chapter  8
22 Pages

Analysis of macroeconomic impacts of energy security improvements in Asia

WithDeepak Sharma, Suwin Sandu, Muyi Yang

Prompted by the concerns about the impending energy security threat in Asia, this chapter analyzes (for the period 2015–2050) the macroeconomic impacts and underlying policy trade-offs associated with three alternative energy scenarios – Country Policy (CP), Country Aspiration (CA), and Sustainable Development (SD); these scenarios represent a diverse range of policies aimed at redressing the energy security challenge in the region. The cases in point for this analysis are provided by seven major Asian countries (China, India, Indonesia, Japan, Korea, Malaysia, and Thailand). The methodological framework for the estimation of impacts is introduced in Chapter 31. Analysis suggests that a continuation of current policy trends (CP scenario) is likely to worsen energy security in the region, making, for example, China and India excessively energy import dependent; adversely impacting energy export incomes for Indonesia and Malaysia; and significantly increasing greenhouse gas emissions for all countries. The adoption of more focused energy policy measures (CA and SD scenarios) will significantly improve energy security and environmental outcomes overall. The underlying impacts and (hence) policy trade-offs will however vary across countries. For example, energy diversity will worsen for Korea, Malaysia, and Thailand, due to an overreliance on non-fossil energy resources, thus requiring Malaysia and Thailand to consider issues of integrating intermittent renewable energy resources, and Korea to handle large-scale nuclear waste. Further, policies in these scenarios could bring significant socioeconomic benefits for energy importing countries, except Thailand and India, where relatively weak employment opportunities will ensue. On the contrary, some economic losses could occur in energy exporting countries (Malaysia and Indonesia) due to the reduced need for fossil fuels in the region, suggesting that policy makers in these countries, while designing their energy policies, should also take cognizance of energy security measures being considered by their major trading partners.