UFRGSMUN 2011
WORLD BANK
INTRODUCTION
Created following the ratification of the Bretton Woods Agreement, at the end of
World War II, the World Bank is an association of five development institutions which
seek to provide technical and financial assistance to member countries. The two main ones
are the International Bank for Reconstruction and Development (IBRD) and the
International Development Association (IDA); the others are the International Finance
Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the
International Centre for the Settlement of Investment Disputes (ICSID).
The World Bank is composed of 187 shareholders who take part in two main
decision organs: the Board of Governors, which is the ultimate police maker and is
composed by all members, and the Board of Executive Directors, which has specific duties
delegated by the Board of Governors. As of November 2010, there are 25 representatives
on the Board of Executive Directors. Each of the five largest shareholders—France,
Germany, Japan, the United Kingdom, and the United States—, appoints one executive
director. The remainder 20 executive directors are elected to represent each a determined
group of countries.
From post-war reconstruction, which was the objective of the International Bank for
Reconstruction and Development, its focus has evolved into assisting middle-income and
creditworthy poorer countries to diminish poverty levels and engage in sustainable
development strategies. To that end, the IBRD promotes loans decided upon by the Board
of Executive Directors. Beyond that, the Board is responsible for creating the Bank’s
general policies, stimulating a positive investment climate, proposing country assistance
strategies and financial decisions, as well as providing support during crisis periods.
Within the World Bank structure, reconstruction is now seen as just a part of the
institution’s framework. Currently, poverty reduction, sustainable growth and development
stand out as the main issues being advanced by the Bank. As a consequence, the World
Bank has become deeply sensitive to matters related to the aforementioned topics,
particularly regarding the achievement of the Millennium Goals.
In that sense UFRGSMUN’s World Bank proposes a tremendously important topic:
energy supply in Asia. It mixes many issues, such as development, sustainability and
poverty reduction, besides security. Therefore, it is complex subject which deserves careful
consideration by the delegates.
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TOPIC: Energy supply in Asia
Iara Binta Lima Machado, Isadora Steffens, Giovani Bastiani Roggia, Bruno Gomes
Guimarães and Brunna Bozzi Feijó
1. HISTORICAL BACKGROUND
1.1. The emergence of modern energy patterns
If faced with the task of having to trace the most significant events regarding
socioeconomic, political and cultural aspects in modern history one can easily state the
outcomes of the increasing sophistication of the use of energy as one of the major turningpoints. Energy and all the apparatus it moves forward, including services, facilities and the
production of goods is in straight and intimate connection with the growth and welfare of
states and is now a great concern to statesmen and strategists (SLESSER, 1978).
Societies were not always dependant on fossil fuels and electricity. Until the outbreak
of the industrial revolution during the 18th century, labor energy needs were satisfied by
man and animal power while heat and cooking were supplied by timber and, to a lesser
extent, coal. The technological novelties introduced by the Industrial Revolution set the
basis for a myriad of energy-consuming technological inventions that soon spread from the
United Kingdom to its counterparts in Europe, the United States and eventually the world,
providing the background for the unprecedented economic growth that would follow. At
the center of these new technologies and economic growth was a fossil fuel, coal
(HOBSBAWM, 1996; SIDDIQI, 2008).
Although most of the routine energy needs were still supplied by animal power for
more than a hundred years after the industrial revolution (THOMPSON, 1966), for the
first time the use of energy became the engine for economic growth and social
development, a pattern that would persist until the present day.
From 1860 onwards the European Continent (and the United States) underwent a
new phase of science-based technological revolutions known as the Second Industrial
Revolution. By introducing electricity and the internal combustion engine the Second
Industrial Revolution brought about a major change not only to the production sphere but
also to the daily domestic life1, consolidating the symbiosis between modern life and energy
(HOBSBAWM, 1977). The use of fossil fuels before restricted to the production of goods,
minor rudimentary heating and illumination systems and steam-powered transportation
And to the energy patterns, since the combustion engine can be considered to be the main sole
cause for the surpassing of coal by oil as the most important fossil fuel.
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now penetrated all spheres of the common citizen’s life. Modern life and energy patterns
became so closely related that one could not be sustained without the other.
Such changes, however, did not occur everywhere at the same pace. Faced with a
long distance from the major centers of development and subjugated by imperial powers,
Asia was unable to close in the technological and economic gap separating it from the
West. Changes in land use, for instance, that took place several centuries ago in Western
Europe and the United States are no more than one century old in Asia. A similar relation
exists regarding large-scale industrialization. Already a three-century old process in Western
Europe and the United States, in Asia it can only be traced back to late 19th century in
Japan and to the last 30 years in the rest of the continent (SIDDIQI, 2008). As
consequence, the energy patterns long present in the West are a novelty in the continent.
This late development of industrial structures – thus also energy demand - coupled
with the ascension of Japan and the spectacular economic growth of the Asian Tigers,
China and the broader Asia-Pacific during the last few decades (and the consequent
explosion of energy demand) will have important consequences to the efforts faced by the
region to secure its energy supply and adequate it to world standards and the contemporary
environmental challenges (SIDDIQI, 2008).
1.2. Asia energy demand growth and contemporary energy related issues
Up until the mid 20th century, the extensive economic growth and its correspondent
models were based under the assumption that energy demand could be increased almost
indefinitely. World reserves of fossil fuels were abundant if compared to consumption rates
and there was little reason to assume that economic and strategic goals could be threatened
by relative scarcity of fossil fuels.
It is true that oil (and coal) supplies’ strategic importance had already been
demonstrated during World War I and II. However, by then oil geopolitics was still
concentrated on merely securing energy supplies. It was not until the 70’s that the global
dimension of energy supply and demand would be felt. The so called “Oil Crisis” of 1973
and 1979 demonstrated how a relatively small disruption on oil supply could have severe
economic and strategic implications. The 1973 crisis, an OPEC driven cut of merely 5% on
oil supply aimed at countries that supported Israel during the Yom Kippur war caused oil
prices to increase sharply from U$ 2.48 in 1972 to U$ 11.58 in 1974, on money of the day
(BP, 2011b)2. The economic consequences of having a fourfold increase on oil prices, a
British Petroleum Statistical Review of World Energy, available at www.bp.com/statisticalreview.
The statistical review is an excellent source for historical energy production, consumption, proved
reserves and pricing.
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fuel that served as an important input to all major economic activities, could hardly be
underestimated.
An economist and also a contemporary witness of the events, Slesser stated that:
The 1973 oil price rise appears to have caught practically every
forecaster by surprise. […] The only explanation can be that there
were factors in the equations of supply and demand which the
methods of forecasting failed to take into account. In the energy
scene up to 1973, supply was not a factor that many people worried
about (SLESSER, 1978, p. 4).
This abrupt realization about the relative scarcity of oil supply resulted later in the
creation of the International Energy Agency (IEA) in 1974 and the start of comprehensive
data analysis regarding the size of the world actual proved reserves, energy production and
energy consumption. Indeed, data available on energy demand and production started to be
measured on an extensive and globalized basis only during the 1970s.
The oil shock raised questions about national and global level dependence on finite
fossil fuels, with important consequences to energy security policy. Level of self-sufficiency
and strong links with oil suppliers, already relevant variables to energy security before the
70s, redoubled their importance on statesmen agenda from there on. However, that was
not all. Recent developments on energy security policy started to gain relevance. The
diversification of suppliers was one of them: when counting with a high number of fuel or
electricity suppliers a state would be better protected against eventual prospects of trade
disruption with one of them (THAVASI; RAMAKRISHNA, 2009). Similarly, by
diversifying its energy matrix and avoiding concentration on one single kind of fossil fuel a
state would be better equipped to deal with instabilities or permanent decay on the
international market conditions of its dominant imported fuel (IEA, 2007a). Furthermore,
the prospect of relying to a higher degree on renewable sources of energy started to look
more appealing, since these do not face scarcity concerns and depend very little on the
international level (THAVASI; RAMAKRISHNA, 2009).3 Another landmark development
on energy security policy was the understanding that improving energy efficiency would
ensure the best use of the available fossil fuel supply and increase the lifetime of existent
national and global energy reserves (KIM, 2010).
These issues were given little importance prior to 1973, when they took the forefront
on energy security policies. They faded away in the late 80’s only to emerge again in the
21st century, as strong economic growth and the rise of emergent markets (China, ASEAN
Indeed they might depend to some extent on external sources only when obtaining the
technology, building the plant or substituting old or exhausted components (such as photovoltaic
cells).
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and India among them) coupled with falling oil production in OPEC countries threatened
with oil shortage signaled for future price hikes (SCRASER; MACKERRON, 2009).
Another important development on the patterns of energy use arising in the 1970’s
was the emergence environmental question. Today’s discussion on environmental issues is
centered on the greenhouse gas (GHG) emissions by fossil fuels, with obvious
consequences to the patterns of energy use and development. However, this was not
always the focal point of the discussion. On its origins, it was a very different one.
Scrase and MacKerron, when explaining the origins of the relation between
environmental and energy security policies, stated that:
The debate about the sustainability of the modern energy economy
began with concerns over nuclear waste, resource depletion and ‘acid
rain’, and has become more urgent over the last 20 years as a result of
growing understanding of the nature, causes and consequences of
climate change (SCRASE; MACKERRON, 2009, p.5).
Human provoked environmental issues were originally debated on a global level at
the 1972 Stockholm Conference on Human Environment. During conferences, the focus
would be gradually changing to gradually GHG emissions, raising the profile of the
environmental question. The discussion culminated on several landmark agreements, such
as the United Nations Framework Convention on Climate Change (UNFCCC) treaty, the
Kyoto Protocol and the Copenhagen Accord at the 15th Conference of Parties to the
UNFCCC. The environmental question attained throughout the years a high profile and is
here to stay as a highly influential issue on energy policy (SCRASE; MACKERRON, 2009;
IEA, 2007a).
As consequence, energy policies incorporating a GHG reduction component have
become the general norm in most develop countries and to a lesser extent in developing
ones. As discussions on environmental issues developed, concerns started to be expressed
about emergent markets’ emissions, especially regarding the climate change effect of
billions of developing countries inhabitants increasing their consumption level and their
access to energy-intensive lifestyles as their home economies develop.
During the last decades it has been increasingly recognized that climate policy and
energy policy in fact overlap. There is the possibility of adopting strategies aimed at
enhancing energy security which can also contribute to GHG mitigation and the transition
to a clean fuel economy (SCRASE; MACKERRON, 2009). For instance, electricity grid
interconnection and gas pipelines, generally regarded as energy security policies, also have
the potential to reduce CO2 emissions (APERC, 2001). Improving energy efficiency and
the share of renewable fuels in the energy mix will also have both effects.
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The conclusion of the above mentioned developments is that energy security and
climate change became in the last decades the two main drivers for energy policy. Policy
makers now need to devise policies that can deal simultaneously with these twin problems
(IEA, 2007a).
1.2.1. Asia Economic Growth and Energy Consumption
In order to access how Asia has been responding to the global energy policy
framework traced above, one must first address what makes East, South and Southeast
Asia so peculiar regarding its energy needs. To answer it shortly, the regions of Asia now in
scope are singular because: 1) They are highly populated, being home to more than half of
the world´s inhabitants; 2) they have experienced unusually high economic growth rates
since the 1970s from a low base-level; 3) their energy demand is growing steadily at a very
high pace and is based on a precarious infrastructure.
It is widely accepted that growth in energy consumption is both a consequence and a
fundamental contributor to economic growth, especially at earlier stages of development.
That is the case in Asia, as can be noted from Figure 1. Since the early 1970s, Asia-Pacific
countries have experienced the highest economic growth rate in the world (KIM, 2010),
raising their share of World’s real GDP from 15.5% in 1970 to 26.6% in 2010. (USDA,
2010). That is a remarkable economic growth. More remarkable yet is the increase on the
World’s Share of Primary Energy Consumption, from 14.8% in 1970 to 38.1 in 2010 (BP,
2011b).
Although both indicators have risen, energy consumption is increasing at a higher
pace, especially after 2000. The result is an increase in the level of energy consumption per
unit of GDP generated (energy intensity). This has to do with the low base-level of
economic development, which tends to benefit a more energy-intensive economy.
However, this alone doesn’t seem enough to exhaust all explanations for the region’s
increase in energy intensity. A good measure of this increase hinges upon the coal-based
energy policy adopted by the two most populated countries in the region, China and India.
Coal is not only the most carbon intensive fuel but also the least efficient in electricity
generation. Switching to more efficient oil and especially natural gas power generation
plants would have reduced the energy needed for domestic and industrial purposes and
lowered the regional energy intensity (KIM, 2010).
The option for a coal-based energy sector in led by China and India Asia was guided
not only by the lower price of coal but also by the characteristics of the region’s fossil fuel
reserves. The region is home to 30.9% of global coal reserves and 39% percent of the high
quality variety. The region is also responsible for 67.1% of global coal consumption and
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67.2% of production. Coal consumption has increased by 107% in the region from 2000 to
2010 against an increase of 48% in the rest of the world (BP, 2011b).
45%
40%
35%
30%
Share of World Real GDP
25%
20%
Share of World Primary
Energy Consumption
15%
10%
5%
0%
1970
1980
1990
2000
2010
Figure 1 — Asia-Pacific Share of World’s Real GDP and Primary Energy Consumption
Note: Asia-Pacific area as defined here includes all Asian countries plus Oceania, except for the
former Soviet Union, the Middle East and Afghanistan.
Source: data from BP (2011b); USDA (2010).
It has to be noted, however, that although coal consumption has increased
immensely in Asia during the last 10-year period, it was not the only energy source to do
so. Gas consumption increased by 95.1%, hydro power by 111.1% and other renewable
energy sources by 191%. China and India, in an attempt to change their energy profile have
led the increase in hydro power and renewable fuels. The Republic of Korea also
accounted for part of the increase in the latter (BP, 2011b). Notwithstanding these recent
advancements, Asia-Pacific countries have been unable to significantly change their energy
mix profile, depending two times more on coal than the world average.
