BANDAR SERI BEGAWAN
Wednesday, May 2, 2012
PETRO-STATES like Brunei have to look at ways of diversifying their economies, a study conducted by the World Economic Forum (WEF) states.
In the paper "New Energy Architecture: Enabling an effective transition", which was released last month, the WEF said that countries that capitalise on their hydrocarbon resource base depend on oil and gas exports heavily to boost their economies.
This in turn puts a heavy toll on the environment and the economies, it added.
Brunei, Saudi Arabia, the United Arab Emirates, Iraq, and Kazakhstan, among others, are categorised by the WEF study as "capitalise" countries, or those with large hydrocarbon reserves and have the energy infrastructure to focus on sustainable ways of harnessing them. Referred to as petro-states, countries under the archetype typically export oil and gas.
"Key opportunities for these countries involve diversification of economies and leveraging experience to enable expansion across the energy value chain," the study states.
It adds that "options with regard to maximising energy sector returns are not necessarily sustainable", and that they must be "carefully considered and executed to ensure co-benefits across government, society and environment".
It notes that these countries often rely on oil and gas exports to generate economic growth and maintain social stability, often taking a heavy toll on their environment and resulting in large fuel subsidies.
These countries, the study states, run the risk of a range of economic problems, including Dutch Disease, where oil exports push up prices and harm other industries.
Heavy focus on oil and gas could also divert capital earmarked for other investments, the study notes, adding that "reform fatigue", where structural economic problems are not tackled due to potential future wealth, may also affect these countries.
"The common challenge for these countries is to ensure that the opportunities for longer term economic development are not lost to economic distortion and ensuring political and social pathologies," the study states.
The WEF study covered 124 countries, which were categorised into four archetypes. Aside from the "capitalise" countries, the other archetypes are: "rationalise" countries, or mature economies, mostly members of the Organisation of Economic Cooperation and Development, that focus on reorganising their energy architecture to balance the needs of the environment, government and society; "grow" countries, such as China, which are focused on securing energy supply in light of rapid economic growth; and "access" countries, like Cambodia and Bangladesh, which struggle with providing its people with basic energy needs at affordable prices.
The study categorised the countries based on their economic growth and development, including energy intensity or the amount of energy they use to produce a unit of gross domestic product, the cost of energy imports, and a combination of GDP and human development index, among others; environmental sustainability; and energy access.
The study aims to present trends that are common to groups of countries with similar needs and objectives, to enable policy-makers to understand the broader consequences of their actions and the trade-offs they entail. It also presents ways for countries to effectively transition into a "new world energy architecture" according to their archetypes, given the radical shift in the way the world sources, transforms and consumes energy.
Data from the study show that the world will need US$38 trillion worth of investments in energy supply infrastructure between 2011 and 2035.
It also points out that global cost of fossil fuel consumption subsidies will reach US$660 billion in 2020 if reforms are not instituted, from US$409 billion in 2010.
World energy consumption, meanwhile, is expected to grow by 40 per cent between 2009 and 2035.
Dipetik dari - The Brunei Times
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