ARTICLE IN PRESS

Energy Policy 33 (2005) 499–509

Energy and environment in the ASEAN: challenges and opportunities

Shankar K. Karki, Michael D. Mann*, Hossein Salehfar
School of Engineering and Mines, University of North Dakota, P.O. Box 7101, Grand Forks, ND 58202-7101, USA

Abstract

The Association of Southeast Asian Nations (ASEAN) is one of the most dynamic economic regions of the world. Its economy is
linked with its diverse energy resources, high-level urbanization, and rapid industrialization. ASEAN’s growing economy in the last
two decades has increased the concern of sustainable development in the face of deteriorating energy security, environmental
pollution, and economic hardship in energy investment. However, opportunities exist to tackle these issues. Increasing energy
efficiency (both supply and demand side), exploitation of renewable energy resources (mostly hydro), and an integrated approach on
energy resource management are some of the important approaches toward the sustainable energy path. Because the options are
capital-intensive, cooperation and development of appropriate institutional structures and decision mechanism across the region are
urgently needed.
r 2003 Elsevier Ltd. All rights reserved.

Keywords: ASEAN energy policy; Sustainable energy; Resource development

1. What is ASEAN? markets in the world, contributing a combined gross

The Association of Southeast Asian Nations
(ASEAN) includes almost all of the southeast Asian
countries. Its key position in the Asian Pacific proclaims
dedication toward peace and stability in the region,
providing significant economic input through integrated
energy management. ASEAN was first officially estab-
lished in 1967 in Bangkok, Thailand, with the signing of
the Bangkok declaration by the five original member
nations: Indonesia, Malaysia, Philippines, Singapore,
and Thailand. Brunei Darussalam, Vietnam, Lao
People’s Republic, Burma/Myanmar, and Cambodia
joined, making the ASEAN a group of 10. The ASEAN
is one of the most dynamic economic regions of the
world. Over the period from 1980 to 1999, its economy
grew by nearly 5 percent a year and energy consumption
by 7.5 percent. The economy is expected to continue to
grow at this rate over the period from 2000 to 2020, and
it is estimated that annual energy supply must increase
by 4.2 percent a year to sustain this growth (Balce et al.,
2001). The ASEAN makes up one of the largest regional
*Corresponding author. Department of Chemical Engineering,
University of North Dakota, P.O. Box 7101, Grand Forks,
ND 58202-7101, USA. Tel.: +1-7017773852; fax: +1-7017773773.
E-mail addresses: shankar.karki@und.nodak.edu (S.K. Karki),
mike mann@mail.und.nodak.edu (M.D. Mann), hossein salehfar@
mail.und.nodak.edu (H. Salehfar).
domestic product (GDP) of US$5781 billion in 2000
(ACE, 2002). The region hosts approximately US$53
billion in direct US investment, and it is the third largest
overseas market for US exports with two-way ASEAN–
US trade totaling US$120 billion in 2001. Hence, the
environmental, social, and economic issues in the region
are very significant and widespread for the rest of the
world.
2. Energy management objective
After the severe oil crisis in 1973, Asian countries
thought of forming a smaller energy cooperative net-
work to make strategies for energy management in crisis
situations. In this regard, the heads of the ASEAN
countries formed an association called ASEAN Council
on Petroleum (ASCOPE) on October 15, 1975. The aim
of this association is to establish cooperation among the
member countries to navigate the energy problems and
issues in times of emergencies due to shortage or
oversupply of petroleum. Because of this principal, the
‘‘Emergency Petroleum Sharing Scheme in Circum-
stances of Shortage and Oversupply’’ was adopted in
July 1977 by the member countries (Balce et al., 1999).
1
Current price.

