2016

Towards Enhanced Australia –Japan Cooperation in Energy

Venkatachalam Anbumozhi

E: v.anbumozhi@eria.org

Roundtable on Cooperation between Australia and Japan as Global Partners , Canberra 15-16 February, 2018

Outline

• Current Energy Cooperation Framework

• Enhanced Cooperation in meeting emerging challenges

• New forums for promoting collaboration

Australia – Japan High Level Group (HLG) on Energy and Minerals Consultation

• Energy and resources policy updates

• Energy market reform

• Renewable energy

• Energy efficiency

• Resources trade and outlook

Australia – Japan Energy Cooperation: The benefits of Being ASEAN’s Neighbor

• Rapid growth of Energy Demand in ASEAN –(Strength of Japanese manufacturing competiveness built on regional supply chains)

• Increasing dependency on imported energy

(Australian resource help fueling industrialization)

• Energy security in the broader sense

(secure supply of clean energy at a reasonable cost)

A-J Engagements in Multilateral Groups

• APEC Energy Security Initiative (ESI)

• APEC Energy Working Group (EWG)

• G20 Sustainability Working Group

• Clean Energy Ministerial (CEM)

• International Energy Program Treaty

• International Partnership for Energy Efficiency Cooperation (IPEEC)

Paris Agreement- Beginning of a New Cooperation Paradigm?

• Bottom up architecture for climate change mitigation, with some top down supervision• Broad participation – 196 countries; all EAS countries• Large variety of Intended Nationally Detrmined Contribution (INDC) targets - Different forms and

ambitions• Uncertainty beyond 2030 – tied with international flow of technology and capital• Opportunities for harmonization?

- Part of broader policy reform agenda!- Part of low-carbon green growth!

NDC - 2030 National Emission Reduction Targets

High Income Upper-Middle Lower-Middle

Reductions below BAU

Korea: 37%

Brunei: 63%Thailand: 20% (25%)

Vietnam: 8% (25%)Indonesia: 29% (41%)

Cambodia: (27%)

Absolute Reductions

Australia: 26-28% below

2005.Japan: 26% below 2013.

NZ: 30% below 2005.

- -

Emissions Intensity

Singapore: 36% below 2005.

China: 60-65% below 2005.Malaysia: 35% (45%) below

2005.India: 33-35% below 2005

Source: ERIA, 2016

INDC = Δ Emissions intensity = Decomposition of Energy Use

Δ CO2 = Δ GDP x Δ CO2/GDP

= Δ GDP x Δ Energy/GDP x Δ CO2/Energy

• Energy intensity (Energy/GDP) – technological improvements within each industry/product

– structural change within the economy

• Carbon intensity (CO2/Energy)– fossil fuels replaced by renewable or nuclear power or CCS

– end use energy efficiency

– Annual changes usually much smaller than Δ Energy/GDP

– But decisive in the longer term

What the Energy Transition also implies …..

1. Liquefied Natural gas (LNG) – Best Energy Mix2. Hydrogen Society- Renewables3. Asia Super Grids: - Integrating renewables to Asia Super Grid

The future of energy system is characterized by (i) growing demand (ii) increasing cost of supply and (iii) Managing energy’s climate foot print

0

100

200

300

400

500

600

2013 BAU Scenario1

Scenario2

Scenario3

Exports, etc

Non-energy use

Res./Com., etc

Domestic marine

International marine

CNG

Industry

Power generation

(Mtoe)

Natural gas demand potential by sector Natural gas demand potential by country

+94Bcm

+106Bcm

+139Bcm

0

100

200

300

400

500

600

2013 BAU Scenario 1

Scenario 2

Scenario 3

Viet Nam

Thailand

Singapore

Philippines

Myanmar

Malaysia

Indonesia

India

Brunei

(Mtoe)

Natural Gas Demand Potential in ASEAN

Source: ERIA, 2016

SUSTAINABLE DEVELOPMENT OF NATURAL GAS MARKET IN ASEAN AND EAST ASIA

Australia – Japan Cooperation on (i)Reseasonable Pricing Mechanism (ii) sufficient investment in every part of the value chain –infrastructure (ii) Tranparency in policy making.

Japan’s Hydrogen Society Dream: A storage Solution Shipped from Australia

Source: Siemens, 2017

Recent innovations inHydrogen generation, storage and transport could transform into ultimate source of clean energy

Australia in partnership with Japan can use Hydrogen to export its Renewable power around the World

Plunging costs of solar and wind means Australian hydrogen fuel exports could replace coal and gas

Source: Siemens, 2017

Asia Super Grid: Dreams of Connecting the world with multilateral trade In Clean Energy

Masayoshi Son

• Rapidly falling cost of Renewable emery technologies, particularly solar and wind abundant in Australia would help the vision of a 100% RE based Super Grid

• Australia could become a source of RE for ASEAN countries connected via HVDC lines

• RE trading from Australia could be beneficial for the countriesof East Asia

Benefits of ASG + Australia

Source: Gulagi, 2017

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Openness to trade and Investment in low-carbon tech and services

APEC ESCAP OECD

MFN

Avera

ge T

raiff

Level (%

)

16Source: ERIA, 2015

• Ensure a strong regulatory framework, investment regime and price mechanism for LNG

• Support early investment in in hydrogen infrastructure and unlock local innovations

• Promote and enhance the attractiveness of Asia Super Grid that includes Australia

• Deepen the relationship with key partners to liberalize trade in low-carbon energy goods andservices

Potential Collaboration that Remain Unrealized

• East Asia Summit (EAS) – Energy Cooperation Task Force; ASEAN +3 -APAEC

• Trans-Pacific Partnership (TPP 11) and RCEP.

• G20 Sherpa Track directive to International Financial Institutions

Forum for promoting regional collaboration in energy Sector