Climate change, geopolitics expect to pressure oil market

The state enterprise told participants at the forum, themed “Regenerative Thailand with Cleanergy”, that it plans to accelerate transition towards clean energy while procuring crude oil to cope with market volatility.

“The world is facing various crises, especially global warming. So, Thailand has to join with ASEAN members in a transition to clean energy,” said CEO Kongkrapan Intarajang at PTT headquarters in Bangkok on November 21.

Kongkrapan expects clean energy volume to increase gradually amid various limitations. Natural gas, which is cleaner than fossil fuel, and coal are still playing an important role in the energy industry, he said.

He noted that PTT needs to find ways of reducing carbon dioxide emissions to tackle climate change, such as mixing hydrogen with gas and adopting carbon capture and storage (CCS) systems.

He also believes that small nuclear reactors will drive the renewable energy transition in ASEAN, improving quality of life for people in Thailand.

Trump’s economic and foreign policies

Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), told the forum that US President-elect Donald Trump’s policies to protect domestic benefits could pressure the global economy.

Trump’s economic and foreign policies are expected to trigger economic volatility, production base relocation, a severe trade and tech war, rising export costs, an influx of Chinese products, strict trade barriers against countries with trade surpluses, delays in climate change mitigation, and cost competition.

“The baht faced severe volatility after Trump won the election,” Kriengkrai said, adding that the US-China tech war would intensify as China has become leader in solar cells and electric vehicles.

Kriengkrai noted that geopolitical tension between the US and China could trigger manufacturers to relocate their production bases to ASEAN, including Thailand. However, he expects Thailand’s trade deficit with China to increase, from 1.4 trillion baht last year to 1.5 trillion baht this year.

He also expects Vietnam and Indonesia to gain benefits from exporting goods to the US. Although Thailand’s exports to the US have increased, the country also imports large volumes from China, he said.

Kriengkrai warned that Trump also has policies to increase production of fossil fuel, natural gas and coal, withdraw from the Paris Climate Agreement, delay investment in clean energy, promote small nuclear reactors and solar cells, and reduce financial support to wind power, hydrogen and CCS.

Trump’s policy to end the Russia-Ukraine war is difficult to predict and could affect the global fuel price, he added.

Impact on Thailand’s energy plan

Wattanapong Kurovat, director of the Energy Policy and Planning Office, stated during the “Future Energy Thailand” panel discussion that the public sector is working to promote energy security, improve access to cheap clean energy in order to reduce greenhouse gas emissions, and achieve the net-zero emissions target by 2065.

The Energy Ministry plans to boost the renewable energy mix in electricity production by 10% or more to achieve its CO2 reduction target in 2037, he said, adding that Thailand currently relies on natural gas for electricity production.

“We have invested a lot in fossil fuel infrastructure, such as natural gas, pipes, terminals and storage facilities,” he said, adding that the public sector will do its best to tackle greenhouse gas emissions by using new technologies, energy management and infrastructure investment.

However, Wattanapong said the enforcement of Thailand’s National Energy Plan would be delayed until early next year due to Trump’s policies and also negotiations on the Thailand-Cambodia overlapping claims area.

India to take lead in energy market

Energy market analysts from PTT Prism predict that India will lead global fuel demand, followed by the US, China and the European Union.

India is currently ranked fourth for fuel demand, with 58% of consumption in the transport sector and 28% in the industrial sector. Global fuel consumption has now reached 1 million barrels per day, PTT Prism said.

The International Monetary Fund expects the global economy to grow steadily at 3.2% this year amid lingering public debt after the Covid-19 pandemic and the global economic slowdown. 

Despite negative sentiment from Trump’s import tariff policy, real estate crisis and household debt, China’s fuel consumption is expected to increase if its government can tackle these issues effectively.

However, the global fuel price is expected to remain volatile due to the Russia-Ukraine war.

“India’s fuel consumption is expected to reach 75% of global consumption between 2025 and 2030 due to a high working-age population, in contrast to other countries with ageing societies,” PTT Prism said.

Experts added that India’s strategic location between the Middle East and Southeast Asia, advanced fibre optic telecommunication system, and government support for foreign investment could boost fuel consumption further.

 

Technology is a key

PTT Prism went on to explain that renewable energy and energy management efficiency are crucial for driving clean energy transition.

Currently, fossil fuel accounts for 73% of global energy consumption, against 27% for renewable energy. However, renewable energy consumption is expected to reach 53% by 2040.

Experts believe that artificial intelligence (AI) and batteries will be a game-changer in clean energy transition, thanks to their efficiency and cost effectiveness.

To boost the volume of clean energy, PTT Prism recommended that the government launch policies supporting the private sector’s transition and run campaigns encouraging consumers to save electricity.