0301-4215/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2003.08.014
 ARTICLE IN PRESS
500 S.K. Karki et al. / Energy Policy 33 (2005) 499–509
In continuation with these agreements, the heads of
government passed a resolution, the Hanoi Plan, at their
1998 ASEAN Summit, which included two main action
items for energy cooperation during 1999–2004 (Balce
et al., 1999):
a. Ensure security and sustainability of energy supply,
efficient utilization of natural energy resources in
the region and the rational management of energy
demand with due consideration of the environment.
b. Institute the policy framework and implementation
modalities by 2004 for the early realization of
the trans-ASEAN energy networks covering the
ASEAN Power Grid and the Trans-ASEAN Gas
Pipeline Projects as a more focused continuation
of the Medium-Term Programme of Action (1995–
1999).
The ASEAN Plan of Action for Energy Cooperation
1999–2004 was formulated and is being implemented
under the leadership of the ASEAN Center for Energy,
located in Jakarta, Indonesia, as a response to this
action plan.
3. Socioeconomic profile of the region
All 10 ASEAN member countries lie in southeast
Asia. The Philippines and Indonesia are two bigger
countries geographically isolated from other member
countries (Fig. 1). The rich natural resources and highly
liberalized economic policies in the region have attracted
many foreign investors, and as a result, this is one of the
Fig. 1. Geographic distribution of the region.
fastest growing economies in the world (Yu, 2003).
Table 1 gives an overview of the economic profile of the
ASEAN. The region is one of the more dynamic regions
in the world. The energy consumption scenarios are
mostly driven by a high industrialization pattern and
evolution toward export-oriented technologies. Some of
the member countries, i.e., Singapore, Malaysia, and
Thailand, are highly involved in electronics and
information technology export business, whereas
Brunei, Indonesia, and Malaysia export crude oil and
liquid natural gas (LNG). From 1980 to 1999, the
average national output (GDP) of the region increased
by 4.9 percent a year and population by 1.9 percent.
While the national output is likely to continue to grow
at 4.9 percent a year over the period from 2000 to 2020,
the population growth is expected to decline to 1.2
percent per year over this period. The ensuing growth in
per capita income will undoubtedly create additional
demand for energy in the region (Balce et al., 2001).
Increasing energy demand in the region is mainly
driven by a rapid level of urbanization and industria-
lization. The region has one of the fastest urbanization
trends in the world. It is predicted that, by the year 2025,
more than 50 percent of the region’s population will
reside in urban areas, as compared with 39 percent in
2000. The rapid urbanization process is creating giant
urban regions, called extended metropolitan regions
(EMR). Emergence of such urban regions accelerates
economic growth and industrialization, requiring extra
infrastructures to meet the demand of the high urban
population. However, this rapid growth is causing major
problems in urban infrastructure provision, land use
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S.K. Karki et al. / Energy Policy 33 (2005) 499–509 501

Table 1
ASEAN: economic and social indicators

Countries Economic Population Urban Per capita GDP at current GDP/ capita at
growtha growtha populationb income growtha market pricec current market priced

1980–1999 2000–2020 1980–1999 2000–2020 2000 2025 1980–1999 1999–2020 2000 2000

Brunei 2.9 — — — 72 81 — — 4.3 12,751

Cambodia 4.8 — — — 16 29 — — 3.3 274
Indonesia 5.4 3.8 1.8 1.2 41 61 3.0 3.1 150.6 740
Laos 5.1 — — — 24 39 2.9 — 1.7 328
Malaysia 5.8 5.8 2.7 1.3 57 71 4.5 4.9 90.0 3870
Myanmar 3.4 6.0 1.9 0.8 28 43 0.6 6.3 6.9 142
Philippines 2.1 4.6 2.3 1.6 59 72 2.5 3.6 74.8 981
Singapore 7.4 4.5 2.4 0.7 100 100 12.0 3.5 92.7 23,071
Thailand 6.1 4.6 1.5 0.7 31 36 9.6 4.5 122.8 1968
Vietnam 6.4 5.6 2.0 1.4 24 30 8.8 5.4 31.3 403
ASEAN 4.9 4.9 1.9 1.2 39 53 5.7 3.9 578.6 1126

Source: Balce et al. (2001) and ACE (2002).

a
Average annual growth rates (percentage).
b
Percentage shares.
c
Billion US$.
d
US$.

