‘Pan-Asian Energy Infrastructure’
Bullet Point Summary:
Grenatec’s vision of a Pan-Asian Energy Infrastructure advocates that Asia:
# 1: Acknowledge the Infrastructure/Climate Change Nexus
1. ‘Asia’ (ie China, Japan, South Korea, the ASEAN states, East Timor, Papua-New Guinea, Australia) needs trillions of dollars of new energy, transport and telecommunications infrastructure between now and 2050.
2. As ‘Asia’ becomes the world’s largest regional economy, it holds the key to minimizing destructive global climate change.
# 2: Realize the Interconnection Potential
1. Asia has interconnection-friendly large-scale infrastructure projects planned or underway. These include:
China: Nationwide high-voltage direct current power lines (electricity).
ASEAN: Trans-ASEAN Gas Pipeline (natural gas).
ASEAN: Trans-ASEAN Electricity Grid (electricity).
Indonesia: Palapa Ring (telecommunications).
Asia: Southeast East Japan Cable (telecommunications).
Australia: National Broadband Network.
Australia: LNG export buildout.
# 3: Seize The Initiative
1. Asia should enhance interconnection between the infrastructure projects above and new ones yet to be built.
2. Asia should ‘bundle’ new power line, natural gas and fiber optic infrastructures to create more flexible cross-border energy and information networks. Building this network would require annual investment of roughly 1-2% of Asian GDP over 40 years.
# 4: Reap The Benefits
1. A Pan-Asian Energy Infrastructure would create huge efficiencies.
1. Lower cost power.
2. Increased trade.
3. More competitive markets.
4. Increased Innovation.
5. Reduced geopolitical tension over energy resources.
6. Reduced regional carbon emissions.
7. Increased economic growth, reduced poverty.
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A Pan-Asian Energy Infrastructure is a big idea.
It’s also a sensible, timely one.
If the utility of Asia’s infrastructure is to be maximized, a Pan-Asian Energy Infrastructure represents compelling value.
A Pan-Asian Energy Infrastructure would use fiscal policy (through carbon pricing and eliminating fossil fuel subsidies) to fund ocordinated infrastructure investment (through multilateral cooperation) resulting in more open markets (through increased cross-border energy trade) resulting in lower prices (through heightened competition).
Economically, it’s highly orthodox.
These Pan-Asian Energy Infrastructure ideas are about the future. They’re about solving climate change. They’re about economic growth.
Most important, they’re about the art of the possible.
As a former economics and technology journalist, co-founder of the DESERTEC Foundation, founder of DESERTEC-Australia and now principal of Grenatec — I hope you’ll see — as I have — how the dots connect in Asia.
In coming years, ‘Asia’ (China, Japan, South Korea, the ASEAN states and Australia) will soon be the world’s largest regional economy.
The region has a unique, once-in-a-lifetime opportunity to build for a low-emission regional energy future and prosper while doing so.
Pan Asian Energy Infrastructure:
In Place By 2050?
By 2050, Asia could be criss-crossed by a highly-efficient network of High Voltage Direct Current (HVDC) power lines, natural gas pipelines and fiber optic cables.
The impact would be revolutionary.
Across the flexible system would flow low-emission energy sources accompanied by the information to manage them.
Solar, geothermal, wind, hydro, wave and tidal power, natural gas and clean coal would compete for customers under common rules in a single market governed by carbon-adjusted pricing.
The result would be a deep, liquid, innovative regional energy market. Ubiquitous interconnection would increase trade, lower prices, curb greenhouse gas emissions and enhance energy security.
A Pan-Asian Energy Infrastructure would be future-proof.
It would enable generation and distribution technologies to evolve (such as ‘load management’ and ‘transport or transmit’) as well as encourage development potential future fuel types (such as hydrogen and bio-fuels) through ensuring market access.
Between now and 2050 China, Japan, South Korea, the ASEAN states and Australia will be investing trillions of dollars to expand, replace and upgrade the region’s transport, telecommunications and energy infrastructure systems.
The above is not discretionary spending.
It’s essential investment.
