Overview on Energy Security Challenges in the Asia and Pacific Region
Speech by
Ursula Schaefer-Preuss
Vice President, Knowledge Management and Sustainable Development
Asian Development Bank
27 April 2008
United Nations Conference Center, Bangkok, Thailand
Introduction
Your Excellencies, distinguished guests, ladies and gentlemen:
I would like to first congratulate UN-ESCAP, the Thai Ministry of Energy, and the country's leading energy companies for organizing this event as a prelude to UN-ESCAP's 64th session tomorrow.
Energy Security
We fully recognize that energy security is a key development issue for many countries in the Asia-Pacific region. For all of us as development partners in the region - balancing the requirements for energy supply, providing energy access to all, and protecting our environment remain as the main challenge. This is not an easy task - and today, I would like to talk about the actions that ADB will take - by forging partnerships with the private and public sectors, and through facilitating regional and sub-regional cooperation.
First, on the supply of energy: Over the past 30 years, energy consumption in the Asia and Pacific region has risen 230% as a result of development and growth. This is expected to increase, as the International Energy Agency estimates that between now and 2030, the region will need more than $6 trillion in new energy infrastructure, mostly in the People's Republic of China and India.
Second, poverty impact of energy: While the supply of energy is a key issue, we also note that in our region, about 1 billion people in Asia do not have access to electricity, and four out of five of these people live in rural areas. More than 1.5 million people, mostly women and children, face grave health risks every year because of the indoor air pollution from the use of biomass fuel. In Asia, almost a billion people have no access to electricity. As we are now aware of the linkage between energy and rising food prices, we have to appreciate the poverty implications of energy.
Finally, the linkage between energy and climate change: Many have discussed much about the impact of energy on climate change, so I will not address this issue in detail. However, it should be reminded that about 70% of Asia's energy needs are dependent on fossil fuels - a primary source of greenhouse gases.
The solutions to this challenge are neither simple nor easy. This is a formidable challenge which requires multiple solutions. One of the key strategies is to pursue energy efficiency. In the demand side, efficient lighting, space heating and cooling can be encouraged in the residential and commercial sectors and the use of well-designed mass transit systems in the transport sector. In the supply side, development and commercialization of renewable energy technology such as wind and solar can be accelerated. Power facilities can be renovated and modernized. Polluting fuels or processes can be made cleaner and more efficient through new technologies. And for this, research and development as well as transfer of new technologies should be consistently supported.
Environmental impacts transcend national and regional boundaries, and therefore must be managed jointly up to the international level. Collective action at all levels will also lead to synergies. This, I believe, is already well-recognized as evidenced by several multilateral initiatives. These include the G-8 Gleneagles Plan of Action on Climate Change, and the resulting Clean Energy Investment Framework that multilateral development banks have been developing to improve access to energy, promoting a low carbon economy, and adaptation.
The Private Sector Role
ADB believes that this is not the task only for the governments and public institutions. The private sector is the key to closing the infrastructure investment gap, as well as closing the technical and efficiency gaps in developing countries.
As the region's development partner, ADB is working with governments to pursue reforms that will attract private sector investments. We are working with governments to translate macro-level investment needs into well-planned, financially viable projects; as well as create the enabling policy and legal frameworks that assure investors of predictability, a level playing field, low transaction costs, and fair rates of return commensurate with the risks that they take.
ADB is in a position to help the region facilitate public private partnerships. Our private sector operations totaled $1.7 billion in 2007, of which about 44% was for infrastructure projects. Our priority investments currently include: renewable energy generation, energy efficiency, energy transport systems, among others. Recently, ADB approved establishment of five private sector equity funds with a total target investment of up to $1.2 billion in clean energy projects in Asia using up to $100 million in seed capital.
Regional Energy Cooperation
The challenges we are facing with energy security, though, are beyond what ADB and any government or public-private initiative can accomplish alone. To post achievements in the three areas I just mentioned, regional cooperation is essential.
Over the past 15 years, ADB has promoted and assisted regional cooperation in the energy sector through regional economic cooperation programs in Greater Mekong Subregion, South Asia, and Central Asia. Export of natural gas from Indonesia to Singapore and ADB funded hydropower projects in Lao PDR which produces energy that is sold to Thailand are good examples. Building on our operational experience in subregional programs, and support the implementation of our Strategy, ADB has recently established the Regional Cooperation and Integration Financing Partnership Facility.
Concluding Remarks
In closing, let me say that we at ADB believe the future of the Asia and Pacific region is a bright future. However, to reach this bright future, we must meet the energy needs of the region, ensure access to poor people, and put the region into a more sustainable development path. We also recognize that this cannot be done through the public sector alone. Private sector involvement - through investment, innovation, leadership, and commitment - is critical to create a sustainable energy future.
As the region's development partner, ADB is committed to a sustainable future and a cleaner environment for Asia and the Pacific.
Thank you.
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