Modeling Assumptions

11-12 September 2007, JETRO Kuala Lumpur

Momoko Aoshima

EDMC/IEEJ

Session 1

2nd Meeting of the Working Group for Analysis of Energy Saving Potential in East Asia region

GDP growth rate in East Asia region will grow by 4.1% per annum toward 2030 with the high growth in Asian developing countries.

Before Starting Session1

2005-2030

2.4%

3.8%

7.0%

6.2%

8.0%

6.5%

1.5%

3.8%

7.5%

4.5%

9.8%

2.1%

6.8%

4.0%

5.4%

8.3%

4.1%

0%

2%

4%

6%

8%

10%

12%

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM Total

Rea

l GD

P G

row

th R

ate

(%/y

ear)

Total Primary Energy Supply will be 6,973 Mtoe in BAU case and 5,399 in APS case in 2030.

East Asia can achieve energy savings of 1,574 Mtoe in 2030 or 23% of the BAU projection.

Before Starting Session1

1,054

1,636

3,125

6,973

5,399

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

BAU APS

1980 1990 2005 2030

Tota

l Prim

ary

Ene

rgy

Sup

ply

(Mto

e)

Energy Conservation1574 Mtoe

Template

Status of Submission

Completeness

Target at one view-Improvement of Energy Intensity (TPES/GDP)

Assumption at one view

Macro Economic Indicators(GDP, Population, Oil Price, Transport)

Energy Conservation plan

Power Generation

Thermal Efficiency

Electricity Trade

Bio Fuels

ContentsSession 1

Period

2010, 2020, 2030

Demand Indicators

GDP, Population, Transport (Car holds), Industrial Production Indices, Services (Floor Space)

Power Development Plan

Power Generation Mix, Electricity Trade, Thermal Efficiencies

Use of Bio-Fuels

Energy Efficiency Goals and Action Plans

We set up two cases , which are BAU and APS.

-Primary Energy Intensity (Energy/GDP)

-Detailed Energy Saving Target

Template

During the 1st meeting held in Thailand, IEEJ requested to submit the assumptions template.

TemplateGDP AND OTHER DEMAND VARIABLESCountry:

2006-2010 2010-2020 2020-2030Real GDP Annual Growth Rate (%)

IndustryServicesAgriculture

2010 2020 2030Population (thousands)

Households (thousands)2010 2020 2030

TransportationVehicle Stock (thousands)Passenger Transport Demand (Million Passenger-Freight Transport Demand (Million Ton-km)

2010 2020 2030Industrial Production Indices (2000=100)

Iron & SteelChemicalsNon-Metallic Mineral ProductsPaper, Paperboard & Pulp Non-Ferrous MetalsMachineriesOther Industries

2010 2020 2030Industrial Output (Metric Tons)

Crude SteelCementEthylenePrimary AluminumPaperPulp

2010 2020 2030Services

Commercial Floor Space (million m2)

POWER DEVELOPMENT PLANCountry:

Power Generation Mix (GWh or %)

2010 2020 2030CoalOilNatural GasNuclearHydroGeothermalWindEtc.

Electricity Trade (GWh)2010 2020 2030

ImportExport

Thermal Efficiencies (%)

2010 2020 2030 2010 2020 2030CoalOilNatural Gas

USE OF BIO-FUELSthousand kiloliters or ktoe

2010 2020 2030 2010 2020 2030Bio-ethanolBio-dieselBio-oilTotal

BAU APS

BAU

BAU APS

ENERGY EFFICIENCY GOALS AND ACTION PLANSCountry:

BAU APSPrimary Energy Intensity (energy/GDP)

Detailed Energy Saving Targets (Short Term)

L

13 of 16 countries submitted the template.

Australia, Brunei, China, India, Indonesia, Japan, Korea, Lao PDR, Myanmar, New Zealand, Philippines, Thailand, Vietnam

Not submitted

Cambodia, Singapore, Malaysia

Status of Submission

As the result of gathering information from each county using this template,

Completeness is different in each country.

