EMTA SPECIAL SEMINAR: THE FUTURE OF ENERGY IN THE ASIAN MARKETS
Friday, November 6, 2015
EMTA
360 Madison Avenue, 17th floor
(on 45th St. between Madison and 5th Aves.)
New York City
Demand for energy in Asian markets is strong and projected to grow. And, with entities like the U.S. Energy Information Administration forecasting that resources such as coal will serve as the primary energy source for many countries for years to come, discussions of what these energy mixes will look like and what is at stake for various market participants has never been more relevant.
This panel will discuss the projected physical reality of various energy sources in the global energy market, especially as it relates to Asian demand. The panel will also examine both the challenges and the opportunities that face controversial resources that can act as a necessary tool in the development and economic growth of Asian economies over the next few decades.
11:45 a.m. Registration
12:00 noon – 2:00 p.m. Panel Discussion
Clara Gillispie (The National Bureau of Asian Research) - Moderator
George David Banks (American Council for Capital Formation)
Li Bin (Chinese Embassy)
Tony Nash (Complete Intelligence)
Lunch will be provided
Registration fee for EMTA Members US$95 / US$695 for non-members / Credentialed Media Complimentary.
Agenda
Relevant Links
Energy Panel
This Special Seminar “The Future of Energy in the Asian Markets” took place on November 6, 2015 at EMTA’s NYC offices. Clara Gillispie (The National Bureau of Asian Research) moderated the panel, with the following panelists: George David Banks (American Council for Capital Formation), Li Bin (Chinese Embassy) and Tony Nash (Complete Intelligence). Relevant documents addressed during the panel discussion can be accessed by Clicking Here.
Demand for energy in Asian markets is strong and projected to grow. And, with entities like the U.S. Energy Information Administration forecasting that resources such as coal will serve as the primary energy source for many countries for years to come, discussions of what these energy mixes will look like and what is at stake for various market participants has never been more relevant.
This panel discussed the projected physical reality of various energy sources in the global energy market, especially as it relates to Asian demand. The panel also examined both the challenges and the opportunities that face controversial resources that can act as a necessary tool in the development and economic growth of Asian economies over the next few decades.
Clara Gillispie provided some background on the context for why Asia was the subject of the panel discussion. She examined the major trends in Asia’s energy outlook, and the continuing role of coal in the region’s energy demand outlooks. She posited that energy is central to economic growth, health and global prosperity, and this was particularly true in Asia. Lifting the population out of poverty through better and more reliable access to energy for transportation, schools, hospitals, etc. was a goal (although not without its challenges). The scale of demand, and how this compares to other regions (65% of projected future demand growth is in Asia, four times the demand in Latin America and Africa combined), as well as what is at stake in addressing energy security (that incorporates concerns for environmental security, geopolitical security and price security) were some of her themes. Promoting energy mixes that are “affordable, available, acceptable, accessible and sustainable” was key, in her view. She stated that Asia needs more supply of energy and greater opportunities to develop geopolitics in the area.
In addition to looking at where the supply of energy was coming from, Gillispie asked the panelists: What might we look for in the future of energy in Asia-Pacific markets, and how might stakeholders work together to strengthen energy outlooks? In contextualizing Asian energy trade flows, how are countries thinking about their partnerships for securing supplies – both on who/where supplies are coming from, as well some of the trends on purchasing arrangements with Japan-Korea, etc.
Tony Nash spoke about the overall longer term energy demand forecast and energy security strategies in Asia and the differences across sub-regions, such as China, India, Southeast Asia and Japan/Korea. Specifically, he discussed up-streaming sourcing activities as pivoting from the Mid-East to Asia, with the U.S. increasingly obtaining energy from Asia, coupled with a growing demand from China, Japan and India. Tangentially, Iran was also becoming a legitimate source of energy. With oil prices depressed, bargain investors were buying empty fields. While Asia was not quite at a “capitulation point”, the question of who will build Asia’s infrastructure loomed.
