Overview

The Association of Southeast Asian Nations (ASEAN), comprising 10 nations in South-East Asia, includes the large economies of Thailand, Singapore, Indonesia, the Philippines and Malaysia and the smaller, generally less developed economies of Vietnam, Cambodia, Laos, Myanmar and Brunei Darussalam.⁹⁷ ASEAN aims to reach economic integration by 2015; from an energy perspective, the integration plan includes the roll-out of the integrated ASEAN Power Grid and the development of the Trans-ASEAN Gas Pipeline – initiatives that would greatly benefit the energy security of the region. Over the past two decades, the ASEAN region has experienced vast energy demand growth, and this trend is expected to increase by an additional 80% between 2013 and 2035.⁹⁸ Given the uneven spread of natural resources across the South-East Asia region, integration of energy systems could be instrumental in balancing supply and demand.

The disparate sizes of ASEAN economies are reflected in the dispersion of scores across the energy triangle. However, Figure 16 highlights some common key challenge areas for ASEAN countries that are likely to be exacerbated by the expected increase in energy demand in the region.

• The ASEAN region faces a number of challenges including energy intensity, import dependence and fossil fuel dependency. In terms of energy intensity, ASEAN countries receive an average score of 0.38/1 against the global average of 0.48/1. Vietnam, Thailand, Brunei Darussalam and Indonesia have the most energy-intensive economies, all scoring below 0.30/1.
• The larger ASEAN economies – Indonesia, Malaysia, the Philippines, Singapore and Thailand – achieve the highest scores for the region, with performances ranging from 0.53/1 for Thailand to 0.51/1 for the Philippines. These countries perform better than other ASEAN countries for a number of reasons including higher electrification rates, higher GPD and, compared to Brunei Darussalam, lower energy intensity.
• Singapore, Brunei Darussalam and Malaysia all receive less than 10% of total primary energy supply from alternative and nuclear sources, drawing attention to the key challenge in the region of over-dependence on fossil fuels – and in the case of Brunei Darussalam and Malaysia, the persistence of fossil fuel subsidies impacting investment in alternative low-carbon technologies. The performance of Vietnam, Cambodia, Indonesia and the Philippines, compared to the other ASEAN countries, is largely due to the continued use of solid fuels for cooking – all above 50% of the population. 
• Cambodia, the least developed ASEAN economy represented in the index,⁹⁹ achieves the lowest performance of 0.36/1 and is one of the lowest performers in the index globally, ranking 120th among the 124 countries included. Low electrification rates and over-dependence on imports of fossil fuels affect scores across the environmental, economic and energy security dimensions of the energy triangle.

Figure 17: ASEAN Overview of Average Performance per Indicator

*Spider chart represents average performance of region/cluster for individual EAPI indicators. Low scores close to the centre of the chart; high scores close to the outer circle.

Table 9: ASEAN EAPI Performance

Economic Growth and Development  

Singapore’s score of 0.58/1 for the economic growth and development dimension makes it the highest ranking in the region, and places Singapore within the upper quartile of performance globally. Singapore benefits from high per capita GDP, driven in part by the service sector, which affords the country lower energy intensity than other ASEAN countries. The performance of other ASEAN countries averages 0.38/1, with key performance challenge areas in fuel subsidies and energy intensity.

Subsidies in ASEAN
Brunei Darussalam, Malaysia, Thailand, Indonesia and Vietnam receive the lowest regional scores in price distortion of super gasoline and diesel; the IEA estimates that in 2012, subsidies in the ASEAN region amounted to US$ 51 billion.¹⁰⁰ Malaysia, Indonesia and Brunei Darussalam are the lowest performers, receiving average scores of 0.28/1. The phase-out of fossil-fuels is being widely advocated, and some ASEAN countries are starting to address the challenge. In June 2013, Indonesia continued its subsidy reform process by increasing gasoline and diesel prices. Brunei Darussalam, Malaysia, Myanmar, Thailand and Vietnam are also implementing policies to improve the alignment of domestic pricing for fuels and energy with global markets.

Energy intensity
Two significant market distortions arising from energy subsidies are the inefficient use of energy and the reduced incentives for investment in energy efficient technologies and renewable energy sources. ASEAN countries with some of the highest subsidy levels also achieve the worst performance across the energy intensity indicator – namely Brunei Darussalam, Indonesia, Vietnam and Thailand. The average GDP per unit of energy use in these countries is comparable to some of the lowest global scores for large net-energy exporters such as Venezuela and Libya. Countries like Indonesia and Malaysia are implementing energy efficiency targets and policies to drive down energy intensity; however, energy subsidies pose a barrier to the success of energy efficiency policies. 