Completeness(1/2)

GDP Population Car HoldsPower

GenerationBAU APS BAU APS

AUS N.A BAU and APS N.A N.ABRN N.A N.A N.A N.A N.A N.A N.AKHM N.A N.A N.A N.A N.A N.A N.A N.ACHN N.A N.A N.A N.A N.A N.AIND Only ShareIDN N.A N.AJPNKOR N.A N.ALAO N.A N.A by 2020 N.A N.AMYS N.A N.A N.A N.A N.A N.A N.A N.AMMR N.A N.A N.A N.ANZL N.A N.A N.APHL By 2014 N.A N.A N.ASGP N.A N.A N.A N.A N.A N.A N.A N.ATHA By 2020 By 2020 By 2020 By 2020 By 2020 by 2020 by 2020 N.AVNM N.A N.A N.A N.A

:Submitted

Target of EnegyIntensity(TPES/GDP)

Thermal Efficiency

Electricity Trade is submitted as follows;Import: Indonesia(2020), Lao PDR(by 2020), Thailand(by 2020), and Vietnam Export: Myanmar(by 2020)

Completeness of the Energy Conservation Plan is more different than macro economic indicators by each country.

Completeness(2/2)

BAU APSAUS Efficiency, Production Energy intensity etc Efficiency, Production Energy intensity etcBRN N.A N.AKHM N.A N.ACHN N.A Efficiency, Production Energy intensity etcIND N.A N.AIDN FEC total efficiency improvement(%) FEC total efficiency improvement(%)JPN FEC by sector FEC by sectorKOR Only explanation with word Only explanation with wordLAO N.A N.AMYS N.A N.AMMR N.A N.ANZL N.A Energy conservation amount by sectorPHL N.A Energy conservation amount by sector (more in detail by 2014)SGP N.A N.ATHA N.A Energy conservation parcentage by sector by 2020VNM N.A Energy conservation parcentage by sector by 2015

:Submitted

Energy Conservation Plan(FEC)

<Bio-Fuels>India (APS), Indonesia (BAU), New Zealand (BAU & APS), Philippines (BAU & APS), Thailand (APS by 2020) and Vietnam (APS) submitted.

Based on the submitted targets and IEEJ’s analysis, the target of energy intensity is set up into the model.

Target at one view- Improvement of Energy Intensity (TPES/GDP)

2030 (toe/Million USD in 2000 Price)Submitted Result

BAU APS APS/BAU BAU APS APS/BAUAUS 182 170 -7% 182 170 -7%BRN #N/A #N/A #N/A 354 354 0%KHM #N/A #N/A #N/A 162 162 0%CHN #N/A #N/A #N/A 359 263 -27%IND 446 327 -27% 362 265 -27%IDN 549 381 -31% 471 327 -31%JPN 74 68 -8% 74 68 -8%KOR 237 200 -16% 222 187 -16%LAO #N/A #N/A #N/A 320 320 0%MYS #N/A #N/A #N/A 393 393 0%MMR #N/A #N/A #N/A 594 594 0%NZL #N/A #N/A #N/A 209 185 -12%PHL (2014) 320 #N/A #N/A 248 199 -20%SGP #N/A #N/A #N/A 167 167 0%THA (2020) 507 461 -9% 411 357 -13%VNM #N/A #N/A #N/A 487 440 -10%

Submitted GDP Assumption

Assumption at one view – Macro Economic Indicators(GDP)

(%)

Present-2010 2020 2030Australia 1.3 1.7 2.1Brunei N.A N.A N.AChina 7.5 7.2India 8.0 8.0 8.0IndonesiaJapan 1.8 1.5 1.1Korea 4.9 4.3 2.8Lao PDR 7.5 7.5 7.5Myanmar 12.0 9.8 8.3New Zealand 2.6 2.3 1.8PhilippinesThailand 5.0 5.5 naVietnam 8.5 8.5 8.0

6.5

6.8

2005-2030

2.4%

3.8%

7.0%

6.2%

8.0%

6.5%

1.5%

3.8%

7.5%

4.5%

9.8%

2.1%

6.8%

4.0%

5.4%

8.3%

4.1%

0%

2%

4%

6%

8%

10%

12%

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM Total

Rea

l GD

P G

row

th R

ate

(%/y

ear)

Model Assumption of GDP 2005-2030

GDP growth in East Asia region will gro by 4.1% per annum toward 2030 with the high growth in developing countries.

