Asia’s energy supply looks protected — even as Europe scrambles

As Europe has problem with a power scarcity, Asia-Pacific’s power supply stays protected generally due to the fact that the area still utilizes a great deal of coal, information has actually revealed.

With liquified gas products in the area rerouted to Europe, power generators in Asia not just have less access to LNG however have actually needed to pull out of purchasing more costly LNG driven by strong need in Europe. 

Europe is fighting with a gas scarcity as Russia cuts its products, requiring numerous nations into an energy crisis in the lead approximately winter season. The U.K.’s National Grid has actually cautioned of possible power cuts.

On Tuesday, the EU guided far from a proposed cost cap on Russian gas as it set out brand-new steps to deal with high energy rates. Russia had formerly stated it would stop all fuel provides to the EU if the bloc enforced these caps, which reduce Russian profits and cost of products.

S&P Global primary energy strategist Atul Aryal stated while the crunch in Europe and the war in Ukraine have actually required up rates of fuel such as oil and gas internationally, it has actually not injured Asia’s energy generation. 

According to the International Energy Agency’s most current gas report, in the very first 8 months of the year, Asian area or short-term LNG imports were down 28% compared to the exact same time in 2015. Overall LNG imports fell 7% year-on-year.

Bloomberg | Bloomberg | Getty Images

“In Asia, instead of using gas, countries are using coal because coal is here, coal is domestic and less expensive,” Arya informed CNBC.

“The downside is that Asia, which is growing gas consumption, has stopped, at least for now.”

Unlike Europe which counts on gas for energy production, gas is less pertinent to Asia. It just forms 11% of its power mix and imported LNG forms a little part of that with most gas originating from domestic production, Wood Mackenzie head of Asia Pacific power & renewables research study Alex Whitworth stated.

Coal uses up a bigger part of the mix, although it is falling, Whitworth included. The share of coal in power generation for Asia-Pacific markets is more than 60%, he stated.

The implementation of renewables takes some time and will not relieve security issues in the short-term … for that reason, we are most likely to see more of a push to increase the supply of nonrenewable fuel sources and for that reason the dependence on these dirtier fuels.

Warren Patterson

ING Economics

Separately, Asia’s LNG imports have actually fallen due to high rates.

According to the International Energy Agency’s most current gas report, Asian area or short-term LNG imports fell 28% in the very first 8 months of the year compared to the exact same time in 2015. Overall LNG imports fell 7% year-on-year. 

Imports to China — now the most significant international LNG importer — fell the most by 59%. The reduction in LNG imports for Japan, Pakistan and India were 17%, 73% and 22% respectively, the IEA stated. 

The firm discussed it wasn’t simply high rates preventing Chinese purchasers, however likewise the nation’s slowing economy, milder winter season temperature levels and strong domestic production of its own gas and coal.

Read more about energy from CNBC Pro

These elements have actually established chances for more coal usage in Asia, in the middle of efforts to decrease making use of nonrenewable fuel sources. For example, Korea Electric Power Corporation has actually begun utilizing more coal in current months, according to the Institute for Energy Economics and Financial Analysis.

The business utilized about 26% more coal in July this year compared to the previous month, however that was still lower than the volume utilized in 2015, information from IEEFA revealed. 

“KEPCO’s data suggests that both coal and LNG power generation have fallen since May as a result of higher prices year on year. However, there is a clear increase month on month of coal power generation,” IEEFA energy financing expert Ghee Peh stated.

LNG imports in China – now the most significant international LNG importer – fell the most at 59%.

Hector Retamal | Afp | Getty Images

This follows that Korea — which, like Japan, utilizes more gas than other Asian markets — so to some degree, have actually needed to contend for minimal gas like Europe. But, due to the fact that of the accessibility of domestic products, they are more protected than Europe, Whitworth included.

In other words, Asia’s reliance on coal and fairly less dependence on gas imports imply it has greater energy security.

In basic, tighter LNG products and greater rates now imply that some nations would need to count on fairly “cheaper and dirtier fuels,” ING Economics head of products method Warren Patterson stated in a current note.

“One would expect that the high fossil fuel price environment would speed up the green push from governments across Asia, particularly given that a number of these economies are large net importers of energy,” Patterson stated. 

“However, clearly, the deployment of renewables takes time and will not ease security concerns in the short term.”

“Therefore, we are likely to see more of a push to boost the supply of fossil fuels and therefore the reliance on these dirtier fuels.”


News and digital media editor, writer, and communications specialist. Passionate about social justice, equity, and wellness. Covering the news, viewing it differently.

Related Articles

Back to top button