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Energy transition in the Asian region

Marc Rathbone, Head of Oil & Gas for Asia at CMS, looks at the prospects in the Asia-Pacific (APAC) region

The drive towards energy transition in Asia has been at a more conservative pace than in Europe. 

There are many reasons for this, including the less-developed nature of some Asian economies prioritisation of gas/LNG infrastructure as opposed to wholesale renewable infrastructure; readily available and abundant base load energy sources (such as oil and coal); and the continued production of coal in the APAC region.

That said, statistically some of largest contributing countries to global renewable energy are the larger emerging and developed Asian economies. 

The drive to transition away from more traditional forms of energy - and reduce carbon emissions - is being led by some of the national oil companies and state-owned entities with underlying governmental influence that cannot be understated.

For example, Petronas is starting to introduce solar and wind development, clean hybrid and storage solutions and CCUS into its portfolio.  It has installed solar panels in some of its upstream and downstream assets to supplement their electricity usage and invested in SOLS a solar photovoltaic start-up (sustainable energy for SME/residential).

CNPC is going through a rebranding process to expand its portfolio to include wind, solar, geothermal and hydrogen offerings. It is trying to reposition itself as an Asian energy transition pioneer in a move that will include a zero-carbon emission target. To date it has invested in domestic offshore wind farms, a small geothermal plant and localised solar arrays for petrol stations.

There are many factors at play that could influence the pace of energy transition in the Asian market over time. These include European companies (already in transition) influencing their operations in Asia; leaps in technological development (hydrogen and battery tech); reduced availability of financing for coal/oil (as is already happening with some Asian banks); and a correlative rise in financial liquidity for renewable projects.

But as is the case in CEE (and other areas of the world) the greatest influencer will be the attitude and motivation of national governments towards transitioning away from coal and oil to cleaner sources of fuel (which would include gas and nuclear).  Without the right incentives and underlying legal frameworks the energy transition will not gain the needed momentum.