Without this investment, Asia can’t improve living standards in the world’s most economically-dynamic region.
The good news is that ‘bits and pieces’ of a Pan-Asian Energy Infrastructure are already falling into place.
At present, they have unglamorous, technocratic names: the National Broadband Network (telecommunications-Australia), Palapa Ring (telecommunications-Indonesia), Trans-ASEAN Gas Pipeline, Trans-ASEAN Electricity Grid and China Fiber Optic City.
It all suggests ‘intelligent design’ underway, albeit subliminally.
Collectively, they mean alot. Individually, they mean little.
And that’s the purpose of this report: to raise awareness of the interlocking synergies the future could bring to Asia through a collectively-interconnected energy infrastructure.
These projects represent the first stage of a dramatic buildout of new energy generation and transmission capacity. They are happening in different ways in different places.
China is building out long-distance electricity transmission across its territory. Australia and Indonesia are building out fiber optic systems. Territorial tensions in the South China Sea and East China Sea could be solved through creating Joint Development Areas connected to common infrastructure.
What’s needed is to put all these ideas together, and create a bundled network in Asia that could last a century or more. It will prove cost-effective, highly efficient in curbing climate change and will contribute to regional peace.
Australia’s National Broadband Network will create a high-speed communications system across the world’s most isolated continent.
Indonesia’s Palapa Ring fiber optic project will provide the country’s scattered eastern archipelago with advanced telecommunications for the first time.
The Association of Southeast Asian Nations’ (ASEAN) Trans-ASEAN Gas Pipeline and Trans-ASEAN Electricity Grid will deepen economic integration among the organization’s 10 members.
China’s plans for a unified domestic electricity grid by 2020. This will speed China’s emergence as a major industrial power. Meanwhile, China is wiring its major cities with fiber optic cables under the China Fiber Optic City program.
Linking these projects together and expanding them will create a mid-21st Century low-emission regional energy network governed by open-access, competition and innovation.
The task now is to grasp the potential.
In this report, Grenatec analyzes the potential for an integrated energy and telecommunications infrastructure in Asia.
Grenatec then proposes infrastructure topologies stretching from Siberia to the Southern Ocean.
To realize the vision, Grenatec recommends that Asia:
1. Deepen cross-border grid interconnection.
Deepened cross-border electricity and natural gas interconnections increase market efficiency and reduce energy transport friction.
Existing and future energy infrastructure in Asia should be made ‘interconnection-ready.’
This shouldn’t be hard. Common standards are widespread.
2. Introduce carbon pricing.
The lack of carbon-adjusted pricing gives an uneconomic advantage to coal.
This market failure has created climate change, the most expensive inter-generational subsidy in human history.
Trillions of dollars of global warming’s accumulated financial liabilities are now being shifted onto the unborn without their informed consent. Intergenerational-equity mandates equitable sharing of these liabilities.
3. Deepen multilateral cooperation.
Deepening interconnection of grids and introducing carbon pricing will encourage multilateral cooperation.
It will enable the market to do the work. As this occurs, the ‘dispatch order’ of regional electricity-generation in an Asian market will rearrange itself.
Asia has huge energy needs. To meet these needs, Asia requires huge investment in energy infrastructure and generation.
If Asia plans ahead and coordinates, these costs (as well as the costs of climate change) can be much reduced. This can be achieved through application of orthodox market economics based upon full-cost accounting.
4. Develop ‘Cloud Energy’
In the past 20 years, packet-switching has replaced circuit-switching as the main mode of global telecommunications.
Figuratively-speaking, the same thing now needs to happen with energy.
That’s because megawatt-hours and megajoules are just packets of energy. They’re well suited to aggregated, multi-path delivery.
In energy, as in data, this can be achieved through creation of an efficient, multilateral infrastructure governed by open access and common standards.
In the past 20 years, fiber optics and the Internet Protocol has enabled ‘cloud computing.’
In the next 20 years, high-voltage direct current power lines and ubiquitously-interconnected markets can enable ‘cloud energy.’
The implications are profoundly positive.