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Birol comments on Asian energy landscape

Hydrocarbon Engineering,

According to Dr. Fatih Birol, chief economist at the International Energy Agency (IEA) in Paris, the global energy map is being redrawn by the resurgence in oil and gas production in the US, the retreat from nuclear power in some countries, continued rapid growth in the use of wind and solar technologies, an increasing policy focus on energy efficiency and by the global spread of unconventional gas production.

The US is expected to be the largest global producer of both oil and gas by the end of this decade. It will also start to experience the effects of new fuel efficiency measures in transport. Birol has indicated that the result will be a continued fall in US oil imports, to the extent that North America is set to become a net exporter by 2030.

This will accelerate the switch in direction of international oil trade towards Asia, putting focus on the strategic routes that bring Middle East oil to Asia markets.

The resurgence in US oil and gas production has also contributed to wide differences in electricity prices in different parts of the world. Birol has emphasised how this is putting strain on industry in Europe and some parts of Asia.

Furthermore, energy efficiency has been an ‘epic failure’ of energy policy making in most parts of the world, according to Birol.

‘For too long, energy efficiency has been considered the low hanging fruit ripe to be picked. And yet, it is not’.

Birol outlined the need for financing instruments that improve affordability and align incentives. Energy efficiency needs to be made the norm. There are both hard and soft ways of going about this. Information and communication campaigns to change behaviour make up the soft approach. Harder methods of incentivisation include building codes and standards for household appliances and vehicles.

The outlook for Asia

In Asia, Japan has traditionally been the leader in terms of improving energy efficiency. However, more recently China and countries in southeast Asia have been placing increased emphasis on improving energy efficiency.

Together with China and India, the ten Association for Southeast Asian Nations (ASEAN) member states are shifting the global energy system towards Asia. Since the Asian Financial Crisis, an economic revival coupled with ongoing urbanisation and industrialisation has driven rapid growth in energy usage.

There remains great scope for further increase in energy demand as energy use per capita is still low.

However, numerous challenges will have to be overcome if the region is to meet its energy needs, including the phasing out of fossil fuel subsidies, increasing access to modern forms of energy and improving energy efficiency.

Adapted from press release by Emma McAleavey.

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