1.2.2. A brief historic review of Asia’s energy infrastructure
The Asia-Pacific region has initiated in the early 1970s a period of high economic
and energy demand growth from a very low base-level. As a result, energy infrastructure
which was originally very underdeveloped had to be rapidly increased, a not so simple task
that threatened with the appearance of several energy related bottlenecks capable of
slowing down economic growth and social development. The high pace of growth in
energy demand requires considerable sums to be invested in energy plant efficiency, electric
grid expansion, improvement and interconnection, rural electrification, renewable fuels and
fuel transportation (i.e. gas pipelines). The resources to do so are seldom available
nationally and private funds are not so easy to come by, although the region has been
steadily opening its power sector to private investment to cover the financial gap (SAHA,
2003).
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Energy efficiency has received constant attention from Asian governments in the
past decades (THAVASI; RAMAKRISHNA, 2009). Nevertheless, besides the obvious
cases of Japan and the Republic Korea, the only Asian country in the Asia-Pacific region
that possesses OECDE efficiency standards for power plants is Singapore. The remaining
developing Asia has energy efficiency levels of 29.7% for coal, 39% for oil and 40.5% for
natural gas (ADB, 2009), well below world average. Governments have concentrated
efforts in equipping new plants with the integrated gasification combined cycle (IGCC)4
system and the combined heat and power (CHP)5 generation system, improving power
plant efficiency. Meanwhile, investments in modern and efficient gas-fired plants are being
made, especially in the ASEAN region (APERC, 2001; SAHA, 2003; THAVASI;
RAMAKRISHNA, 2009).
Another important discussion that has become common place in the security of
energy supplies and GHG mitigation in the Asia-Pacific is the construction of an
international infrastructure for the import and export of natural gas and electricity. The
security of supply, efficiency gains and environmental benefits of gas pipelines and
electricity grid interconnections have driven East and Southeastern Asian states to actively
pursuit this energy policy option (APERC, 2001). In Southeast Asia a trans-ASEAN gas
pipeline project is being concluded in a step-by-step process through the interconnection
of neighboring economies’ gas networks.
As for East Asia, proposals have been made and discussed for years regarding a gas
pipeline connecting the natural gas reserves of Irkutsk (Russia) to Beijing, with possible
ramifications to Japan and South Korea. The long distance between production and
consuming centers in East Asia and the consequent heavy financial costs necessary for the
construction of the gas pipeline, however, contributed for the project to be abandoned
(APERC, 2001). China has successfully constructed a pipeline along with Turkmenistan
and Kazakhstan which entered into operation in 2009, enhancing China’s proportion of
natural gas in the primary energy consumption by 2 to 3%. It is widely accepted that
further gas pipeline projects could and should be undertaken to improve the natural gas
participation in the Chinese and Indian economies. Financial questions have limited such
projects until now. East Asian countries have instead turned to the import of Liquefied
Natural gas (LNG), a more expensive option, becoming major importers (MAY, 1998).
The problem is that due to transportation costs, LGN prices are higher than pipelinetransported gas, which makes the transition from coal to gas less likely.
IGCC improve the efficiency of coal, oil or biomass power plants by utilizing the residual gas
released from the burning of fuel to generate additional electricity, increasing plant efficiency.
5 CHP uses the residual heat from the fuel burning to generate extra power, just like IGCC makes
use of gas.
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A final and very relevant energy infrastructure gap in Asia is closely related to human
development: the access to electricity. Estimations point out that around 799 million
people have no access to the electricity in developing Asia, from which 186 million reside
in East Asia and 612 in South Asia (ADB, 2009). About 85% of them reside in rural areas.
This issue has long been target of governmental efforts to extend energy grids to remote
areas. Recently, concerns have been expressed about the environmental impact of the
inclusion of this mass into modern energy uses (SADDIQI, 2008). One of the presented
solutions to the problem is the introduction of distributed power technologies in remote
areas, consisting of small-scale renewable energy generators located near the intended area
of use. This is, however, is not only an efficient solution but also a currently very expensive
one, which has been dampened by the scarce financial possibilities of the region (APERC,
2001).
Overall, in the last 10 years R&D investment on cleaner and more efficient energy
technologies has increased steadily in the Asia-Pacific Region, along with investment on the
infrastructure of the energy sector as a whole, as a way to tackle both energy security needs
and improve the environmental standing of the region (THAVASI; RAMAKRISHNA,
2009).
1.2.2. Asia’s response to contemporary energy security challenges
Asian states’ responses to the contemporary energy security challenges were not
harmonized region-wide but have very important elements in common.
First of all, the diversification of energy supplies has been everywhere the
cornerstone to protect against eventual supply disruptions and the rise of prices. Most
states still rely heavily in fossil fuels, with 90% of participation in ASEAN and even more
in China and India. The two latter, however, have internalized most of its fossil fuel needs
with the production of Coal. The situation is different in ASEAN, where 60% of the fossil
fuels needs come from the Middle East (THAVASI; RAMAKRISHNA, 2009).
China and India are making major investments on nuclear plants along with Russian
and French partners. Philippines, Indonesia, Vietnam and Thailand have also revived their
nuclear energy programs. Myanmar has recently announced the construction of a small
generator with Russian assistance (THAVASI; RAMAKRISHNA, 2009). There is no
telling whether such efforts in amplifying the nuclear power generation will persist after the
accident with the Fukushima reactor in Japan.
Nevertheless, most of the countries have recognized renewables as a safer and more
feasible solution to lower fossil fuel imports’ dependence. Investments in photovoltaics
(PV), geothermal energy, wind power, biofuels and hydropower have been through
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consistent growth since 2000. China, Japan, South Korea and Singapore are leading the
pack in these categories, with the exception of geothermal energy. Of all renewables, wind
and hydropower power have generally been regarded as the cheaper and low-risk options
(THAVASI; RAMAKRISHNA, 2009).
Besides diversification of fuels, Asian nations have dedicated considerable efforts to
increase their economies’ overall energy efficiency and to develop an international energy
network for gas and electricity trade, as mentioned earlier. Interconnected gas and electric
grid networks were seem as one of the favorite options to enhance energy security in East
Asia. Gas pipelines were deemed as the safest way to secure gas supplies with low
operation costs. Electric grid interconnections are seen to improve the quality of the
electricity supply while increasing its efficiency and providing the possibility of trading
surplus local hydro generated electricity across countries. Existing electricity grid
interconnections’ capacity is still marginal, but has been growing steadily in ASEAN
countries (APERC, 2001). Gas pipelines have also been successfully developing in
Southeast Asia while several projects are being analyzed for East and South Asia. The
ASEAN coordination mechanism has been particularly useful in stimulating energy
network interconnections. Financing for such projects, however, continues to be a critical
issue (SAHA, 2003) and could benefit from international aid and partnerships.
1.2.3. Asia’s response to climate change issues
During the past 30 years, CO2 emissions by Asian countries have been increasing due
to economic and population growth. The pace of the increase was such that 4 of the ten
largest emitters are from the Region: China, India, Japan and the Republic of Korea
(SADDIQI, 2008). An increase in carbon emissions in face of economic growth was of
course expected, since economic growth and energy consumption have a strong historical
correlation, especially in early stages of development (SAHA, 2003). Nevertheless, the
impacts the growth in Asian CO2 emissions will have over an already stressed climate have
raised widespread concern.
Based on the fact that economic growth and human development lead to increased
energy consumption which in turn leads to higher GHG emissions, developing Asia
countries have refused to compromise with absolute reductions on their emissions, even in
non-binding agreements such as the Copenhagen Accord, under the argument that
economic development and poverty alleviation comes first. Historically low levels of energy
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consumption (and consequently GHG emissions) per capita have helped them to sustain
this position (SADDIQI, 2008).6
However, this doesn’t mean developing Asia did not make any move towards
achieving a cleaner economy and reducing its energy intensity and carbon footprint.
Renewable energy sources are still in an early stage of development (SADDIQI, 2008), but
as mentioned in section 1.2.1., yearly renewables and hydro power consumption has
increased by a factor of 2 and 3, respectively, in the last 10 years.
Efforts towards changing power generation base from oil and coal to gas are
widespread in the Asia-Pacific region, but still limited in regions other than Southeast Asia
and the developed Japan and South Korea (APERC, 2001). The region as whole has
increased its natural gas consumption by 95.1% in the last 10 years. Natural gas is a more
efficient fossil fuel and has a lower carbon composition, contributing to mitigate current
and future emissions. Furthermore, energy efficiency, as noted in the previous two
sections, is an important part of the Asia-Pacific energy policy, with the potential to meet
half of the energy needs of the region (THAVASI; RAMAKRISHNA, 2009). Either with
measures directed to tackle GHG emissions per se or to improve energy security and
efficiency, Asia has not been standing idle in the face of climate change.
2. STATEMENT OF THE ISSUE
2.1. Energy sources in the 21st century
Stating that energy is one of the driving forces in the world today is not euphemism.
Even if its importance has not been properly acknowledged by most, energy is an
underlying component to all activities in human life, be it at the individual level or within—
and among—communities. Across time, several energy sources have been discovered, and
their use has been made possible by the technologic creations brought about by scientists
around the world. As different concerns took hold of the scientific community, such as
climate change and environmental damage, new sources of energy have been developed.
Either largely in use or still in testing phase, they present a series of different characteristics,
advantages and disadvantages.
Biomass still plays a central role in the lives of many people, especially among poor
populations. It consists of “organic material that has stored sunlight in the form of
chemical energy, such as plants, agricultural crops or residues, municipal wastes, and algae”
(US DEPARTMENT OF ENERGY, 2010) which can be used in traditional or modern
forms. Traditional forms of biomass—wood, straw, charcoal, dung, among others—are
An average american citizen emits four times more CO2 than an average Chinese and 20 times
more than an Indian.
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usually used by poor people to provide for their heating and cooking needs. Generally, it
does not constitute a commercial fuel; most of its consumption is based on female and
child gathering across long distances every day (IEA, 2004). They are considered inefficient
and unsustainable, leading to deforestation from both domestic and industrial usage
(GOLDEMBERG; COELHO, 2004). Another major issue arising from traditional
biomass is indoor air pollution which arises mainly from the lack of high quality stoves or
chimneys to drain smoke outside (REDDY, 2000). On the other hand, modern biomass
tends to be sustainable (GOLDEMBERG; COELHO, 2004). As several cases have shown,
transportation, electricity and heating systems can be powered by solid waste, agricultural
and forest residues (GOLDEMBERG; COELHO, 2004). In recent years, biofuels such as
biodiesel and ethanol became more popular in many countries. As such, modern biomass
can be classified as a renewable energy source. Beyond that, they help diversify energy
portfolios, increasing supply security by allowing local production (GOLDEMBERG;
COELHO, 2004; US DEPARTMENT OF ENERGY, 2010).
Coal, oil, and natural gas—also termed fossil fuels7—have played prominent roles in
energy supply and consumption throughout the last few centuries. According to British
Petroleum statistics (2011b), oil remains the world’s most consumed fuel, even though it
has continuously lost market share over the years. A reasonable explanation for that might
be the fact that:
Petroleum, in particular, spawned unprecedented world-economic
growth because its excess energy—net of the exploration, extraction,
refining and transport processes—was enormous; and because the
energy could be delivered in a highly useful form—a liquid which,
due to its high energy density, could effectively power transportation
(KESSIDES; WADE, 2011, p. 4–5).
One of the main uses for coal has been electricity generation. In 2010, it accounted
for nearly 30% of global energy consumption, with China being responsible for 48.2% of it
all (BP, 2011b, p. 5). Fossil fuels are considered non-renewable sources since such
resources risk depletion over time. Furthermore, they are the main energy sources to blame
for greenhouse gas emissions, with an expected augmentation in the contribution
developing economies can give to these issue of environmental concern(REN21, 2006).8
Price volatility is also worth mentioning, as well as import dependence (FLAVIN; AECK,
2005; US DEPARTMENT OF ENERGY, 2010). Oil spills, such as the Gulf of Mexico
case also inspire some apprehension towards other possible environmental damages caused
Fossil fuels are an energy source derived from hydrocarbon or carbonaceous rocks mostly
originated from organic matter through a lengthy process that normally lasts millions of years
(AHLBRANDT, 2001).
8 Coal presents the highest levels of CO2 emissions among fossil fuels. Oil and natural gas oxidize
other elements beyond CO2 (FAINBERG, 2001).
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by fossil fuels. A cleaner option is natural gas, whose carbon dioxide emissions are lower
than those of other types of fossil fuels (ABD, 2009). Recently, its liquefied version (LNG)
is becoming more popular, even though its continuous spread is dependent on high levels
of technological development and investment (ADB, 2009).
Nuclear energy is largely used for electricity purposes. It is rendered a clean energy
source since it is almost carbon-free (IEA, 2007b). Another advantage is the low uranium
needed to supply electricity (MCFARLAND, 2001). Still, nuclear energy usage is
controversial due to possible diversion of means towards nuclear weapons development.
There is also the issue of nuclear waste storage and its secure reprocessing and disposal
(IEA, 2007b; MCFARLAND, 2001). Notwithstanding these and other disadvantages, one
of the biggest problems posed by nuclear energy is the prevention of nuclear accidents
such as Chernobyl, and, more recently, Fukushima. This inspires opposition among the
general public and it is a matter to be addressed by governments interested in fostering
nuclear power development within their countries.
On the range of clean energy sources, hydropower has been important for electricity
generation. It presents many benefits to the countries that possess hydro resources to
explore hydroelectricity. First of all, energy supply security is enhanced, since import
dependence is reduced (DOMAN, 2001). Furthermore, energy system integration can be
fostered through shared water courses and joint efforts for technology development. In
times of great concern with environmental damage and climate change, hydroelectricity
represents an interesting alternative to greenhouse gas emissions from fossil fuels
(DOMAN, 2001) and is deemed to be a renewable energy source. Still, some disadvantages
can be pointed out such as population displacement and negative effects on animal life due
to the construction of dams and the flooding it implies (DOMAN, 2001). Droughts can
also affect electricity supply (DOMAN, 2001). The Three Gorges Dam project in China is
often quoted as a great example to both positive and negative impacts.9
Environmental concerns as well as energy security considerations in general have
pushed countries to seek other energy sources to meet power, transportation, lighting,
electricity, and heating needs. This has spurred investment into the development of
renewable fuels which “capture their energy from existing flows of energy, from on-going
natural processes” (FLAVIN; AECK, 2005, p.14). Through a series of technology
developments they can be put into use in a sustainable manner, easing the uncertainty that
surrounds the usage of already conventional energy forms, especially fossil fuels. Among
the renewable energy sources, wind energy, for example, has been used mainly for
electricity generation through installation of wind turbines onshore and offshore (IEA,
9
Peter H. Gleick has sought to analyze the project and its implications (GLEICK, 2009).
