The East China Sea: North Asian Energy Hub?
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The East China Sea: North Asian Energy Hub? Qingdao Ximeng-Wuxi, 2018 Yellow Sea Basin Pusan Theoretical Median Cheju Do Jiuquan-Jiangsu, 2016 (South Korea) Fukuoka Shaanxi-Jiangsu, 2016 Socotra Rock Jiangsu Wuxi Yacheng Cheju Kagoshima Basin Theoretical Median Japan-South Korea Xiangjiaba-Shanghai, 2010 JDA Jingping-Sunan, 2012 Longjing Pingbei Haijiao China- Pinghu Japan Field Yuquan Joint Development Zone Xihu (2008) Lishui Field Theoretical Median Daiyos/Senkakus Okinawa Conoco- Philips Senkaku/Diaoyutai Islands Tachao Basin Tainam Basin Gaolan Terminal Liwan 3-1 Panyu Panyu 4-1 3-2 Panyu 3-1 1 Bullet Points: By 2050, China, Japan and South Korea could be connected by an East China Sea energy infrastructure. “We need to start building the infrastructure to meet the deadlines that nature will impose on us.” Benefits: Tim Flannery Environmental Author 1. It would raise cross-border energy trade. This would increase Australian Of the Year (2007) efficiency, lower prices and raise supply security.Together, the three represent a huge market. 2. Each country could serve as a source of reserve supply for the other two, given asynchronous energy demand profiles. Northern China’s peak demand is for winter heating. Japan and South Korea’s peak demand is for summer air conditioning. Sharing seasonally- idled capacity benefits all three. 3. Geopolitical benefits would ensue from cooperative infrastructure.- This would reduce the risk of conflict over territorial disputes. 4. Extending infrastructure penetration into the East China Sea would speed development of new energy sources. These could include including wind power, tidal power and ocean thermal energy conversion and solar. These are already being developed. 5. The North Sea could be a template. The East China Sea could then become template for the Timor Sea and the Northeastern United States. 2 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, Australia) needs trillions of dollars of new energy, transport and telecommunications infrastructure. 2. As it becomes the world’s largest regional economy, Asia holds the key to minimizing destructive global climate change. # 2: Realize The Interconnection Potential 1. Asia already 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 1-2% of Asian GDP over 40 years. # 4: Reap The Benefits 1. A Pan-Asian Energy Infrastructure would generate huge efficiencies. These include: 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. 3 Disclaimer The research in this report is derived from sources believed reliable. However, its accuracy is not and cannot be guaranteed. Readers must judge the veracity of this report’s contents independently. Readers must do their own research before drawing any conclusions. Grenatec does not guarantee the accuracy of anything in this report. Grenatec is not liable to and does not indemnify any party relying on the content of the report against any action, suit, claim, demand, loss, cost or expense whatsoever arising out of or referable to this document. By downloading this report the recipient and any subsequent entities receiving this study from the above readers release Grenatec from liability of any kind arising from or referable to this report. Nothing in this report constitutes investment advice. Website links in this report are for information purposes only. Their inclusion does not constitute endorsement by Grenatec of the accuracy of the information in the link nor the organization that created the content. The links are included exclusively to assist readers in doing their own research. This work is copyright. Other than use permitted under the Copyright Act 1968 (Australia), no part may be reproduced without prior written permission from Grenatec. 