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close this bookThe Global Greenhouse Regime. Who Pays? (UNU, 1993, 382 p.)
close this folderPart III National greenhouse gas reduction cost curves
close this folder11 Thailand's demand side management initiative: a practical response to global warming
View the document(introduction...)
View the documentIntroduction
View the documentEnd-use energy efficiency policies
View the documentCosts and benefits of the DSM master plan
View the documentCO2 reductions from the DSM Plan
View the documentWhy should other developing countries adopt DSM?
View the documentThe role of the multilateral development banks
View the documentConclusions
View the documentReferences

Introduction

Today, Thailand's power sector accounts for nearly 33 per cent of the country's total carbon dioxide (CO2) emissions. During the next decade, the power sector will surpass transportation as the major source of CO2 emissions in Thailand. By the year 2011, we project that the sector will account for 43 per cent of Thailand's CO2 emissions.

To keep up with the rapidly rising demand for electricity, the Electricity Generating Authority of Thailand (EGAT) is planning to more than triple its capacity over the next fifteen years, from 10,000 to more than 30,000 megawatts (MOO) by 2006. Most of the new plants being built will burn lignite and coal. This trend will lead to greatly increased emissions of carbon dioxide and other greenhouse gases.

Here we focus on the potential for reducing CO2 emissions in the power sector, since this is one of the most rapidly growing sources of such emissions in Thailand. It is also the sector for which there are the best data on costs and associated CO2 reductions. The cost of conserved carbon (CCC) for residential electricity conservation measures ranges from negative US$155 to positive $41 per tonne of carbon as CO2 equivalent in the year 2001. The average CCC for a comprehensive electricity conservation effort covering all subsectors (industrial, commercial, and residential) may be even lower, around negative $190 per tonne of carbon.

At present, there are inadequate data to enable similar analyses for the transportation and industrial sectors. In the future, work needs to done to apply the principles used here to perform analyses of the technical potential and cost feasibility of CO2 reduction measures in the transportation and industrial sectors as well.

We also describe the crucial role that the multilateral development banks can play in providing the financial, technical, and policy support necessary to seriously address the problem of growing CO2 emissions in rapidly industrializing countries.

Even if current predictions of global temperature rise are overstated, the economic impacts of continued high rates of growth in energy use worldwide will be untenable. The World Bank estimates that developing countries will require an average of US$100 billion annually just for capital expenses in their power sectors alone during the next decade. The amount needed over the next three decades is an estimated $4 trillion. Foreign exchange currently pays for about 38 per cent of these capital expenses. Yet only $10-12 billion per year is expected to be available from multilateral and bilateral agencies, the main providers of foreign exchange for electricity supply projects (Philips 1991). A shift to cleaner, cheaper fuels and improved energy efficiency will reduce the debt burden of developing countries, and thus yield additional societal benefits besides just reducing emissions of greenhouse gases.

Shift in Thai CO2 emissions

Thailand is not currently a major contributor to global warming, in terms of emissions of carbon dioxide and other greenhouse gases. The World Resources Institute has estimated that Thailand emits 1.2 per cent of the world's total of greenhouses gases (125 million of a total of 10.6 billion tonnes of C annually as CO2 equivalent (SKI 1992)). In 1987, Thailand emitted 1.3 tonnes of carbon per capita, matching the world average (SKI 1992). By 1990, Thailand's CO2 emissions had declined to about 0.98 tonnes of carbon per capita (TTCGE 1991).

Increases in CO2 come from two major sources: deforestation, which increases CO2 emissions directly and also reduces the uptake of CO2 from the atmosphere; and fuel combustion, which emits CO2 directly into the air. In the past, deforestation was by far the largest cause of Thailand's CO2 emissions. As Thai forests are depleted and energy use increases, however, fossil fuel combustion will rapidly become the dominant source. In the near future, as Thailand's economy expands and its burning of fossil fuels grows, so too its contribution to global warming will increase. The U-shaped curve of total CO2 emissions implied by Figure 11.1 tells the story.


Figure 11.1 Thailand's net CO2 emissions from deforestation and fuel consumption

In Thailand, the ratio of CO2 emissions from deforestation to emissions from fuel consumption has declined dramatically from 13.7 in 1979 to nearly l in 1991. CO2 emissions from fossil fuels are expected to rise fourfold over the next 20 years, to 100 million tonnes by 2011.

The transition from deforestation to fuel consumption as the main source of CO2 emissions is a possible pattern that will occur in other countries with formerly abundant forest reserves - that are on the road to industrialization. The drop in the amount of CO2 released due to deforestation in Thailand's case has two primary causes: reduction in the amount of remaining forests and the nation-wide logging ban instituted by the government in January 1989. The large increase in fuel consumption will come from two main sectors: transportation and power. This chapter focuses on the potential to reduce greenhouse gas emissions from the rapidly growing power sector.