conflicts, and environmental deterioration. Moreover,
rapid economic growth with export oriented industria-
lization has caused increasing environmental degrada-
tion and excessive depletion of natural resources (Elliot,
2000).
Despite significant regional economic growth, poverty
is still a major barrier in some of the member countries.
For example, per capita GDP is about a $1/day in some
of the member countries (Yu, 2003). The economic
growth was quite impressive before the financial crisis of
1997–1998. The percentage of population below the
national poverty line is as low as 40 percent in the
Philippines in 2000–38.6 percent in Laos in 1997.
Because of the economic crisis after 1997, unemploy-
ment figures are soaring. The unemployment rate has
increased from 0.6 percent in 1997 to 3.7 percent in 2000
in Thailand. Unemployment is as high as 10.1 percent in
2000 in the Philippines.
4. The energy supply–demand outlook
Oil is the main commercial energy resource in the
region and will be dominant for the next several years.
About 45 percent of the total commercial primary
energy supply will be filled by oil for the 10-year period
from 2000 to 2010, whereas natural gas will increase to
about 30 percent (Table 4). Renewable energy makes
about 8 percent of the total commercial primary energy
supply in the ASEAN (Luukkanen and Kaivo-oja,
2002). However, the contribution from renewable
energy will nearly double during the next 10 years
(Balce, 2001b).
Driven by the strong economy, the use of commercial
energy (coal, oil, gas, electricity) has increased substan-
tially in the ASEAN region in the last 25 years
(Luukkanen and Kaivo-oja, 2002). During the 1980s,
energy consumption more than doubled, with an annual
average growth rate of 7 percent. The average annual
growth rate of energy consumption in the region during
1980–1999 was 7.5 percent. The annual energy require-
ment of the region is expected to increase by 4.2 percent
over the next 20 years, whereas the figure is just 1.7
percent for the world. Because of its large population,
Indonesia is responsible for about half of the primary
energy consumption in the region (Table 2). The
ASEAN region is endowed with about 8 percent of the
fossil fuel resources in the world. The available fuel
diversity in the region has been a very promising
criterion for enlisting regional energy cooperation. For
instance, nearly all of the coal reserves are located in
Indonesia (83 percent) and Vietnam (10 percent);
natural gas and oil are found in Brunei, Indonesia,
Malaysia, and Vietnam (ACE, 2002); and Indonesia and
Philippines possess substantial reserves of geothermal
energy (2), ranking them as the second and fourth
geothermal power producers in the world (ACE, 2002).
Brunei, Indonesia, and Malaysia are significant crude oil
and LNG exporters in the region. Hydropower is
abundant in most of the member countries except
Brunei and Singapore. Singapore is the only country
which does not have any energy resources, but it
possesses refinery capacity.
Most ASEAN member countries are also well
endowed with wood fuels, a common non-commercial
energy source for cooking and heating. Biomass
(Table 3) also contributes a significant proportion to
energy use in the region because most of the rural people
are still dependent upon biomass for energy. In 2000, 26
percent of the total primary energy mix was contributed
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Table 2
ASEAN energy resources and reserves

Country Oil reserve (billion Natural gas reserve Coal reserve (million Hydropower resource Wood fuels (MT)
barrels) (trilion cubic feet) MT) (GW)

Brunei Darussalam 6.0 34.8 — — —

Cambodia — 9.9 — 10 81
Indonesia 10 169.5 38,000 75 439
Lao PDR — 3.6 600 26 46
Malaysia 3.4 84.4 1025 25 137
Myanmar 3.1 12.1 — 108 129
The Philippines 0.26 4.6 346 9 89
Singapore 0.0 0.0 0 — —
Thailand 0.2 12.2 1240 10 67
Vietnam 3.2 21.8 45,000 69 49

Source: ACE (2002).

Table 3 Table 4
Biomass as percentage of total energy mix of the ASEAN countries Commercial primary energy mix in the ASEAN region (percentage)

1990 1995 2000 Fuel type 1990 1995 2000 2005 2010

Brunei 0.0 0.0 0.0 Natural 18.8 22.3 26.5 30.9 32.0
Cambodia 89.9 82.1 73.8 gas
Indonesia 33 25.3 20.3 Coal 9.2 9.9 11.2 12.4 14.5
Lao PDR 72.6 69.5 54.2 Oil 65.5 60.6 54.1 48.9 44.4
Malaysia 16.7 9.3 5.8 Hydro 5.6 6.1 7.0 6.9 8.3
Myanmar 78.1 78.2 65.4 Others 1.0 1.1 1.2 1.0 0.8
Philippines 35.1 31.7 27.2 Total 100.0 100.0 100.0 100.0 100.0
Singapore 0.0 0.0 0.0
Thailand 32.7 21.9 19.9 Source: ACE (2002).
Vietnam 74.5 66.8 60.0
Total ASEAN 37.5 30.0 26.2

Source: ACE (2002).
from biomass. The share of biomass is as high as 73.8
percent in Cambodia followed by Myanmar (64.5 percent),
Vietnam (60 percent), and Lao PDR (54.2 percent) (ACE,
2002). But the share of biomass is decreasing in the total
energy consumption; its share in the region is expected to
decrease to 20 percent in 2020.
According to the fuel-type consumption in total
primary commercial energy, oil is dominant, with about
54 percent of the energy mix, followed by natural gas (26
percent), and coal (11 percent) (Table 4). The transpor-
tation sector is the major oil consumer. It is estimated
that approximately 20 percent of primary commercial
energy will be required for electricity generation alone in
the next 10 years. Electricity also constitutes a major
part (B10 percent) of final commercial energy con-
sumption (Balce, 2001a).
region have taken measures to protect the environment
and to control the rate of exploitation of resources, they
continue to face difficulties such as institutional and
technological limitations. Some of the member countries
are not able to finance infrastructure development with
their poor economy. Although ASEAN has adopted
general integrated policies to launch energy and
environmental programs throughout the region, they
lack appropriate legislation and specific policies for
significant energy sector reform (Yu, 2003).
Primary energy resources in the ASEAN region being
fossil fuels, economic and environmental policies are
expected to play a main role in long-term sustainable
energy development in the region. In this section, the
economic and environmental status of the member
countries and the possibility of economic and environ-
mental benefits through an integrated approach in
energy management issues are discussed.
5.1. Energy investment (energy–economy)

