the need for comprehensive agreements to combat climate change. 

In the late summer flooding in Pakistan saw one-third of the country under water, killing more than 1700 people and causing an estimated $32bn in loss and damages. 

With some 1.2bn people exposed to high flood risk in South and East Asia, including 395m in China and 390m in India, Asian nations have been at the forefront of the use of technologies such as artificial intelligence (AI) to track and mitigate risk for flooding and other natural disasters.

Malaysia has become a global leader in deploying forecasting and monitoring technologies, with its Department of Irrigation and Drainage rolling out its National Flood Forecasting and Warning System at the end of the year. 

Emerging markets are also deploying carbon credit mechanisms to protect their rainforests, hoping to prevent deforestation that could further aggravate the adverse effects of climate change. 

A study published in February by National University of Singapore’s Centre for Nature-based Climate Solutions found that 58% of forests under threat in South-east Asia could be protected via carbon credit schemes.

The region is home to 15% of the world’s remaining rainforest, much of it in Indonesia, which has seen a higher rate of deforestation in recent years than its neighbours. 

Against the backdrop of the COP27 UN Conference on Climate Change in Sharm El Sheikh, Egypt, Indonesia held talks with Brazil and the Democratic Republic of the Congo to form a strategic conservation alliance, nicknamed “OPEC for rainforests”.

Powering the future

The International Energy Agency (IEA) projects that renewable energy capacity in the Asia-Pacific region, excluding China, will expand by 360 GW, or 70%, in the 2022-27 period, with solar accounting for more than two-thirds of new deployment. 

This energy transition could help some emerging markets in the region become top solar-power exporters.

Backed in part by demand from Singapore, which by 2035 aims to import up to 4 GW of low-carbon electricity, equivalent to 30% of its demand, Indonesia announced several new solar mega-projects in 2022.

Although Indonesia has just 210 MW in installed solar capacity, one of the smallest solar footprints in the world, planning has begun for projects amounting to up to 17,000 MW in capacity. All but 3300 MW is slated for export, signalling significant potential for future renewable projects for the domestic market.

For its part, in October 2021 Malaysia banned the export of renewably generated energy, citing domestic needs. 

ADVERTISEMENT

 Although severe drought in China saw reduced output in 2022, the adoption of pumped storage hydropower technology could expand the role of hydropower in the global energy mix. This low-cost, low-carbon electricity source is likely to have an outsized footprint in the region, with the IEA expecting 75% of new hydropower capacity to come from large-scale projects in Asia and Africa.

In August India pledged $2.4bn develop the West Seti and Seti River Hydropower Projects in Nepal, which amount to a combined capacity of 1.2 GW that could be exported. Another major hydropower project completed this year, the 720-MW Karot project in Pakistan, was financed by China, although funding levels for China’s Belt and Road Initiative have slowed noticeably across the region since the pandemic.

Biogas is another energy source with significant potential to boost the green circular economy in the Asia-Pacific region, with the IEA estimating in 2018 that the region could produce up to 200m tonnes of oil equivalent by 2040. The region also boasts the world’s lowest biogas production costs, thanks to low-cost feedstocks, supportive government policies and experience.

Several notable biogas-related projects picked up speed in 2022. 

In October India commissioned the continent’s largest biomethane plant, in Sangrur, Punjab, with a $27m investment by German bioenergy company Verbio. The plant features eight digesters with a capacity of 10,000 cu metres.

In April Indonesia’s national energy company Pertamina and Japanese engineering company JHG Holdings signed an agreement to process methane generated during palm oil production into biofuel.

Meanwhile, in August the Philippines announced that it would construct a 20-cu-metre digester in Baler, Aurora, funded by the Department of Science and Technology. 

Funding the transition

Fuelled in part by the impact of this year’s floods in Pakistan, the biggest takeaway of COP27 was the establishment of a funding mechanism to compensate vulnerable countries for loss and damage caused by climate change-incurred natural disasters, although the details of the mechanism are still being firmed up. 

Similarly, a number of emerging markets have tapped into creative climate financing solutions to help meet their emissions commitments

Focus has been placed on helping Indonesia, which held the G20 presidency in 2022, to shift away from burning coal. The archipelagic nation is the world’s eighth-largest emitter of greenhouse gases, with coal generating some 60% of its electricity and serving as a key industry in some regions. 

The G20 summit held in Bali on November 15 saw the launch of the Indonesia Just Energy Transition Partnership (JETP), a $20bn agreement to decarbonise Indonesia’s economy supported by all G7 member states, as well as Denmark and Norway. 

The country’s renewable capacity deployment in the 2022-27 period is expected to quadruple from 2016-21 levels, with solar and hydropower to account for the bulk of new growth. The introduction of competitive auctions by presidential decree in September 2022 has the potential to accelerate deployment significantly.  

Similar JETPs have been floated for Vietnam and India, modelled after an $8.5bn deal to scale back South Africa’s coal usage launched in November 2021.

By Oxford Business Group

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage


ADVERTISEMENT


ADVERTISEMENT



Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News