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2008c). Solar energy is also used to provide electricity, be it by photovoltaic technology or
concentrating solar thermal power (REN21, 2011; IEA, 2009a). Solar heating and cooling
is also another application for sunlight which is directly used for heating and industrial
purposes, as well as air-conditioning (IEA, 2009b). Another alternative for electricity
generation is geothermal energy which also provides direct heat to space and water heating,
industrial processes, among other services (IEA, 2010d; REN21, 2011). Ocean energy can
also be quoted as a form of generating electricity, even though its technology development
still falls behind that of other renewable fuels (REN21, 2011).
Renewable energy sources in general present several advantages. Generally, they are
carbon free or carbon neutral which implies a qualitative and quantitative contribution to
reduce greenhouse gas emissions worldwide. Beyond environmental concerns, renewable
energy can increase security of supply (CHRISTENSEN et al, 2006) by reducing energy
import dependence and consequently making countries less vulnerable to price
fluctuations, for example (US DEPARTMENT OF ENERGY, 2010; FLAVIN; AECK,
2005). Nevertheless, there still exist some barriers to the enlargement of renewable energy
sources usage across the world, one of the most important being the high initial capital
costs to install such energy systems (FLAVIN, 2005). This spurs the need to develop not
only efficient technology, but also one which can be easily affordable even by poor
populations.
2.2. Asia’s energy outlook
Over the last two decades, the Asian continent has gained notoriety for its strong
economic growth and increasing development rates. Countries that until the 1980s were
not known for fast improvements on living standards, such as China, are now leading Asia
on the path to further development. This, in turn, has led the world to focus on the
region’s potential, putting forward predictions of further social development. Nonetheless,
Asia still has a long way to go to surmount a series of problems which stand on its way and
consequently inhibit the region’s progress.
2.2.1. The Asian reserves scenario
One of the major issues facing Asia today is energy. Energy runs economies and
therefore is one of the most important components in ensuring development. Asia holds a
considerable share of the world’s energy reserves and energy potential within its
boundaries. However, that is not sufficient to ensure every country disposes of the
necessary amount of energy to run its own economy, since energy resources are unevenly
distributed among nations and certain types of energy are more suitable for specific
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activities. Regarding oil reserves, Kazakhstan holds alone 2.9% of total world reserves, a
share which almost equals that of the bulk of Asian nations at 3.3%10, of which only China
overcomes the 1% barrier (BP, 2011b). The contrast to the OPEC members is ever more
relevant for those countries alone account for 77.2% of proven oil reserves (BP, 2011b).
On the natural gas scenario, the bulk of Asian nations possess 8.7% of total world
reserves. Nevertheless, Turkmenistan stands out on the continent being accountable for a
4.3% share of natural gas reserves (BP, 2011b). Coal is the one primary energy type where
the former group of countries becomes prominent. Even though Kazakhstan holds 3.9%
of total coal reserves, the other nations put together add up to a 30.9% share (BP, 2011b).
The rising powers China and India total 13.3% and 7% of world reserves, respectively (BP,
2011b). Although an analysis of the amount of energy resources available in Asia is
important to underline the region’s development potential, this data alone is neither
sufficient to determine the future paths of economic growth nor to highlight the main
failures in each country’s development trajectory.
2.2.2. Prospects on primary energy demand and production11
Between 1990 and 2005, Asia and the Pacific registered the highest annual energy
demand growth rates at 3.5%. This was due to the fast economic growth experienced by
Asian countries during this period, with highlights to China and India. Until 2030, this rate
is projected to slow down to 2.4%, but still above the 1.5% expected for the rest of the
world12 (ADB, 2009). According to the Asian Development Bank (2009), by 2030, the
developing member countries will present a slightly higher annual growth rate (2.6%) and
will be responsible for 89.5% of the continent’s energy demand. Energy demand per region
should evolve as follows (Table 1):
Former Soviet Union Asian members are excluded from considerations on share of oil, natural
gas, and coal reserves. On the other hand, Australia, New Zealand, Papua New Guinea and
Oceania are accounted for on the data
11 For methodological purposes, most of the forthcoming data under subsection number 2 will be
based on regional divisions from the Asian Development Bank. If that is not the case, there will be
specific remarks to the contrary. The ADB acknowledges six groups: Central and West Asia
(Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan,
Turkmenistan, and Uzbekistan), East Asia (Hong Kong, China; the Republic of Korea; Mongolia;
the People’s Republic of China; and Taipei, China), the Pacific (Cook Islands, Fiji Islands, Kiribati,
Nauru, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, and Vanuatu),
South Asia (Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka), Southeast Asia (Brunei
Darussalam, Cambodia, Indonesia, the Lao People’s Democratic Republic, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Vietnam), and Developed Group (Australia, Japan, and New
Zealand).
12 Data refers to primary energy demand (oil, coal, natural gas, hydro, nuclear, and new and
renewable fuels).
10
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In that scenario, even though coal’s share on energy demand will be reduced13, it will
continue to be the most used energy resource in Asia, growing an average 2.1% per year,
being mainly used for power generation. In second place, comes oil, growing at an annual
2.2% and maintaining a 27% share (ADB, 2009). China will be a major contributor to
growth rates in Asia and in the world until 2030, directing most of its demand to the
transport and industry sectors (BP, 2011a). Due to its diminished harms to the
environment and the possibility of transporting it in its liquid format, natural gas demand
will grow fast in Asia (3.6% annual rate), but it will only attain a 14.5% share, being mainly
used in the power sector. New and renewable fuels’ share in 2030 will be of 11.2%, due to
biomass and biofuel production potential in Asia and experiments with new sources, such
as wind, geothermal and solar. Hydro will not attain an expressive share in energy demand,
3% over the outlook period. As for nuclear energy, the prospects are of a 5.1% (ADB,
2009) increase with projects in India and China being put into practice. However, the
recent incident in Japan might affect states’ perceptions on the benefits of nuclear energy
usage.
Increasing demand needs to be met by larger supplies. As mentioned before, Asia is
rich in a variety of energy sources, but their geographic distribution indicates that many
regions need to import a large part of the energy they consume to meet their demand and
attain their development goals. This import increase in some areas will in turn be
sponsored by suppliers within Asia, such as Central and West Asian nations, as well as
other nations, especially Middle Eastern ones and Russia. In addition, Africa and Latin
America are becoming relatively significant energy exporters to Asia. Nonetheless, this
does not exclude reliance on internal resources to help fuel the economic and development
engines.
13
From 41% in 2005 to 38.3% in 2030 (Asian Development Bank, 2009).
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Without disregard for their own short and long term needs in primary energy
demand resources, Central and West Asia countries will sustain their position as net energy
exporters, with a forecast of increase in production in Central Asia. Led by China, East
Asia is set to become the greatest energy importer in absolute numbers, projecting an
annual energy import growth rate of 4.2%. South Asia will rank second place in absolute
import numbers, with highlights to India. By 2030, Southeast Asia will no longer be an
energy exporter due to decrease in production from Indonesia, Thailand, Vietnam and
Malaysia and growing natural gas imports in the Philippines, Thailand and Singapore. This
tendency will be visible in oil and natural gas. On the Pacific, natural gas exports should
intensify with production in Timor-Leste and Papua New Guinea, but imports will be more
expressive in oil demand (ADB, 2009).
The situation has led to the development and expansion of intra-regional and
interregional deals among countries, searching to reassure their demand by import. China,
Japan, India, and South Korea illustrate this trend very well as all of them have sought to
pursue deals with countries in Central Asia, the Middle East, the Americas and Africa to
enhance prospects of supply security.
2.2.3. The electricity outlook
Economic growth and social development are intrinsically correlated to electricity
demand, given the necessity of energy access to further development and fulfill the material
needs of populations. As stated by the International Energy Agency (2010f), 1.4 billion
people do not have access to electricity worldwide. Out of the current amount of
individuals in that deploring situation, more than half of them (799 million) live in
developing countries in Asia, with India alone responding for 404 million people. China
accounts for 8 million and the remainder correspond to other developing nations14.
Until 2030, electricity demand in Asia and the Pacific is expected to grow 3.4% per
year, with the developing nations growing at an annual 4% (ADB, 2009). The bulk of the
electricity demand in absolute figures will be taken by East Asia, China alone answering for
84.3% of total regional demand. Nonetheless, it is South Asia, mainly sponsored by India,
which will hold the highest annual growth rates, at 5.5%, against 3.5% in East Asia. Central
and West Asia, Southeast Asia and the Pacific are expected to record an average 3.4%,
The International Energy Agency (2010f) estimates that an even larger number of people in
developing Asia depend on biomass fuel for cooking (almost 2 billion). Of those, 855 million live in
India, followed by 423 million in China alone. The remainder 659 million is spread throughout the
other developing nations. Biomass fuels pose an intrinsic health danger due to air pollution and the
breathing of toxic particles (IEA, 2010c). It is important to note, however, that these differ from
the biomass used as renewable sources for the latter is transformed during the economic energy
cycle. It must also be noted that the available data is in accordance to IEA`s definition of
developing Asia. For a listing of countries, please refer to IEA documents
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4.8% and 4% annual growth in electricity demand, respectively (ADB, 2009). In absolute
numbers, the electricity demand per region is projected to look as follows (Figure 1):
Once again, the energy resources used in each country and region differ according to
availability. Notwithstanding, coal should sustain the bulk of electricity production,
particularly because it is largely used in China and India, two of the biggest power
generating countries. Despite that fact, the need to increase electricity production and
environmental concerns are directing countries (including China and India) towards
exploitation of natural gas as a power generating resource. Nuclear power is also
considered an effective fuel for electricity, though it presents higher risks in management
and it is not entirely approved by public opinion.
Even though energy generation projections show a large increase in energy
production, this might still not be enough to ensure complete electrification rates by 2030.
For starters, energy production will be unevenly distributed among nations, with China,
India, and Japan expected to generate three-quarters of all produced electricity in Asia and
the Pacific (ADB, 2009). In addition to that, several countries in Asia face infrastructural
problems, not possessing the necessary equipment to provide electricity to the general
population. Much of that is due to shortage of financial resources. Hence, in order to boost
electricity access and supply of primary energy demand, “the government of a developing
member needs to ensure a level playing field to receive financial assistance from different
investors, including donors through bilateral/multilateral cooperation or international
institutions such as development banks” (ADB, 2009, p. 51). If further measures on that
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sense are not taken, the nation’s energy security will be compromised, reflecting on its
economic growth and social development progress.
2.3. Energy and development
2.3.1. Poverty and human development
Well into the 21st century, an enormous amount of people still live in poverty and do
not have the adequate prerogatives to achieve high levels of human development. In Asia,
among the myriad of countries that compose this heterogeneous continent, this statement
is equally true. Several of the continent’s nations present elevated levels of poverty, while
only a few have managed to restrict this problem to a lower percentage of their national
population. As such, this means that a considerable amount of people live under
“pronounced deprivation in well-being” (WBG, 2001, p.15).
According to Haughton and Khandker (2009), the meaning of well-being can be
understood under three approaches. The most traditional view targets poverty under
monetary terms, qualifying as poor the individual who does not have the necessary
resources to account for its needs. The second approach relates to specific types of
goods—shelter, food, education, health care—and if a person is able to access them or not.
At last, the word capabilities arises on the third approach, one where poverty is
multidimensional and encompasses the other two viewpoints. Poverty is then seen to arise
“when people lack key capabilities, and so have inadequate income or education, or poor
health, or insecurity, or low self-confidence, or a sense of powerlessness, or the absence of
rights (…)” (HAUGHTON; KHANDKER, 2009, p.2–3). Despite all that, the most
common statistics concerning poverty are still measured in terms of economic provisions.
As such, extreme poverty relates to people living with less than $1.25 a day, whereas
moderate poverty encompasses those living under the $2 a day poverty line.
Poverty is directly related to human development since the former has the ability to
undermine—or even prevent—the path to higher levels of the latter. Human development
is also built on a broader notion that extends beyond strictly economic concerns. It is
“about steadily sustaining positive outcomes and combating processes that impoverish
people or underpin oppression and structural injustice” (UNDP, 2010, p.22). Hence:
Human development is the expansion of people’s freedom to live
long, healthy and creative lives; to advance other goals they have
reason to value; and to engage actively in shaping development
equitably and sustainably on a shared planet. People are both the
beneficiaries and drivers of human development, as individuals and in
groups (UNDP, 2010, p. 22).
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Human development must, therefore, create conditions to bring people out of
poverty on the long term.15 Furthermore, it must respect the different settings and
characteristics of each country and the groups within it, giving room for the flourishing of
personal and community values. The breadth of the definition does not, however, preclude
the recognition that at the core of human development stand the ideals of high quality
education, of decent living standards and of a long and healthy life (UNDP, 1990, p. 10), all
of which pertain to the eradication of poverty.
2.3.2. Poverty and human development in Asia
The Asian continent is cut by many disparities. While some countries report low
levels of poverty and have managed to rank high on the development scale, others still
possess the bulk of their population living below poverty line. According to Wan and
Sebastian (2011), Asia and the Pacific region hold 62.78% of the world’s poor, followed by
Sub-Saharan Africa at 32.73%. Nevertheless, an extended research conducted by the bank
on available data on 25 developing member countries16 has found that poverty levels have
dropped in general on the region, even if the distribution of such progress was uneven
throughout it, the largest decreases displayed on East Asia largely due to reductions in
China. Between 2005 and 2008, the number of people living under the extreme poverty
line—less than $1.25 a day—has fallen from 903.4 million to 753.5 million, which translates
into a decrease from 27.1% of population in 2005 to 21.9% in 2008 (WAN; SEBASTIAN,
2011, p. 5). Even though China and India accounted for the bulk of reductions—a decrease
of 85 million and 29 million people, respectively—, they still remained at the top of the list
on number of poor people. Hence, in 2008, India’s poor reached 426.48 million, while the
Chinese numbered 122.33 million. They were followed by Bangladesh (70.96 million),
Indonesia (40.36 million), and Pakistan (29.88 million) (WAN; SEBASTIAN, 2011).