5. ASEAN energy situation: challenges for sustainable
development
ASEAN’s growing economy in the last two decades
has raised the concern of sustainable energy develop-
ment into a higher plane. Although countries in the
The energy sector is highly capital-intensive. It is
anticipated that more than US$140 billion of capital
investment will be required in the energy sector of the
region during 2006–2010 (Balce et al., 2001). Of
this, approximately US$88 billion will be required for
the power sector alone (ACE, 2002). This amount
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represents about 3% of the region’s GDP. ASEAN is decreasing trend of self-sufficiency or the inability of
determined to invest significant amounts (i.e., about production to meet its rapidly increasing energy needs is
US$48 billion) on energy efficiency improvement during creating concerns about regional energy security.
the period. It is also expected that a large portion of this A common measure of self-sufficiency is the Herfin-
investment will be externally financed. For example, the dahl index. This is measured simply by the sum of the
external financing proportions for centrally planned squares of fuel supply fractions, giving a measure of fuel
Asia and South Asia projects for the period 1999–2020 diversification (Neff, 1997). The lower the index is, the
are 51 and 44 percent, respectively (WEC, 1993; Balce greater will be the diversifications of primary energy
et al., 2001). This clearly will place enormous economic supply, meaning higher energy security. The Herfindahl
burden on the regional economies. The member index for primary commercial energy supply in the
countries are also determined to improve the energy ASEAN is 0.36; the corresponding values for Asia
efficiency of the energy conversion system, transmission, (excluding China), the United States, and the world are
and distribution since there are still efficiency gaps in the 0.34, 0.29, and 0.29, respectively (Balce et al., 2001). The
respective sectors in the region. The energy efficiency reason for the higher than average value of index is the
improvement activities are also capital-intensive and strong dependence of the ASEAN energy supply on
pose additional economic challenges in the region. fossil fuels. Nearly two-thirds of the power in the region
Hence, economic challenges are enormous for the is generated from thermal sources (coal, oil, gas).
region’s energy management. Moreover, there has been a declining trend in the share
of hydropower generation in the region, except in
5.2. Energy security Vietnam and Malaysia. Lack of fuel diversification can
have adverse implications in the production sectors (i.e.,
Most of the ASEAN commercial energy requirement the ASEAN grid is suffering with frequent blackouts
is contributed by oil. But ASEAN imports about 60 and brownouts and poor diversification in terms of
percent of its oil requirement from non-ASEAN resource availability in the electricity sector). In the case
countries (especially from the Middle East). This import of the Philippines, during the 1990s, the economy lost
level is expected to increase more by 2020, placing US$2.2 billion, which represents nearly 3 percent of its
energy stability in ASEAN at greater risk. For sustain- GDP, due to power shortages (Balce et al., 2001).
able economic development, the rate of energy con-
sumption growth should be large enough to sustain
economic growth. Concerns over energy security prob- 6. Environmental status in the region
ably reached their peak during the 1970s when the world
economy struggled to overcome the damaging effects of Climate change is causing environmental concern all
the oil crises of 1973–1974 and 1979–1980. These were over the world, even in ASEAN countries, where about
triggered by inflation, which ultimately led to economic 90 percent of the total commercial primary energy
recessions involving substantial losses of GDP and high requirement is fulfilled by fossil fuel resources. The
unemployment throughout the world (Bielecki, 2002). combustion of fossil fuels and biomass in transport,
The self-sufficiency figures for the member countries industry, agriculture, and households releases huge
have decreased from 1993 to 1997, and the trend is amounts of environmental pollutants. Air quality in
expected to continue in the near future (Table 5). The most cities in the region is seriously degraded because of
low-efficiency motor vehicles. Traffic congestion is
another concern in the metro areas in the region. For
Table 5 example, the average speed during rush hour in the inner
ASEAN energy self-sufficiency city area is 10–12 km/h whereas it is 15–19 km/h, in the
Countries Self-sufficiency (energy production/total primary energy
outer area in Bangkok (Ichinose et al., 1993). Three-
supply) wheeled passenger vehicles and two-stroke motorcycles
are mainly responsible for excessive air pollution in the
1983 1987 1993 1997
city areas. Total suspended materials (TSP) released in
Brunei 9.63 7.26 10.14 8.35 some of the city areas are already above the World
Indonesia 1.86 1.75 1.66 1.60 Health Organization (WHO) standard level. For exam-
Malaysia 1.01 1.00 0.99 0.94
ple, metropolitan cities (i.e., Jakarta, Indonesia; Bang-
Myanmar 1.01 1.00 0.99 0.94
Philippines 0.57 0.58 0.53 0.43 kok, Thailand) have already crossed the TSP level set by
Singapore 0.00 0.00 0.00 0.00 WHO guidelines (see Table 6). But other pollutants such
Thailand 0.53 0.65 0.59 0.58 as lead, sulfur dioxide, and nitrogen dioxide are well
Vietnam 0.94 0.93 1.12 1.11 below WHO guidelines (UNEP, 2000).
Asia 1.04 1.01 0.95 0.90
Most of the member countries have already intro-
Source: IEA (2000) and Balce et al. (2001). duced unleaded gasoline; after that, the level of lead in
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Table 6
Urban air quality in the ASEAN region

