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p. 3 of 30 BACK | NEXT Introduction Regional Energy Context Region's Diversity Commercial Energy Past Bank Assistance Capital Requirements for Expansion Energy Policy Issues Conclusions and Recommendations

Bank Policy Initiatives for the Energy Sector : Regional Energy Context

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Region's Diversity

1. The Asian and Pacific Region has great diversity in its economic geography encompassing three industrialized, four newly industrialized, three industrializing, several developing, and many land-locked or island economies, with populations ranging from a few thousand to over a billion. The population of the Region has nearly doubled to three billion during the past 25 years. More than a half of all global population growth occurs here with about the population of Thailand being added each year.¹ The Region also carries more than half of the global poverty burden with about 800 million people below the poverty line. Also, urbanization has mushroomed; by the year 2010, the Region will have 16 of the world's 35 megapolis areas, each with more than four million people. The consequent impact on environmental degradation is evident. The amount of SOx, NOx and total suspended particles in the air, for example, increased by a factor of 10 in Thailand, 8 in the Philippines, and 5 in Indonesia between 1975 and 1988.

2. There is a wide range in the patterns of energy endowment and consumption, environmental degradation, energy intensity, and sectoral performance.² Energy security is a common policy concern of all the countries in the Region. Energy demand is highly correlated with economic growth, industrialization, and urbanization (Appendix 1 shows the relationship between per capita commercial energy consumption and per capita gross domestic product of 20 DMCs). Energy is an ubiquitous input in all production, besides comprising significant shares of private and public consumption, and different sources of energy may substitute for one another. Investments in energy supply tend to require large inputs of scarce physical, human, and financial resources for which there are often competing demands from other sectors; thus, energy issues cannot be viewed in isolation. While the proposed energy policy framework is largely influenced by considerations of efficiency and environment, it would be inappropriate to treat the DMCs as a homogeneous group facing the same problems or requiring the same policy prescriptions. Although similarities exist, there are considerable differences among DMCs' economic, geographic, political, social, and cultural perspective. These country-specific differences underscore the need to focus on the pace and sequencing of proposed policy reforms and remedial measures.

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