Thailand's policy responses to global warming

During the preparations for the United Nations Conference on the Environment and Development (UNCED) in Brazil in June 1992, Thailand's government showed significant interest in international environmental issues, and particularly in addressing global warming. In addition to hosting a series of high-level international conferences on the environment, the government attempted to identify the most effective response strategies at its disposal for dealing with climate change. Thailand's national report to UNCED concluded that the country's most significant contribution will be a comprehensive set of energy conservation programmes that, if aggressively pursued, could reduce projected increases in Thai CO2 emissions from the power sector by more than 2.5 million tonnes of carbon annually over the next decade (TTCGE 1991).

Thailand's energy picture

The agency responsible for setting the direction of Thai energy policy is the National Energy Policy Council (NEPC), a cabinet-level committee that sets the policies governing fuel and electricity. The operating arm of the NEPC is the National Energy Policy Office (NEPO), which is under the Office of the Prime Minister. NEPC is responsible for overseeing the kingdom's three electric utilities, the Electricity Generating Authority of Thailand (EGAT), the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA).

EGAT is a state-owned enterprise that produces virtually all of Thailand's electricity. MEA and PEA distribute electricity provided to them by EGAT. They are state enterprises under the direction of the Ministry of Interior.

The agency charged with taking the lead on energy conservation and renewable energy activities is the Department of Energy Development and Promotion (DEDP), which is under the Ministry of Science, Technology and Energy. In summary, NEPC and NEPO develop energy policies and the electric utilities; DEDP, and other institutions (for example, the Petroleum Authority of Thailand) are responsible for implementing those policies.

Thailand's primary energy use grew at an average annual rate of 13.4 per cent between 1985 and 1990. The rapid, sustained growth is due to the overall pace of growth of the economy and expansion of industrial, construction, and transport activities. The Seventh Economic Plan projects an economic growth rate of 8.2 per cent from 1992 to 1996. It is expected that energy demand will grow at an even faster rate, for example 10.3 per cent in the power sector (NEPO 1991).

Transportation accounts for the largest share of primary fossil fuel demand at about 30 per cent, followed closely by the power sector (29 per cent) and the industrial sector (20 per cent) (see Figure 11.2). Energy use in the power sector is rising faster than energy use for transportation, however. By 2006, power generation will account for some 37 per cent of Thailand's primary fossil fuel demand, compared to 35 per cent from the transport sector (TDRI 1991). To keep up with the rapidly rising demand for electricity, EGAT projected in 1990 that its installed capacity in the year 2006 would have to reach 24,900 (EGAT 1990). The estimate was recently revised upward to more than 30,000 MW (EGAT 1992).


Figure 11.2 Thailand's primary fossil fuel demand, by sector

Sources of CO2 emissions

Petroleum is the largest fuel source in Thailand, accounting for 56 per cent of primary energy demand. Most of this fuel is used in the transportation sector, which contributed 40 per cent of Thailand's CO2 emissions in 1991. The next largest sources of CO2 emissions are the power sector (33 per cent) and industry (15 per cent). During the next decade, the power sector will surpass transportation as the major source of CO2 emissions in Thailand. By the year 2006, we estimate that the power sector will account for 43 per cent of Thailand's CO2 emissions from fuel consumption (see Figure 11.3).

Thailand's policy is to promote the use of domestic energy resources in order to reduce the burden on the country's balance of payments. Domestic energy resources comprise gas, lignite, biomass (including fuelwood) and hydropower. The use of fuelwood and hydropower is unlikely to grow significantly, due to the government's efforts to encourage reforestation and to growing public opposition to the building of dams.

The implications of this strategy of relying on domestic and inexpensive energy resources can be seen most clearly in the power sector. In 1991, oil and natural gas together accounted for 66 per cent of electricity generation. By 2006, a complete shift will have taken place. Oil and gas together will account for just 36 per cent of primary energy supply to electricity generation, while coal and lignite will make up 55 per cent. Lignite is readily and cheaply available in Thailand. Coal, while not mined locally, is available in the region (from Australia and Indonesia) and its price is expected to remain stable because of the large available resources.


Figure 11.3 Thailand's CO2 emissions by sector, 1997 and 2006

In the power sector, where most of the lignite and coal is used, consumption will rise more than fourfold - from 11.6 million tonnes in 1991 to 49 million tonnes annually in 2006 (EGAT 1990). In Figure 11.4, we show the dramatic shift in fuel mix that will occur in the energy and power sectors. Two 1,000-MW nuclear plants are scheduled to come on line in 2006, with four more units following soon thereafter.