Urban air quality WHO guidelines ASEAN range (mg/m3)

TSP 100 mg/m3 95–270

SO2 50 mg/m3 o50
NO2 50 mg/m3 o50
Leaded gasoline Phased out in much of ASEAN; planned for the rest by 2001–2005
Lead in ambient air Before implementing unleaded gas After implementing leaded gas
Malaysia and Thailand 1.4–1.5 mg/m3 0.1 mg/m3
Singapore 0.5–0.6 mg/m3 0.1 mg/m3

Source: UNEP (2000).

Table 7 It should be noted that indoor air pollution in some

Introduction of unleaded gasoline in the ASEAN
rural (and urban) areas of ASEAN may be a worse
Countries Unleaded introduced Completely unleaded health hazard than outdoor pollution for those who
Brunei Jan. 1993 March 2000 depend on wood, charcoal, and other biomass fuels.
Cambodia N/A N/A When the fuels are burnt using inefficient stoves with
Indonesia 1997/1998 1999/2000 poor ventilation, concentrations of particulates may
Lao PDR Malaysia N/A N/A exceed WHO guidelines by ten times or more (UNEP,
1991 N/A
2000). Over time, there is a high risk of emphysema,
Myanmar N/A N/A
Philippines 1993 2001 other lung problems, and serious eye irritations, mainly
Singapore Jan. 1991 July 1998 affecting women.
Thailand May 1991 Jan. 1996
Vietnam May 2000 Jan. 2005 6.2. Environmental emissions
Source: UNEP (2000).
The environmental degradation is primarily due to
emissions from fossil fuel combustion in the region. The
ambient air quality has improved considerably (see main sources of environmental emissions are power
Table 7). Most of the countries have implemented the generation plants, cement factories, oil refineries, agri-
air quality standards adopted by the Environmental based industries such as palm oil and rubber processing,
Protection Agency in the US Environmental Protection chemical plants, and wood-based industries. About 90%
Agency (EPA). of the ASEANs primary commercial energy requirement
is fulfilled by fossil fuels (coal, oil, and gas). Renewable
6.1. Indoor air pollution energy contributed only 8.2 percent in 2000. The CO2
emissions in the region are increasing; however, because
In ASEAN member countries, considerable indoor air of the small economies compared to the developed
pollution is caused by incomplete burning of biomass countries, CO2 emissions per capita are still quite low
and coal while the people cook in traditional cook compared to industrialized countries like the United
stoves. As much as 90% of the biomass is consumed in States (Luukanen and Kaivo-oja, 2002). Table 9
the household sector in Philippines (Bhattacharya, shows the trend of CO2 emissions from fossil fuel
2000). The study done by Bhattacharya (2000) shows combustion in various countries in the region over the
that 29.1 Mt of CO2 was emitted from biomass last decade.
combustion, whereas 50.2 Mt was emitted from fossil The high share of thermal electrical generation is
fuel combustion in the Philippines in 1995. The figures responsible for approximately one-third of the total
are 569 and 2660 Mt for China, respectively. The high environmental emissions (CO2, SO2, and NOx) in Asia.
emissions from the cook stoves are due to low efficiency Table 10 shows emissions of CO2, SO2 and NOx for
and high emission factors (see Table 8). The average selected ASEAN countries. CO2 emissions are expected
efficiency of the most widely available cook stoves is to increase from 40 Mt in 1993 to 355 Mt in 2020 in the
about 16 percent, using charcoal as fuel. A typical cook case of Thailand. SO2 emissions are expected to increase
stove used in Thailand has an efficiency around 14 from 141,000 tons in 1993 to 1,474,000 tons in 2020 and
percent and emission factors (g/kg of fuel used) of 26.4 NOx emissions from 146,000 to 1,332,000 tons in this
CO, 1596 CO2, 10 CH4, and 0.120 NOx (Bhattacharya period. Overall, it is estimated that, during 2000–2010,
et al., 2002). Not only is the heat from the burning the use of coal for electrical generation in the region will
wasted, but because of poorly designed chimneys, the increase by 235 percent (ACE, 2002). The environmental
indoor air pollution is more severe. problems associated with this increased share of thermal
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Table 8
Efficiencies and emission factors of selected stoves using charcoal as a fuel

