Asia’s energy trilemma

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Asia’s energy trilemma

United Nations Secretary General Ban Ki-moon recently said that energy was the “golden thread” connecting all of the UN’s Millennium Development Goals. The solutions to energy challenges would help alleviate other global problems, from poverty and the rights of women to the protection of children.

But the development of a stable, affordable and environmentally sound global energy framework is not simple. Instead, the world must balance three conflicting goals when it comes to achieving energy sustainability. This is known as the “energy trilemma.” It consists of:

Energy security. The world’s seven billion people depend on secure energy to fuel economic development. For energy exporters this means effective management of energy resources and for energy importers it relates to having access to stable energy supplies at acceptable costs.

Social equity. Promoting social equity and universal access to energy when 1.3 billion people still do not benefit from modern energy supplies.

Environmental impact mitigation. Protecting our climate and environment, which means promoting energy efficiency and developing alternative low-carbon energy supplies, while promoting improved global governance on energy safety, including nuclear and deep-water drilling.

All three goals are commendable but demand hard choices in setting priorities. For example, there are enough global energy resources to fuel economic growth. Existing hydrocarbon resources could support current rates of consumption for another two centuries, but they are unevenly distributed across the globe, are carbon-emitting and are becoming more expensive and difficult to access.

In contrast, new low-carbon energy systems based on renewable sources can be exploited in many countries. But they may prove to be too expensive for widespread use in some countries or suffer from supply disruptions, thus limiting energy access as a result.

Dealing with the energy trilemma implies having a long-term vision, defining milestones accordingly and taking into account the real costs of technologies. This is all the more important as many countries are still struggling to put an end to the global financial crisis, and tend to push environmental issues into the background.

Korea and the rest of Asia have a crucial role to play in efforts to reach a global balance when it comes to the energy trilemma. It is one important reason why the World Energy Council is enthusiastic about holding its forthcoming World Energy Congress in Daegu in October 2013 under the theme of “Securing Tomorrow’s Energy Today,” when more than 5,000 delegates, including government officials, industry CEOs and energy experts will gather to debate these issues.

Asia is the continent of superlatives when it comes to energy, but the region also illustrates the challenges of confronting the energy trilemma. It is now the world’s most dynamic energy market with China’s energy demand having surpassed that of the U.S. in 2009. Asia is also host to the world’s greatest challenges in terms of energy access as India’s giant blackout that affected more than 600 million people in July reminded us.

As Asia consumes more of the world’s energy resources, it also must confront the task of assuming greater responsibility for protecting the global environment. Historically, Asia has relied heavily on cheap fossil fuels to power its growth. But this will not be sustainable in the future. Asia must adjust to a global carbon-constrained regime. In addition, energy security is assuming paramount importance because of rising geopolitical risks when it comes to having access to energy resources.

These challenges will demand changes in the region’s consumption patterns and force Asia to focus on energy diversification. Asia is already emerging as a center of energy innovation. The strong impact of the accident at the Fukushima nuclear reactor in March 2011 has forced Japan to undertake tremendous efforts to save energy and use it in a more efficient manner. Korea is spearheading its own green growth initiative that could serve as a global model for developing pragmatic energy and environmental policies that combine the use of renewable energy with innovation in smart technologies.

But more needs to be done. The World Energy Council annually produces an Energy Sustainability Index to measure how individual nations are managing the energy trilemma. Asia has some of the best scores in the world, as well as some of the worst, illustrating the diversity of the region when it comes to natural resources, geographical or historical constraints, and energy policy decision making.

Energy sustainability involves a shifting balance of trade-offs with no single “silver bullet” formula. But as countries develop and economies mature in Asia, it is clear that they are all moving in the same general direction. This should encourage increased cooperation among Asian governments, and governments all over the world, to find answers to the energy trilemma.

* The author is chairman of the World Energy Council and honorary chairman of Electricite de France.

by Pierre Gadonneix
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