Once the moderate poverty line is considered—those living on less than $2 a day—
the overall number of poor people shows a decrease of 168 million, from 1.80 billion in
2005 to 1.63 billion in 2008. In percentage of population, this translates into a decline from
54% to 47.4% over the reviewed period (WAN; SEBASTIAN, 2011, p. 9). China and
This analysis does not seek to exhaust all possible links between poverty and human
development. The sole focus is to highlight that both concepts are related. As such, it is important
to note that the attainment of high development levels does not translate into the complete
annihilation of poverty. Nevertheless, it serves as an indicator of the amelioration of objective and
subjective conditions in a given country, region or place.
16 Member countries under analysis are Armenia, Azerbaijan, Bangladesh, Bhutan, Cambodia, the
People´s Republic of China, Georgia, India, Indonesia, Kazakhstan, the Kyrgyz Republic, Lao
PDR, Malaysia, Mongolia, Nepal, Pakistan, Papua New Guinea, the Philippines, Sri Lanka,
Tajikistan, Thailand, Timor-Leste, Turkmenistan, Uzbekistan, and Viet Nam, which together
account for roughly 95% of the total population on the Asia and the Pacific region (ADB, 2011).
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Indonesia showed most improvements, accounting for 92% of people who overcame the
moderate poverty line. If progress can be seen through data analysis, this must not serve to
obscure the fact that in eight out of the 25 countries more than half of the population
continues to live under de $2 poverty line. In India, a staggering 73.28% of the population
is classified as poor (WAN; SEBASTIAN, 2011), evidence which highlights that high levels
of economic growth are not enough to eradicate poverty and bring about human
development. The remainder of countries in the same group is Nepal (75.05%), Bangladesh
(74.88%), Timor-Leste (68.73%), Lao PDR (67.15%), Pakistan (56.43%), Cambodia
(56.14%), and Uzbekistan (52.23%) (WAN; SEBASTIAN, 2011, p. 10).17
2.3.3. Energy as a means of overcoming poverty and fostering human development
Even if unnoticed, the continuity of present day life is energy dependent. Energy
allows people to warm up their home when it is cold, to eat when they are hungry.
Nevertheless, these services are not attainable with the same degree of efficiency by all. The
direct accessibility of sources, the availability of modern-day technology, the scale of public
and private investment, among other factors, are relevant variables influencing people’s
energetic possibilities. These, in turn, are correlated with overall levels of poverty and
development within society.
Traditional thinking on poverty and human development has paid little attention to
the two-way linkage between both topics and energy; mostly highlighting the impact
development has on energy use (IEA, 2004). As a result, the inputs energy brings to higher
levels of human development and to the eradication of poverty have been largely
overlooked. This situation has begun to shift over the last years, however, with several
international organizations and governments seeking further enlightenment on the matter.
One of the systematic efforts on the matter to gain notoriety within the international
community has been made by the United Nations Development Programme. According to
the UNDP:
Energy services are a crucial input to the primary development
challenges of providing adequate food, shelter, clothing, water,
sanitation, medical care, schooling, and access to information. Thus
energy is one dimension or determinant of poverty and development,
but it is vital. Energy supports the provision of basic needs (…)
Energy also fuels productive activities (…). Conversely, lack of access
to energy contributes to poverty and deprivation and can contribute
to economic decline (REDDY, 2000, p. 44).
Through a series of transformation processes, energy sources are transmuted into
energy services such as lighting, cooking, heating, transportation, among others, which are
17
Wan e Sebastian (2011) also present poverty estimates for 2009 and 2010 in their work.
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essential to ensure that people achieve decent living standards, education and enjoy a long
and healthy life. As such, in seeking energy to provide for their well being, people are in
fact looking for the services energy provides, thus implying that the sources themselves are
less important for immediate concerns, allowing demand for energy to be classified as a
“derived demand” (DIFD, 2002, p. 5). Thus, the provision of energy services would be the
main goal to be achieved by any given energy system (GOLDEMBERG; JOHANSSON,
1995).18
According to the International Energy Agency (2004), extensive use of biomass and
lack of access to electricity are marked characteristics of developing countries. Such
conditions are explained by a number of factors, among which are the high primary costs
of certain energy technologies and infrastructure to increase energy provision and
efficiency both at the household and national levels. In turn, this situation has an impact on
the availability and quality of energy services and it contributes to reproduce the condition
of energy poverty, one that reports to the “absence of sufficient choice in accessing
adequate, affordable, reliable, high-quality, safe, and environmentally benign energy services
to support economic and social development” (REDDY, 2000, p. 44). The use of biomass
has elevated costs to those who depend on it. Even if it can be argued that in monetary
terms this would represent a cheap energetic deal, low efficiency and the necessary time to
gather fuel wood, for example, have a great negative impact on people’s lives. Some studies
have showed that an average family can even spend up to 6 or more hours a day colleting
biomass sources to provide for energy services (DFID, 2002). However, one of the biggest
implications concerns the health damages caused by indoor air pollution, especially on
women since they normally carry the responsibility over household chores. With regards to
electricity, on-grid and off-grid systems could help reduce dependence on kerosene for
lighting, increasing efficiency and service extent.
Ensuring people exit energy poverty has direct and indirect benefits to poverty
eradication and human development (FLAVIN; AECK, 2005). In that sense, the transition
to modern energy fuels and technology, along with the guaranteed access to electricity
would provide people with higher quality energy services which would have a direct impact
on cooking, heating and lighting, for example. Furthermore, the envisaged benefits of
energy service amelioration can be perceived at the local, national, and even regional and
global levels. In terms of economic development, the amelioration of energy services at the
local level can be translated into income increase and improved productivity from the
fostering of new economic activities—especially micro-enterprise businesses—and
“Energy services are the desired and useful products, processes, or services that result from the
use of energy” (GOLDEMBERG; JOHANSSON, 1995, p. 1).
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agricultural advancement from crops to consumer markets (DFID, 2002). Nationally,
economic prospects are boosted by industrial growth and the expansion of communication
and transportation networks (DFID, 2002). As a result, regional and global connections
can be established through market creation and augmentation.
Poverty reduction and human development, however, cannot be solely achieved
through economic growth. Immaterial determinants to both topics are also extremely
important to bring about long-term changes and improvements to people’s lives. Relevant
issues on topics such as education and healthcare extend beyond concerns with the
existence of classrooms, hospitals and clinics, as well as funds to purchase medication and
notebooks. The continuity of everyday activity in such fields is also energy dependent.
Schools are not able to function properly without efficient energy supplies since access to
learning materials—especially digital devices—is hampered. Furthermore, education
prospects are diminished if kids do not have access to lighting at home to study at night.
(DFID, 2002). Healthcare is also damaged by lack of high quality energy services since
clinics are forced to open in reduced hours and cannot store medication and perform
several medical exams (DFID, 2002). The provision of high quality and efficient energy
services would, even if indirectly, contribute to reverse such characteristics of many areas in
developing countries, determining that energy is able to provide an excellent input to
several elements of human development.
In an effort to clarify the relation between energy and development and to keep track
of progress on the transition to modern energy fuels (IEA, 2004), the International Energy
Agency has advanced the Energy Development Index (EDI). “The index seeks to capture
the quality of energy services as well as their quantity” (IEA, 2004, p. 342) and rests on four
indicators19, seeking to mirror the Human Development Index (IEA, 2004). The EDI’s
main contribution, however, goes beyond the identification of major flaws within energy
systems. Even if it is not a perfect measurement of reality, it provides the foundation for
country-specific energy policies to counter poverty and stimulate development. It is an
attempt to capture the complexity of processes to overcome energy poverty. As a
consequence, context based strategies can be advanced, finally escaping from “one fits all”
The four indicators are as follows: “per capita commercial energy consumption—which serves as
an indicator of the overall economic development of a country; per capita electricity consumption
in the residential sector—which serves as an indicator of the reliability of, and consumer’s ability to
pay for, electricity services; share of modern fuels in total residential sector energy use—which
serves as an indicator of the level of access to clean cooking facilities; share of population with
access to electricity” (IEA, 2011b). According to IEA (2004, p. 342), “this is a first effort to
produce an index of energy development. We have decided to introduce it here to encourage
thinking about the role of energy as a contributory factor in development, rather than simply a
consequence”.
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formulas which have proved damaging to development and poverty eradication projects in
the past. The EDI for Asian nations in 2010 ranked as follows:
According to the International Energy Agency (2002), there are three basic
determinants to the transition to modern fuels: availability, affordability and cultural
preferences. All three of them concern not only the energy sources themselves, but also the
necessary technology to put them into use. If they cannot afford a modern stove, for
example, households will continue to use biomass in inefficient ways. Consequently, the
transition process might be subject to setbacks along the way. Such scenario demonstrates
that:
The transition from energy poverty to relative affluence is a complex
and irregular process, varying widely from nation to nation, village to
village and family to family. In a general way, it is a journey from
nearly exclusive reliance on traditional biomass to the access and use
of electricity together with a range of other modern fuels (IEA, 2002,
p. 372).
The provision of high quality energy services involves several underlying dimensions
to the determinants quoted above, thus adding to the complexity of the matter. Before all,
it involves the outlining of a specific strategy by a group of decision makers who must
work together to ensure that the continuity and quality of services over time is consonant
with the country’s overall development goals, providing benefits not only to households,
but to nations as a whole. Natural resource endowment, economic needs, social and
political characteristics and conditions must be taken into consideration. Different
countries dispose of different resources which can be used to provide energy services.
China’s large coal reserves—approximately 13.3% of the world’s total (BP, 2011b, p.30)—
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might render this a cost-effective energy source to provide for electricity. Yet, current
environmental concerns and demand projections have constrained countries to start
exploring the potential of renewable energy sources. China is among the nations which
have largely followed this process (REN21, 2011). Nevertheless, elevated initial monetary
costs for several renewable energy technologies have served to delay the spread of its
benefits (FLAVIN; AECK, 2005) Since both sides present advantages and disadvantages,
the better off solution could be a combination of both, integrating as well traditional
biomass in a more sustainable manner (DFID, 2002).
Population distribution between rural and urban settings is also a relevant factor for
energy policies. Regarding only electricity access numbers, it is possible to identify a huge
disparity between scenarios. Out of the 799 million people lacking access to electricity in
developing Asia, 716 million of them live in rural areas—380 million of which are located
in India—while only 82 million inhabit urban environments (IEA, 2010b).20 These
differences might be attributed to the high connection costs to on-grid systems in remote
areas – especially rural ones – since they often do not concentrate enough population nor
consumption patterns to payoff investments (FLAVIN; AECK, 2005). This suggests that
the buildup of mini-grid and off-grid systems can constitute an alternative in middle size
settlements and rural areas (IEA, 2002, FLAVIN; AECK, 2005).
Governments must be reliable and committed to a development strategy which
presents effective mechanisms to reduce poverty and foster human development. Choosing
the best energy sources and installations to every particular situation involves decisions
taken at the national level for the most part. Nevertheless, efforts to ensure long term high
quality energy services extend beyond those two aspects. Despite the divide between rural
and urban settings, one general characteristic of poor environments is the absence of basic
infrastructure, increasing communication and transportation costs for fuels and technology
(DFID, 2002). Therefore, governments need to invest; they should invest not only on
roads or school buildings, but also on greater institutional efficiency, on measures to attract
private capital into energy schemes, on local skill building to guarantee operational capacity
of energy systems, on establishing subsidies strategies to different energy sources than
exclusively fossil fuels to accelerate renewable energy sources usage (O’KEEFE,
O’BRIEN, PEARSALL, 2010; FLAVIN; AECK, 2005). Governments should also devise
R&D programmes to develop more efficient energy technology and seek partnerships to
account for technology transfer from developed countries and other developing ones. All
afore mentioned aspects taken together would contribute to set up a sustainable energy
For clarification as to which countries are included on the aforementioned statistics, please refer
to IEA documents.
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system, one which is able to secure long term access to the energy services needed to
improve human development and poverty eradication perspectives.21
2.3.4. Energy and the Millennium Development Goals
The Millennium Development Goals constitute a framework initiative promoted by
the United Nations since 2000 to enhance development prospects around the world. In
2010, the MDG 2010 Summit saw a renewed commitment from UN agencies,
governments, donor bodies, businesses, and NGOs to accelerate measures towards 2015
targets (UNDP 2011; UNGA, 2010). Though not a particular goal, energy services, as can
be expected, are of utmost importance to any MDG national policy (PANGESTU;
SACHS, 2004).
Energy has a contribution to each of the eight United Nations development goals.
Goal number 1 stresses the commitment to eradicate extreme poverty and hunger; to
which energy services can assist by diverting time spent gathering biomass fuels to the
development and expansion of income generating activities and increasing crop
productivity (PANGESTU; SACHS, 2004). This would also provide families with the
monetary means and technology to purchase, store or produce food (UN-Energy, 2005;
FLAVIN; AECK, 2005).
Goals 2 and 3 call on the achievement of universal primary education and the
promotion of gender equality and female empowerment, respectively. Aside from creating
conditions for children to study at home during after dark and ensuring schools have
access to all required means to educate students, energy services give an incentive for
families to send kids to school by reducing—or even eliminating—the time they spend
gathering fuel. Electricity could also encourage teachers to move to remote surroundings
(UN-Energy, 2005; FLAVIN; AECK, 2005). Women, who most often carry the
responsibility over household chores, are also given a chance to learn how to read if their
working hours at home are considerably reduced. Furthermore, electricity can increase the
amount of information they receive on gender issues (UN-Energy, 2005).
The Millennium Development Goals also highlight major health concerns through
goals 4, 5, and 6. Efforts to reduce child mortality, improve maternal health, and fight
several diseases—among which are HIV/Aids and malaria—can profit from high quality
energy services. Healthcare prospects can be boosted when clinics are able to operate for
There are six dimensions to sustainable energy systems. Thus, energy systems must be: (a)
appropriate—addressing community needs and cultural preferences; (b) use available renewable
resources; (c) enhance capacity—allowing the development of productive activities; (d) adaptable—
adjusting to community needs across time; (e) easily repaired and maintained—ensuring locals can
perform necessary operations; (f) upgradeable—easily integrating new technology (O’KEEFE;
O’BRIEN; PEARSALL, 2010, p. 61).
