Southeast Asia: Energy Security and Economic Growth

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Introduction

The Southeast Asian peninsula is made up of the countries that are geographically positioned south of China, north of Australia, and east of India. The peninsula occupies a landmass of 5 million square kilometers. Southeast Asian people share a number of somatic characteristics. However, there are significant variations in relation to population size, religion, ethnic groups, languages, culture, and forms of government adopted in different regions. The total volume of trade and services emanating from the region was estimated at $1.7 trillion as of 2008 (International Energy Agency 2013). On its part, the average GDP was pegged at over $1.5 trillion (Williams and Guest 2015, 12). Southeast Asia is viewed as the next growth engine in the Asian peninsula. For example, in 2015, the Asian Development Bank observed that the economies of Malaysia, Indonesia, Philippines, Vietnam, and Thailand are estimated to grow by 6% by 2030 (Williams and Guest 2015, 78). The five countries have a combined population of approximately 525 million and a GDP of $2.8 trillion.

In this research paper, the author will analyze the link between energy security, sustainability, and economic growth in Southeast Asia. To this end, the author will review urbanization in this region and how energy spurs economic growth.

Energy Security, Sustainability, and Economic Growth in Southeast Asia

Overview

For a long time, the growth of the Southeast Asian peninsula has been eclipsed by China and India. However, the GDP of the peninsula was almost equal to that of India in 2015. It is estimated that the region could overtake Japan within a few decades. To support the rapidly growing ASEAN economy, the countries need to harness their energy capacity. As of 2012, the demand for energy was outstripping production (Williams and Guest 2015, 36). It is also observed that the coal and onshore oil resources in this region are on the decline after years of exploitation and reduced investment. The ASEAN countries have resorted to the importation of energy as they explore new sources of the resource.

Urbanization in Southeast Asia

Most parts of the Southeast Asian region have experienced rapid urbanization in the recent past. The development is mainly driven by industrialization, as well as the globalization of the region’s economic activities. Most of the immigrants living in the cities are drawn from rural areas. The increased production, which is brought about by industrialization, a fall in transport costs, and strong export-oriented economies, has fostered the growth of urban centers across Southeast Asia (Williams and Guest 2015, 39).

The rapid urbanization has led to overcrowding in most of the urban centers. The growth in infrastructure does not match the rise in the needs of the population. Consequently, an expansion of the informal settlements in the cities has presented a serious risk to the inhabitants (McGee 2007, 277). The people living in these informal settlements are poor. They also lack food and have no access to safe water. In addition, hygiene facilities are non-existent, which is a danger to human life. The urbanization has also led to the growth of what is referred to as the extended metropolitans (Hong and Lugg 2013, 24). The metropolitans are extensions of the cities to the periphery as a result of the growth in the major towns. The rapid growth of the extended metropolitans is driven by cheaper land, fewer regulations, and inadequate planning mechanisms, which is not the case in the core city (Williams and Guest 2015, 42).

The lack of appropriate urban planning by both local and national governments, as well as the deterioration of the environment, have put Southeast Asia in a quandary. The local and national governments play a key role in the provision of leadership in policy, legal, and regulatory frameworks (Smits 2015, 45). The problem begs for a clear and strong institutional commitment from the leaders. In addition to the growing urbanization in the core and the periphery, there are increasing demands for energy for domestic and industrial use. It is important to note that growth demands for sustainable and secure supply of resources, including energy and expertise. It is argued that over half of the population has no access to electricity. The region suffers from significant disparities in relation to power distribution. Some areas suffer from power outages and shortages. The regular typhoons and the extreme climate changes render the region particularly vulnerable (Smits 2015, 47).

Most of the Southeast Asian countries experience problems when it comes to coordination between the various levels of government. The result is that most of the nations are caught up in an institutional limbo and weak decentralized structures. As such, they have no clear understanding of the structure and power. For example, in the Philippines, where decentralization of governance was introduced earlier than in the other nations, the problems are with the provincial level of government. The provinces lack coordination (Biggs et al. 2015, 390). Each province formulates plans and implements them independent of other government bodies and provinces. There is a total disregard for the benefits of collaboration.

