ANNEX | REGIONAL SUMMARIES: EAST ASIA
REGIONAL PATHWAYS TO 2040 – KEY HIGHLIGHTS
Modern JazzIn the Modern Jazz world, the region increasingly takes advantage of digitalisation and disruptive innovations to secure its energy needs through sustainable alternatives.
China, followed by Japan and South Korea, leads in terms of technological development and energy innovation. China drives renewable energy and use of next-generation vehicles, including hybrid vehicles, electric vehicles and fuel cell vehicles via smart charging, battery recycling and development of an open power market. The rapid exploitation of digital and renewable energy expertise allows China to be a global market shaper, exporting its technologies and know-how world-wide.
Commercialisation of hydrogen as a fuel becomes promising, particularly in Japan, South Korea and China. Japan explores the potential of hydrogen and ammonia as carbon- free fuels and develops ammonia utilisation technologies that draw strong interest from Europe, Australia, the US and Saudi Arabia. Initiatives, including many that use blockchain, gain momentum. Partnerships become increas- ingly common. For example, TEPCO, Japan’s leading utility, partners with blockchain energy start-up Conjoule GmbH to develop peer-to-peer marketplaces for producers and consumers of renewable energy, as well as owners of batteries and other sources of flexibility.
As the world moves towards new levels of interconnectedness, cutting-edge technologies become mainstream in energy grids and smart utilities emerge. Digitalisation advances lead to new business models and start-ups that incorporate intelligent energy management services. Based on AI and big data, these start-ups look at providing energy efficiency optimisation, operation and maintenance monitoring, carbon emission management, electricity sales, micro-grid services and other digitalised technology solutions.
Clean coal technologies such as ultra-supercritical power plants (USC) and CCUS, R&D aimed at cost reduction of renewable energy, hydrogen utilization and electricity storage gain momentum.
Initiatives such as advanced energy management systems and energy-saving practices like the green building index are implemented, and more efficient technologies are utilised in the industrial, transport, residential, commercial and even the agricultural sectors. Mongolia begins privatising the state-domi- nated energy sector to boost innovation and use of advanced technologies. Enormous improvements in energy efficiencies in both supply- and demand-side technologies continue to be developed and implemented across the region in varying degrees.
In Modern Jazz, electrification in East Asia rises from 24% in 2020 to 35% by 2040. While the con- tribution of coal reduces by half to 30% in 2040, the region doubles its reliance on gas in electricity
Projects like the Asian Supergrid between China and Mongolia and other projects to connect pipelines flourish. An increased global emphasis on providing support for technology innovation and technology transfer to developing countries also makes a difference in the region.
On a cross-regional scale, the Trans-ASEAN Gas Pipeline, LNG transportation as a virtual pipeline the ASEAN Power Grid (APG) and other regional networks support region-wide trade in electricity and increase energy security. The increasing interdependence of economies enhances collaborative efforts across the region to meet energy challenges.
Governments recognise that renewables must play a bigger role in their energy mix. Policy incentives encourage research in renewable energy as well as in its industrial application, and governments attempt to align energy demand with environmentally sound energy policies. China’s innovations help other economies in the region to adopt best practices for reducing environmental impact.
In Asian mega-cities, rapid mass transportation systems reduce the need for shared mobility. Some Asian cities, such as the Yokohama Smart City in Japan, implement integrated planning in urban set- tings to boost the standard of living with more efficient and less carbon-intensive energy systems.
Technology transfer and joint development of technologies such as in LNG shipping, CHP and CCGT, among others, helps in coping with increasing energy demand.
In order to manage the growing dependence on Middle Eastern oil, East Asian economies explore opportunities for more Russian crude imports, develop and utilise more natural gas, establish joint emergency oil stockpiles and establish better coordination among importing countries in order to reduce oil price shocks. Developing mutually beneficial cooperation with countries in the region remains a key priority for the government of Mongolia, which strengthens its international ties and works with international companies to develop its renewables potential.
South Korea continues to expand cooperation with resource-rich countries and strengthen the competitiveness of its new energy business models and innovative energy start-ups. Taiwan’s markets remain relatively open and are thus attractive to the European and North American players. Moreover, Taiwan’s strategic location in East Asia, with close proximity to key markets, including China, means leading technology firms see the country as a potential hub for the Asian market.
As highlighted in Japan’s G20 presidency 2019, governments continue to work together to increase cross-border and public-private collaboration using a range of mechanisms, including Technology Collaboration Programmes, Mission Innovation, Innovation Accelerators and Regional Centers.
The share of electricity in final energy climbs from 25% in 2020 to 42% by 2040. The solar and wind share in electricity generation increases almost three times in two decades, reaching 29% by 2040, with most of the increase coming from developments in China. Although coal is currently the dominant energy source in the region, contributing 62% of its electrification needs, the share of coal drops to a low of 21% by 2040.
Switching from coal to gas leads to significant improvements in air quality. Nuclear remains significant to regional power companies, growing from 5% to 17% of electricity generation by 2040.
Hard Rock
With growing geo-political tensions in Hard Rock, primarily the US-China trade war, governments establish policies and inward measures that aim to enhance security and address environmental concerns within their own countries. While technological cooperation and technology diffusion take
a setback, the straining multilateral trading system creates incentives for more rapid development of viable alternatives, such as electric storage and affordable hydrogen, to meet rising energy demand.
In China, the UHV transmission-based distribution grid brings electricity from the west of China, where renewable power sources are based, to the demand-heavy east, and this and other initiatives continue to meet the energy security challenges at the country level. In addition, China’s emissions trading system is set up at a massive scale, promising to shape global trends and spur a faster transition toward clean energy and a low-carbon economy.
Mongolia’s hydroelectric plants continue making the largest contribution to the country’s renewable energy. In South Korea, inward-looking initiatives that include voluntary agreements, energy audits, appliance labelling and standards, fuel economy and increased use of public transit continue to play important roles in energy savings. The “Basic Energy Plan”, established after the Fukushima nuclear accident, promotes renewable energy and contributes to Japan’s decarbonisation agenda.
However, foreign businesses with operations in East Asia and foreign investors face uncertainty, which discourages investment. The region, as a whole, continues to rely on cheaper domestic energy resources, such as coal. International power grid connections become politically difficult for ASEAN countries and impossible for Japan, South Korea, North Korea, and China. Eastern Asian power grid interconnection seems unlikely to be realised before 2040.
In Hard Rock, because of the increasing concerns over energy security, the competition for securing oil supplies in Northeast Asia and the Asia-Pacific region intensifies. Ongoing tensions between China and Japan continue because of their overlapping claims to petroleum resources in the East China Sea and competing oil pipeline proposals for importing Russian oil and gas.
Although many Asian countries have abundant hydro, wind, solar or biomass, high costs, uneven distri- bution of resources, intermittency and the lack of either the necessary infrastructure or the necessary investment levels remain barriers to higher levels of integration for renewables. The electrification rate reaches 27% by 2040, with 16% of it derived from solar and wind. Meanwhile, the contribution of coal decreases by two-thirds in two decades and reaches 44% in 2040.
ANNEX | REGIONAL SUMMARIES: EAST ASIA