21
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longer hours, to store medication and to conduct clinical exams. Beyond that, cutting down
malnutrition, lowering indoor air pollution and providing populations with clean water
supplies may have direct impact over people’s health conditions. Individuals can also
receive more information on prevention and treatment methods through communication
channels (UN-Energy, 2005).
The achievement of goal number 7—environmental sustainability—can benefit from
the usage of cleaner and renewable energy sources, as well as from greater efficiency and
technology development on fossil fuels (DFID, 2002; UN-Energy, 2005). As for the
establishment of a global partnership for development—goal number 8—, it can be said
that energy considerations must be included in development strategies if they are to fully
change the lives of those living in degrading conditions. Thus, even if energy alone is not
enough to eradicate poverty and promote human development, it might be an effective way
to break the vicious cycle some countries find themselves drowned into.
2.4. Energy security in Asia
Energy security has been an issue of concern for countries for centuries, given the
importance of energy in the pursuit of further social development and economic growth.
Concerns about energy security contribute to shape state behaviour, influencing the
construction of alliances and patterns of cooperation among nations. Over the past
decades, these concerns have gained notoriety given the fast economic growth
experimented by Asian nations. Nonetheless, literature on the matter has not been able to
reach a consensus definition, even though there is considerable similarity in
characterization.
Over the last few decades, the debate on energy security has evolved. Whereas major
discussions were focused on the pure necessity to ensure stable energy supplies (supplybased approach), they now encompass several of the challenges in the 21st century. In turn,
this has led to a new wave of possible definitions; none yet considered to be ideal by
analysts.
The
United
Nations
Development
Programme
(GOLDEMBERG;
JOHANSSON, 2004, p. 42), for example, relates energy security to “the availability of
energy at all times in various forms, in sufficient quantities and at affordable prices, without
unacceptable or irreversible impact on the environment (...) Energy security has both a
producer and a consumer side”. The enlargement of the concept allows for the inclusion of
different sources of energy, surmounting the oil prerogative to include gas, coal (already in
large use), nuclear, solar, renewable, and others, on the scope of possible alternatives,
without disregard for environmental concerns.
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Acknowledgement of a producer and a consumer side to energy security also
accommodates those countries which present a prominent export emphasis—and most
probably depend on it to secure a percentage of state revenue—, as well as those that
depend—to various degrees—on imports to ensure their energy demand is met over time.
Hence, such a differentiation is at the basis of developing and established trade patterns
across the globe. Global trade movements of oil, coal, and natural gas illustrate to the
importance of those trade flows.22 Even though the UNDP definition helps to broaden the
scope of energy security, it still carries some flaws. For instance, the role of transit nations
is not accounted for, at least not explicitly. Transit countries are nations whose territories
serve as pathways between importers and exporters (LUFT; KORIN, 2009), and they are
becoming more important as inland connection routes are being envisaged and built.
Besides, these nations might extract fiscal and supply benefits for themselves. As examples,
it is possible to quote the Kazakhstan-China oil pipeline and construction of a pipeline
linking China to Turkmenistan across Uzbekistan and Kazakhstan to supply the country
with natural gas (CHOW; HENDRIX, 2010).
Furthermore, energy security might have different meanings among nations. As such,
a country’s energy policy will be affected by resource availability, geographical location,
pattern of alliances, political system, short-term vs. long term decisions, and economic
strength (LUFT; KORIN, 2009; VON HIPPEL et al, 2009). Thus, countries which possess
a large quantity of energy resources or the necessary environmental conditions to produce
new and renewable ones will possibly—but not necessarily—be more energy secure than
those which do not, since they can use the resources in hand. Deprivation of traditional
fossil fuels has forced Japan to resort largely to imports and nuclear technology to address
its needs. However, recent nuclear accidents may lead the country to rethink its energy
security strategy. Similarly, a focus on long term energy security concerns might prompt a
state to foster the development of new technologies which could improve efficiency in
energy production and use, for example. In the end, however, it is the combination of the
factors mentioned above which will determine what energy security finally means for a
country and how energy secure the nation actually is. Every country’s understanding of
energy security is also shaped by the challenges that affect it the most, some of which are
derived from the characteristics described above. Internal political disruptions, large scale
poverty, climate change, low prospects on R&D, terrorism, among other factors, therefore
influence states’ decisions towards energy security.
The difficulty in providing a definition that encompasses all aspects of energy
security to all countries has led specialists to focus rather on energy security strategies.
22
For further details, refer to British Petroleum (2011b) statistics.
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Building on a broad concept of energy security similar to the UNDP one mentioned above
and acknowledging the intrinsic differences among nations and the challenges they face,
Kerr (2011) has advanced four strategies for planning and mobilizing resources to attain
the best possible energy security status. On the other hand, it is important to note that they
are not mutually excluding, but countries tend to emphasize them according to perception
of their current status and capabilities, as well as their projected development objectives.
The first approach relates to autonomy and auto-sufficiency in energy resources. In that
sense, it does not necessarily mean any country has achieved such position, but only that
some may be working towards it. Apart from that, countries can also seek security of
external supply, a strategy which will ultimately include considerations such as
diversification of suppliers and control over foreign resources. Strategy number three
concerns regional energy integration, whereas number four emphasizes technology
innovations to ensure efficiency and diversification of energy resources.
2.4.1. The Asian Dynamics
Recent economic growth in Asia has increased the continent’s concerns over energy
security. In that sense, projected strong demand increase in some regions—especially in
China and India—, and decreasing levels of oil production on Southeast Asian countries—
turning them into net energy importers—, point to the need of developing efficient
measures to prevent economic disruption and interference on service availability in order
to foster social development. Electricity itself is also a major issue, since a large share of the
world’s population who do not have access to it live in Asia (IEA, 2010f).
The continent is also subjected to many of the current challenges regarding energy
security worldwide which impact directly on energy security prospects on the continent.
The struggle against terrorism in Pakistan and Afghanistan; the continuity of territorial
disputes, though not always violent, which could disrupt trade flows; environmental
damages; and infrastructural and financial difficulties, affecting largely the efficient
provision of electricity, illustrate a few of those challenges. In alignment with the
aforementioned characteristics distinguishing energy security perceptions among nations
and projected patterns of demand and supply, such challenges help shape the environment
in which energy security concerns in Asia are advanced.
Whereas the importance of efficiently using available resources within each national
territory must be stressed, it is also crucial to point out that the pursuit of energy security
brings about the inevitability of competition among Asian states. As a consequence,
countries are pushed towards the establishment of trade patterns to guarantee the
attainment of required supply levels. Therefore, given the high prospects for competition
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arising for the great Asian energy needs, it becomes logical to single out Asian geopolitics
in order to understand how energy security dynamics are shaped on the continent and
elucidate some of the measures currently taken by states towards energy security.
Wesley (2007) points to the existence of two geopolitical dimensions in Asia:
maritime and terrestrial. Even though his analysis highlights the importance of the United
States and the pressure arising from emerging Asian economies on the first dimension, a
focus on the needs of Asian countries in general stresses the value of the maritime
alternative to a large number of nations. Currently, maritime routes are the most used
transportation channel around the world (WESLEY, 2007), ensuring the trade of the bulk
of oil supply, for example. In Asia, the sea borne option is also very important for it allows
for oil from the Persian Gulf to reach planned destinations. China, for instance, is largely
dependent on sea line communication routes for its oil import. As of 2008, about 80% of
total oil supply to the country was delivered through the Malacca strait (DEPARTMENT
OF DEFENSE, 2010). Besides, the insular location of many nations also singles out the
value of water routes on the Asian scene, as Japan’s situation illustrates and that of insular
Asian countries.
Over the last few decades, however, terrestrial transportation alternatives are
becoming more popular as some countries strongly seek to diversify their sources. In that
process, Central and West Asia23 have become prominent, especially with regards to
negotiations on pipelines for oil and gas transportation. One of the factors influencing the
land transportation dynamic is the landlocked position of most Caspian Sea countries.24
Based on data from APERC (2009), the Asian Development Bank (2009) has shown that
in recent years China has invested largely on the region. This accounts for the construction
of a crude oil pipeline linking Kazakhstan to China and projects to build another one
connecting China and Myanmar. India has not lagged behind, counting on the envisaged
development of a pipeline currently known as IPI (India-Pakistan-Iran).25 Developed Asian
nations such as Japan and South Korea are also seeking to enter the competition in Central
and West Asia. Even though geographical and political issues might undermine their
position in a terrestrial scenario, they have invested in projects on the region (APERC,
2009). Accordingly, in order to tackle this situation, South Korea has recently been
involved in talks on the construction of a pipeline from Russia to its territory through
North Korea (N. KOREA, 2011).
As classified by the Asian Development Bank
The Caspian Sea region is composed of five countries: Russia, Iran, Azerbaijan, Kazakhstan, and
Turkmenistan. Of those, the last three are landlocked.
25 Negotiations on this pipeline have slowed down over the last few years, but developments have
recently regained pace although skepticism over the issue still remains (PPI, 2011; IPI, 2011).
23
24
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Notwithstanding, energy dynamics in Asia are not only built around Asian nations.
As such, the United States and the European Union appear as large competitors for
resources emanating from the Persian Gulf and Central and West Asia. Concerning
suppliers, Russia, Africa and Latin America also stand out as focal points of origin,
especially when states seek to diversify import partners. The nature of the challenges faced
by Asia on energy security, together with the competitive environment concerning
resources—especially with regards to fossil fuels—must lead states into thinking of ways to
enhance their energy security prospects. By doing so, their growing demand could be
met—and regional supply channels could be ameliorated—and electricity access would be
definitely improved. In the end, economic growth and human development would be
further advanced.
2.4.2. Enhancing energy security in Asia
A plethora of measures could be taken to enhance energy security in Asia. First of all,
states could try to reduce projected energy demand, a decision that would probably require
adaptation of economic infrastructure and increasing efficiency in energy provision
methods. Another proposition involves the buildup of strategic petroleum reserves (SPRs)
to respond to emergency situations, a maneuver already in place in countries like Japan,
South Korea and more recently China and India. Still on the traditional fossil fuels
dilemma, diversification of suppliers is one way of ensuring energy resources to lock-in
increasing demand. A few measures have already been taken on that sense, as countries
from Africa and Latin America cut deals with Asian nations such as China. In 2008, Angola
was the second larger individual supplier of oil to China (17%), losing only to Saudi Arabia
(20%) (US DEPARTMENT OF DEFENSE, 2010). However, sole diversification of
suppliers is not enough to cope with the challenges of today’s world. A diversification of
energy sources is therefore needed.
Diversifying sources would by itself augment the prospects for energy security since
countries would increase the spectrum of methods to fulfill their needs. Beyond that, one
of the biggest advantages of such a shift could possibly be a reduction of environmental
degradation. Be it local air pollution or even climate change, resorting to cleaner energy
types could have advantages for all. In that sense, even the substitution of coal for natural
gas for electricity generation could translate into a huge improvement. Nevertheless, that
change would necessarily have to bring about solutions for some of the other challenges
faced by Asian nations, such as low conditions for investment in R&D and basic
infrastructure needs. Failure to invest on security of internal energy supplies would likely
impede the usage of those alternative sources of energy. This also has implications for the
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continued use of traditional fuels for the failure to renew or build new infrastructure will
ultimately mean less efficient use of resources. This affects all countries in Asia, since
problems with efficiency and lack of technological development impact not only energy
import-export dynamics, but also on energy access to the populations of both importer and
exporter countries.
Cooperation is also an effective way of boosting energy security. A number of
regional, continental and global initiatives have surfaced to foster cooperation on energy in
Asia. Nonetheless, this does not exclude efforts on bilateral agreements between countries.
The United Nations Economic and Social Committee for Asia and the Pacific (ESCAP)
(2008a) has outlined a non-exhaustive list of decision-making initiatives around energy,
some well-developed, and some still in beginning stages. A lot of them are
intergovernmental, such as the mechanisms within the Asia-Pacific Economic Community
(APEC), while others are structured as partnerships, networks and programmes. They also
work on a variety of energy topics, from fossil fuel and renewable energy to electric power
and energy efficiency.
Cooperation has helped increase
and create
patterns of transboundary
interconnection within regions and between them not only through the development of
pipelines, but also through electricity partnerships. The Shanghai Cooperation
Organization (SCO) is one of the regional groupings whose subjects have evolved to
comprise energy issues, specially gas and oil (ESCAP, 2008a; WESLEY, 2007). The
possibility of increasing cooperation has led ESCAP to promote South–South cooperation
as a means of boosting energy security through information-sharing on technological
know-how on renewable energy, as well as other measures to allow for transfer of
technology (ESCAP, 2008a).
APEC, through its Energy Security Initiative (ESI), has divided potential measures to
enhance energy security into short term and long term categories. The first one presents
four focal points: increasing transparency levels on the global oil market, the fostering of
emergency mechanisms and contingency plans, improvement of maritime security, and
creation of an information-sharing mechanism to respond to emergency situations (APEC,
2009). In response to some of the envisaged measure mentioned above, the Joint Oil Data
Initiative (JODI), an extensive database on energy, was implemented in 2002 (ADB, 2009).
On the other hand, long term measures relate to mechanisms which could foster
technology, trade, and investment trades concerning the full spectrum of energy resources
(APEC, 2011a).
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2.5. Energy supply and sustainable development
Sustainable development is an ever-changing process in which the needs of present
and future generations are met. This may happen as long as the exploration of natural
resources, investments, scientific and technologic progresses work together with
institutional changes (MARQUES, 2009). Besides environmental issues, it also
encompasses long term poverty reduction measures. Bearing that in mind, energy supply is
one of the basic means to reach such conditions.
