Understanding the Energy Investment and Infrastructure in Asia

The energy sector in Asia has been dynamic and diverse for the past few decades. The region is home to many of the world’s top energy-producing countries, such as China, India, and Indonesia. In addition, Southeast Asia is one of the fastest-growing regions of the world with an increasing share of global economic growth. As one of the most dynamic and promising regions in the world, Asia is attracting investments from many large international corporations. Here, are some important facts on energy investment and infrastructure in Asia.

The primary challenge of the global energy transition is to make it cost-competitive with fossil fuels. After several decades of growing use of oil, the rapid transition from a peak in oil production to a new peak is challenging. Oil use will peak in the next 10 to 20 years and will grow by an annual average of 1.6 million barrels per day (b/d) over the period from 2035 to 2060. This is significantly less than the average growth of the past 50 years.

This will be the “new normal” and average demand will gradually fall. However, demand is now starting to be replaced by other energy sources, which, in most cases, are considered cleaner than oil.

Asia is the largest source of energy-hungry consumers in the world, and demand for energy in the region is expected to grow rapidly in the future. For instance, by 2050, the region’s demand for energy will be almost five times that of today. Hence, Asia will be the primary driver of energy-related investments for the next two decades.

Asia’s increasing demand for energy is a result of rising levels of prosperity and rapid urbanization. Moreover, Asia has seen rapid industrialization, demographic and economic growth, the emergence of a consumer class, and rapid improvement in health and education standards. The region is facing challenges, such as air pollution, a growing population, and rapid climate change, which could limit the growth in oil demand and impact the Asian economy.

The Asian energy industry is being supported by growing economies, which account for more than half of global GDP growth. Many countries in Asia, such as China and India, are progressing from being oil importers to being exporters. Meanwhile, Southeast Asian countries are also starting to import oil, which will give them a chance to export their resources. Countries in this region have been undertaking large-scale expansion of their renewable energy and storage technologies to achieve a sustainable energy mix. Japan, for example, is continuing to develop a renewable energy portfolio, which consists of biofuels, solar energy, and the development of electric vehicle charging stations.

Asia’s renewable energy investment is projected to grow faster than the global average in the coming years. It is expected that Asia Pacific investments in renewable energy generation by 2030 will rise up to $1.3 trillion. According to the Energy Information Administration (EIA), Indonesia, China, India, and Japan are the top four countries that are investing in renewables.

Nuclear power is one of the major electricity generation options in Asia. Among the countries in the region, Japan is one of the most prominent nuclear power producers with a major contribution in generating electricity. According to the World Nuclear Association, nuclear power plant construction in Asia increased to 35 units in 2019.

Over the past two decades, Asia has continued to grow at a rapid pace in terms of economic output, population, and energy consumption. As a result, Asia is projected to have the second-fastest growth in energy demand in the world by 2035, despite an expected decrease in energy demand in the United States and Europe. Most of this growth will occur in developing countries in Asia, as emerging market demand grows from between 4.4 to 6.6 percent per year through 2035, while growth in developed markets in Europe and North America declines from 3.3 to 3.1 percent. As a result, the energy demand in developing countries in Asia will continue to grow rapidly, while the demand in developed markets will decline.