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Difficult choices ahead for Thai energy system

Publication Date : 08-10-2012

 

Thailand’s energy sector has come under pressure in recent years. Inflation and the removal ofenergy subsidies have led to increased energy prices. With energy consumption growing at 6.2 per cent annually for the last 25 years, concerns about the security of Thailand’s energy supply and its sustainability have risen, especially with carbon emissions rising at 3 per cent per year between 2004 and 2008.
 
These concerns are taking centre stage as Thailand prepares for the formation of the Asean Economic Community (AEC).From 2015, the unified market will accelerate growth across the Asean bloc, creating the world’s 8th largest economy by 2020, with a projected combined GDP of US$1.9 trillion.But the AEC could release a new wave of competition that threatens the advantages of established national energy companies. The competitiveness of Thailand’s energy sector is therefore of fundamental importance.
 
A new report, New Energy Architecture: Thailand produced by the World Economic Forum in collaboration with Accenture and the Ministry of Energy of Thailand, looks at how Thailand can both prepare for ASEAN energy integration.This process will not be straight forward, and requires critical decisions and compromisesto be made.
 
Thailand’s fuel mix provides a good example of a focus area. Through the Alternative Energy Development Plan (AEDP) 2012-21 the Ministry of Energy has created a plan for the development of the renewables sector. It could drive a significant shift in both the power generation and transportation sectors. Butin reality, ambitious targets and policies do not necessarily lead to success. To implement the AEDP a set of financial and technical support mechanisms are required, including government support for research and development of new and emerging technologies. All of this comes at a cost: while an enhanced renewables sector will support greater sustainability and security, in the short-to-medium term it will likelyresult in higher energy prices, unless it is accompanied by energy efficiency measures. This problem is not unique to the renewables sector – there are trade-offs to be made in the use of all fuel types. There is no easy option. What policymakers must do is determine whether these trade-offs are acceptable, and whether the choices they have made match their long-term objectives.
 
Expansion of the energy sectoris made more difficult by a lack of support amongst consumers. Events such as the Fukushima nuclear incident and continuing climate change have generated global concern about the impact of the energy sector. Consumersare increasingly voicing these concerns. In Thailand, this is evident in growing public opposition to the construction of new power plants, as seen in anti-coal protests in Prachuap Khiri Khan and anti-nuclear protests in Surat Thani and Kalasin Provinces. But the subsequent delays and project cancellations threaten the country’s ability to expand the supplies it drastically needs. Again, the trade-off is clear: building infrastructure comes at a cost to the environment, but every new power plant increases security and supports further economic growth.
 
Policymakers in Thailand need to explain the costs and benefits of building new energy infrastructure to their citizens to gain the necessary support and acceptance. The private sector, too, has a responsibility to make the downsides of energy investment transparent. The best way to achieve that is by engaging in an open debate about the difficult choices ahead.

Espen Mehlum, Associate Director & Head of Knowledge Management and Integration, Energy Industries, World Economic Forum; Michael Moore, Project Manager, New Energy Architecture, World Economic Forum & Accenture

 

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