Cook stove types Emission factors (g/kg fuel used)a Efficiencyb (%)

CO CO2 CH4 NOx

Cambodian traditional 34:273.2 2352713 7.770.8 0.07070.001 14.5

Thai-bucket cook stove 35:773.9 2155726 6.870.4 0.03070.001 16.2
Philippines charcoal/firewood 15577 2567767 7.870.4 0.1470.02 21.5
Lao improved 13474 2451713 9.870.3 0.1970.01 16.5
Vietnamese improved 87.275.7 2233761 10.870.8 0.370.09 25.0
Malaysian improved 155716 2576759 8.270.3 0.4370.04 18.0

Source: Bhattacharya et al. (2002).

a
Mean7standard deviation of the mean (standard error of the mean) for five experimental runs.
b
Average value for three tests.

Table 9 6.3. Energy efficiency

CO2 Emissions from fuel combustion 1990–1998, (million tons)

Countries 1990 1998 %CO2 increase Energy intensity measures the level of energy effi-
(1990–1998) ciency. Table 11 shows that energy intensities in the
Brunei 3.2 4.9 53 region have increased over the period 1983–1997. It is
Indonesia 141.5 226.5 60 expected that a similar trend will continue in the future.
Malaysia 47.4 92.4 95 Studies have shown that poor energy efficiency is a
Myanmar 3.9 7.8 99 major contributor to the increasing trend in energy
Philippines 36.0 62.0 72
intensities in the region (Balce et al., 2001). It is also
Singapore 34.9 43.5 25
Thailand 80.2 148.1 85 expected that the energy efficiency in generation,
Vietnam 18.0 32.9 83 transmission, and distribution will not improve signifi-
ASEAN 365.1 618.1 69 cantly in the near future.
Source: IEA (2000). If we look at the efficiency status of the electricity
sector in the region, there are considerable efficiency
gaps. In the case of the electricity cycle, energy can be
generation in the region is, therefore, likely to be a lost during conversion of primary energy into electrical
source of major concern. energy (i.e., generation), transmission and distribution
Other environmental problems such as inundations of electricity, and conversion of electricity into useful
of forests and their associated ecosystems due to energy (end use efficiency). The fossil fuel power plants
damming of large hydro plants and loss of fertility used in the ASEAN region suffer technical problems
in the soil because of the rapid deforestation are causing because of low maintenance practices, poor efficiency of
direct social and economic impacts. In addition to the combustion boiler, and poor design of the genera-
these, large hydropower plants emit significant amount tion plants. The efficiency of such plants range between
of environmental emissions (CO2 and CH4) due to 21 and 34 percent. These efficiencies are, however, 18–40
decomposition of submerged biomass in the reservoir percent lower than corresponding efficiencies in the
and other energy intensive activities such as moving OECD countries (Balce et al., 2001). Data also show
large amounts of earth or creating large concrete that the average efficiency of the oil-fired plants in
structures (Gagnon and Vate, 1997). However, these Singapore is comparable to OECD countries, whereas
environmental emissions are 30–40 times less than the rest of the countries still have many efficiency gaps
that of fossil-fuel generation. Developing appropriate that can be filled or corrected.
size of hydropower projects will offset significant Transmission and distribution (T&D) in the electricity
amount of environmental emissions. Hydropower sector is also generally low in the ASEAN countries. For
development being capital intensive, major investments example, T&D losses in Myanmar, Laos, and Cambodia
are necessary to develop hydropower projects. Smaller were 35 (1997), 30 (1995) and 34 (1995) percent,
sized hydropower projects may be financed through respectively (World Bank, 2000). More generally, T&D
the Clean Development Mechanism (CDM) under the losses in the developing countries are two to four times
Kyoto Protocol of the United Nations Framework higher than in the OECD countries (World Bank, 1997).
Convention for Climate Change (UNFCCC). In this Fig. 2 shows T&D losses in ASEAN countries and, for
mechanism, developed countries could invest in comparison, in Japan.
such projects in the developing countries to claim Low-efficiency electrical appliances and industrial
emissions credits. motors are still used in the member countries. For
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Table 10
Fossil fuel emissions: 1993–2020

Countries CO2 emissions (thousand tons) SO2 emissions (thousand tons) NOx emissions (thousand tons)

1993 2020 1993 2020 1993 2020

Cambodia 440 3406 2.8 14.6 1.5 13.2

Lao PDR 770 770 0.01 0.01 0.01 0.01
Myanmar 856 3348 0.48 0.2 3.1 12.1
Thailand 39,692 355,576 141 1474 146 1332
Vietnam 4722 57,344 20 229 18.1 221

Source: ADB (1995).