Energy Security and Sustainability

Energy security is a concept that is used as a broader term encompassing the various aspects associated with energy policy. It is defined as the process of providing affordable, efficient, reliable, and socially acceptable energy provisions to end users in an equitable manner. In 2013, the International Energy Agency observed that energy security means diversification and self-sufficiency (International Energy Agency 2013). Sustainability in this context refers to energy efficiency, which is accompanied by low carbon emissions.

Most of the definitions of energy security are anchored on the maintenance of supplies. They focus mainly on the supply of oil and fossil fuel. The cornerstone of the focus is the reduction of vulnerability to foreign threats and, in some instances, pressure on oil supplies. The prevention of a supply crisis and minimization of the economic impacts of such a situation are also treated as areas of concern in relation to energy security (Hyun and Schreurs 2007, 12). The current national, and to a large extent, international, energy policies have faced new challenges in the recent past. However, there are tools that could be considered as components in the definition of emerging energy security concepts.

There are good reasons why oil is the major focus of energy security policies. To start with, this source of fuel dominates the global energy supply. It accounts for a large percentage of most of the fuels in transportation in the industrialized world. Secondly, the sources of most fuel oil are located in the Middle East, a region that is characterized by instabilities (Hyun and Schreurs 2007, 15). The range of oil suppliers has increased significantly. However, the market for this commodity has also tightened. What this means is that a disruption in the supply systems would have significant impacts on the oil market and the world economies. Thirdly, oil supply and the associated pricing are largely affected by the political decisions made in the supplying and buying sides. It is also observed that the global economy is still vulnerable to price volatilities. The reason is that a number of major sectors are largely dependent on oil. They include transportation, agriculture, and petrochemicals. Globalization has introduced transparency in the oil market. In spite of this, the prices are largely determined by speculators and fluctuations in the major currencies.

Energy as a Catalyst for Economic Growth

Energy inputs, electricity, and fossil fuels are important ingredients in industrial and commercial activities. The energy is also needed to support activities at the household level. The demand for fuel and electricity is dependent on the objectives of the users. For instance, households require a steady, affordable, and safe supply of energy. Industrial and commercial consumers demand an economically sustainable, competitive, and secure supply of power. As such, the availability and cost of energy are significant determinants of economic competitiveness (Biggs et al. 2015, 391).

Competitiveness is attained through reduced inputs, low transport costs, and enhanced production. On its part, energy security is characterized by the stability of the commercial, industrial, and household activities. Finally, sustainable development in relation to energy supply is attained through sustainable management of the exploitation of natural resources, efficiency, as well as climatic and environmental control measures (Williams and Guest 2015, 88). According to the International Energy Agency, Southeast Asian countries have near-total dependence on oil, coal, and natural gas. The situation is different in the European countries, where dependency is estimated to be about 83.6%. In North America, the figure stands at 87%, while it is 85.4% in the OECD countries (International Energy Agency 2013).

Pathways to Energy Sufficiency and Security

Energy is an integral part of the economy of any nation. Its need is fueled by the growth in global population, which has escalated the demand for resources that cater for the energy demand. For instance, Southeast Asia was estimated to have a population of 1.7 billion people and a GDP of approximately $2.6 trillion. It is also projected that the global middle class is likely to rise to 3 billion people in the next few decades (International Energy Agency 2013). Most of the people in this new middle class will come from the Asian nations. With such kind of population growth, energy demands are likely to soar.

The International Energy Agency is one of the entities that provide a working conceptualization of energy security. To this end, safety is viewed as the reliable supply of this commodity at an affordable cost. As such, it is important to work towards energy security, sustainability, and efficiency. Most energy policies are based on sustainability, efficiency, and security of supply. Southeast Asia faces several energy security issues, including shortages (McGee 2007, 56). The shortages are occasioned by a rise in demand and poor planning on the side of policymakers. It is also observed that an increase in demand is associated with a corresponding pricing fluctuation. The development may paralyze power capacity of the region.

The nations in Southeast Asia have a number of energy resources. The region is endowed with coal, hydro power, oil, gas, wind, and solar energy. There is also the availability of nuclear energy, especially in Japan. However, this new source has not taken off. As such, the policy on nuclear energy in most countries is still at the infancy stage. India leads the way with a potential of 5,576 million tons of fossil oil. On its part, Pakistan has approximately 3,600 million tons (Smits 2015, 67). Viable coal deposits are widely spread in the region. A case in point is the deposits in India. The deposits are approximately 245,690 million tons (Smits 2015, 67).

