GAVIN MAGUIRE: Thailand’s use of gas risks slowing SE Asia energy transition

Littleton, Colorado — Thailand has jumped from 11th to eighth in the world ranking for imports of liquefied natural gas (LNG), after purchases through October soared 25% from the same period in 2022.

Thailand imported 22.9-million cubic metres (MCM) of LNG through October, compared with a record 19.8 MCM in all of 2022, data from Kpler shows, helping it crack the top 10 of super-chilled fuel importers for the first time.

Thailand’s robust appetite for LNG contrasts with substantial declines in purchases by other major importers in 2023, cheering key LNG exporters such as Qatar, Australia and Malaysia.

But Thailand’s voracious appetite for gas is a growing concern for supporters of Southeast Asia’s energy transition, as Thailand is viewed as a regional power that can influence others in terms of energy transition ambitions and strategies.

The main driver of Thailand’s LNG imports — which have jumped 127% since 2019 — is its gas-heavy electricity generation system. Natural gas has accounted for about 67% of Thailand’s total electricity generation in 2023, according to data from think-tank Ember. That compares with a gas share of about 30% for Southeast Asia as a whole, and around 10% for all of Asia.

Coal

Thailand’s gas-powered average is up from about 63% in 2022, as its power firms have increased gas-fired output in 2023 to offset a decline in coal’s share of the generation mix from nearly 20% in 2022 to about 16% this year.

Reduced coal output has helped cut Thailand’s coal-fired emissions by close to 2.5-million tonnes over the first eight months of 2023 compared with the same period in 2022, Ember data shows.

But lower coal emissions have been more than offset by a nearly 5-million tonne jump in emissions from gas-fired power generation over the same period.

As a result, Thailand’s total power sector emissions have climbed to new highs in 2023, despite curbs to coal generation, raising concern for climate trackers hoping for region-wide efforts to reverse emissions trends.

As the second-largest Southeast Asian economy behind Indonesia, Thailand is viewed as a regional bellwether in terms of overall economic momentum and energy transition potential.

Indonesia, the world’s largest thermal coal exporter, has for decades relied on its domestic coal mining sector to provide fuel for its power stations, and uses coal to generate about 62% of its electricity.

Thailand has historically been a notable natural gas producer from wells in the Gulf of Thailand. But depleting reserves combined with fast-growing demand for energy have meant that Thailand has been a net gas importer for more than 20 years, according to the Energy Institute.

Renewables

That import dependence has historically raised expectations that Thailand would become a prominent developer of renewable energy sources, especially given the abundant sunshine it enjoys and extensive coastline suitable for wind power. However, Thailand has been one of Southeast Asia’s slowest developers of solar and wind energy supplies, which account for less than 5% of its total generation.

Vietnam, by contrast, sources over 13% of electricity from solar and wind, while in Asia as a whole that share is around 11%.

Thailand also uses bioenergy facilities and hydro power to generate clean electricity but has prioritised the development of additional natural gas generation capacity over other sources.

Since 2015, natural gas capacity expansions have accounted for 72% of Thailand’s total increases in electricity generation capacity, Ember data shows.

Coal has accounted for an additional 2% of capacity growth since 2015, and has ensured that Thailand ranks higher than even Indonesia in terms of the share that fossil fuels have in electricity production.

Such a high reliance on fossil fuels has alarmed climate trackers, who worry that others may follow Thailand’s lead and remain heavy users of fossil fuels despite global support for transitioning energy systems.

Tracking progress

A key solace for transition advocates is that the development of new electricity generation capacity may be more important than historical capacity development trends.

All Southeast Asian countries have pledged to accelerate renewable energy development, with Thailand targeting non-fossil fuels to supply 35% of its needs by 2037, according to its latest power development plan. To achieve that, renewable generation capacity must rise sharply and overshadow the growth rate of fossil fuel capacity for the next decade at least.

Such a pace would in turn result in a slowdown in Thailand’s imports for LNG. For the near term, however, the strong growth pace of Thailand’s LNG imports suggests fossil fuels have most of the expansion momentum in Thailand’s energy system.

Reuters