Table 11 improved through increasing the share of hydropower

Evolution of ASEAN energy intensities
generation in the region, for which significant potential
Countries Energy intensity (toea/1990 US$thousand) already exists. Currently, only 9 percent of the region’s
1983 1988 1993 1997
hydropower potential is developed so far (see Table 12).
To avoid the major environmental degradation due to
Brunei 0.08 0.10 0.15 0.19 large hydropower plants, the combined development of
Indonesia 0.32 0.30 0.30 0.32
run-of-the-river mainstream projects and storage pro-
Malaysia 0.28 0.28 0.34 0.34
Myanmar 0.06 0.05 0.04 0.06 jects should be optimized, for which there is already a
Philippines 0.19 0.21 0.26 0.29 promising feasibility study (Yu, 2003). This also
Singapore 0.15 0.17 0.15 0.16 contributes to the improvement in the diversification
Thailand 0.22 0.23 0.27 0.31 index in the commercial energy supply. Even with the
Vietnam 0.72 0.70 0.71 1.28
endowment of enormous hydropower resources, cost-
Source: IEA (2000). effective resources are not utilized because of economic
a
Tons of oil equivalent. constraints in the region.

member countries like Laos, Cambodia, and Myanmar,

incandescent bulbs still represent a large share of
lighting in the household sector. Air conditioners
(AC), used widely in Thailand, consume about 45
percent more energy than energy-efficient ACs. The
standard motors in the member countries consume
about 8 percent more energy than energy-efficient
motors (EEMs). Energy-efficiency improvement (EEI)
on the demand side is a promising option for mitigation
of greenhouse gases in the electricity sector.
7. Potential opportunities in the energy economy and
environmental improvement for sustainable development
Energy sources and their associated environmental
improvement management factors must be integrated
into developmental efforts to achieve sustainable devel-
opment for the economy. On the case of ASEAN, the
region’s enormous hydropower development, improve-
ment in energy efficiency in energy conversion, trans-
portation and utilization, and regional cooperation in
energy development and management are promising
factors in the successful pursuit of sustainable develop-
ment in the region.
7.1. Hydropower exploitation
The low level of energy security and environmental
degradation because of fossil fuel power plants could be
7.2. Utilization of biomass, geothermal and solar energy
in power generation
Southeast Asia possesses diverse renewable energy
sources (RES), from biomass to geothermal. Biomass
resources in the form of wood and agricultural residues
are abundant in the region. In 2000, biomass accounted
for about 9 percent of renewable electricity generation
and the use of biomass in power generation is expected
to increase substantially during the next decades (Balce
et al., 2003). Geothermal energy is another abundant
energy resource (available mainly in Indonesia and
Philippines) for power generation. About 2300 MW of
geothermal based power generation has been developed
so far in these two countries. Indonesia and the
Philippines rank second and fourth in terms of global
potential. However, lack of mature technologies and
sound economic policies limit development of these
geothermal resources. The trend of solar energy utiliza-
tion through solar home systems has been increasing in
rural areas, where there is no grid access. About 19 MW
of solar power plants are in operation throughout the
region.
The ASEAN member countries have agreed to
cooperate in the development of renewable energy as
per the agreement signed in 1986. As a result, the
development of renewable energy is expected to accel-
erate in the near future. Despite the evolution of such
renewable energy sources in the power generation, the
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Fig. 2. Transmission and distribution losses (1997). (Source: World Bank, 2000; Note: Figures for Lao PDR and Cambodia represent from 1995.)

