Working Group Report on Energy Security Cooperation in East Asia

 

I. Introduction

 

 

The WG meeting had three panels and a general discussion.  Each panel had two sessions: presentation and discussion. Background papers were first read to establish the agenda for discussion. Delegates then freely exchanged their views on the issues concerned. The panels consisted of the following:

 

1. Improving Energy Efficiency

 

This panel focused on the experiences gained and challenges faced in improving energy consumption efficiency in the APT countries. The lead paper was on the impressive efforts of the Japanese industry and society to conserve energy since the 1973 oil shock. Indeed, Japan can be considered the benchmark for energy efficiency and conservation for other APT countries to emulate. (APT energy efficiency statistics are provided in Appendix 1). Delegates from other APT countries also presented papers on their respective countries' experiences as well as shared their national requirements and efforts to improve energy consumption efficiency.

 

While delegates in principle accepted the logic of the market to set energy prices, avoid waste and boost energy efficiency, they were also sensitive to the political and social realities of certain APT countries which provide fuel subsidies to maintain social stability. Nevertheless, APT countries should seriously consider reducing energy price subsidies in the long run to ensure greater efficiency and conservation of energy resources.

 

2. Energy Security Cooperation: The Maritime Dimension

 

This panel explored various potential areas for cooperation among East Asian countries in their search for maritime energy security. One background paper examined China's energy security needs while another focused on the issues of piracy and hypothetical terrorism in the Straits of Malacca. This panel examined the possible role of APT countries for enhancing energy security cooperation in the Straits of Malacca. Analysis of energy security in the Straits is timely especially when Lloyds has labeled the Straits a “war risk" area and hiked insurance premiums.

 

It was concluded that the alleged problems of piracy and terrorism in the Straits of Malacca have been exaggerated. There have actually been few pirate attacks on oil tankers and no terrorist attacks at all within the Straits. Nevertheless, there is still much room among the APT countries to cooperate with the littoral states to prevent potential piracy and terrorism, and ensure the unimpeded flow of energy through the Straits where 60,000 ships transit annually, carrying 525 million tons of cargo worth US$ 390 billion (one-third of world trade). By 2004, 26 tankers heading for Asian ports passed through the Straits each day carrying 11 million barrels of oil. Moreover, with continuing increases of traffic in the Straits, APT countries may need to address the problem of congestion and potential accidents which could delay or disrupt energy flows vital to the region.

 

3. Energy Conservation: National Policies

 

Delegates shared their countries' experiences and policies on energy conservation. This panel also discussed various APT countries' experimentation with bio-fuels and geo-thermal energy which may reduce oil dependence in the future.

 

4. General Economic Framework

 

There are at least four factors which underpin energy conservation: economic, institutional, a “green" strategy to raise public consciousness, and the sharing of national experiences and the need for regional cooperation.

 

Economic factors: Energy consumption is closely related to GDP growth. Indeed, the levels of energy consumption are closely linked to the level of economic development of a country, or more precisely, the stages of its industrialization. To reduce energy consumption, the price mechanism is most effective, ie, how to get the price right, though it is acknowledged that certain APT countries cannot eliminate energy price subsidies quickly without incurring serious social dislocation. Reducing energy consumption also involves the use of “incentives"; for example, citizens and companies are given awards and publicity for drastically reducing their energy consumption by using electric devices/equipment which the government has labeled “energy efficient" (these consume less power per unit of output, but with higher initial capital outlay), and “disincentives" such as penalizing people and organizations that continue to use old, energy-inefficient equipment.

 

Institutional factors: The state plays an important role in ensuring energy conservation, including the use of tax incentives, a conducive regulatory framework, voluntary guidelines and/or mandatory ones (eg, the setting of air conditioning no lower than 26 degrees Celsius), governmental efforts and commitments to energy saving techniques and R & D (eg, research into new building styles and materials which reduce the need for air cooling and heating), and establishing standards for energy efficient buildings and cars. Simply put, the state has an important role to formulate and implement energy conservation measures.

 

Raising public awareness about energy conservation: governments should inculcate energy-saving behavior in the general public, school children, and industrial/business associations, through energy conservation campaigns and competitions that alert citizens from all walks of life about the quantities of energy that they as individuals, families and workers use for various daily activities and how they could play a part in saving energy at home, school and at work. These activities are highly cost effective from the standpoint of energy conservation.

 

APT countries should share their national experiences and enhance regional cooperation in energy conservation. The papers presented at the workshop sent the “signal" that APT countries are cooperating to make East Asia more efficient in the use of precious energy and friendlier to the environment.

 

 

Recommendation 1: APT countries should set national targets of energy efficiency with a view to catching up with the world's best standards in the long run. China's target in its 11th Five-Year Plan (2006-10) for reducing energy consumption by 20% per unit of GDP is a case in point.

 

Recommendation 2: APT governments should expand all existing energy conservation efforts. These may include: conducting energy audits and inspections, setting minimum energy consumption efficiency standards, arranging energy efficiency demonstrations, enhancing public education on energy efficiency, and organizing energy-efficiency labeling programs and international technical exchanges (especially from Japan).

 

Recommendation 3: APT states should pay attention to energy-saving activities by introducing (mandatory or voluntary) energy efficiency standards for common household products. These include: air conditioners, heaters, gas cooking appliances, gas water heaters, oil water heaters, refrigerators, freezers, ovens, rice cookers, computers, DVD players, TV sets and fluorescent lights.

 

Recommendation 4: Manufacturing industries should adopt more efficient methods of production by using less energy per unit of output.

 

Recommendation 5: APT governments should promote energy conservation efforts in the consumption of oil -- especially gasoline and diesel -- in the transport sector, developing policies which ensure that the increasing numbers of vehicles on the roads use fuel as efficiently as possible.

 

Recommendation 6: APT countries should hold regular energy conservation campaigns which educate people about the relative quantities of energy they use and waste in the home and at work each day, and instill in them the imperative of practicing energy-conserving behavior at all times.

 

IV. Policy Recommendations: Energy Security Cooperation in the Straits of Malacca

• handle environmental disasters caused by oil spillage from tankers, tugs and barges in the Straits, and
• provide humanitarian assistance by mounting search and rescue operations in the Straits. These initiatives can be regarded as CBM (Confidence Building Measures). They aim to boost mutual trust and confidence, reduce suspicion and develop a spirit of cooperation among APT countries.