COMMENTARY: Thailand's energy transition

Bangkok (The Nation/ANN) - For the past decade, Thailand has experienced significant economic growth, moving into the World Bank's upper middle income bracket.

This period of growth has led to an ever-growing demand for resources: over the last 25 years energy consumption has grown at 6.2 per cent per annum. Looking forward, meeting this demand will become increasingly challenging, making energy security a focus for the coming years.

In partnership with the Ministry of Energy, the World Economic Forum is exploring how Thailand can create a new energy architecture that is secure, sustainable and affordable. Our work thus far has revealed three important steps:

Improving efficiency through energy literacy

The Ministry of Energy has set a target of reducing energy intensity by 25 per cent in 2030, compared with that in 2005, or equivalent to reduction of final energy consumption by 20 per cent in 2030.

Promoting behavioural change through improved energy literacy will be central to achieving this.

The public needs to better understand the true costs and challenges involved in securing supplies, and the implications of government targets for their everyday lives.

Lessons can be learnt from Japan's post-Fukushima efficiency gains, where a national drive for setsuden (conserving energy) galvanised the population into action.

Increasing diversification to spread risks

Thailand's transportation sector is dominated by the use of petroleum products sourced from overseas, while the country's power generation is highly dependent on natural gas, domestic sources of which are beginning to plateau.

This dual threat has seen its energy import bill balloon to 847 billion baht (US$26 million) in 2011, a 26.2 per cent increase on 2010.

To minimise its exposure to global markets, Thailand is pursuing a policy of diversification, with the shares of coal, nuclear and renewables slated to rise over the coming decades.

Meeting government targets for a new energy mix requires taking an inclusive, collaborative approach, in which policies are shaped across stakeholder groups in public-private partnerships, with benefits, such as job creation, shared with local communities.

Playing a central role in regional energy integration

The formation of the Asean Economic Community (AEC) is a potential game-changer for Thailand's energy sector that can bring significant energy security benefits, as well as opportunities to take competitive advantage of the Asean market, as cross-border trade is opened up.

Given its central location in the region, Thailand has the opportunity to become a hub for energy trade in a number of different sectors, including gas, electricity and biofuels.

Central to achieving this ambition will be the expansion of Thailand's internal energy infrastructure, such as its gas pipeline network, as well as its connections with its neighbours, as through the Trans-Asean gas pipeline. The process will not be straightforward.

A number of potential obstacles may slow the pace of integration, including permitting processes, finance requirements, and the need for harmonised technical standards across countries.

To overcome such challenges requires a robust strategy, and strong leadership. Striking the balance between economic growth, environmental sustainability and energy security will entail trade-offs and difficult choices to be made.

If Thailand is to retain its regional competitiveness in the era of the AEC, its leaders must make bold decisions today that position it effectively for tomorrow.

Roberto Bocca is senior director of the Head of Energy Industries and Busba Wongnapapisan is associate director of the Head of Renewable Energy Industries.



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