Since energy is one of the most important inputs for economic development,
providing an adequate and accessible infrastructure is essential for eradicating poverty and
improving the well-being and quality of life of present and future generations, according to
Marques (2009). The author further affirms that the crescent energy production in the past
decades has contributed to global climate change, representing “an unprecedented
challenge for humanity” (MARQUES, 2009, p. 37), since it is one of the main sources of
environmental damage. For instance, the oil industry burns between 150 and 170 billions of
cubic meters of natural gas every year just to release the pressure of oil fields and facilitate
the drilling, which is approximately the same amount which both Germany and Italy
together consume every year (WELZER, 2008).
Therefore, the utilization of energy supply as a tool for sustainable development
should consider the improvement of energy efficiency and the reduction of environmental
impacts (WBG, 2009; MARQUES, 2009). Consequently, this has many implications for
energy supply planning, namely infrastructure, management and delivery concerns. In
addition to that, energy supply reliability is another relevant issue concerning sustainable
development, since it enhances household welfare and business operations (WBG, 2009).
Currently, energy production, transformation and use are major contributors to rising
Green House Gas (GHG) emissions, which cause climate change—one of the most
pressing environmental challenges nowadays—. In order to deal with this, strategies
comprising changes in energy systems should be pursued (WBG, 2008). Greater end use
efficiency and adoption of new pollution reducing technologies are some alternatives to a
switch to cleaner fuels for the medium term.
Nonetheless, these measures ought to take into account the energy needs of
developing countries for their own economic growth and development. This raises the
question of how can least developed countries economically grow without accelerating
current environmental impacts. Rourke and Boyer (2004) remind that limiting the
development of nations and/or un-developing them is hardly an option and, thus, the
other available option would be to link economic growth to environmental friendly
technologies. They also point out that these technologies are rather costly, which makes
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them unattractive to least developed countries. In addition to that, the research for new
ones is also very expensive, further discouraging them. However, for developed countries
these technologies and their research can be affordable. Joint solutions for new energy
supply projects, such as technology-sharing, could be, hence, beneficial so as to achieve
sustainable development (ROURKE; BOYER, 2004). Even so, the implementation of
measures—either regional or unilateral—which promote innovation and competition
through research and development of environmental friendly technologies should be
considered as a means for handling with this issue. Otherwise, many controversies and
disputes could arise from the competition between Asian countries for (non-renewable)
energy sources, as energy security could be at stake.26
Another point of concern lies on the side of demand, which is closely linked to
development, namely population increase and the fact that the majority of the people in
developed societies live in urban agglomerations (ROURKE; BOYER, 2004). Nowadays,
“more than two thirds of modern energy consumption takes place in cities” (WBG, 2008,
p. 6), which can be a challenge for nations, since their social and economic development is
brought by energy access and this brings more demands for energy too. Furthermore, most
solid waste and transport-related GHG emissions are produced in cities. As a result,
development may bring a great environmental impact, if projects are not adequately
elaborated with environmental aware measures to tackle those issues, for example:
advanced planning, new fuels, green technologies and modal shifts (WBG, 2008).
Therefore, an underlying principle of such plans is:
[…] the need to reduce the ecological impact of consumer patterns,
rather than reduce the well-being that consumption is intended to
produce; in other words, to improve the quality of consumption,
rather than reduce the quantity of consumption (ESCAP, 2008b, p.
58).
Moreover, considering current existing green technologies and environmental
friendly energy sources (hydropower and bio-fuels being the most relevant), the increase in
demand for energy caused by development will also boost demand on water resource bases
(WBG, 2008). Particularly in Asia, while declining poverty rates are giving birth to a rising
consumer class due to economic growth, it already exerts “high levels of environmental
pressure, evident in the form of unmanageable levels of waste and pollution, and increasing
energy and water demand exceeding existing resources” (ESCAP, 2008b, p. 56).
Better infrastructure and management practices would therefore be needed so as to
cope with such a situation. Marques (2009) points out that an adequate planning of energy
For more information on the linkage between energy security and sustainable development, read
ESCAP. Energy Security and Sustainable Development in Asia and the Pacific. Bangkok: United
Nations, 2008.
26
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supply (and water) in both medium and long term would demand an enduring and
coordinated effort of prevision and programming. That is why thorough analyses of social,
economic and environmental impact are deemed necessary before making any investment.
The need of establishing new environmental friendly energy infrastructure and
management practices is not denied, notwithstanding.
Accordingly, policy measures concerning environment protection and energy supply
should be sought. There are some which are currently being considered by the World Bank
Group (2002): The promotion of clean transport fuels and switch from coal to gas;
facilitation of environmentally sustainable extraction, production, processing, transport,
and distribution of oil, gas and coal; strengthening environmental management capacities;
elimination of market and regulatory barriers to renewable energy and energy efficiency
investments for biomass and power; and reduction of gas flaring (which increase GHG
emissions). In view of that, there are already some proposed means to protect the
environment regarding energy supply. They are “programs to promote fuel switching and
energy efficiency through energy service companies, energy efficiency funds, rural energy
funds, and emissions trading”, and “economic and sector analysis and knowledge
dissemination in support of capacity building” (WBG, 2002, p. 23).
In accordance with these aforementioned policy measures, major policy changes have
been occurring in Asia. The Republic of Korea, for instance, has taken a leadership role in
this area by establishing the “Low Carbon, Green Growth” development strategy in 2008,
which defined their energy policy until 2030. This strategy targets both reduction of energy
consumption and efficiency improvement, as well as the reduction of fossil fuels
dependency while increasing the use of clean energy (UNEP; 2010; ROK, 2010). It also
promotes the green technology industry in the country. Furthermore, the example given by
the country on the issue:
has inspired regional groupings, such as Association of Southeast
Asian Nations (ASEAN) and the East Asian Climate Partnership, to
pursue this strategy (…) other emerging economies such as China and
India have achieved unprecedented progress for low carbon
development (ESCAP, 2010, p. xiii).
On top of that, according to Marques (2009), measures for achieving sustainable
development in specific regions ought to be based upon the diversification of their energy
matrix through utilization of alternative sources, especially those which are more
environmental friendly. For the formulation of new projects and implementation of
existing ones, it is indispensable to know which energy sources are available, whether they
are renewable or not and whether they meet social demands (MARQUES, 2009) so as to
make tailored approaches which meet environmental requirements (WBG, 2008).
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Furthermore, the support of “energy generation growth by means of renewable energy
technologies slows the depletion of natural resources, limits global environmental damage,
and can contribute to the substitution of domestic resources for imported ones” (WBG,
2010, p. 10).
Current alternative energy sources being developed include: wind power, solar
photovoltaics (PV), concentrating solar thermal power (CSP), solar hot water/heating,
biomass power and heat, bio-fuels, geothermal power and heat, hydropower and ocean
energy. Regarding the first one, the People’s Republic of China has been leading the
installation of wind power capacities, planning to install more than 30GW in 2011 and
2012; the country currently accounts for half of the global market, (REN21, 2011). Another
trend concerning wind power is the “growing popularity of community-based projects and
distributed, small-scale grid-connected turbines” (REN21, 2011, p. 12), which can be
placed in different geographical locations, fostering the development of small communities.
REN21 (2011) states that China is also a leading consumer of solar energy, especially solar
hot water, being also the country which most invests in expanding its capacities on the
field. Moreover, Asia is becoming the main manufacturer of solar PV cells, with 10 of the
top 15 companies operating in the region (REN21, 2011). Concerning biomass, whose
supplies of electricity and heat have been rising in spite of being the major source of
heating from renewable sources, China and India are its main markets in Asia. The first is
world leader in the number of household gas plants, whereas the latter has increased the
use of gasifiers for heat applications in enterprises (REN21, 2011). Energy from
hydropower has also developed in the continent, particularly in China.
Even though much progress has been made towards environmental friendly energy
supply, many challenges still remain at the regional and inter-regional level for expanding
energy access, notably from sustainable sources. For that reason, the World Bank Group
created the Asia Sustainable and Alternative Energy Program (ASTAE) in 1992. Since then,
the program, which rests on three pillars—renewable energy, energy efficiency, and access
to energy—, has supported more than 40 projects in Asia towards cleaner energy, with the
funding from the Netherlands, Sweden, the United States, Australia, the United Kingdom,
Canada, Finland, Japan, and Switzerland, besides contributions from the World Bank itself.
ASTAE’s indicators of sustainability are 1) new MW and GWh of renewable energy, 2)
GWh avoided through energy efficiency, 3) number of household connections to improved
energy sources, and 4) avoided CO2 emissions. These are used to measure not only
ASTAE’s own projects, but also the ones from the World Bank.
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Taking into account the indicators, the overall situation has shown improvements
over the past few years, but still many challenging issues regarding the topic remain in Asia,
so that:
six priority areas of focus in the energy sector in the coming years
were identified for the region: scaling up renewable energy, improving
energy efficiency, increasing access to energy, introducing new
technologies and low-carbon energy solutions, promoting regional
energy trade and market integration, and advancing sector reforms
and financial viability (WBG, 2010, p. iii).
3. PREVIOUS INTERNATIONAL ACTION
3.1. Asian Development Bank (ADB)
The Asian Development Bank was established in 1966 by the UN Economic and
Social Commission for Asia and the Pacific (UNESCAP) and has since grown to
encompass 67 members, of which 19 are outside the region. With the motto “fighting
poverty in Asia and the Pacific” ADB comprises a large and important funding agency
aimed at providing economic growth and social development for Asia and the Pacific
region. ADB acts not only through direct and immediate funding, but also through
technical assistance and publication of scientific research, pertinent databases and analyses.
Currently, all operations until 2020 are guided by ADB’s Long-Term Strategic Framework
(Strategy 2020) launched in early 2008 (ADB, 2008, p.5), a program divided in three
branches of reciprocal action: a) inclusive growth; b) environmentally sustainable growth; c)
and regional integration. Energy supply is a prominent element to such a framework:
ADB will help DMCs [development member countries] move their
economies onto low-carbon growth paths by: (a) improving energy
efficiency; (b) expanding the use of clean energy sources; (c) reducing
fugitive greenhouse gas emissions, such as methane released from
landfills; (d) modernizing public transport systems; and (e) arresting
deforestation (ADB, 2008, p. 14).
According to the ADB, regional integration spurs inclusive growth and helps
shrinking regional disparities, as shows the case of South Asia and its natural gas and
hydropower resource distribution, a situation which prompts the establishment of energy
trade patterns among the region’s countries (ADB, 2008).This must all be interconnected
with possible environmental damages arising from energy use, since “the Asian energy
sector’s share of global carbon dioxide emissions have more than tripled from about 8% in
1980 to about 28% in 2005[…]The region has the highest air pollution levels in the world,
despite slight improvements in some cities” (ADB, 2008, p. 5).
In 2009, the ADB launched a new Energy Policy to respond to current challenges
facing energy nowadays, such as climate change. This concern has given rise to an energy
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approach based on three main pillars: energy efficiency and renewable energy promotion;
maximization of energy access for all; and energy sector reform, capacity-building, and
governance (ADB, 2011b) which are to be developed in accordance with Stategy 2020. tAs
such, the 2009 Energy Policy intends to “help DMCs to provide reliable, adequate, and
affordable energy for inclusive growth in a socially, economically, and environmentally
sustainable way” (ADB, 2011b).Even before establishing a new energy policy, the ADB
had started developing several energy initiatives under the scope of former energy policies.
As a result of energy related work up to date, a relatively wide range of initiatives has been
put into practice, such as the Energy for All Initiative, the Carbon Market Programme, the
Cities Development Initiative for Asia, the Sustainable Transport Initiative, and the Energy
Efficiency Initiative (ADB, 2011c). The latter has recently been reformulated, being
replaced by ADB’s Clean Energy Programme in 2010 (ADB, 2010).
It seeks to increase regional energy efficiency in energy, transport and
urban sectors; to adopt renewable energy sources; and to improve
access to energy for the poor and remote regions - avoiding the use
of traditional biomass. The clean energy program seeks to meet
energy security needs, facilitate a transition to a low-carbon economy,
universal access to energy, and achieve ADB's vision of a region free
of poverty (ADB, 2011d).
Low carbon technology initiatives are also covered by the Asian Development Bank
(ADB, 2011d).
3.2. World Bank (WB)
The energy theme is a constant concern to the World Bank. It believes that energy
supply is crucial to shrink poverty and for economic growth. As the major global
multilateral financial institution, the WB has formed a number of partnerships with
governmental institutions, such as the ADB, focusing on social and economic agendas, in
which the energy issue is a key element. The institution provides substantial assistance to
developing countries through knowledge transfer and financial instruments. According to
World Bank figures, the energy sector accounted for $13 billion worth of loans throughout
fiscal year 2010 (WBG, 2011c). The share of low-carbon energy projects and programs
responds to 42% of that amount, reaching over $5.5 billion (WBG, 2011c). This is part of
an ongoing effort which has seen investments of $17 billion since 2003 - $14.2 billion on
energy efficiency and renewable energy alone (WBG, 2011c). Despite the large sums made
available for low-carbon projects, the World Bank has not ceased financing coal projects.
Nevertheless, it has advanced specific criteria regarding coal use, the main argument being
“cases in which a country has no other options to respond to urgent demands for
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electricity” (WBG, 2011b). As such, the World Bank (2011b) is supporting the quest for an
energy smarter future:
Through lending and analytical work, we are delivering energy to the
poor in sustainable ways, ranging from low-carbon cook stoves to
supporting countries’ development of hydropower, large and small, as
well as solar, wind and construction of energy-efficient infrastructure.
We are supporting low-carbon country studies, analysis and plans to
develop regional energy markets, to remove fossil fuel subsidies, and
develop new sources of renewable energy (WBG, 2011b).
The Energy Sector Management Assistance Programme (ESMAP) was established in
1983 to function under the WB’s auspices. Its main purpose is to “is to assist low- and
middle-income countries to increase know-how and institutional capacity to achieve
environmentally sustainable solutions for poverty reduction and economic growth”
(ESMAP, 2011a) through four energy-related themes: renewable energy, energy security,
energy poverty, and market efficiency and governance (ESMAP; SARCP, 2008)—without
disregard to climate change concerns. As an example of ESMAP’s work, it is possible to
highlight the Energy Assessments & Strategy Programs (EASP), the Pro-Poor Energy
Access Technical Assistance Programs (PEA-TAP), Energy Efficient Cities Initiative
(EECI), and Renewable Energy Market Transformation Initiative (REMTI) (ESMAP,
2011b).