Besides coal, the Southeast Asian region has huge unexploited hydropower potential. According to the Energy Institute, only 9% of the approximately 437,000MW has been exploited (McGee 2007, 52). The problem is that the governments fail to understand the bridge between the supply and demand of the commodity. As such, they are unable to diversify their resources (McGee 2007, 59). It is a fact that Pakistan and India have made efforts to diversify their energy sources. However, Sri Lanka still depends on oil, Bangladesh on gas, while Bhutan and Nepal are dependent on hydropower (International Energy Agency 2013).

The Link between Governance and Efficient, Sustainable, and Secure Energy Provision

According to most energy observers in Southeast Asia, including the World Bank and other bilateral partners, such as the Asian Bank, governance is the most significant element underlying the various problems facing the region’s energy supply (International Energy Agency 2013). However, insiders and experts in the sector observe that energy cooperation is the way to go. The strategy can be used to address the supply and other issues within the peninsula, such as wars. The region has already established intra-region energy trade. However, the relationships need to be enhanced. By pursuing such trade agreements, countries like Bhutan and Nepal, which have excess hydropower, can export the commodity (Hong and Lugg 2013, 78). As such, all that is required is for nations in this region to make an effort to address the problem.

Renewable Energy

The Southeast Asian countries have the potential to exploit renewable energy. For instance, the region has an ideal combination of high solar insulation and willing buyers. Cheap solar energy can provide electricity to most parts of the region, especially where people are still off-grid (Williams and Guest 2015, 114). The solar energy is significant because it can bypass the expensive installation of power gridlines.

Cross-Border Trade and Energy Security

The Southeast Asian region can forge interregional energy cooperation through well defined legal, policy, institutional, infrastructural, and regulatory frameworks. Such arrangements can remove the barriers that inhibit trade. Such barriers include lack of trans-regional energy master plans and infrastructure, including transmission networks (International Energy Agency 2013). In theory, trans-border energy trade among the Southeast Asian states could lead to lower costs and enhanced welfare for the cooperating nations. The countries will be able to enjoy comparative advantage availed by their neighbors’ resource endowments and technology.

Conclusion

The Southeast Asian region faces numerous challenges related to energy resources. The problems are driven by the rapid growth in population, as well as industrialization. The factors are a challenge to the energy resources, which are still dependent on oil and gas. Part of the problem is the lack of government policy on energy resources and commitment to finding solutions to a problem that has negative impacts on the progress the region has made so far. Possible solutions include establishing cross border energy trade. The move will help the states with excess energy to export to those that have limited capacities.

Reference List

Biggs, Eloise, Eleanor Bruce, Bryan Boruff, John Duncan, Julia Horsley, Natasha Pauli, Kelli McNeill, Andreas Neef, Floris Ogtrop, Jayne Curnow, Billy Haworth, Stephanie Duce, and Yukihiro Imanari. 2015. “Sustainable Development and the Water-Energy-Food Nexus: A Perspective on Livelihoods.” Environmental Science & Policy 54: 389-97.

Hong, Mark, and Amy Lugg. 2013. Asia’s Energy Trends and Developments. London: World Scientific.

Hyun, In-Taek, and Miranda Schreurs. 2007. The Environmental Dimension of Asian Security: Conflict and Cooperation over Energy, Resources, and Pollution. New York: US Institute of Peace Press.

International Energy Agency. 2013. “Southeast Asian Energy Outlook: World Energy Outlook Special Report.” Web.

McGee, Terry. 2007. “Many Knowledge(s) of Southeast Asia: Rethinking Southeast Asia in Real Time.” Asia Pacific Viewpoint 48.2: 270-80.

Smits, Mattijs. 2015. Southeast Asian Energy Transitions: Between Modernity and Sustainability. London: Routledge.

Williams, Lindy, and Michael Guest. 2015. Demographic Change in Southeast Asia: Recent Histories and Future Directions. New York: Cornell University.

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