He predicted that, by 2019, Asia will have trillions more in wealth, surpassing US and Europe. The Asian governments will raise more taxes based on this wealth and will spend more on power generation and distribution. Asia has grown past the post-Colonialism era of old infrastructure and was ready to accommodate investors in such power generation. The Western influence in Asia is waning, and, once power is taken by the region, it will be less beholden to the World Bank. In fact, he thinks that China will outshine the US at the Paris Conference in December, and Asia generally, with its demand, will make markets. China’s rise is not at the expense of the U.S.’s (it’s not a zero-sum game), while Europe will be the loser in terms of economic power. China uses coal, but has also spent money on alternative energies, and India is likewise wrestling with similar issues as to how to best service its population. The U.S. should enable China to make a peaceful transition, and help it use its newly gained power effectively and efficiently.
Li Bin discussed how China is trying to accomplish its energy transformation and the policy decisions behind it. Given the energy transformation underway in China and the shift to strengthening its energy mix through both cleaner fuels and cleaner technologies, China has made substantial investments in its coal infrastructure, given that it still has a long-term demand for coal. Specifically, in response to Gillispie’s questions on how China could increase its efforts to manage emissions, while continuing to engage on cleaner coal technologies, he discussed China’s energy consumption that has shown modest increases over the last year in conjunction with slower GDP growth. Coal still accounts for 66% of consumption (with oil at 17%), but a bigger increase in nuclear energy is expected. On the production side, while energy was also being imported from other countries, coal still accounts for 74% of supplied energy (with oil at 8.4%).
Rather than substantially reducing coal consumption (since a move toward the more non-traditional energy sources, such as oil, natural or shale gas and nuclear power will take time to develop), Bin suggested changing the way it’s being used and improving the way it’s being burned. He also suggested that the government punish the pollution producers (which were industrial pollutants, like cars and construction sites, not necessarily power plants). He was not as concerned with energy security in an environment of low energy prices (which he remarked were set more by traders of the commodity than its producers) where the current supply levels were adequate. With respect to the climate change initiative, he was in favor of utilizing new technologies and thought China would substantially reduce coal consumption over time, and that presently it was more expensive to buy coal within China (due to corruption) than from Australia. He implored the U.S. to supply China with energy through long-term contracts, despite the political climate, so China does not obtain its supply from nearby Russia with plenty in reserves. And, with respect to the TPP (trade agreement), he hoped China would join, not because the U.S. wanted it to, but rather because it was in China’s interest to do so. Reforms are needed within China, with or without the TPP.
George David Banks discussed the status of U.S.’s shifting global energy market and, more specifically, the benefits of U.S. energy exports to U.S. foreign policy and national security. Free flowing trade of resources, technologies and services between market participants will maximize efficiency, achieve global climate change goals and stabilize the market against rogue actors. In response to Gillispie’s questions on the outlook and policy needs for strengthening North America/U.S.-Asia energy ties in respect of natural gas and crude oil exports and coal trade infrastructure, Banks spoke of the U.S. obstacles to plentiful supply in the region. He explained that the roots of energy insecurity and scarcity in the U.S. harkened back to the 1970’s when the U.S. was more interested in protecting and conserving its own energy supplies and resources. This “resource nationalism” policy prohibited the U.S. from even thinking about exporting as it deemed it more important to keep a competitive advantage for its own energy industry. However, it could, in fact, export energy if it wanted, and the U.S. could play a role in increasing security in the region by supplying it with various forms of energy (for example, Japan, South Korea and Taiwan were 90% dependent on energy imports). U.S. policy, in its energy restrictions, helped undermine the foreign trade regime.
And, the bigger issue, in his view, was that the current policy was shaped by environmental and climate concerns. This polarized non-bipartisan approach would have significant negative implications for the U.S. in the future. The current emerging gap between the supply needs of other nations and what the U.S. could provide impacts the U.S.’s ability to shape trade and finance policy. The Keystone pipeline topic is an example of how President Obama declined its development because he perceived the U.S. as having to be the leader in the environmental debate. In Bank’s view, the U.S. needs to reform its energy policy, consistent with a free trade approach, allowing continued access to reliable energy sources.