Asia Needs $11.7 Trillion Energy Spending by 2035, ADB Says

Asia-Pacific nations will need $11.7 trillion of investments in the 25 years to 2035 to meet energy demand as power consumption more than doubles, according to the Asian Development Bank.

Spending on electricity and heating will account for about 73 percent of the total, the ADB said in its Energy Outlook report for Asia and the Pacific, published today. The Manila-based lender’s forecast assumes government policies are unchanged. Natural gas extraction, production and trading infrastructure will account for about 11 percent while oil would need about 8.5 percent and coal 8.1 percent.

“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,” the lender said in the report. “Steady progress in this regard is necessary to improve the financial balance of utilities and to enable them to cope with future investment requirements.”

Primary energy demand in the region is forecast to increase 2.1 percent a year, faster than the projected world growth rate of 1.5 percent, the lender said. Consumption will rise 68 percent to 8,358.3 million metric tons of oil equivalent by 2035, up from 4,985.2 million tons in 2010.

Power use is expected to more than double to 16,169 terawatt-hours by 2035, according to the ADB’s estimates. Natural gas consumption will rise 3.9 percent a year because of the increased use of the fuel at electricity generators, outpacing oil’s demand growth of 1.9 percent and coal’s increase of 1.7 percent.

Power Swaps

“Demand for coal will go up by 50 percent for economic and technical reasons but at a slower pace,” S. Chander, the special senior adviser for infrastructure and public-private partnerships at ADB, said at the World Energy Congress in Daegu, South Korea, today. Consumption growth will be led by China and Southeast Asia, according to the report.

The Asia-Pacific region would have to invest $19.9 trillion in the energy sector if countries shift to using low-carbon sources and more advanced technologies, the report showed. The additional costs compared with the base-case scenario would “outweigh the estimated benefits arising from the savings from fossil fuels,” the ADB said. Under the alternative case, primary energy demand will increase at an annual rate of 1.4 percent, it said.

Countries should accelerate the connection of cross-border electricity and gas grids to improve efficiency and cut costs, Chander said in a statement on the lender’s website.

“Cross-border power exchanges can play a central role in helping Asia and the Pacific meet its booming demand for power,” he said. “Countries cannot meet these huge power requirements all on their own.”

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