Thailand's green energy, green growth revolution?

CRS Asia 25 July 2009

Richard Welford

I have been in Thailand this week and certainly the economy is being badly hit by the general economic downturn and a major slump in tourists who evidenced the conflicts earlier in the year. In difficult economic times, reducing the costs of doing business is more important than ever and in today's Bangkok Post there is an article pointing out that electricity and energy costs in general are a significant burden for most companies in the country. Last year the nation spent 1.2 trillion baht (US$35 million) on imported energy, which represents almost 14% of gross domestic product. So the article points to a new green energy strategy, developing alternative or renewable forms of energy, such as biomass, biogas, ethanol-based oil, biodiesel, natural gas for vehicles, wind, solar and waste energy. The benefits to Thailand include less harm to the environment, less global warming, more jobs, more investment and reducing the nation's dependence on imported fossil fuel, especially oil, it claims. The government has a 15-year plan to lift alternative and renewable energy's share of total energy production from 6% today to 20% by 2022. The article says that Thailand's climate and soil provide great opportunities for crops such as rice, sugar cane, palm oil and cassava to be developed into alternative fuels. But what is not discussed at all is the impact on ecosystems, biodiversity and food production to achieve this. It's an old story but one does worry about simple "solutions" continuing to be pushed in the name of "green growth" which could end up being nothing of the kind. You can read the full article here.


ALTERNATIVE ENERGY ONE OF THE KEYS TO THAILAND'S GROWTH

Writer: PIYA SOSOTHIKUL

Bangkok Post 25/07/2009

Newspaper section: BusinessIn difficult economic times, reducing the costs of doing business is more important than ever. Electricity and energy costs in general are a significant burden for most companies and the potential for savings in this area is great.


Advanced Info Service began operating its first wind-powered mobile-phone base station in Ban Amphoe beach in Pattaya, in June.
What is good for business is also good for Thailand's competitiveness. Last year the nation spent 1.2 trillion baht on imported energy, which represents almost 14% of gross domestic product. Trimming this bill is essential if we want to progress economically.

One of the keys to achieving this is by developing alternative or renewable forms of energy, such as biomass, biogas, ethanol-based oil, biodiesel, natural gas for vehicles, wind, solar and waste energy. The benefits to Thailand include less harm to the environment, less global warming, more jobs, more investment and reducing the nation's dependence on imported fossil fuel, especially oil.

The government recognises these benefits, and has a 15-year plan to lift alternative and renewable energy's share of total energy production from 6% today to 20% by 2022.

That's a challenging target, but the good news is that Thailand's climate and soil provide great opportunities for crops such as rice, sugar cane, palm oil and cassava to be developed into alternative fuels, as well as converting waste to biogas. For example, a recent seminar Bangkok Bank organised on biomass energy opportunities from the palm oil industry attracted 28 executives from 16 crude palm oil mills.

Of course, we share these natural advantages with others. Some of our Southeast Asian neighbours, such as Malaysia and Indonesia, have many of the same physical characteristics and the potential to develop the same sources of alternative energy, so we will need to work hard to enhance our energy competitiveness.

To succeed requires strong collaboration between the government, industry and the financial sector. This was one of the reasons why the bank in June organised a workshop on alternative energy at the 2009 Euromoney Thailand Investment Forum.

For more than a decade now Bangkok Bank has actively supported private sector investment in the energy industry, in both its traditional and alternative forms.

We have lent more than 10 billion baht to more than 200 companies for investment in alternative energy. And we estimate that approximately one trillion baht in overall investment will be needed if industry is to meet the government's targets by 2022.

Our Bualuang Green project, for example, supports businesses of all sizes wanting to invest in projects for saving energy and improving efficiency, as well as producing environmentally-friendly products. It's part of our Bualuang Energy Saving Project initiated by bank executive chairman Kosit Panpiemras, who has long championed alternative energy as a way to reduce costs, for both the business sector and the nation.

This assistance includes credits worth billions of baht to customers - including businesses and farmers - who come up with innovations that use alternative energy, such as biogas and biodiesel consumption in the agricultural sector.

The fact that Thailand's energy needs are increasing is positive - it shows that the country is heading in the right direction economically. But for businesses struggling to keep a lid on their costs and stay competitive, finding cheaper and more efficient sources of energy has never been more important.

Piya Sosothikul is an Executive Vice-President with Bangkok Bank. Meeting the Challenges appears every two weeks.

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