Data has shown that Asia-Pacific’s supply is secure despite Europe’s ongoing power crisis, mostly because coal is still widely used in the region.
Since the region’s liquified natural gas supplies are being sent to Europe, power plants in Asia have less access to LNG. They also can’t afford to buy more expensive LNG because of Europe’s strong demand.
Europe has a gas shortage because Russia has cut back on its supply. As winter approaches, this is putting many countries in an energy crisis.
The National Grid in the UK has issued a warning about potential blackouts.
Tuesday, when it announced new steps to fight rising energy prices, the EU didn’t go along with a suggestion to put a cap on the price of Russian gas.
In the past, Russia threatened to stop all fuel exports to the EU if the bloc enforced these limitations, which would reduce Russian income and the price of goods.
According to S&P Global’s chief energy strategist, Atul Aryal, while the European financial crisis and the conflict in Ukraine have increased fuel costs globally, Asia’s energy production has not been negatively impacted.
According to Arya, “Countries in Asia are utilizing coal instead of gas because coal is here, coal is domestic, and coal is less expensive.”
The drawback is that Asia has temporarily ceased increasing its gas consumption.
Gas is less important to Asia than it is to Europe, which depends on it to provide energy. According to Alex Whitworth, head of Asia Pacific power & renewables research at Wood Mackenzie, it makes up just 11% of the country’s total energy mix, with most of the gas coming from domestic sources.
Despite declining, coal still makes up a higher share of the mixture, according to Whitworth. According to him, coal accounts for more than 60% of the power generated for markets in Asia and the Pacific.
We are going to see more of a drive to increase the supply of fossil fuels and consequently the reliance on these dirtier fuels because the deployment of renewables takes time and won’t reduce security concerns in the short term. Richard Patterson, ECONOMICS, ING
Separately, Asia’s imports of LNG have decreased as a result of high costs.
Asia’s imports of spot or short-term LNG decreased 28% in the first eight months of this year compared to the same period last year, according to the International Energy Agency’s most recent gas report. Overall LNG imports decreased 7% compared to last year.
China is now the world’s largest LNG importer, and its imports decreased the most by 59%. According to the IEA, LNG imports to Pakistan, India, and Japan all decreased by 17%, 73%, and 22%, respectively.
The agency noted that in addition to high pricing, other factors discouraging Chinese consumers included the nation’s faltering economy, warmer winters, and a robust domestic coal and gas industry.
In spite of efforts to minimize the use of fossil fuels, these variables have created chances for increased coal use in Asia. According to the Institute for Energy Economics and Financial Analysis, Korea Electric Power Corporation has recently began using more coal.
Data from IEEFA indicated that although the company used roughly 26% more coal in July this year than it did the month before, it was still less than it did in 2017.
“According to KEPCO data, power generation from both coal and LNG has decreased since May as a result of increasing pricing year over year. But coal power generation has clearly increased month over month,” IEEFA energy finance analyst Ghee Peh remarked.
As a result, Korea, which uses more gas than other Asian economies save for Japan, has been forced to compete with Europe for scarce gas. But Whitworth said that they are safer than Europe because they have easy access to supplies at home.
In other words, Asia has stronger energy security because of its reliance on coal and relative lack of reliance on gas imports.
According to ING Economics’ head of commodities strategy, Warren Patterson, fewer LNG supplies and higher prices generally indicate that some nations would have to rely on relatively “cheaper and dirtier fuels.”
Given that several of these economies are significant net energy importers, Patterson said, “One would assume that the high fossil fuel price environment will speed up the green drive from governments across Asia.”
But it is clear that using renewable energy takes time and won’t solve security problems right away.
Because of this, there will probably be more work to make fossil fuels more available and lessen our reliance on them.
Asia’s energy supply appears safe, despite Europe’s frantic efforts…
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