Home / Economy / The Emergence Of A Global Energy Network – Analysis | Stewart Taggart

The Emergence Of A Global Energy Network – Analysis | Stewart Taggart

Can China’s Asia Infrastructure Investment Bank (AIIB) lay the groundwork for a Global Energy Internet? The goals look aligned.

The AIIB is keen to invest in infrastructure. State Grid Corp. of China foresees a global energy grid by 2050.

Combining the two could create a global pump-priming fiscal economic stimulus that solve a host of collective problems at once — ranging from reducing destructive climate change to spurring economic growth to funding the needs of an aging global population.

A Global Energy Grid would be the mother of all economic stimulus projects. It would be built out in phases and completed by mid-century.

The logical pathway looks remarkably obvious. The place to start would be Asia, the world’s fastest growing region, where much infrastructure is yet to be built out for the first time. Asia is also the world’s fastest growing regional economy and its largest single trading bloc.

Deepening energy interconnections between its nations will spur economic efficiency and raise economic growth rates. It will reduce the region’s carbon emissions through providing pathways to market for low emission energy sources.

The first regional projects should be in Southeast Asia, with the first individual projects being the Trans-ASEAN Gas Pipeline and Trans-ASEAN Electricity Grid. These will provide the core of a concentrically-expandable multilateral energy delivery infrastructure.

This can later be expanded to China, Japan and South Korea and southward to Australia.

These expanded routes could follow infrastructure pathways already proposed for, for instance, Indonesia’s Palapa Ring fiber optic infrastructure project, the Ichthys Timor Sea gas pipeline and the East China Sea power line projects proposed by Japan, South Korea and China.

The first stage in this process can be traced back to 2008. In that year, China’s State Grid won a landmark 25-year contract to refurbish and operate the Philippine electricity grid. State Grid is now considering expanding the effort to connect the Philippines to other Southeast Asian nations using high capacity power lines.

The next step should be construction of the Trans-ASEAN Gas Pipeline and Trans-ASEAN Electricity Grid. Both could be funded wholly or in part by the newly-opened Asian Infrastructure Investment Bank (AIIB). The AIIB is slated to make its first loan later this year.

In addition to the AIIB, needed economic reform in Asia can provide the funding for construction of a Pan-Asian Energy Infrastructure that can later interconnect to a Global Energy Grid.

These economic reforms can and should include carbon pricing, creating more liquid and fungible energy markets arbitrated by price, dispatch and carbon and eliminated subsidies for fossil fuels.

These three reforms will eliminate trillions of dollars of economic inefficiencies so the resulting savings can be invested in better infrastructure and trade as well as provide the long-term returns necessary to pay for an aging global population.

Low emission energy connected to an ubiquitous energy delivery infrastructure enabling proper competition among energy sources undistorted by fossil fuel subsidies, discriminatory access to transport infrastructure, unpriced carbon will create a long lasting economic boom.

The result will be creation of a global energy infrastructure that will serve the world economy for a century or more.


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