Events in Ukraine have put energy security at the top of Europe's policy agenda. The uncertainties raised by this crisis have reminded the EU that access to a continuous, reliable and affordable supply of energy is essential to a modern economy.
Energy security is indispensable to Southeast Asia, too. The International Energy Agency estimates that energy consumption in the region will nearly double over the next 20 years, with electricity demand rising to 1,900 terawatt-hours by 2035 — a level equivalent to the combined current demand of Japan and Korea.
Securing access to the resources that can meet this demand is a fundamental challenge, especially in an energy-hungry world where others are clamouring for the same limited supplies. Meeting this challenge will be one of the most important leadership tasks over the next generation.
Thailand illustrates the challenges and opportunities of energy policy well. The efficient development of indigenous resources has been a major driver of its impressive growth over the past three decades. During this time Thailand has built a strong energy industry in partnership with international companies which have brought billions of dollars of investment, technologies and experience.
Energy cooperation is an unsung success-story of the Thai-EU relationship. The resulting supply of secure, inexpensive energy is the envy of many neighbours. It has been a key input for the high value-added export sectors that have helped propel Thailand's modernisation. And the near-universal access to electricity in Thailand has improved the quality of life of millions of households.
But major challenges lie ahead. The data shows that in the next few years a large and growing gap will open between rising energy demand and declining domestic supply. In fact, Thailand already imports around 80% of its oil and 20% of its gas needs. If nothing changes, this dependence on more expensive foreign sources of energy will steadily increase at a time when regional integration in the Asean Economic Community will put a premium on competitiveness.
The scale of this challenge requires a complex solution with several parts. Fortunately, most of these parts are already in Thailand’s hands. Here are three of the most important ones.
First, Thailand can unlock further significant oil and gas reserves, and so continue the success story of self-sufficiency in energy development. Clarity on the future of current concessions beyond their expiry early in the coming decade will help to attract fresh investments to maximise recovery. And a great prize awaits in the Overlapping Claims Area, where as much as 11 trillion cubic feet of gas may lie.
This cannot currently be developed due to a maritime boundary dispute with Cambodia. But the successful example of the Malaysia-Thailand Joint Development Area shows that solutions can be found which are strongly in the interests of all parties.
Second, Thailand can diversify its domestic supplies by driving forward renewable energy programmes, including progress towards the admirably ambitious target of raising the share of renewable energy to 25% of total consumption by 2021.
Third, Thailand can manage its demand for energy through smart technologies, materials and systems which optimise energy generation, transmission and use.
The EU business community has much to offer in all these areas. New oil and gas ventures can deepen long-standing and successful exploration partnerships. As a global thought-leader in environmental policy and green technologies, the EU is ideally placed to provide technologies and share policy experience on renewable energy, energy efficiency and sustainability.
Given its critical importance, energy policy should also enjoy a broad consensus. Local communities and civil society should feel they are partners. Here too, the EU can help: the engagement, inclusiveness, and ethical standards which are hallmarks of socially responsible European business offer experience in fostering collaboration and enhancing trust among all stakeholders.
One specific suggestion for Thailand to consider is accession to the Extractive Industries Transparency Initiative (EITI). This embodies international best practice in openness in the hydrocarbon and mining sectors and is based on consultation and co-operation between government, business and civil society. Forty-one countries now implement the EITI standard, including the Philippines, Indonesia and Timor-Leste, with Myanmar making strong progress over the past year.
Everyone needs energy at work and in the home. Securing Thailand's energy future is therefore a compelling shared interest. As the coming energy supply challenge looms, Thailand's European friends will hope that this common interest will find a consensus that allows the country to develop and deliver the long-term energy policy to meet this challenge. The EU business community stands ready to support this.
Nigel Gould-Davies is chair of the Energy and Energy Efficiency Working Group of the European-ASEAN Business Centre (EABC) in Thailand.