Primary energy demand in ASEAN is projected to almost double over the next 20 years. This implies further widening of the supply-demand gap, which may well lead to increasing reliance on energy imports and the doubling of ASEAN’s contribution to global carbon emissions. To better understand the ASEAN energy challenges, this chapter first reviews the current national energy conditions (institutional framework and policies) and maps out energy resources and infrastructure across ASEAN. Four potential mitigation measures for the energy gap problem are identified:
- efficient utilization of energy;
- reduction of carbon content of energy;
- diversification of sources of energy supply; and
- regional interconnection of energy supply infrastructure and resources.
The background review clearly demonstrates the uneven distribution of energy resources and demand centers in ASEAN and the fact that the existing infrastructure for both gas and power connectivity is not yet at sufficient levels to allow for the seamless flow of energy between countries. Trading of energy between countries, through the ASEAN Energy Market Integration (AEMI) mechanism, will be an even greater challenge, given the varied energy institutional setup across the ASEAN region.
The second half of this chapter seeks to define AEMI and establish its core objectives. Five key building blocks for a successful AEMI are identified:
- trade liberalization;
- investment liberalization;
- the development of regional energy infrastructure and institutions;
- liberalization of domestic energy markets; and
- energy pricing reform.
Based on this comprehensive review of the ASEAN energy situation, it is clear that much work remains to be undertaken to move AEMI towards the next step to bringing the AEMI objectives to fruition.
Endang Jati Mat Sahid, Head of Energy Economics, Institute of Energy Policy and Research, Universiti Tenaga Nasional (UNITEN) and Senior Lecturer at UNITEN, Malaysia
Aishah Mohd Isa, On secondment to the Asia-Pacific Energy Research Centre (APERC), Japan; Senior Lecturer, UNITEN
Y P Leong (lead), Director, Institute of Energy Policy and Research, UNITEN
Xunpeng Shi, Chief Researcher and Director, Energy Efficiency and Conservation Division, Brunei National Energy Research Institute (BNERI), Brunei Darussalam
Read full document – AEMI Working Paper- Rationale for AEMI