Model Assumption of Population 2005-2030

(Millions)

2010 2020 2030Australia 21.5 23.6 25.5Brunei N.A N.A N.AChina N.A N.A N.AIndia 1,177 1,344 1,473Indonesia 234 261 282Japan 127.2 123.5 116.9Korea 48.9 49.3 48.6Lao PDR 6.4 8.4 11.1Myanmar 57.9 70.7 86.3New Zealand 4.3 4.6 4.8Philippines 94.0 111.8 128.1Thailand 67.2 70.5 N.AVietnam 87.8 97.0 104.0

Population in East Asia region will be slightly increased with the annual growth of 0.8%. Developed countries will be decreased while China and India will keep high growth.

Assumption at one view – Macro Economic Indicators(Population)

20 0 14

1,308

1,095

220

128

486 25 50

4

83

464 83

26 1 20

1,452 1,460

290

11749

11 3586

5

128

572

104

0

200

400

600

800

1,000

1,200

1,400

1,600

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM

Pop

ulat

ion

(Mill

ions

)

20052030

Submitted assumption ↓

The Assumption of Oil Price

Real price remains unchanged toward 2030.Nominal price will be increased with inflation toward 2030.

Japan's Import Oil Price (CIF base)

0

20

40

60

80

100

120

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

$/bb

l

Nominal

Real

Assumption at one view – Macro Economic Indicators(Oil Price)

Submitted Assumption of Car holds(Thousand Cars, %)

VehicleOwnership

rateVehicle

Ownershiprate

VehicleOwnership

rateAustralia N.A - N.A - N.A -Brunei N.A - N.A - N.A -China N.A - N.A - N.A -India 27,109 2% 70,034 5% 217,626 15%Indonesia 65,305 28% 122,587 47% 167,955 60%Japan 77,398 61% 79,692 65% 78,507 67%Korea 15,405 32% 19,489 40% 20,094 41%Lao PDR 660 10% 1,762 21% 4,706 42%Myanmar 930 2% N.A - N.A -New Zealand 3,500 82% 3,900 85% 4,300 89%Philippines 3.3% - 3.3% - 2.5% -Thailand 27,991 42% 40,467 57% N.A -Vietnam N.A - N.A - N.A -

2010 2020 2030

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM Total

Num

ber o

f Car

hold

per

Cap

ita (U

nit p

er P

erso

n)

20052030Model Assumption of Car holds

Assumption at one view – Macro Economic Indicators(Transport)

Motorization will grow in developing countries.Car hold per capita will double in 2030.

Assumption at one view– Energy Conservation Plan(FEC)(1/2)

The Assumption for energy conservation is different depending on countries. The plan of some countries are aggregated while some countries have a lot of information.

BAU APSAUS Transport Sector(vehicle stock share)

90.4%(ICE) 49.9%(ICE) 6%(Advanced ICE/partial Hybrid) 12.9%(Advanced ICE/partial Hybrid) 3.5%(full hybrid) 36.9%(full hybrid) 0.1%(non-fossil fuel) 0.3%(non-fossil fuel)Transport Sector(average fuel efficiency) 8.4L/100km(light duty cars and motorcycles) 7.4L/100km(light duty cars and motorcycles) 26.1L/100km(freight road vehicles) 23.7L/100km(freight road vehicles)Industry Sector 3.2GJ/t of clinker(Cement energy intensity) 2.5GJ/t of clinker 0.4% improvement by 2050(alminium energy intensity) 27% 22.5GJ/t(Iron and steel energy intensity, blust furnace) 19.5GJ/t 5.1GJ/t( " , electric arc furnace) 4.3GJ/t 12% improvement(wood, paper and pulp energy intensity) 24%

BRN N.A N.AKHM N.A N.ACHN N.A Production energy intensity by Industry (Total: 760Kgce/t(2005)-700Kgce/t(2020))

Transport Sector (average fuel efficiency: 9.5L/100km(2000)-8.2-6.7L/1000km(2010)Residential/CommercialAir conditionar efficiency index: 2.4%(2000)-3.2-4%(2010)Refrigrator efficiency rate: 80%(2000)-62-50%(2010) etc

IND N.A N.AIDN 10-15% savings potential with little or no cost 30% saving potential with investmentJPN 425 million kl (Final energy consumption) 377 million kl

188 million kl (Industry) 185 million kl136 million kl (Residential & Commercial) 144 million kl101 million kl (Transport) 78 million kl

KOR Explanation without the number for target. Explanation without the number for target.

