When a rare ray of certainty shines through the mist of guesswork in the energy markets, we must be proactive. We know that the world’s energy market faces its most challenging tightrope yet: meet rising energy demand and simultaneously hit the unprecedented low-carbon targets that are detailed in the Paris Agreement.
What isn’t certain is how to achieve it.
The historic alliance between the Middle East and Asia can help producers on both sides of the Indian Ocean achieve the holy grail: affordable low-carbon energy security. Collaboration and innovation are vital tools for producers trying to keep their balance as this 21st century energy transition gains traction.
To the east, China and India are two of the world’s largest energy markets and the 60 per cent growth in energy demand over the last 15 years in the Association of Southeast Asian Nations (Asean), detailed by the International Energy Agency (IEA), is likely to continue. In the Middle East, ‘BP Outlook’ expects energy consumption to rise by 54 per cent by 2040.
Swelling populations largely underpin this surge on both sides of the Indian Ocean. The United Nation (UN) expects Asia to still have the world’s biggest populations by 2024, with 1.44 billion people in both China and India. In the Middle East, the 39 per cent growth rate in the UAE’s population to 13.1 million by 2050 echoes regionally.
What are the potential release valves to these burgeoning pressure points? The rise of renewable energy, leveraging gas as the “greenest” fossil fuel and greener enhanced oil recovery (EOR) are on the still-exploratory list.
Renewable energy is a key focus. The IEA expects Asia to be home to two of the three countries — China, US, India — that will account for two-thirds of the global renewable expansion up to 2022. And renewables are an integral thread in the energy strategies of most Gulf countries’ “national visions”. The UAE, long an advocate of solar power, also launched the world’s largest Concentrated Solar Power (CSP) project last year.
Looking ahead, how can the expertise of these renewable pioneers be leveraged so they co-author an even more impressive chapter? And how can new sweet spots in the ancient east-west alliance be leveraged via China’s Belt and Road Initiative (BRI), India’s ‘Think West’ policy and Gulf nations’ plan to widen their influence outside the Middle East?
Maximising the use of natural gas and LNG, considered the greenest fossil fuel, is part of energy strategies in both regions, which are also home to the world’s first and second largest bunkering hubs — the Port of Singapore and the UAE’s Port of Fujairah, respectively.
Cutting CO2 emissions from EOR is another vital link in the balancing act, especially as the market expands. Transparency Market Research expects the global value of the market to soar from $38.1 billion (Dh140 billion) in 2012 to $516.7 billion by 2023. But EOR stakeholders cannot play by the old rules — low carbon operations must be implemented to prevent producers slipping from the tightrope.
There are many other pressure points where opportunities for collaboration abound. How to hasten the electrification of energy markets and affordably diversify refineries’ crude palette to increase the supply of biofuels? How to help the aviation industry adjust to the UN’s new carbon offsetting scheme from 2021?
And how to improve the utilisation of wastewater in energy production amid warnings by the World Economic Forum (WEF) that scarcity is a top global risk?
Answering even elements of these multifaceted questions will quicken the Middle East and Asia’s journey towards sustainability and showcase their influence as low-carbon pioneers on the global energy stage. Together, they can clear the mist.
Abd Malik Jaffar is Regional Director at Petronas Subsidiaries M.E.