Figure 18: ASEAN – Energy Triangle Performance: Average against High/Low Performer

Environmental Sustainability

ASEAN countries’ average performance across environmental sustainability is overall low at 0.39/1 compared to the global average of 0.46/1. Fossil fuels, especially coal, dominate the power mix of ASEAN economies and this affects performance across the emissions indicators and on the share of low-carbon energy. The top performer for the region is the Philippines, which achieves the best scores compared to ASEAN peers across most of the emissions indicators – especially per capita nitrous oxide emissions. Brunei Darussalam, the region’s largest net exporter, is also the worst performer across this indicator – evidencing the relationship between hydrocarbon production, subsidies and emissions.

Renewables
Brunei Darussalam, Malaysia and Singapore obtain less than 5% of their TPES from non-fossil fuels, setting these countries within the lower quartile performance of the index. Conversely, Cambodia and the Philippines receive the highest contribution in the region, primarily driven by the continued use of traditional biomass for energy. Although renewable capacity in ASEAN has expanded in recent years, progress to establish and develop a renewables market has been slow. However, all ASEAN countries have set renewable energy targets, albeit with varying aspirations and levels of commitment. The Philippines has set itself the aggressive target of tripling installed renewable capacity by 2030. In Indonesia, the target of receiving 25% of its energy consumption from renewables by 2025 is backed by feed-in tariffs for all renewables, including biogas.

Emissions intensity
Indonesia, Brunei Darussalam and Cambodia all rank within the lower quartile of the index for the CO₂ intensity of their power-generating sector. This largely reflects the dominance of fossil fuels in the sector, and the inefficiency of power-generating technology. According to IEA analysis, improvements in the efficiency of coal-fired generating plants to beyond the current 34% could have a significant impact on reducing CO₂ emissions and local pollution. ¹⁰¹

Indonesia has among the highest PM10 concentrations across the index globally at 60 micrograms – 10 micrograms above the health levels recommended by the EPA.¹⁰² Urban pollution, such as particulate matter, is generally due to inefficient fossil fuel combustion in power generation. In urban settings, proximity of industry and power generation to cities compounds the issue. Some cities in Asia are trialling a “green belt” to move polluting industries further from urban centres. However, these types of solutions only relocate emissions instead of reducing them. The concluding article of the ASEAN section looks further in detail at solutions for addressing energy consumption and pollution in urban environments.

Energy Security and Access

With the region’s energy demand expected to grow by 80% to 2035, energy security is a key challenge for ASEAN countries.¹⁰³ Although ASEAN has extensive natural resource endowments – notably in Indonesia, Brunei Darussalam and Malaysia – the region’s supply infrastructure is a growing challenge. The IEA estimates that US$ 1.7 trillion of cumulative investment in energy supply infrastructure is needed to 2035; nearly 60% of this investment is required for the power sector.¹⁰⁴ 

Balancing supply and demand
On the whole, the ASEAN region is endowed with significant natural resources. However, as indicated by the disparity in scores for the net export indicator, these resources are not equally divided across the region. The ASEAN region includes four net-energy exporters – Brunei Darussalam, Indonesia, Malaysia and Vietnam – with the remaining four ASEAN countries covered by the index relying on an average of 50% net imports. Brunei Darussalam, given the size of the country relative to its extensive natural resources, is one of the highest performers globally, ranking in 5th place.

A solution to addressing the region’s supply and demand imbalances is in part expected to come through the planned integration of ASEAN countries’ energy systems. One of the key elements of the ASEAN Economic Community is the development of the integrated ASEAN Power Grid and the Trans-ASEAN Gas Pipeline. If successful, the implementation of the ASEAN energy integration plan could have a significant impact on both the quality of energy supply and the region’s energy security. However, a number of challenges are likely to hinder integration plans, including the cost of addressing differences in the power and gas infrastructure. In view of the upcoming ASEAN chairmanship in Myanmar, the country’s minister of energy provides his perspective on the energy integration plan in the perspective which concludes the ASEAN section.

The energy access challenge
The region’s lowest-performing country across energy access-related indicators is Cambodia. It achieves the lowest access to electricity relative to population (at 31%), and nearly 90% using solid cooking fuels. In terms of real numbers, Indonesia has the largest population lacking energy access at 66 million. The challenge in Indonesia is compounded by its complex geography and the related difficulties of delivering access across the world’s largest archipelago. However, progress has been made across ASEAN, generally by government and donor-led initiatives to bring distributed power-generating capacity to rural populations, where energy access challenges are localized. For example, Indonesia has allocated a US$ 1 billion annual budget to bring distributed energy solutions to rural and isolated communities.¹⁰⁵