4 Introduction The East China Sea borders Asia’s three largest economies: China, Japan and South Korea. All three want increased trade. None of the three wants territorial trouble. Everyone can gain from working together. The East China Sea and the North Sea have a lot in common. They’re roughly the same size. Both have oil and natural gas resources. Both are windy. China, South Korea and Japan could learn from the North Sea’s efforts to develop cross-border energy links and deepen multilateral energy market integration. As time goes on, these ideas will become increasingly commonsense. Stewart Taggart Principal, Grenatec 5 EXECUTIVE SUMMARY East China Sea Cross-border energy market integration could transform the East China Sea into a regional energy hub. The template could be the North Sea -- an ocean area of roughly equal size. In the North Sea, natural gas pipelines connect Norway to the UK. High- capacity power lines now connect Norway to Holland. Fiber optic cables are everywhere. The two maps below display the East China Sea and the North Sea at equal scale. At left is existing and proposed offshore pipeline and power line infrastructure in the North Sea. At right is Grenatec’s ‘bundled’ pipeline and power line infrastructure proposed for the East China Sea. The North Sea The East China Sea Seoul 0 kilometers 500 Grid (Existing) Qingdao Grid (New) Shetland Ximeng-Wuxi, 2018 Islands Yellow Sea Wind Sweden Basin Pusan Orkney Norway Islands Cheju Do Jiuquan-Jiangsu, 2016 (South Korea) Fukuoka Shaanxi-Jiangsu, 2016 Scotland Jiangsu Denmark Wuxi Yacheng Cheju Kagoshima Shanghai Basin Xiangjiaba-Shanghai, 2010 Jingping-Sunan, 2012 Longjing Gas Ireland Germany Pingbei Wind Haijiao United Pinghu Poland Field Yuquan Ocean Kingdom Netherlands Xihu Grid (Existing) BelgiumBelgium Grid (New) Natural Gas (Existing) France ‘Bundled’ HVDC/ Natural Gas/ Fiber Optic (New) A dense network of power lines and gas An efficient ‘bundled’ infrastructure could pipelines is planned for the North Sea. cross the East China Sea. Grenatec’s proposed East China Sea infrastructure would head east from Shanghai. It would then follow the territorial median lines between China, Japan and South Korea. East of South Korea’s Cheju do Island, it would then split into forks headed to Pusan, South Korea and Fukuoka, Japan. The East China Sea: Energy Hub? Offshore territorial spats between China, Japan and South Korea now dominate headlines about the East China Sea. This obscures more positive news about cooperation. For instance, Japan and South Korea have had a Joint Development Area in the East China Sea for decades now. In 2012, China and Japan agreed to 6 negotiate an adjacent one. In addition, China, Japan and South Korea have agreed to negotiate a free trade agreement. A free trade agreement coupled with expanding joint development areas could open the way for collective development of a common-carrier energy and data infrastructure across the East China Sea. All three countries would gain. For China, it would enhance redundancy in a domestic energy network reliant on West-East and North South domestic energy transfers. For Japan, it would reduce vulnerability to energy supply disruption. This vulnerability was brutally illustrated by the 2012 Fukushima earthquake and tsunami. For South Korea, it would create a ‘demand-pull’ opportunity to develop and export wave and tidal energy. South Korea has targeted ocean energy as a strategic domestic technology to develop. For all three countries, an East China Sea energy infrastructure would lay the foundation for energy market innovation. The result would be a virtuous circle of wealth creation, reduced greenhouse gas emissions and more stable international economic relations. Oil and Gas The East China Sea may hold 60-100 million barrels of oil and 1-2 trillion cubic feet of natural gas, according to the US Energy Information Administration.1 The East China Sea Basin, is the biggest prospective oil and gas area the East China Sea lies -- roughly -- midway between Japan, China and South Korea. East China Sea Gas Fields Beijing Bohai Basin Seoul Yellow Sea Basin Tokyo East China Sea Basin Gas 500 -k Shanghai Hydro Solar Grid (Existing) Geothermal Grid (New) Natural Gas (Existing) Wind Natural Gas (New) Biomass Fiber Optic (Existing) Fiber Optic (New) Ocean The potentially oil and gas rich East China Sea Basin lies between China, Japan and South Korea. Source: Marine Policy, vol. 35 (2011), p. 27 1 “East China Sea: Background,” US Energy Information Administration, Sep 25, 2012 7 The East China Sea’s biggest piece of offshore energy delivery infrastructure is a 440-kilometer long oil and gas pipeline system connecting Shanghai to the Pinghu Field. Co-financed by Japan,2. it was built in the early