In order advance alternative energy use, the World Bank has prompted the creation
of the Asia Sustainable and Alternative Energy Program (1992). Throughout the years the
initiative grew to support the attainment of sustainable energy which allows it to fulfill its
main objective that is “to scale up the use of sustainable energy options in Asia to protect
the environment and reduce energy poverty” (WBG, 2010, p. 10). Built around three
pillars—renewable energy, energy efficiency, and access to modern energy services—to
guide its activities, ASTAE not only gives direct support to World Bank projects, but it also
contributes to fostering sustainable energy by becoming closer to client countries over the
years. Furthermore, to achieve its main goal, ASTAE seeks to cooperate with other World
Bank Trust Funds; ESMAP and ASTAE have establish an efficient partnership with the
former providing the basis for ASTAE to act.
As a result of its establishment, ASTAE has spent more than US$62.6 million in its
projects since its inception and it invested US$3.9 million in 2010 only (WBG, 2010). There
are several ASTAE projects currently under implementation in Asian countries, namely
China, Laos, Cambodia, Vietnam, India, Philippines, Indonesia, Timor-Leste, Papua New
Guinea and Mongolia (WBG, 2010). Also during fiscal year 2010, China, Vietnam, and
Indonesia received the largest share of allocations (39%) (WBG, 2010). Alongside
ASTAE’s actions towards East Asia, the programme has “recently extended its activities to
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the South Asia region with a project approved in India to support energy efficiency in small
and medium enterprises (WBG, 2011a)”.27 As South Asia turned out to be notoriously
vulnerable to climate change effects, WB’s efforts in the area concentrate at growing
climate-related projects and developing energy infrastructure in order to avoid unnecessary
waste that harms the environment. The World Bank also works closely with the Global
Environmental Facility (GEF) due to similarities on main issue areas (GEF, 2010)
In addition, WB has recently set the bases for an updated energy sector strategy to
face the many challenges to development in an environmentally sustainable manner and to
promote energy poverty alleviation (LATTANZIO, 2011). From previous consultations
with governmental institutions, as well as civil society and the private sector, an enriching
Approach Paper, made in early 2009, gave the basis to the sector to-be. The document
encompasses various efforts aimed at “helping developing countries to achieve the twin
tasks of: improving access and reliability of energy supply and facilitating the shift to a
more environmentally sustainable energy development path” (WBG, 2009, p.9). Further
developments on the matter have led to the creation of a strategy document entitled
Energizing Sustainable Development: Energy Sector Strategy of the World Bank Group (ESS)
(LATTANZIO, 2011).
3.3. United Nations (UN)
The UN is responsible for coordinating actions to a much larger and ambitious scale
for it enables the deliberation of development issues on a global basis, even though its
guidelines can be streamlined and put into practice from regional spheres. In 2004,
following developments at the 2002 World Summit on Sustainable Development (WSSD),
the United Nations established UN-Energy, a “mechanism for inter-agency collaboration
in the field of energy” (UN-Energy, 2011a). Beyond a simple response to WSSD’s
demands, UN-Energy seeks to address the lack of specific energy related organisms within
the United Nations by bringing together UN actors, as well as external stakeholders (UNEnergy, 2011a). The mechanism has selected three main themes, each of them coordinated
by two UN organizations. Work on energy access is conducted by UNDP and UNDESA,
having the World Bank as a partner. FAO and UNEP—with help from UNESCO—lead
renewable energy topics, while energy efficiency is the matter of UNIDO and IAEA (UNEnergy, 2011a).
Throughout Asia, UN-Energy specific actions have been centered around
frameworks provided mainly by UNESCAP (UN Economic and Social Commission for
Asia and the Pacific), ASTAE (Asia Sustainable and Alternative Energy Programme), and
27
The regions are defined according to World Bank criteria.
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UNIDO (United Nations Industrial Development Organization). UNESCAP’s focus has
been energy efficiency and the establishment of mechanisms and strategies to enhance
energy security. Increased energy efficiency is to be sought through the advancement of
policy reforms, as well as institutional ones, in order to promote low carbon development.
Cooperation among regional actors, information sharing and capacity-building are deemed
by UNESCAP to be the means to facilitate the achievement of such goals (UN-Energy,
2011e). Regarding energy security, UNESCAP aims to build a regional energy mechanism
to provide for transboundary energy cooperation (UN-Energy, 2011c). The proposed
Trans-Asian Energy System would come as a consequence to efforts on that matter. As for
ASTAE, reducing energy poverty levels and environmental damages arise as a main
concern to which the fostering of sustainable energy options would greatly contribute (UNEnergy, 2011b). Renewable energy projects under the scope of UNIDO seek to “enhance
productive activities and increase competitiveness of small and medium enterprises (SMEs)
in rural on/off-grid areas through the promotion of mainly bio-energy, small hydropower,
solar energy and wind energy” (UN-Energy, 2011d). Beyond that, other initiatives and
mechanisms of global scope also operate in the Asian scene.28
3.4. International Energy Agency (IEA)
The International Energy Agency (IEA) was established in 1974 following the then
recent first oil crisis. Currently, it is composed of 28 industrialized nations, of which two
belong to Asia—Japan and the Republic of Korea. From its initial focus on responding to
oil supply uncertainties across time, the organization has evolved to encompass four topic
areas: energy security, environmental awareness, economic development, and engagement
worldwide (IEA, 2011a). Into practical terms, such a shift has been showed on the series of
analysis, statistics, among other activities, performed by the IEA. They now include
considerations for diverse energy sources and seek to provide the same kind of assistance
to non-member countries in order to find common solutions to common energy problems.
According to provisions under the organization’s treaty (1974), the member countries have
become “committed to taking joint measures to meet oil supply emergencies. They also
have agreed to share energy information, co-ordinate their energy policies and co-operate
in the development of rational energy programmes” (IEA, 2011c, p. 1). The IEA
emergency response mechanisms are also guided by the treaty and were improved by
complementary mechanisms established at a later date:
The I.E.P. Agreement requires IEA member countries to hold oil
stocks equivalent to at least 90 days of net oil imports and – in the
event of a major oil supply disruption – to release stocks, restrain
28
For further information on activities in Asia, please refer to the UN-Energy webpage.
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demand, switch to other fuels, increase domestic production or share
available oil, if necessary. (…) Close dialogue and co-operation are
maintained with consuming countries that are not member countries
of the IEA and collective actions are taken in co-ordination with
major producing countries (IEA, 2011c, p. 3).
The IEA also works in partnership with the Organization for Economic Cooperation
and Development (OECD).
3.5. The Asia-Pacific Economic Cooperation (APEC)
Established in 1989 in the city of Canberra, Australia, APEC is the chief AsianPacific economic forum, gathering 21 countries of the Pacific Rim.29 Energy security is
particularly important and also a reason for concern among APEC countries, since this
group alone accounts for nearly 60% of the world’s annual energy consumption (APEC,
2011). Besides, this number is likely to increase as populations shift from rural to urban
areas as a result of industrialization.
Seeking to improve energy efficiency and tackle climate change, the APEC has
established various working groups to assist governments in meeting their goals. For
instance, APEC’s Energy Security Initiative and the Asia-Pacific Network for Energy
Technology address the critical issue of energy supply and regional collaboration regarding
energy research, respectively. Moreover, APEC’S Energy Working Group “is strengthening
collaboration with other international energy groups on issues including maritime
transport, energy security, emergency preparedness, energy efficiency, clean energy
technology (APEC, 2011b)”.
The 2007 Leaders’ Declaration on Climate Change, Energy Security and Clean
Development, provides an outline of the group’s actions and guiding principles on the
topic of the regional energy agenda:
Fossil fuels will continue to play a major role in our regional and
global energy needs. Co-operation, including joint research,
development, deployment and transfer of low and zero emission
technologies for their cleaner use, particularly coal, will be essential. It
is also important to enhance energy efficiency and diversify energy
sources and supplies, including renewable energy. For those
economies which choose to do so, the use of nuclear energy, in a
manner ensuring nuclear safety, security and non-proliferation in
particular its safeguards, can also contribute (APEC, 2007).
In the following annual Leaders’ Declarations, from 2007 to 2010, in different
nuances and themes, energy remained untouched as a critical point for fostering inclusive
Members are: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong
Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Papua
New Guinea; Peru; the Philippines; the Russian Federation; Singapore; Chinese Taipei; Thailand;
the United States of America; and Vietnam.
29
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economic growth. Furthermore, following the 2008-2009 economic global crisis, APEC
Trade Ministers, in the Statement on Addressing the Economic Crisis and Positioning for Recovery
(APEC, 2009), pointed out that developing clean and efficient energy technology is a
crucial step to ensure growth and economic stability.
3.5. The Association of South-East Asian Nations (ASEAN)
Created in August, 1967, in Bangkok, Thailand, ASEAN gathers ten countries in
Southeast Asia.30 Guided by the spirit of social and economic integration, ASEAN
prompted the Center for Energy (ACE) in early 1999:
The Center is envisioned to be a catalyst for the economic growth
and development of the ASEAN region by initiating, coordinating
and facilitating regional as well as joint and collective activities on
energy. To realize this vision, the Center will accelerate the integration
of energy strategies within ASEAN by providing relevant information
state-of-the-art technology and expertise to ensure that over long
term, necessary energy development policies and programmes are in
harmony with the economic growth and the environmental
sustainability of the region (ASEAN, 2011).
Notwithstanding the regional focus, ACE’s strategies aim at participating in global
exchanges of energy information and pursuing external sponsors or partners for its
initiatives. The ASEAN-German Mini Hydro Power Project, an ongoing partnership
between the German government and ASEAN, launched in 2005, is an example of this
endeavor.
3. BLOC POSITIONS
Brazil’s main energy source is oil, and with the 2007’s discovery of a giant deepwater oil field, localized from the coast of Espírito Santo to the coast of Santa Catarina, the
country is expected to play a greater role in the international oil industry. Also, Brazil is the
second largest producer of bio-fuels, with 26.3% of world’s production (BP, 2011b).The
country has played an important role in the development of renewable fuels since 1975,
after the rise of the petroleum prices. More recently, in 2005 the National Program for
Production and Use of Biodiesel was created, focused on social inclusion and development
(SILVA; SAKATSUME, 2007). Other important energy sources for the country are natural
gas and hydropower. Also in South America, Argentina has the largest production of
natural gas of the continent (BP, 2011b), being gas the main source for its domestic energy
needs (IEA, 2008a). Argentina has raised trade levels with Asian partners in the past few
30
Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.
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years, especially due to China’s interest in America’s oil; in this context, a major buy of a
50% share of the Argentinean oil and gas group Bridas Corporation was made by the China
National Offshore Oil Corporation (CNOOC) in 2010 (CHINESE, 2010).
Canada has the potential to export oil to other regions of the world, provided it
develops a sustainable way to extract its unconventional resources. The country is world
leading uranium producer, exporting to countries like the United States, Japan, and the
European Union. Also, it exports oil, natural gas, and coal. Domestically, hydropower
represents more than half of electricity production, while other types of renewable energy
are being promoted by the government. Nuclear power represents about 9% of primary
energy supply. With a growth in demand, especially in the industrial sector, and a high
energy usage per capita, improvement of energy efficiency has been a Canada’s target over
the last decade (IEA, 2010a).
The rapid economic growth of Asian countries, mostly China and India, is driving
the economic center of the world towards the continent. That trend is reflected not only on
national’s energy sector strategy, but also on the global energy competition; while Western
countries have diminished their oil demands due to the global financial crisis, the rise in the
global oil trade in 2010 was driven mostly by Asia Pacific imports (BP, 2011b).
Accordingly, the People’s Republic of China is the main driver of the raise in global
energy consumption, overcoming the United States to the position of largest energy
consumer (BP, 2011b). The country’s oil consumption reached 10.6% of world’s total. The
high dependency on oil imports, mainly from Middle East, has made China’s policymakers
seek to diversify its global acquisitions and imports sources to other regions, mainly in
Africa, South America and Russia (EIA, 2010b). The rise in oil consumption, and specially
the use of coal, of which China represents almost half of global production and
consumption, led China to the positions of global top greenhouse gases emitter. Even
though the government recognizes the problem, it maintains the position of prioritizing
economic development over the diminishing of coal usage, defending that the main
emission cuts should come from developed countries (BUCLEY, 2010). While reserving
the right to use fossil fuels to boost the economy by not signing international
compromises, China is leading world’s investment in clean energy (US DEPARTMENT
OF STATE, 2011), and the country has an important influence in global growth of
renewable energy in 2010, especially regarding hydropower and wind energy. China’s
represents 21% of world’s hydroelectricity consumption (BP, 2011b) and has one of the
largest wind turbine manufacturing industries in the world.
The European Union (EU) stands out as a competitor for energy around the world.
Seeking to secure its own energy supplies, the bloc has participated in the construction of
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pipelines linking Central Asia and Russia to its member countries. Additionally, there are
several gas lines projects intended to strengthen connection among the EU, Russia and
Central Asia. The most relevant ones being the North Stream (Russia–EU), South Stream
(Russia–EU), Nabucco (Central Asia–EU), and AGRI (Central Asia–EU) (EU, 2011;
ENERGY, 2009; CHAUSOVSKY, 2010). On the other hand, the EU is also a source of
technological know-how, primarily over its use of large-scale nuclear power in countries
like France and the United Kingdom (IEA, 2010a; COMMISSION, 2011a).
Furthermore, over the last few years, investment has been made on renewable energy
sources, translating into a large increase in wind and solar power as sources of electricity
and into the 2008 integrated energy and climate change policy (COMMISSION, 2001a;
2011b). One of the leaders of that process has been Denmark, whose investments in
cleaner sources of energy since the 1970s have changed its energy scenario and
transformed it into the world leading state on wind turbine production (DEA, 2010).
Moreover, Denmark has profited from exporting its energy technology to other countries
(DEA, 2010). Since 2002, Germany has been developing its Renewable Energies Export
Initiative whereby contact between German and foreign companies in enhanced allowing
the launching of trade patterns regarding renewable energy technology (BMWI, 2011).
