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Welcome to the third edition of our Asia newsletter for 2024.
This month, we released analyses covering key recent developments in Asia’s energy transition across four key markets: Pakistan, South Korea, Japan, and Canada.
Here are some key findings:
At present, Pakistan has at least two virtual liquified natural gas (VLNG) projects underway. Yet, the economic viability of such ventures and their impact on the local consumer base remains unclear.
South Korean consumers were burdened with US$17 billion of additional costs for electricity in 2022 due to utilities’ overreliance on fossil fuels. The slow adoption of renewable power generation is a missed opportunity to reduce power prices and has increased South Korea’s exposure to environmental externality costs.
Japan’s demand for liquefied natural gas (LNG) has fallen rapidly in recent years, marking an important shift in global markets. The over-contracted position of Japan’s four largest utilities — JERA, Tokyo Gas, Osaka Gas, and Kansai Electric — could increase in the coming years.
The U.S. LNG export facility permitting pause should not be viewed as an opportunity for Canada to accelerate natural gas development, as factors like nuclear restarts in northeast Asia and energy restructuring in Europe are reducing gas demand.
This month, I also had the pleasure of spending time with our IEEFA leadership team to discuss all things energy transition, strategy, and management. When you work remotely, these in-person gatherings are precious.
We look forward to continuing this work and producing impactful research, analyses, and engagement to accelerate the energy transition.
Paige Nguyen
Regional Director, Asia Institute for Energy Economics and Financial Analysis
From left: Lea Glaze (Director of Human Resources); Tom Sanzillo (Director of Financial Analysis); Vibhuti Garg (Regional Director, South Asia); Paige Nguyen (Regional Director, Asia); Todd Leahy (Regional Director, North America); Amandine Denis-Ryan (CEO, IEEFA Australia); Sandy Buchanan (CEO, IEEFA); Arjun Flora (Regional Director, Europe); Sarah Weeks (CFO)
Latest Releases
South Korea's power trilemma
Michelle (Chaewon) Kim
March 21
This report examines how and why South Korea’s “power tariff trilemma” – the interconnected challenges of energy security, competitiveness and sustainability – has contributed to rising electricity bills, analyzing the root causes of high power prices through the lens of three key energy policy perspectives.
"The lack of competitiveness in South Korea's power sector hinders sustainability goals, undermining the transition to more affordable, reliable and clean energy sources."
Consumers may pay too high a price for virtual LNG ‘pipelines’ in Pakistan
Haneea Isaad
March 21
In a move aimed at diversifying its natural gas supply options, Pakistan appears to be considering setting up virtual liquified natural gas (VLNG) ‘pipelines’ across the country. At present, the country has at least two VLNG projects underway, yet the economic viability of such ventures and their impact on the local consumer base remains unclear.
“All things considered, the future of a virtual LNG pipeline network in Pakistan remains highly uncertain, caught between complex economics and the need for strict safety and environmental regulations.”
For most of the last 50 years, Japan has been the world’s largest, most important buyer of liquefied natural gas (LNG). However, Japan’s demand for LNG has fallen rapidly in recent years, marking an important shift in global markets.
“Rather than absorbing more volumes from the global supply pool, Japanese companies aiming to resell LNG may add to a looming global glut later this decade.”
Canadian LNG expansion does not make sense, regardless of U.S. LNG pause
Christopher Doleman & Mark Kalegha
March 4
Despite the U.S. LNG pause, Canadian LNG projects face an unstable future with increasing market risk, given the dwindling prospects for global demand growth and looming oversupply. In addition, barriers to Asia’s demand growth undermine the need for new West Coast export projects.
"Recent price volatility and supply disruptions have spurred developing Asian economies to second-guess the role LNG can play in their future energy mix."
Japan’s largest utilities—including JERA, Tokyo Gas, Osaka Gas, and Kansai Electric—are likely to face an over-contracted position of roughly 11 million tonnes per annum (mtpa) for the remainder of the decade.
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