Table 12 ing power stations could be improved through the

Hydropower potential in the ASEAN region (MW)
adoption of better maintenance and operating practices.
Countries Energy and power demand scenario The efficiency of new plants can be improved with
efficient technologies, for instance, integrated gasifica-
Total installed Installed hydro Hydro potential
capacity in 2000 capacity in 2000 tion combined cycle (IGCC) and pressurized fluidized-
bed combustion (PFBC). These technologies have
Brunei 705 0 0
efficiencies of the order of 45 percent. Not only will
Cambodia 145 0 8600
Indonesia 36133 5420 76625 such efficiency improvements help to narrow the
Laos 636 636 20042 electricity demand and supply gap, it will also be
Malaysia 13651 2184 25000 beneficial for the environment. For example, it is
Myanmar 1173 457 5600 estimated that an increase in efficiency of a standard
Philippines 11000 1650 9150
coal-fired power plant from 35 to 45 percent (typical
Singapore 6950 0 0
Thailand 20057 2808 7000 efficiency of supercritical technology) could lead to a
Vietnam 5469 4758 15600 reduction in overall emissions by 29 percent in the
ASEAN 95919 17913 202417 region (Balce et al., 2001).
Source: IEA (2000) and ESCAP (2000). Significant potential for energy savings in T&D in the
ASEAN also exists. A study by the World Bank shows
that cutting T&D losses by merely one-tenth in Asia will
contribution of wind energy has been very negligible reduce investment requirements for new installed
(less than 1 MW in the entire region). Hence, there needs capacity by US$8 billion, which is enough to pay for
to be a greater research and development efforts from control technologies to reduce particulate emissions for
government and non-government organizations work- every new power plant built in the entire developing
ing towards sustainable energy development. Once the world during the 1990s (World Bank, 1992).
effective environmental and economic policy instru- End use energy efficiency improvement is yet another
ments are set up in the member countries, greater area that creates significant benefits in the region. As
utilization of these renewable energy resources will not explained earlier, the Thai industrial sector consists of a
only provide environmental benefits but will strengthen significant portion of standard motors. Replacement of
the energy security in the region. such standard motors by efficient ones could result in a 7
percent savings in electricity. Similarly, in Malaysia,
7.3. Energy-efficiency improvement efficient air conditioners consume 44 percent less
electricity than conventional ones. It is estimated that
Energy-efficiency improvement is another area which more than 100 million kWh (0.1 percent) of energy and
offers significant opportunities for sustainable energy more than 58,000 tons of CO2 could be saved annually
management. For example, significant opportunities by implementing the minimum energy-efficiency stan-
exist, both in existing and new power stations, to dardization program for air conditioners alone in
improve generation efficiencies. The efficiency of exist- Malaysia (Mahila et al., 2000).
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508 S.K. Karki et al. / Energy Policy 33 (2005) 499–509

Table 13 kWh; whereas it ranges from 2.91 to 7.38 cents/kWh for

Fuel and economic saving potential through efficiency improvement the fossil fuel-based Thailand electrical system (ACE,
Countries Savings in Mtoea Value of savings 2002). Moreover, there is a huge variation in per unit
(US$thousand) electricity prices throughout the region (minimum being
2000 2005 2010 2000–2005 2005–2010 0.55 cents/kWh in Laos to 17 cents/kWh in Cambodia in
2002). Thus the price variation in electricity could be
Brunei 0.04 0.13 0.17 158 279
minimized with an integrated approach in the planning,
Cambodia — — — — —
Indonesia 3.13 6 9.81 8491 14704 operation, and management of a power system.
Laos — — — — —
Malaysia 2.25 3.75 3.75 5580 6975
Myanmar — — — — —
Philippines 0.52 2.38 2.62 2697 4650 8. Conclusion
Singapore 1.08 2.16 0.54 3013 2511
Thailand 2.2 8.78 10.98 10,212 18,378
ASEAN has diverse natural resources. However,
Vietnam — — — — —
ASEAN 8.7 23.2 27.87 30,151 47, 497 many of these resources are minimally or not exploited
because of various reasons. Economic diversification,
Source: ACE (2002). lack of institutional infrastructures, and political con-
a
Million tons of oil equivalent.
flicts are the major barriers to sustainable energy
development. Lack of appropriate legislation and
Similarly, there are still opportunities to improve policies for energy sector reform are other barriers.
energy efficiency through high-efficiency motors, high- The realization of a sustainable energy path could be
efficiency transformers, variable-speed controls, the greatly assisted by common interests and adoption of
automatic power factor control, and demand control. regional approaches on addressing energy issues. Such
It is estimated that 15–30 percent of the energy used in approaches could include developing trans-ASEAN gas
cement factories can be saved with improvements in pipelines and electricity grids, creating regional energy
efficiency. Economic saving potential due to energy- markets, and adopting common efficiency standards.
efficiency improvement is very promising; altogether These are in the implementation stage to some extent.
US$47.5 million could be realized in the region during Efficiency improvement both in the supply and demand-
the period 2005–2010, excluding Cambodia, Laos, side and energy diversification through the development
Myanmar and Vietnam (see Table 13). of non-fossil fuel resources (i.e., hydropower, solar,
These efficiency improvement options are cost-effec- biomass and geothermal) are the key to economic and
tive also, and this could lessen the foreign debt, creating environmental benefits. Because both options are
extra money for investment in the energy sector of the capital-intensive, there is strong need for cooperation
region. and developing the appropriate institutional structures
and decision mechanism across the region.
7.4. Cooperation in energy and environmental
management
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