Ethiopia’s energy access rate is low, around 18% (WBG, 2011d), and the majority of
the population still uses traditional biomass—wood and manure—to most of its energy
needs. The use of wood for fuel has caused deforestation problems in the country.
Regarding electricity generation, 86% of it comes from hydropower, followed by 16% from
oil and less than 1% from geothermal (IEA, 2008a). Seeking to increase access rates by
augmentation of energy generation and diminishing of energy waste, Ethiopia has received
loans mainly from the World Bank and from China. The country has high potential to
produce both hydropower and geothermal power, but government projects prioritize the
first due to the high costs and risks of geothermal power plants. Ethiopia’s effort to
increasing its hydropower production is not only for domestic purposes, but also to
exportation to neighbor countries, such as Sudan and Kenya.
India’s oil consumption last year grew by 21.5% (BP, 2011b), and relatively low
domestic production results in high dependency on imported oil, mostly from the Middle
East (EIA, 2010b). Natural gas follows the same pattern: despite the gain in quantity and
importance of domestic production, the rising demand for the “Fuel of the 21st Century”,
as called by the Indian Ministry of Petroleum and Natural Gas, generated by economic
growth causes significant dependency on imports (IEA, 2008a). Natural gas imports are a
critical matter to Indian government, especially regarding pipeline projects from Iran,
Myanmar and Turkmenistan that would require passage through neighbor countries
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Pakistan, Bangladesh, and Afghanistan, compromising national security (INDIAN
MINISTRY OF PETROLEUM AND NATURAL GAS). Despite the rise in oil and
natural gas demands, coal remains the main energy source in India, the country being the
4th largest coal producer in the world (BP, 2011b). Regarding renewable energy, biomass
it’s crucial to India, fulfilling more than one quarter of domestic energy needs; also, the
country is the 4th world producer of wind energy (IEA, 2008a).
Rising domestic energy needs, that are growing about 7% by year, and the declining
production of oil in Indonesia (IEA, 2008a) has made the country a net oil importer since
2004 (EIA, 2011), causing it’s withdrawal from OPEC four years later (INDONESIA,
2008). Oil is the most important source of energy, with 31% of total primary energy supply,
followed by biomass, coal, and natural gas. (IEA, 2008a) Medium-term energy goals are to
reduce the importance of oil in the energy mix down to 20% or less, increasing other types
of energy. There is potential growth of renewable energy, especially geothermal and
biofuels (IEA, 2008a); Indonesia’s geothermal generator is one of the world’s largest. (EIA,
2011).
The Islamic Republic of Iran has in the fossil fuels sector its main source of
exports earnings, having the third largest oil reserve and the second largest natural gas
reserve in the world (BP, 2011b). The country suffers from sanctions from the UN Security
Council regarding solely nuclear and missile projects. Yet, pressure by the United States
and the European Union governments, added to bureaucracy and political interference in
businesses inside the country, hamper foreign investments from these countries. As a
reflex, some of Iran’s major partners are Asian nations. China is currently Iran’s biggest
destination for exports, followed by Japan, India and South Korea (US DEPARTMENT
OF STATES, 2011). The country also has a relative decline in oil foreign earnings due to
growth in domestic demand and the decrease of productivity in oil fields. In addition, the
lack of infrastructure and refineries has made Iran an importer of oil products (IEA,
2008a). In an attempt to reduce oil imports, the Iranian government subsidizes natural gas,
which accounts for about half of domestic energy consumption. In the renewable energy
field, hydropower is used for electricity generation in the country, although its importance
is still relatively small. Also, the Bushehr Nuclear Power Plant has started its operations in
September this year, in cooperation with Russia, beginning the nuclear power production in
the country.
Israel has historically been an energy importer. Nevertheless, recent discoveries of
offshore natural gas might have the potential to turn the country into an exporter of that
energy resource. Production on the new fields is set to start in 2012 and to be completed
by 2018. The recent discoveries have in turn pushed other countries in the region to
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ponder on the possibility of finding resources of their own (RATNER, 2011). The country
has, however, been investing on technology for the development of renewable sources of
energy, with emphasis on solar power (ICA-MITL, 2011).
Japan has few natural resources, having to rely on imports to attend almost all of its
needs for its major energy sources: oil, coal and natural gas. The country has reduced its oil
usage since the petroleum shocks of the 1970’s (US DEPARTMENT OF STATE, 2011), a
trend that it’s likely to continue, while use of coal and natural gas will probably still grow on
the next years (JANES, 2009). To improve its energy security, the country invests heavily
on nuclear energy, being the third world largest consumer of it (BP, 2011b). On March,
2011, a good part of the country’s energy infrastructure was destroyed by an earthquake
followed by a tsunami on the coast of Sendai. The tsunami caused an diminishing of the
total power generating capacity of nuclear facilities (EIA, 2011), being especially
problematic at Fukushima nuclear power plant, where a leak of nuclear radiation rose
worldwide concerns about a potential nuclear catastrophe, and whether the benefits of a
carbon-free high-energy generation are worth the risks. Polls taken in May with Japanese
citizens, after the crisis, showed that around 40% of the population still supported the use
of nuclear energy, while the rest wanted it decreased or abolished (WNA, 2011b). In the
short term, there will probably be an absolute decrease in energy usage following the
destruction of the Japanese cities, while there will be a relative increase of oil and natural
gas demands to fulfill the energy gap left by the accident in Fukushima’s reactors (EIA,
2011).
Kazakhstan’s oil and natural gas production have been growing constantly over the
past years. The national economy has sided this growth scenario, with exception of 2009
and 2010 when it was under the effects brought by the world economic crisis. Kazakhstan
is currently the 13th world’s top oil exporter, the development of three major oil fields is
could increase its importance to the world market, at least doubling its production levels by
2019 (EIA, 2010b). The country exports mainly to China, France, Germany, and Russia.
Neighboring China and Russia are major partners to Kazakhstan, not only on trade but
also through provision of financial support. A matter of great importance to the landlocked country is transportation for its outflows, an issue being tackled through the use of
pipelines to send oil and natural gas exports to Europe and China.
As Japan, the fact that the Republic of Korea has a very developed economy and
poor natural resources makes the country highly dependent oil, coal and natural gas
imports (IEA, 2008b). In 2008, it was signed a natural gas agreement with Russia, and to
reduce transportation costs there is a project of a pipeline that will pass through North
Korea (N. KOREA, 2011). Also, the search for energy resources is likely to cause tension
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with countries of the region, like China and Japan, especially regarding regional waters
(JANES, 2009). Searching to improve its energy security, the country’s national energy
companies have sought overseas for opportunities (EIA, 2010b), and the government has
sought to improve its nuclear energy program. South Korea is the fifth largest nuclear
energy consumer, and is aimed to become a major technology exporter on the sector
(WNA, 2011a). Regarding other types of renewable energy, South Korea’s goal is to raise
consumption share to 11% by 2030 (WILLS, 2010). The country’s “Low Carbon, Green
Growth” development strategy established in 2008, which defined their energy policy until
2030, also has many goals regarding sustainable development and the promotion of green
technologies (UNEP, 2010; ROK, 2010). Accordingly, approved in 2010, the Renewable
Portfolio Standard program stimulates public and private investments in the wind and solar
power areas to achieve the target.
The Russian Federation is a major player in world energy, with exports being
crucial to its economy and political power. The country is between the top exporters of oil,
natural gas and coal. In 2010, Russia led the raise on net export with a 7.2% growth (BP,
2011b). The country mainly exports to Europe—about 80%, Asia and South America
(EIA, 2010b). Although oil and natural gas pipelines are mostly directed towards Europe,
new projects are being explored to construct pipelines directed to Asia (JANES, 2009).
Marking this trend, the first Russia–China oil pipeline began its operations in the beginning
of this year (RUSSIA-CHINA, 2011), diminishing the transportation costs. Russia’s
domestic consumption is about half met by natural gas, while oil, coal and nuclear energy
also have a significant share of the total energy mix (IEA, 2008a). Russian government has
sought to diminish the use of natural gas on electricity generation, maximizing the use of
coal, nuclear energy and hydropower, so that a larger quantity of natural gas is available to
exportation (WNA, 2011a).
South Africa’s economy is based on energy-intensive mineral industry, depending on
imported crude oil, and having coal as the main source of energy (IEA, 2008a). Also, the
country is one of the most important synthetic fuel producers in the world. Facing a
gradual depletion of coal reserves and a pressure to reduce its greenhouse gas emissions,
South Africa it’s seeking to increase the use of alternative energy sources, mostly by
developing nuclear energy (WNA, 2011a). The World Bank has supported several projects
to improve the country’s energy infrastructure and mitigate carbon emissions. Also in SubSaharan Africa, the Democratic Republic of the Congo is almost energy self-sufficient,
producing the totality of its renewable fuel and waste usage, which represents 93.2% of
total primary energy supply (IEA, 2008a).
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Timor-Leste, after its independence from Indonesia, has sought to revert
Indonesian agreements with Australia, so as to readjust the maritime border and place the
majority of oil fields in the country’s territory (JANES, 2009). Although the country is a
crude oil exporter, it depends on diesel and oil products imports, mainly from Indonesia.
The reconstruction of energy infrastructure, badly damaged by years of occupation, is being
supported and financed by the United Nations, the World Bank, and the Asian
Development Bank. Most of the rural population, which represents about 70% of the total
(CIA, 2011), does not have access to an energy system, relying mostly on biomass for
fulfilling energy needs. It is estimated that biomass is the country’s most used energy source
and it comes mostly from wood burning, generating a deforestation problem (REEEP,
2010). Also, the population is becoming urbanized at a rate of 5% a year (CIA, 2011), but
the cities lack infrastructure. Most of them do not have energy provision during all day, and
the ones that do—major cities Dili and Bacau—are submitted constantly to outages
(REEEP, 2010).
Turkey’s energy usage is still relatively low, but the growing economy pushes for an
energy policy focused on augmenting supply. The country is a net importer that mainly
uses natural gas, oil and coal as energy sources, the three composing 90% of Turkey’s
energy mix (IEA, 2008b). Therefore, oil diplomacy with its neighbor countries is necessary
and has been successful, closing supply agreements with Russia, Turkmenistan, Azerbaijan,
Iran, Iraq and Egypt. These connections with Middle East, Russia and other Caspian Sea
countries reinforce Turkey’s position as an important player to Europe’s energy supply,
acting as an energy transit point between the continent and world’s major oil producers
(EIA, 2011). Turkey is also seeking to raise its domestic production. Renewable energy
represents about 10% of energy usage in Turkey, biomass and hydropower being the most
important types. Geothermal, wind and solar energy usage is still small, but rising, as an
effort to improve energy security (IEA, 2008b).
The United Arab Emirates (UAE) has the seventh global largest reserves both of
oil and natural gas, being the hydrocarbons the base to Middle East’s third largest
economy. The main oil exports go to Asia, Japan being the main importer, followed by
South Korea, Thailand and India (EIA, 2011). It also maintains good relations with the
West, due to its moderate foreign policy and its openness to private foreign investments on
the free trade zones. The country has similar characteristics to neighbor Saudi Arabia, like
oil dependency, linked to pursuing of economic diversification. Both countries are also
members of the Organization of Arab Petroleum Exporting Countries. Saudi Arabia has
the largest oil reserves in the world and stands out as the second largest oil producer and
top oil exporter in the world (BP, 2011b). Its economic plans focus on the pursuit of
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economic diversification, especially improving education and stimulating a greater private
sector, although it still has a highly oil-dependent economy. The largest country in the
Middle East is of great strategic importance, particularly because it uses its capacity to
stabilize the global oil market by respecting OPEC’s quotas or raising its exports when
necessary. The United States sees in Saudi Arabia an important political and economic ally,
but the economic crisis in 2008 caused a sharp drop in the US demand, while the crude oil
exports to Asia grew to 57% of total in 2009 (EIA, 2011). In the same year, China passed
the US as the major importer of oil from Saudi Arabia.
The United States of America is a great energy consumer in the world market.
Even though it holds large oil reserves (BP, 2011b), it still imports a big portion of the oil it
consumes. The US seeks its supplies in similar regions as to Asian countries, spreading
from the Americas onto Africa and to the Middle East (EIA, 2010a). The country is also
involved in initiatives to foster the usage of clean energy technologies on the Asian
continent. That is the main objective underneath the work of the Asia-Pacific Partnership
on Clean Development and Climate (APP). Other members are Australia, China, India,
South Korea, Japan, and Canada. As such, the nation seeks to foster social development
and economic growth by sustainable means. Nonetheless, the partnership ended in 2011
with hopes of continued individual work and transfer of projects to other mechanisms
(APP, 2011).
The Bolivarian Republic of Venezuela is a major oil producer, holding 15.3% of
the world’s proved oil reserves (BP 2011b), and the only member of the Organization of
the Petroleum Exporting Countries of the Western hemisphere, having an oil-based
economy since the 1950s. The oil policy instituted by President Hugo Chávez stresses the
defense of national sovereignty by nationalization of the sector and the defense of national
interests of development. The United States is the biggest importer of Venezuelan oil,
although US’ energy imports from the country are relatively diminishing in the past years.
Asia comes is Venezuela’s third biggest oil importer after the US and the Caribbean, with
about 13% of its total crude oil exportation, of which 6% are to China (EIA, 2011).
Regarding Venezuelan domestic demand, hydroelectric power is the main source for
electricity generation, followed by natural gas (IEA, 2008a).
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UFRGSMUN 2011
5. QUESTIONS TO PONDER
i.
Which actions can the World Bank take to help countries cope with their growing
energy demand?
ii.
How can the World Bank ensure that the developments in the energy sector reach
the poorer shares of the population? How can we be sure to respect individual,
community and national characteristics while doing so?
iii.
How do we improve the quality of energy services without undermining the
requirements for a sustainable future?
iv.
When there are trade-offs between meeting energy needs for economic production
and reducing environmental damages—especially the ones related to global
greenhouse effects—, which principles should guide the solution of the trade-offs?
v.
Which measures can be taken to help developing countries enlarge their energy
portfolios and therefore increase reliance on renewable sources of energy?
i.
Given the importance of energy security and the need to enhance it, how can
cooperation between member countries be advanced to the benefit of all?
51
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UFRGSMUN 2011
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