Growth in energy consumption is closely tied to economic growth, infrastructure development and improved standards of living. Energy security stands at the crux of critical policy issues in the Southeast Asia region, not least of which includes military modernisation, maritime security and environmental policy. The energy security strategies of states across the region, if not working in cooperation with each other, could have severe geopolitical and economic repercussions in a region where high food and oil prices threaten economic recovery and human security. This is particularly significant as the region heads towards increased connectivity through the establishment of an Association of Southeast Asian Nations (ASEAN) Economic Community by 2015.
Asia Pacific Economic Cooperation (APEC) member economies together account for more than 60 per cent of global energy demand and around 40 per cent of the world’s population. As a consequence, international oil supply disruptions and oil price spikes, and their effects on the economies of the region, are a substantial anxiety. The increase in consumption and its growing rate poses the question of how the region will diversify sources of supply, build reserves and capitalise on energy-related assets.
Southeast Asian governments recognise that the supply and demand of energy resources in Asia has a direct impact on the economic and political development of the region as a whole, although a concerted level of political engagement towards cooperation has been limited. Regional rivalry over resources, military posturing and diverse political systems has increased Asia's energy security vulnerability.
ASEAN and energy security
In order to ensure stable, cost effective and sustainable supply of energy based on an efficient energy supply system, emergency preparedness and international cooperation, there is an impending need for ASEAN to formulate more integrated structural and technological responses through intergovernmental cooperation. Moreover, as the region becomes increasingly exposed to China's power as it matures economically and becomes more confident diplomatically and militarily, there will be increased impetus throughout both the short and medium term to solidify energy cooperation and wider policy cohesion.
While there has been broad recognition of the need to construct a better framework of energy cooperation over the past decade, it should be noted that progress has accelerated in the past year. Energy is beginning to move to the forefront of the plans for the transformation of ASEAN into a stable, rules-based and competitive economic community by 2015 - formulated as an ASEAN Economic Community (AEC) blueprint at the 2007 Singapore Summit. As a follow-up, ASEAN developed the Plan of Action for Energy Cooperation (APAEC) 2010-15 under the components of ensuring a secure and reliable energy supply for the region, the promotion of cleaner coal use, energy conservation, and renewable energy including biofuels and nuclear power. The ASEAN Economic Community 2015, according to its formal blueprint, intends to establish a single market and production base, a competitive economic region, a region of equitable economic development and a region fully integrated in the global community.
Despite repeated claims of commitment to energy cooperation and sustainable development, obstacles relating to the scope and impact of the regional organisation cannot be ignored. ASEAN member states often prioritise immediate economic growth and are susceptible to developing and exploiting resources in return for short or medium term gains. With many power generation and energy companies state-owned, the sector can be a lucrative and immediate source of national income. There is also the basic admission that member-states have such diverse political systems, that cooperation is often very difficult. In ASEAN, geographical area is paramount to domestic systems.
Energy plays a crucial role in economic development and will remain critical to the continued economic growth of the ASEAN region. Under the current ASEAN Plan of Action 2010-2015, greater emphasis has been placed on accelerating the implementation of the previous two Plans of Action which allowed for Trans-ASEAN Gas Pipeline (TAGP) and the ASEAN Power Grid (APG), both of which are expected to encounter continual financial and legal complexities.
Although ASEAN has set out various types of ‘communities’ under its mandate, including socio-cultural and political, that it wants to establish in the medium term, it is likely the ASEAN Economic Community 2015 has the best chance of success, and thus there are notable prospects for energy cooperation. Moreover, ASEAN's prospects of integration appear to be improving with the growing view of China as an external threat requiring a degree of banding together by member states.
Tensions over the resource-rich South China Sea in response to China's designation of the entire maritime area as part of its indisputable sovereignty has served as a facilitator for a more proactive regional response that emphasises international law-based integrated and diplomatic resolutions that may be progressively translated throughout the organisation and increasingly towards energy cooperation.
Author: Brittany Damora, AKE Risk Consultant and Intelligence Analyst. www.akegroup.com
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