High commodity prices hang over Australia, Japan and South Korea as the economy starts to recover

IHS Markit Local weather and Sustainability is happy to current to you the OECD Asia Energy and Renewables Market Briefing protecting Q1 2022 for Australia, Japan and South Korea. That is the primary publication and can be adopted by a collection of standard quarterly market briefings protecting the most recent insights for these OECD (Group for Financial Co-operation and Growth) nations.

A rebound in electrical energy demand was seen in Japan and South Korea throughout the fourth quarter of 2021, thanks partly to an easing of the COVID-19-related restriction in Japan, in addition to the onset of a chilly winter, boosting demand. of electrical energy for heating. In distinction, on-grid demand declined in Australia over the identical interval, with robust development behind meter era, together with cooler east coast climate, decreasing demand for cooling energy.

OECD Asia - Q4 2021 demand and y/y comparison

On the similar time, wholesale vitality costs in Japan and South Korea are rising – excessive crude oil costs have fueled the Korea Fuel Firm’s (KOGAS) weighted common price, leading to a rise in wholesale fuel costs. KOGAS started charging the total price of spot LNG purchases to energy mills as the worth enhance rose to 4 occasions the earlier yr’s stage. The value of residential electrical energy in Japan has surged to a five-year excessive as crude oil and LNG worth will increase final summer time started to shine by throughout the energy firms’ lagged gasoline adjustment method. As oil and LNG costs proceed to rise, end-user costs are more likely to stay at their excessive stage, placing downward stress on an financial system that’s recovering.

As the brand new fiscal yr rolls on, a number of new bulletins have been noticed on the coverage facet;

  • Australia’s federal authorities has launched its funds for 2022-23 forward of upcoming elections, which included A$1.3 billion in low-emission know-how, together with hydrogen and carbon seize and storage, in addition to offering funding for the event of pure fuel infrastructure.
  • In November 2021, the Australian Parliament handed the Offshore Electrical energy Infrastructure Actpaving the best way for the event of offshore renewable vitality and transmission infrastructure, resulting in the announcement of greater than 19 offshore wind tasks with a mixed capability of 30 GW.
  • Japan’s sixth Strategic Power Plan will come into impact in April, which additionally included altering the subsidy scheme for photo voltaic tasks (>1 MW capability) to a
    Feed-in-Premium (FIP) Subsidy construction.
  • South Korea introduced the Korean Sustainable Finance Taxonomy Guideline (Okay-Taxonomy)which encompassed using LNG as a ‘transition’ financial exercise to alleviate new fuel mills underneath rising stress to draw new financing, whereas excluding thermoelectric and nuclear energy crops.

Be taught extra about our protection of Asia Pacific vitality analysis by our Asia Pacific Regional Built-in Service.

Logan Reese, primarily based in Brisbane, Australia, is Affiliate Director of the Fuel, Energy and Local weather Options workforce, protecting the fuel, vitality and renewables markets in Australia, with a deal with market fundamentals, vitality developments and renewable vitality and coverage developments.

Kaori Tachibana, primarily based in Tokyo, Japan, is Affiliate Director of the Fuel, Energy and Local weather Options workforce, protecting the vitality, fuel and renewables markets in Japan, analyzing provide/demand balances, infrastructure developments, coverage and pricing outlook.

Vince Heo (Yoonjae Heo), primarily based in Seoul, South Kora, is Affiliate Director of the Fuel, Energy and Local weather Options workforce, specializing in renewable vitality and vitality market improvement and LNG demand evaluation.

Posted on April 25, 2022

This text is revealed by S&P World Commodity Insights and never by S&P World Rankings, which is a individually managed division of S&P World.

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