Asia is home to two of the world’s most populated countries. 93 of the 100 most polluted cities in the world are in Asia, as well as six of the top ten countries at risk from climate change. Many Asian countries are densely populated and their economies are developing, as a result, the region faces high energy demand, which is predominately sourced from fossil fuel, mainly because it is the cheapest option for many. In recent years, there has been an increase in efforts to support the process of energy transition as several countries are adopting various sustainable policies and alternatives.
GlobalData’s most recent report on Asia Energy Transition currently shows that the power mix in the region is dominated by thermal power, accounting for 70%, the majority generated from coal. Thermal generation is expected to account for 55% of Asia’s energy mix by 2035, as the region adopts various means of renewable energy. However, external factors such as the Russia-Ukraine crisis, have caused disruption in energy supply and subsequent high energy prices and inflation.
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The energy crisis and crippling economy have gradually undermined the progress several Asian countries have made. For example, the Philippines doubled their fuel subsidy for public transport, and plan to increase their use of coal for electricity generation. Thailand and Vietnam have also increased their fossil fuel subsidies and Indonesia has ramped up their coal exports. Russia still holds the position as the largest exporter of nickel, and the war has resulted in a shortage of supply of these minerals, which are key components in materials such as electric vehicle (EV) batteries used in the energy transition.
Asia’s overall power capacity is forecast to see a continuous increase in renewable capacity, with 63% in 2035, compared to 40% in 2022. Despite thermal capacity expected to decline by 2035, with oil capacity to decline by 15%, that of gas is to increase by about 44%. This is because of the rising demand for lower-carbon fuels, favouring natural gas rather than oil. Coal capacity has not declined as much as expected, and this is because of the lack of clear coal-phase-out policies within Asian countries.
The journey to cleaner energy – Electric Vehicles
EVs are a major contributor to Asia’s road to cleaner energy and net zero. The transportation industry is one of the largest sources of greenhouse gas (GHG) emissions in the region, accounting for about 15% of emissions between 2018 and 2050, thus the adaption of EVs will play a major role in achieving its climate goals.
Asian countries are adopting the idea of EVs at different rates. China, South Korea and Japan have swiftly accepted this idea ad have set a ban on internal combustion engines (ICE) for 2035, this will however not affect hybrid vehicles. While other countries, such as Indonesia, plan to phase out ICEs by 2050.
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By GlobalDataWhile there is no clear policy on EVs, various Asian countries have various approaches to embracing this new means of cleaner transportation, countries such as South Korea and India have extended their EV subsidy budgets, which will encourage the purchasing of EVs, privately and commercially. Indonesia and Thailand plan to produce batteries for exporting and domestic use. Thailand and Indonesia have invested heavily in the manufacturing of EV parts and attracting major automobile players, such as Great Wall Motors, as well as becoming region hubs for the EV market.
Building the EV system in Asia will require developing and fleshing out its EV value chain, coupled with prompting supply and demand. This will require intense investment, which can come in various forms, such as clear policies, partnerships, digital technology, infrastructure, and governmental incentives.
Policies and partnerships on clean technologies
Despite the lack of energy policies for renewables, mature markets, such as China and Japan, have made policies and initiatives and thus progress on clean technologies, such as EVs, renewable fuels and hydrogen.
One such example is the regulatory policy for sustainable aviation fuel. In China, there is the EU-China Aviation Partnership Project (APP) which focuses on sustainable aviation strategies between both parties, which has generated economic growth as well as sustained safe aviation growth. And in India, the Indian Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas are working on incorporating a sustainable aviation fuel (SAF) proposal over the coming months. The proposal will entail the various approaches to reducing carbon emissions within the Indian aviation industry and expand the concept for Indian airlines to adopt.
South Korea’s airline, Korean Air, and Shell have a five-year signed patronship with Shell Aviation to explore the supply of SAF and purchase from Shell at major international airports in Asia-Pacific and the Middle East, starting from 2026.
Mature markets such as Japan, have created a few hydrogen policies, which include: the 2017 – Basic Hydrogen Strategy, 2019 – Strategic Roadmap for Hydrogen and Fuel Cell, 2021 –-The Green Growth Strategy and 2021 – Sixth Strategic Energy Plan. These aims and policies are also backed by deployment funding. For example, JPY2tn has been allocated for research and development (R&D), demonstration, social deployment, and new technologies to support companies working on carbon neutrality and hydrogen projects. While other countries, such as India, have only recently put together a hydrogen policy; the National Hydrogen Mission which was launched in 2021. It will support India in becoming a hub for the production and exporting of green hydrogen. Unlike Japan, India is still looking for sources of funding and thus has set a goal to invest $1bn into R&D for hydrogen and green hydrogen technologies.
Technologies such as carbon capture and storage (CCS) can be seen as an effective vessel in facilitating the transition between traditional and renewable energy generation. However, the momentum on this technology in Asia has been very slow, slower than other cleaner technologies. The lack of collaboration, solid policies and development of technology are the main reasons why the region has very little friction on CCS.
Don’t keep all your energy in one basket
Oil and gas corporations are exploring sustainable substitutes to current energy generation methods, diversifying their assets, investing funds into the development of renewable technology, such as solar, wind, nuclear, hydro and biopower. Asia is projected to increase its shares in renewable generation from 32% in 2022 to 50% in 2035, according to GlobalData’s latest report. The geographic location of Asia, with vast exposure to seas and oceans, as well as the intense exposure to solar radiation, especially in the southeastern part of the continent, has allowed the continent to be well positioned for wind and solar power.
As such, there have been initiatives to maximise its geological and meteorological resources, and thus being the development of 10,000MW CHNG Jiangsu Offshore Wind Farm in China, 9,000MW Ulsan Floating offshore Wind Project in Japan, and 10,000MW RRECL THDCIL Rajasthan Solar Park and 8,000MW Adani Renewable Energy Park in India.
As one of the world’s fastest-growing regions in terms of economic growth, population and demand for electricity, achieving its net zero emissions in the future will depend on the rolling out and enforcement of various decarbonisation policies, collaboration, development and adaptation of technologies in order to increase its momentum of achieving its cleaner energy goals.
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