Issues Paper No. 7

Energy Dynamics and Sustainable Development in the East Asia-Pacific Region

by

Nicholas Grollman

Monash University

December, 1996

SYNOPSIS

By the year 2010, annual energy consumption in the East Asia-Pacific region is forecast to be at least 50 percent (and up to 80 percent) greater than at present, and still rising. Since new energy supplies will be based largely on fossil fuels, this growth has major implications for the region's greenhouse gas emissions and, therefore, for global warming. It is recognised that global warming is of less immediate concern to developing economies than environmental pollution and social dislocation arising from local energy development and consumption. However, it is maintained that impacts on both scales can be addressed by a single policy framework designed inter alia to achieve the replacement of fossil fuels by renewable sources and sustainable technologies over the course of the 21st century. The purpose of this paper is therefore to assist the APEC Energy Working Group (EWG) to match the broader policy objectives of APEC with the provision of the energy services necessary for both substantial and sustainable improvements in the living standards of the people of the East Asia-Pacific region.

The paper acknowledges that the region is moving into a new "coal age" which, rather than replace the "hydrocarbon age", will help to prolong it. Properly planned and managed, this need not be incompatible with an energy strategy which phases out fossil fuel combustion. However, this objective will be achieved only if the continued development of fossil fuel resources and related energy infrastructure takes place with such an outcome in view. Among the factors currently militating against such an outcome are:

• the tendency of the EWG's energy research and implementation function to focus on clean coal technologies whilst relegating renewable technologies to 'niche applications';
• the credence given to the medium-term supply-focused energy projections of the International Energy Agency, which are largely based on scenario assumptions reflecting past trends, rather than to forward-looking, longer-term, end use-focused normative scenarios involving the eventual phase out of fossil fuels; and
• the absence of a 'level-playing field' in energy technology markets, such that penetration by renewable technologies on a large scale is not encouraged.

The paper recommends a restructuring of the principles governing energy consumption within APEC and a realignment of the tasks of the EWG. Four key themes are identified for the development of a sustainable energy policy:

• Supply and security: recognition of the extent to which energy options are constrained by geographically and politically accessible resources;
• Strategic impacts of fuel and technology choices: assessment of the extent to which current or planned energy infrastructure projects will facilitate, or at least not inhibit, large-scale transition to environmentally sustainable sources in, say, 30 or 40 years;
• Institutional change: assessment of the scope for incorporation of energy options into a broader strategy for ecologically sustainable development within APEC that may require formal institutional arrangements; and
• Intraregional equity: provision of equitable benefits between the people and countries of the regions regardless of their status as energy producers and consumers.

A print version of this Issues Paper is available from the Australian APEC Study Centre

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Http://www.monash.edu.au/ausapec/iss7.htm Last update: 20 May 1997