Twin Challenges: Energy and the Environment in Asia

Article excerpt

William F. Martin is Chairman of Washington Policy and Analysis and Former US Deputy Secretary of Energy.

Over the next 15 years, Asia's demand for energy is expected to more than double--accounting for approximately 40 percent of world energy demand. The rapid economic expansion of the industrializing nations of Asia is dramatically redefining energy security in the region for, while this economic growth is raising living standards in many of these nations, it is resulting in a dramatic increase in the demand for energy. The World Bank estimates that, over the next ten years, more than half of all infrastructure expansion in Asia will be devoted to energy-related projects. As Asian energy demand increases, principally for fossil fuels such as oil and coal, the energy insecurity and environmental quality challenges associated with these energy resources become glaringly apparent.

Energy demand has risen in Asia largely as a result of the increasing industrialization of Asian economies. The removal of barriers to free trade and greater liberalization of markets has facilitated a shift in manufacturing away from industrialized economies, such as those in the Organization for Economic Cooperation and Development (OECD), to rapidly industrializing economies, such as those in East Asia. Basic steel production, for example, shifted from the United States and Europe to Japan, then to Korea, and is now concentrated in Thailand and other East Asian economies.

These manufacturing industries, such as steel, use a greater amount of energy per unit of gross domestic product (GDP) than the more service-oriented economies in OECD countries. Energy demand is also expanding because increasing percentages of Asian populations are living in cities. Urbanization leads to a greater demand for refrigerators, televisions, electric fans, and other appliances, and is also directly related to the rise in demand for motorized transportation.

Energy and Environmental Insecurity

At present, approximately half of Asia's demand for oil is supplied through imports from outside the region. With a growing transportation sector, this dependence on imports will only worsen over time. While there are several regions in Asia, such as China's Tarim Basin, which could have potentially huge oil reserves, technical and financial obstacles make it unlikely that these areas will be sufficiently exploited to impact oil supply levels in the near future.

Given the soaring demand, this lack of indigenous oil production, is pushing Asian nations toward a greater reliance on oil from the volatile Persian Gulf region. In fact, this huge increase in Asian demand for oil and Asia's subsequent dependence on Middle Eastern oil producers is driving global reliance on the Persian Gulf back toward mid-1970s levels.

Ironically, this increasing Asian dependence is occurring at a time when North America and Europe are lessening their overall dependence on the Middle East. Greater than expected production in the North Sea, Canada, and the Gulf of Mexico is diversifying the base of supply for North America and Europe.

Unfortunately for Asia, there arefewer options. It is inevitable that Asia will become the principal consumer of Middle Eastern oil, engendering entirely new dynamics in the economic, political, and military relations between Asia and the Middle East. Some of these dynamics have already manifested themselves in the new relationship between China and Iran. China's expanding appetite for oil corresponds to Iran's desire to acquire and develop advanced military technology, thus leading to an increased risk of nuclear proliferation.

In addition to the geopolitical risks of Asia's dependence on oil, the environmental impacts of fossil fuel use pose a further challenge. Asia's expanded fossil fuel use will intensify environmental problems such as global climate change and acid rain. Asian nations are expected to double their greenhouse gas emissions over the next 15 years, raising gas emissions from Asian nations from 28 to 45 percent of the world total. …

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