Singapore 28 October 2011

"Securing energy supplies" is a catchphrase that's become incredibly overused in Asia in recent years as virtually every country in the world's fastest-growing region competes to fuel economic expansion. It's a theme sure to re-emerge at the Singapore International Energy Week, a top-level gathering in the city state from Oct. 31 to Nov. 4 that will address not only supplies, but also efficiencies and abating carbon pollution.

But is the discourse heading in the right direction? The focus of Asian countries appears to be more on grabbing as many energy resources as they possibly can in order to boost economic growth so the region's economies can industrialize as fast as possible.

The underlying philosophy is that Asia deserves the kind of lifestyle enjoyed by the developed world and that energy is necessary to power societies where consumer goods are king.

The problem with all this is that it is just not going to be possible to reach the level of energy intensity needed to match the lifestyle of the average American, European or Australian.

This may sound like a case of yet another rich, white guy telling Asians that they can't have what he takes for granted, but there has to be a better way for Asia than trying to emulate the flawed and energy-intensive way the West industrialized.

Rather than trying to replicate the energy-inefficient lives of people in the West, Asia should think of how to achieve their economic aims without burning masses of fossil fuels. So far, this isn't what is driving Asian governments. Instead, what we are seeing is more coal-fired power being planned by more countries, including countries in Southeast Asia that have traditionally relied on natural gas.

Power demand in Southeast Asia is expected to double by 2020 and triple by 2030, representing a need for an additional 190 GigaWatts of electricity by 2030, according to Wood Mackenzie, an Edinburgh-based energy consultancy. Much of this will be met by coal, with possibly as much as four times more coal being burned in 2030 than last year.

Of course, this makes Southeast Asia a minnow in coal consumption when compared to China, but the point is that a region that used to be one of the cleanest producers of electricity through gas and hydro, will gradually become more polluting as it seeks cheap energy to fuel growth.

It's much the same story with oil, with Asian nations led by China, seeking to secure as much crude as they possibly can rather than thinking about how they can organise their cities to use less fuel per capita. By 2030, world oil demand is likely to be in the region of 112 million barrels a day, with much of the increase from today's 89 million barrels a day coming from Asia.

While peak oil theorists are wrong about supplies running out, cheap oil theorists are right that inexpensive sources of crude are harder to find and the cost of extraction is only going to rise.

While this is providing impetus in the developed world to find alternatives as witnessed by the tapping of oil in shale formations in the United States, in Asia it appears countries spend more time trying to lock up sources of existing oil, often by forging relations with dodgy regimes.

One of the main problems with burning fossil fuels is that, according to the overwhelming majority of scientists, we humans are causing our planet to warm up with consequences for weather patterns and ultimately food security, perhaps the one thing more important than energy security.

Global carbon emissions may rise to 40 billion tonnes a year in 2030 from half that level in 1990, again with Asia, led by China, contributing much of the increase. Given that Asia is probably, along with Africa, the worstplaced continent to deal with any serious climate change, you would think that Asians would be pressing hard for a global solution to carbon emissions.

But whatever happens at the United Nations Climate Change Conference in Durban, South Africa, at the end of November, it is virtually certain that an overarching global system to tackle emissions won't emerge. Part of the problem is that Asian countries, and developing nations on other continents, still appear to want to emulate the West, rather than surpass it.

Imagine a world where the West decides, once over its current economic malaise, to invest heavily in new energy technologies, develops these and uses them to propel economic growth and rising wealth levels. And this happens while Asians are building coal-fired power stations and squabbling to do dirty deals with tinpot dictators.

Maybe it's time for Asia to lead rather than follow. Maybe it's time for Asia to think how it can produce the Apple Inc. Of energy rather than compete with each other to build the things others invent.

Maybe it's time for a new catchphrase for energy in Asia.

Ends --

By Clyde Russell, Reuters market analyst – for Commodities Now with permission.

The views expressed here are his own.