Asia Pacific Energy Research Centre

APEC Energy Demand and Supply Outlook and New and Renewable

Energy26th Meeting of APEC New and Renewable Energy Technologies Expert Group Meeting

3-4 April 2006

Yonghun JUNGVice President

Asia Pacific Energy Research Centre

Outline Regional Grouping Key Factors in the APERC Outlook Drivers Final Energy Demand Primary Energy Demand Oil Import Dependency Electricity Generation Investment Requirements for the Energy

Sector Environment Implications

Regional Grouping

Russia

JapanKorea

Chinese Taipei

Philippines

USA

Mexico

Canada

Chile

Peru

New Zealand

Australia

China

IndonesiaMalaysia

Singapore

Thailand

Viet Nam

Papua New Guinea

Brunei Darussalam

Hong Kong, China

North America

Oceania

Latin America

Northeast Asia

Southeast Asia

Key Factors in the APERC Outlook

Income growth and change in life style Urbanisation Pursuit for comfort and convenience

Growing number of electric appliances (Residential), escalating number of passenger vehicle (Transport), and surge in PC use (Commercial)

Industrialisation of the developing economies China’s robust growth for iron and steel, petrochemical, cement

industries and its repercussion to the global economy. Asian economies to develop automobile industries.

China, Indonesia, Japan, Korea, Malaysia, and Thailand Rising energy security concern Water availability and power demands Integration of regional energy markets into global market Technology development

Drivers for the APEC Energy Demand

Income Growth GDP per capita will grow at an

annual rate of 3.5 percent.

Urbanisation By 2030, share of urban

population will reach 68 percent of the total from 52 percent in 2003.

26 million people per year will move from rural to urban cities.

Industrialisation Industry value added will grow by

4.8 percent per year, while GDP will grow by 4.1 percent per year.

(Source) Blackwell (2005)

-400

-200

0

200

400

600

800

1000

1200

1400

1600

N.

Am

eri

ca

L.

Am

eri

ca

NE

Asia

SE

Asia

Ocean

ia

Ch

ina

Ru

ssia

OE

CD

Eu

rop

e

No

n-O

EC

D E

uro

pe

CIS

/FS

U

Mid

dle

East

Afr

ica

Oth

ers

Th

ou

san

d B

arr

els

per

Day

APEC

APEC economies accounted for 90

percent of the world’s increment of oil

demand (2000-2004).

Growth of Oil Demand (2000-2004)

Income Growth and Fast Pace of Motorisation (1980-2030)

1

10

100

1000

100 1000 10000 100000

Income (USD, 2001 Price)

Pas

sen

ger

Veh

icle

Ow

ner

ship

per

1,0

00P

op

ula

tio

n

AUS CHL CDA PRC INA ROK JPNMAS NZ MEX PE PNG SIN RPRUS USA THA CT

AUS USA

NZ CDAJPN

PRC

PE

ROK

CTMAS

SIN

CHLTHA

RPINA

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

Urbanisation and Residential Energy Demand in the Selected APEC Economies

Urban and Rural Residential Electricity Demand Per Person

Urbanisation

2003 2030 2003 2030

N. America 261 354 80% 87%

L. America 112 160 76% 84%

NEA Asia 146 159 71% 78%

SEA Asia 210 389 44% 63%

Oceania 22 29 76% 77%

China 504 878 39% 61%

Russia 105 94 73% 78%

APEC 1,360 2,063 52% 68%

Urban Population(Millions)

Share of UrbanPopulation

(Source) United Nations (2003), “Urban and Rural Areas” (Source) APERC Internal Database

0

1000

2000

3000

4000

5000

6000

China (2003) Philippines(1995)

Thailand (2003)

Resid

ential e

lectr

icity d

em

and

(kW

h p

er

pers

on)

Urban

Rural

Urban

Rural

Urban

Rural

Share of Sectoral Value Added by Region (2002 and 2030)

North America

1 0.8

22.7 19.5

76.3 79.7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2030

Latin America

4.7 2.7

28.928.2

66.4 69.1

2002 2030

Northeast Asia

1.7 1

29.8 30.9

68.5 68.1

2002 2030

Southeast Asia

15.29.9

4043.6

48.8 53.5

2002 2030

Oceania

3.4 3.2

27.4 26.1

70 71.8

2002 2030

China

16.8

6.8

47.2

49.6

36.143.6

2002 2030

Russia

16.8

6.8

47.2

49.6

36.143.6

2002 2030

Service

Industry

Agriculture

Increasing Share of Services Sector across the Region

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

(Note 2) Residential demand includes demand for electricity, gas, oil products, heat and biomass.

