ASIA-PACIFIC nations will need US$11.7 trillion (RM37.21 trillion) of investments in the 25 years to 2035 to meet energy demand as power consumption more than doubles, according to the Asian Development Bank (ADB).
Spending on electricity and heating will account for about 73 per cent of the total, the ADB said in its Energy Outlook report for Asia and the Pacific, published yesterday.
The Manila-based lender's forecast assumes government policies are unchanged. Natural gas extraction, production and trading infrastructure will account for about 11 per cent while oil would need about 8.5 per cent and coal 8.1 per cent.
"Many of the ADB members have undertaken market reform to increase the energy supply tariffs for electricity, gas, and petroleum products to cover the cost of investment, although sometimes such efforts face political difficulties," the lender said. "Steady progress in this regard is necessary to improve the financial balance of utilities and to enable them to cope with future investment requirements."
Primary energy demand in the region is forecast to increase 2.1 per cent a year, faster than the projected world growth rate of 1.5 per cent, the lender said. Consumption will rise 68 per cent to 8,358.3 million tonnes of oil equivalent by 2035, up from 4,985.2 million tonnes in 2010.
Power use is expected to more than double to 16,169 terawatt-hours by 2035, according to ADB's estimates. Natural gas consumption will rise 3.9 per cent a year because of the increased use of the fuel at electricity generators, outpacing oil's demand growth of 1.9 per cent and coal's increase of 1.7 per cent.
"Demand for coal will go up by 50 per cent for economic and technical reasons but at a slower pace," S. Chander, the special senior adviser for infrastructure and public-private partnerships at ADB, said at the World Energy Congress in Daegu, South Korea.
Consumption growth will be led by China and Southeast Asia, according to the report.
The Asia-Pacific region would have to invest US$19.9 trillion in the energy sector if countries shift to using low-carbon sources and more advanced technologies, the report showed.
The additional costs compared with the base-case scenario would "outweigh the estimated benefits arising from the savings from fossil fuels," the ADB said. Under the alternative case, primary energy demand will increase at an annual rate of 1.4 per cent, it said. Bloomberg