More deeply integrating global energy market infrastructure will create trillions of dollars of opportunity.
Consider the backdrop: China suffers industrial overcapacity, all countries need new energy infrastructure and markets for pricing and trading carbon are emerging.
Meanwhile, long-term fiscal challenges such as funding future retirement outlays needed for aging populations hang over all countries.
Investing in efficiency-enhancing energy production and delivery Infrastructure can fix some or much of this in one fell swoop.
The reason: it eliminates the economic distortions that have created cimate change: unpriced carbon and uncontrolled global carbon pollution.
Infrastructure investment will make it happen.
A series of large-scale multilateral infrastucture ideas already are on the table. What ‘s needed is to invest in them.
For instance, a ubiquitous cross-border energy transmission and clearing market will eliminate rigidities created by isolated national energy systems. This will drive down energy prices, reduce carbon pollution and minimize inefficiency.
Ultimately, energy will be pulled by consumers instead of pushed by producers.
All of this couldn’t come at a better time. The global economy is slowing, economic growth is becoming more difficult to generate and the world is aging.
China suffers from industrial overcapacity. Meanwhile, pension funds need long-term investments to pay promised returns on actuarial obligations. Both sides would gain from, for instance, increased investment in electricity distribution infrastructure.
Separately, large-scale investments can be made in natural gas pipeline networks This will increase energy supply security.
Europe leads the way. In the North Sea, power lines and gas pipelines are connecting littoral countries, enabling Norwegian hydropower to offset Dutch wind power and Norwegian gas to heat English homes.
In the Mediterranean, bold ideas exist to cross the sea with power lines and gas pipelines to bring solar energy and North African gas to the developed energy markets of the European Union. In the United States, proposals have been made to link a series of offshore winds farms along the nation’s East Coast into a large network.
Seen at scale, they all offer similar, and grand, opportunities.