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note 1) The outlook shown here includes tentative result subject to change.

Commercial sector to grow at the fastest pace followed closely by industry and transportation sectors.

APEC Sectoral Energy Demand Outlook (2002-2030)

2002 2010 2020 2030 2002-2010 2010-2020 2020-2030 2002-2030

Industry 1407.1 1841.8 2288.6 2768.6 3.4% 2.2% 1.9% 2.4%

Transport 1090.0 1334.6 1675.3 2074.2 2.6% 2.3% 2.2% 2.3%

Commercial 383.4 471.9 609.0 777.5 2.6% 2.6% 2.5% 2.6%

Residential 871.8 960.8 1071.9 1199.7 1.2% 1.1% 1.1% 1.1%

Absolute Level (Unit:Mtoe) Annual Growth Rate

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

APEC Primary Energy Demand Outlook (2002-2030)

Coal to grow at the fastest pace, followed by natural gas.

0

2000

4000

6000

8000

10000

12000

2002 2005 2010 2015 2020 2025 2030

Mto

e

Oil Coal

Natural Gas Hydro

Nuclear Biomass and New Energy

Oil: 1.7% p.a.

Coal: 2.8% p.a.

Natural Gas:

2.0% p.a.

Hydro: 2.0% p.a.

Nuclear: 1.8% p.a.

Biomass and new

energy: 0.7% p.a.

Oil Import Dependency (2002-2030)

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

2002 2010 2020 2030

North America 55% 50% 54% 60%Latin America -73% -35% -27% -16%Northeast Asia 101% 100% 100% 100%Southeast Asia 21% 37% 56% 68%Oceania 25% 42% 55% 62%China 22% 39% 53% 68%Russia -167% -156% -139% -141%APEC 36% 38% 44% 52%

Rising oil import dependency in North America, Southeast Asia, Oceania, and China

Natural Gas Trade: LNG and PNG

(Source) Circum-Pacific Council (2005)

Electricity Generation in APEC (2002-2030, GWh)

Coal to remain the dominant share in generation

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

0

5,000

10,000

15,000

20,000

25,000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

TW

h

Wind, Solar & Others

Geothermal

Hydro

Natural Gas

Nuclear

Oil-Based

Coal Steam

Biomass

Electricity Generation by Types

AGR

2002 2030 2002 2030 2002-2030Biomass 92 181 1.0% 1.2% 2.4%Coal Steam 4,029 8,078 43.8% 53.1% 2.5%Oil-Based 556 398 6.0% 1.4% -1.2%Nuclear 1,466 1,988 16.0% 11.6% 1.1%Natural Gas 1,665 3,149 18.1% 19.2% 2.3%Hydro 1,326 1,903 14.4% 11.3% 1.3%Geothermal 43 118 0.5% 0.9% 3.7%Wind, Solar & Others 14 186 0.1% 1.3% 9.8%Total 9,191 16,000 100.0% 100.0% 2.0%

TWh Share

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

NRE will grow at the fastest pace, while its share remains small.

Power Sector: Incremental Growth of Installed Capacity by Region and by Energy Type (2002-2030, GW)

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

-100

400

900

1,400

1,900

APEC NA LA NEA SEA OCE PRC RUS

Inst

all

ed

Cap

acit

y A

dd

itio

ns (

200

2-2

003,

GW

)

Wind, Solar &Others

Geothermal

Hydro

Natural Gas

Nuclear

Oil-Based

Coal Steam

Biomass

887GW

123GW

54GW

215GW209GW

92GW

396GW

1,978GW

APEC NA LA NEA SEA OCE PRC RUS

Annual Additions (2002-2030,GW)

