DAEGU, SOUTH KOREA – From oil to nuclear power, via gas, coal and renewables, Asia’s economic growth is increasingly steering the path forward for the global energy industry.
“It’s clear that Asia’s emerging economies have entered a historic phase of industrialization and urbanization,” Peter Voser, chief executive of energy giant Shell, said at the ongoing World Energy Congress in Daegu, South Korea. “The pace of change is almost inconceivable.”
Shell estimates that energy demand across Asia will double over the next 50 years, with China and India the main growth drivers for at least the next two decades.
“This is not only transforming Asia’s energy system, but also the world’s,” Voser said.
The geographical shift in global energy consumption is already becoming clear. China passed the United States in September as the world’s biggest net oil importer, driven by faster economic growth and strong auto sales, according to data released last week by the U.S. Energy Information Administration.
In August, energy consultancy Wood Mackenzie predicted that China will be spending $500 billion per year on crude oil imports by 2020 to meet rising demand.
As a result, members of the Organization of Petroleum Exporting Countries would be “compelled to shift their focus” from the United States toward China, Woodmac said.
Increasing Asian demand for natural gas is also resulting in profound sectoral changes, with suppliers boosting production of liquified natural gas that can be transported by boat to markets not served by pipelines.
“In the gas sector, we have shifted our focus from the Atlantic basin to Asia-Pacific, through agreements with a number of major Asian players,” Gerard Mestrallet, chairman of France’s GDF Suez, said in Daegu.
The French giant is engaged in a number of energy infrastructure projects in the region — particularly India and China — and is a partner in a liquified natural gas export terminal being built in the United States to supply Asian markets via Panama.
Surging Asian demand for coal is also redrawing the energy landscape. China already consumes more than half of the global coal supply and Woodmac estimates the fuel will surpass oil as the world’s major energy source by the end of the decade.
China will account for two-thirds of that growth in consumption, with half of the country’s new power generation capacity to be coal-driven.
Asia also looks set to drive the nuclear power sector, despite safety concerns and significant public opposition in the wake of the 2011 Fukushima No. 1 plant meltdowns disaster in Japan. China is currently building 30 atomic reactors and India seven, and dozens more are in the pipeline across the region.
And Asia’s search for energy sources extends to renewable energies, with investment increasing especially in wind and solar power to complement the existing mix.
Although the cost of alternative energies, especially in relation to coal, will inevitably restrict their roles, an Asia Development Bank study released in Daegu suggested that renewable sources would account for 7.1 percent of the energy produced in Asia by 2035 — compared to just 1.9 percent in 2010.