Alternative energy: Beware hidden costs

Updated On: Jul 22, 2006

ASIAN governments are caught between an ever-increasing demand for cheap energy to fuel development and an unabating rise in global oil prices. A few South-east Asian governments are feeling the financial pain of costly fuel subsidies and are looking else- where for energy sources.

The hunt for alternative energy sources has led Asian nations to explore nuclear energy and biofuel technology, among others. Their widespread use is not yet clearly viable, nor has the cost of implementation been easy to stomach for government budget planners.

Media and investor hype, lauding the merits of adopting renewables along with pro-active government claims of 'going nuclear' and embracing biofuels, may obscure important non-economic issues.

Pursuing the nuclear option

ASIAN countries going nuclear will help fulfil rapidly increasing domestic power demands without the greenhouse or acid rain effects from burning fossil fuels. Japanhas the third-largest nuclear generation capacity in the world, with 47.6 gigawatts as of June this year, while South Korea occupies 5th position with 16.8 gigawatts (Nuclear Energy Institute). Both countries aim to expand their nuclear capacity by 60 per cent, by 2035 and 2050, respectively.

In South-east Asia, Indonesia is capturing the headlines with a US$8 billion (S$12.7 billion) project to build four 1,000MW nuclear power plants as part of a 4,000MW overall capacity plan by 2016. Vietnam recently announced plans to install two nuclear reactors to sustain the country's power needs by 2020. A July 12 Bernama report also noted Malaysia's interest in using nuclear technology to generate electricity.

Several concerns stand in the way of a successful nuclear option strategy. Lessons should be drawn from the veteran players in the region.

Japan's experience had not been picture-perfect, with the 1999 Tokaimura and 2004 Kansai incidents that saw problems with maintenance and falsification of safety records.

The greatest obstacle lies with nuclear waste (spent fuel) disposal. South Korea took 19 years to dispose of its low-level waste properly, and Taiwan is experiencing similar problems.

Indonesia faces strong resistance from the public and non-governmental organisations such as the Walhi environmental group. The country's inadequate infrastructural and institutional framework, as well as poor protection mechanisms against natural disasters, render facility location a major problem.

Elsewhere, Myanmar's participation adds a sinister twist to the otherwise benign nuclear energy plot that Asean has enacted thus far. A July 5 Australian media story reported Myanmar's recent bid to procure nuclear weapons from North Korea, following an unrealised deal with Russia in 2002.

Issues such as safety and disposal of nuclear waste need to be thought through and debated to raise awareness. Governments should also give a more complete calculation of the cost and benefit of nuclear energy.

The biofuel alternative

BIOFUEL is uniquely appealing to Asian governments interested in decreasing fossil fuel dependence in the transport sector. Production would engage existing national agricultural industries, namely sugar, coconut, cassava, castor kernel and oil palm plantations.

Giving a boost to the large number of farmers in the region is good politics for South-east Asian leaders, so policymakers are devoting much airtime and funding to the biofuel cause.

Biofuel technology has taken two paths of development:

·  bio-ethanol gasoline, or 'gasohol', from food crops like sugar and cassava;

·  biodiesel, from oil-producing crops like coconut, castor kernel and oil palm.

ThailandIndiaChina and Japan have all launched national gasohol policies, and work is under way in the Philippines and Indonesia to also 'go gasohol'. Thailandhas the longest-standing programme in gasohol, started in 1985, and now has more than 4,000 stations serving the alternative fuel. The blending of 10 per cent ethanol into gasoline will be mandated by year-end, with an import ban on MTBE, the petrol-based fuel additive that ethanol replaces.

Japan's Environment Ministry is following suit, recently proposing a plan to require the car fleet to use 10 per cent ethanol fuel by 2030, which will help the nation meet its strict Kyoto Protocol targets. In China, the government is making 10 per cent ethanol blends mandatory in five provinces, which accounts for 16 per cent of the nation's passenger cars. This is part of a new national energy policy unveiled in January, requiring China to boost renewable consumption to a fifth of total consumption by 2020.

Biodiesel initiatives are under way in the Philippines ('cocodiesel'), ThailandMalaysia and, in very early stages, Singapore.

Most recently, and with much fanfare, the Indonesian government announced its new focus of biofuel. The Minister of Energy unveiled on July 13 the country's intention to raise and invest 200 trillion rupiah (S$35 billion) over the next five years for biofuel production and distribution.

Indonesia is particularly focused on biodiesel production from palm oil. According to an earlier announcement by the Ministry of Agriculture, three-quarters of the biofuel production funds for the next five years, or 51 trillion rupiah, will be used for palm oil production.

Indonesia is keen to replicate the success of the Malaysian government's Envo Diesel programme which, despite hiccups, is expected to produce up to 500,000 tonnes of biodiesel made up of 5 per cent palm-oil-derived diesel and 95 per cent petroleum-derived diesel.

Malaysia announced guidelines to its biodiesel policy last August, and the buzz is already attracting interest from foreign businesses and governments seeking to set up plants for large-scale production.

The social and environmental benefits of a biofuel industry in South-east Asia as a whole require thorough scrutiny. Though a few projects would make use of existing agricultural land or abandoned farmlands, there is also a possibility that virgin forest would be cleared for new plantations.

More carbon emissions?

THIS is bad news, and not only for the region's already threatened forests. It also nullifies any emission reductions provided by the use of biofuels. In a comparison of cumulative carbon dioxide emitted in the life cycle of a fuel - from production to distribution to final use in a car engine - biofuel from cleared forest land actually outstrips petrol fuel in its carbon dioxide intensity because of the massive loss of carbon dioxide absorption capacity when virgin forest is cut down.

The second issue with land use is the possibility that fuel source plantations will compete with food crops. With malnutrition and under-nutrition being major concerns in the region, it seems morally ambiguous to choose biofuel at the expense of the basic food needs of South-east Asian people.

Use of jatropha, which is normally processed to create castor oil, for biodiesel seems like a less controversial and more far-sighted option for South-east Asia, as the plant grows in poor soil and will thus not compete directly with food crops. Jatropha plantations for biodiesel are under way in four regions of Indonesia, and have had success in parts of India.

While the general impulse of governments in response to rising oil prices and in search for energy security has been to seek 'alternative' energy sources or 'solutions', equal emphasis should also be placed on conservation efforts. These can be achieved through capacity building and effective regulatory measures to discipline energy consumption behaviour - without which, any national energy security strategy will be incomplete.

By Gavin Chua Hearn Yuit and Jardine Wall, The Straits Times (Review), 22 July 2006 [reproduced in Channel News Asia, 28 July 2006 and International  
Institute for Sustainable Development's (IISD) Subsidy Watch (September 2006 issue),