70.7 14.1 3.3 7.5 7.7 1.9 31.7 4.4

Regional contribution to thetotal additions of installed

capacity in APEC100% 20% 5% 11% 11% 3% 45% 6%

Total Energy Investment Requirements 2003 – 2030, by Sector

Between 5.3 trillion USD to 6.7 trillion USDInvestment by sector, cumulative 2003-2030

High case

Coal production &transportation,

2.1%

Oil & Gasproduction &

processing , 18.0%

Oil & Gasinternational trade

, 9.1%

Oil & Gas domesticpipelines, 11.1%

Electricitygeneration &transmission,

59.7%

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

USA

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1971 1980 1990 2002 2010 2020 2030

Ind

ex (

199

0=1

)

CO2/TPED TPED/GDP CO2

China

0

0.5

1

1.5

2

2.5

3

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TPED TPED/GDP CO2

Kore a

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TP ED TP ED/GDP CO2

Japan

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TPED TPED/GDP CO2

USA

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1971 1980 1990 2002 2010 2020 2030

Ind

ex (

199

0=1

)

CO2/TPED TPED/GDP CO2

China

0

0.5

1

1.5

2

2.5

3

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TPED TPED/GDP CO2

Kore a

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TP ED TP ED/GDP CO2

Japan

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1971 1980 1990 2002 2010 2020 2030

Ind

ex

(1

99

0=

1)

CO2/TPED TPED/GDP CO2

Prospects: CO2 Emissions, Carbon Intensity and Energy Intensity

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

Energy Intensity

Carbon Intensity

Energy Intensity

Carbon Intensity

Energy Intensity

Carbon Intensity

Carbon Intensity

Energy Intensity

Options for Reducing CO2 Emissions

C = (C/E)*(E/GDP)*GDP

Government’s Interest “constraining carbon

intensity while minimizing adverse affects on GDP growth”

Energy Intensity Big gap among economies

Industry structure Energy efficiency improvement

Technology Weather Life Style

Carbon Intensity Relatively small gap among

economies Continued reliance on fossil

fuels Oil for transportation Coal for power generation

Energy Intensity

Carbon Intensity

Prospects for Fuel Switching in APEC (2002-2030)

(Source) Asia Pacific Energy Research Centre (2006), “APEC Energy Demand and Supply Outlook”, Forthcoming

(Note) The outlook shown here includes tentative result subject to change.

Limited potential for fuel switching.

26% 28% 30% 31% 31% 32% 32%

37% 36% 35% 35% 35% 35% 34%

21% 20% 20% 20% 20% 20% 20%

2% 2% 2% 2% 2% 2% 2%7% 6% 6% 6% 6% 6% 6%8% 7% 7% 6% 6% 6% 5%

0%

0%

0% 0% 0% 0%

0%

-20%

0%

20%

40%

60%

80%

100%

2002 2005 2010 2015 2020 2025 2030

Electricity

Biomass andNew Energy

Nuclear

Hydro

Natural Gas

Oil

Coal

• without externalities, coal is the cheapest option and NRE (except solar) are competitive to natural gas.

Leveraged Costs of Electricity Generation (Japan)

(Source) Asia Pacific Energy Research Centre (2005), “Renewable Electricity in the APEC Region”

NRE Share: Externality Case and BAU Case

• With the application of externality to the cost of generation, almost half of the APEC member economies would have significant changes in generation structure.

Individual sensitivities of APEC member economies to the application of externality

Implications Limited potential for fuel switching

Increasing use of coal and damaging impact on local and global environment

Need for NRE to offset likely environmental impact from BAU

Potential to increase NRE in electricity generation Time to reflect environmental cost on price

Call for realistic commitments for the expansion of NRE from the International initiatives

APEC bio fuel task force UNFCCC Asia-Pacific Partnership on Clean Development and Climate

New Project for 2006/2007 (provisional) Transportation energy: demand trend and new

supply options Urbanization Biofuel, NGV, Hybrid vehicles, and etc

APEC Energy Security in the 21st century: constraints and options

Resource constraints: conventional and NRE Input constraints: water, land(siting), public acceptance Human resources

International Energy Initiatives: fact and myth G8, APEC, UNFCCC, ASEAN, UNDP, OECD, AP6 and etc Origin, operation, impact and future