U.S. needs new initiatives to seize energy investments in SEA: CSIS

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In a recent report, the Center for Strategic & International Studies (CSIS) has described the United States as losing its footing as the Southeast Asia’s largest trading partner. This is in part due to increasing intra-regional trade and can also be attributed to a rising China.

The report, “Sustainable Energy Futures in Southeast Asia”, aims to bridge government and business initiatives in meeting fast-growing energy needs in Southeast Asia, which the Asian Development Bank said will be the next big growth engine with a combined GDP of more than $2.8 trillion dollars and half a billion of the world’s population.

CSIS, a think tank which focuses on issues ranging from energy and climate to global development and economic integration said that with more than $165 billion worth of investments, the U.S. continues to play an important role in oil and gas development in the Asia, but is increasingly losing out to Japan, Korea and China, which offer much better credit and financing terms.

As recently as 2004, the U.S. was Southeast Asia’s biggest trading partner, with two-way trade reaching $192 billion, but since then has been rapidly losing market share to China. Today, the U.S. ranks as the region’s fourth largest.

Given suitable financing, however, it could still compete with foreign firms actively pursuing investment opportunities in Asia. Indonesia, Malaysia, the Philippines, Thailand, and Vietnam - which CSIS terms the ‘ASEAN-5’ - have all developed plans to include significant spending in energy infrastructure such as power generation facilities, energy distribution and smart grid technology.

These developments are in line with Southeast Asia’s projected capacity increase of 20 percent - or 24 gigawatts - needed to support rapid economic growth. Increased spending signals potential sales of as much as $16 billion dollars of energy equipment exports for U.S. companies. However, CSIS said that the companies are unlikely to capture gains unless the government launches new initiatives to seize shares of this investment.

Rising demand has meanwhile increased the ASEAN-5’s reliance on conventional fossil sources, and imports of vast amounts of fossil fuels in particular coal have offset the governments’ efforts to incorporate the use of renewables.

According to the report, countries such as Indonesia and Vietnam are rapidly becoming a major source of greenhouse gas emissions, and will continue to do so until alternatives such as nuclear provisions are in place. While some of the ASEAN-5 nations anticipate nuclear becoming part of their energy mix, it remains in large part a stigma in the region.

The environmental and energy policies of the ASEAN-5 would have major implications, CSIS said, but on the whole it found that energy policymakers in Southeast Asia are headed in the right direction. This forms the basis of the various recommendations that it has proposed for Asian governments.

CSIS recommends that governments reduce or cut altogether energy subsidies that deprive energy utilities and government budgets of revenue that could be used to upgrade energy infrastructure, as well as to step up efforts in exploring the construction of a trans-ASEAN gas pipeline and power grid, and fostering a strong investment climate and energy efficiency.

More importantly the governments should to cooperate with the United States and others in regional economic groupings such as APEC and the TPP trade negotiations to reduce tariffs and non-tariff barriers on energy and environmental goods and services.

The full report is available for download and purchase at:http://csis.org/publication/sustainable-energy-futures-southeast-asia

BY : CSIS