Submitted

Assumption at one view– Energy Conservation Plan(FEC)(2/2)

BAU APSLAO N.A N.AMYS N.A N.AMMR N.A N.ANZL N.A 3 PJ/year (Labelling and Efficiency Standard)

1 PJ/year per 100,000 homes retrofitted (housing insulation new and retrofit)9 PJ/year (energy efficiency standards for commercial buildings)3 PJ/year (Increase Energy Productivity in Industry)35 PJ/year (vehicle efficiency improvements)2-8 PJ/year (divert freight from road to rail and water)5-10 PJ/year (city design for walking, bicycling and public transport)0.5 PJ/year (Smart Electricity Networks)

PHL N.A Residential/Commercial (Total 63.3Mtoe saving from 2006 to 2030)

Industry (Total 21.8Mtoe saving)

Transport (Total 34.4Mtoe saving)

SGP N.A N.ATHA (2011) N.A Total Energy saving 9.1%(Final Energy Consumption)

Total Energy saving 9.4%(Industrial&Commercial Sector)Total Energy saving 10.0%(Residential)Total Energy saving 5.4%(Transport Sector)

VNM N.A Overal target:Aims to reduce 3-5% of total energy consumption in the 2006-2010 period (equivalentto 5 MTOE) and 5-8% (equivalent to 13.1 MTOE) in the 2011-2015 period by EEmeasures

Target for the industry sectorAims to reduce 5% of energy consumption of the industry sector (equivalent to 2.6MTOE) in the 2006-2010 period and 8% (equivalent to 6.4 MTOE) in the 2011-2015period

Target for the service sector:Reduces energy consumption in newly built buildings by 20%

Submitted

Assumption at one view– Power GenerationCoal share will decrease in developed countries while the share will increase in developing countries. Coal share of some countries, Myanmar, Philippines and Vietnam, will at least double toward 2030.

0

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2030

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM

%

OthersGeothermalHydroNuclearNatural GasOilCoal

Assumption at one view– Thermal EfficiencyThermal efficiency is improving in developed countries.The improvement in developing countries is slow.

45

5153

4243

35

45

5050

464646

37

26

54

45

36

51

41

53

413939

4341

3536

45

40

4542

49

4442

3336

28

37

32

3734

2626

48

35

0

10

20

30

40

50

60

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

BAU

APS

'05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30

AUS BRN KHM CHN IND IDN JPN KOR LAO MYS MMR NZL PHL SGP THA VNM

Ther

mal

Effi

cienc

y (%

)

APS BAU

Assumption at one view– Electricity Trade

Import countries: India, Indonesia, Lao PDR, Thailand, VietnamExport countries: China

Primary Energy Supply, Electricity(ktoe)

1980 1990 2005 2030 2005/ 1980 2030/ 2005 2030BAU APS BAU APS APS/ BAU

Australia AUS 0 0 0 0 0 - - - -Brunei BRN 0 0 0 0 0 - - - -Cambodia KHM - - 0 0 0 - - - -China CHN 0 158 -532 -532 -532 - 0.0% 0.0% 0.0%India IND -3 118 146 146 146 -216.5% 0.0% 0.0% 0.0%Indonesia IDN 0 0 0 0 106 - - - -J apan J PN 0 0 0 0 0 - - - -Korea KOR 0 0 0 0 0 - - - -Lao PDR LAO - - -195 2 2 - -183.6% -183.6% 0.0%Malaysia MYS 7 -5 0 0 0 -100.0% - - -Myanmar MMR - - 0 0 0 - - - -New ZealandNZL 0 0 0 0 0 - - - -PhilippinesPHL 0 0 0 0 0 - - - -Singapore SGP -8 0 0 0 0 -100.0% - - -Thailand THA 65 53 325 3,016 3,016 6.6% 9.3% 9.3% 0.0%Vietnam VNM 0 0 0 2,135 2,135 - - - 0.0%Total Total 61 325 -256 4,768 4,874 -205.9% -212.4% -212.5% 2.2%

Assumption at one view– Bio FuelsBio fuel assumption is set into the model and the future demand will be 10 Mtoe in BAU case and 48 Mtoe in APS case.India, China and Thailand will be major producers in East Asian.

Finally

•Most Assumptions are set into the model as exogenous factors.

•The future energy demand is explained using these assumptions.

•Using the energy conservation plan, we derive the energy conservation factor that is applied to the BAU regression equation.

• Mr. Barcelona and Mr. Yanagisawa will explain the model structure and the result in next session.

Thank you very much!