Immense investment forecasted for Asia-Pacific energy sector: ADB
Asia and the Pacific as a whole will need a cumulative investment of about US$11.7 trillion in the energy sector during 2010-2035, to meet energy demand in the business-as-usual (BAU) case, according to the forecast by the Asian Development Bank.
This investment will be in upstream energy extraction and production to midstream energy transformation and transportation to downstream energy distribution, ADB said in the new report "Energy Outlook for Asia and the Pacific" which provided an energy supply and demand outlook for the region up to 2030.
By type of energy source, electricity and heat will account for the biggest share of total investment requirements in the BAU case (72.5 per cent), followed by natural gas (including its extraction, production, and the construction of infrastructure for international trading) (10.9 per cent), oil (8.5 per cent), and coal (8.1 per cent).
"The estimated regional investments in the energy sector in the BAU case depend on the amount of new infrastructure that needs to be built. Driven primarily by the energy needs in China, East Asia's estimated energy sector investments will amount to the biggest share in Asia and the Pacific, at $5.8 trillion (2010-2035). This will be followed by South Asia at $2.4 trillion, which is driven by the energy needs in India. Meanwhile, despite the projected decline in its primary energy demand, the Developed Group is expected to have the third-largest share of investments, at $1.7 trillion, as a result of the investment needs for the assumed deployment of
new natural gas-fired and new and renewable power plants in Japan, in addition to assumed expansion in Australia's LNG export capacity," the report said.
The estimated burden of energy investments in the BAU case tends to be high for rapidly developing members. These members will have to introduce new infrastructure and energy transformation facilities, and upgrade existing ones. Nevertheless, the governments of rapidly developing members or their energy utilities tend to suffer from financial constraints and cannot allocate enough investments into energyinfrastructure development and renovation. Many of the ADB members have undertaken market reform to increase the energy supply tariffs for electricity, gas, and petroleum products to cover the cost of investment, although sometimes such efforts face political difficulties.
"Steady progress in this regard is necessary to improve the financial balance of utilities and to enable them to cope with future investment requirements," the report said.