ASEAN’s Growing Industry Sector and Energy Challenges

The ASEAN industry sector plays a pivotal role in economic development, generating employment opportunities and contributing significantly to national revenue. This growth has made ASEAN a dynamic hub for industrial activities, driving rapid economic expansion. However, the industry sector is also the most energy-intensive, with its energy demand soaring from 93.9 Mtoe in 2005 to 150.5 Mtoe in 2020, largely reliant on fossil fuels, including from electricity (ASEAN Centre for Energy, 2022) . This poses environmental challenges linked to climate change and air pollution, jeopardising long-term energy security.

Despite efforts, only 15% of the industry sector’s total final energy consumption in ASEAN is derived from renewable sources, primarily biomass. The sector’s unique reliance on high-temperature processes makes it particularly resistant to decarbonisation. With global economic and population growth, the industry’s energy demand is projected to quadruple by 2050, hindering ASEAN’s pursuit of Net Zero Emissions by 2060.

Energy Efficiency as a low-hanging fruit: is it enough?

Enhancing industrial energy efficiencies is one of the well-established measure for curbing fossil fuel usage in the sector. One reason for this is due to energy efficiency measure being the cheaper alternative.  For comparison, ASEAN investment requirements for EE in industry is valued at USD 20.6 billion, whereas investments required for renewable end uses (biofuel) reach USD 38.3 billion, between 2018 – 2030, respectively (IRENA).

From the industrial perspective, energy efficiency also yields substantial cost savings through reduced energy expenditures and enhances productivity by minimising downtime associated with equipment maintenance or inefficient operations. Based on  statistics from the US Department of Energy shows that on average, businesses can save up to 30% on energy bills through energy-efficient measures.

Energy management system for example, is a common little to no cost modality introduced across ASEAN Member States (AMS), where mandatory policies and/or regulations has required energy intensive factories, buildings, textile industries, and other relevant sectors to implement energy management programmes and/or energy audit. Other policies include the enforcement of standards and labelling for electric motors, to push for a more efficient motor.

Even so, whilst certain measures to address efficiency are already in place, they lack effective implementation. The adoption of technologies with the highest possible efficiencies remains limited in ASEAN, where compared to industrialised countries, as they at times, still lack facilitated access to capital. The Covid‑19 pandemic has also exacerbated this limitation by creating liquidity stress and delaying investments in more energy efficient technologies.

Under the regional energy blueprint document – the ASEAN Plan of Action for Energy Cooperation (APAEC) Phase II: 2021 – 2025, ASEAN has set a collective target to achieve 32% energy intensity reduction target by 2025 based on 2005 levels, of which 24.5% was achieved in 2021 – indicating a slow, but steady progress on energy efficiency.

A potential cause for this stunt may be due to the rapid industrialization and economic growth of AMS which may outpace its energy efficiency measures, especially considering the ASEAN formula for energy intensity is measured by the ratio of TPES to GDP. This may be exacerbated by lack of stringent EE&C policy frameworks across AMS that often uses voluntary measures to implement the EE&C measures, or the lack of financial drivers and mechanisms to fund the uptake of clean energy efficient technologies.

Nevertheless, although energy efficiency efforts can achieve short to mid-term fossil fuel reductions, energy efficiency alone, even when it is fully implemented, cannot eliminate fossil fuel and achieve significant decarbonisation.

Synergising Energy Efficiency and Renewable Energy Efforts

Considering that most industries are electrified, energy efficiency is still more feasible for achieving a sustainable industry. However, it is a no-brainer that the addition of renewable energy penetration as a form of fuel switching, with the synergy of energy efficiency technology will enrich the decarbonisation efforts.

According to IEA, three-quarters of the energy used in industry in process heat, and the rest is for mechanical work and day-to-day operational electricity. About 48% of the process heat is high-temperature heat, which utilised for material transformation process. 30% and 22% of the process heat are low-temperature heat and medium-temperature heat.

The novel renewable energy technology for heating only able to support the low-temperature process, yet the product is uneconomical for commercial purposes. The alternative options through alternative fuels can be substantial but may raise concerns on its sustainability.

If both efforts can be simultaneously implemented, it will significantly contribute to lower energy intensity used, gradual renewable energy utilisation, and offer flexibility for innovation on cutting-edge renewable technologies. As technology cost decreases over time, potential of having more economics renewable-based heating will come greater. This is where continuous supports on research and development will be the catalyst.

Best Practices from Winners of the ASEAN Energy Efficiency Awards

The ASEAN Energy Efficiency Awards is a methodological support tool designed to provide public recognition for excellence in the field of energy efficiency and conservation. The awards aim to enhance awareness and encouragement to private sector participation in EE&C, specifically in buildings and industry.

One of the categories under the Awards is Energy Management in Large, and Small-Medium Industries. Winners from this category often include novel energy efficient technologies (i.e., utilising waste heat recovery system, reduce energy loss of reheating furnace by ceramic fiber coating, reduce energy consumption by using centrifugal air blower, etc.) as first measure, then coupled with renewable energy to fuel switch and hit the decarbonisation goal.

Examining the 1st Winner of the 2023 Energy Management in Large Industry Sector, for example, implemented its top five programs that give the most significant impact on decarbonisation: (1) Optimize Electric Supply from Grid instead of from Gas Turbine Generator, (2) Retrofit absorption chiller to magnetic levitation chiller, (3) Retrofit Package Boiler, (4) Implementation Condensate Recovery System, and (5) Signed a Renewable Energy Certificate (REC) sale and purchase agreement with electricity company to meet corporate renewable energy goals. As a result, 34% energy reduction (99.646 GJ/year), USD 1.59 Million cost savings, and 91% emission reduction was achieved in 2022, from 2018 levels.

Way Forward

Improving industrial energy efficiency is crucial to cut fossil fuel dominance and to meet decarbonisation goals. While effective, energy efficiency measures alone are insufficient. It is vital to integrate renewable energy into industries for significant decarbonisation. By synergizing energy efficiency and renewable energy efforts, industries can lower energy intensity, gradually increase renewable energy utilization, and foster innovation in cutting-edge renewable technologies.

Many roads can be taken to reach this synergy. ASEAN Industries may replicate the best practices from industry leaders under the ASEAN EE&C Awards that has demonstrated the potential of combining energy efficiency and renewable energy for a sustainable industrial future. In parallel, to clearly provide industries tangible guidance,  ASEAN policy makers may also be benefitted by developing a comprehensive energy roadmap tailored specifically to the industry sector that addresses the need for supportive policy packages to facilitate the integration of energy efficiency and renewable energy measures. Such a roadmap will serve as a strategic blueprint, guiding member states and related industries towards a greater sustainable industrial practices.

According to aseanenergy.org