In late April dozens of the world's top energy leaders gathered by the side of the Bosphorus in Istanbul to continue a tradition of discussion that has been going on since the end of the First World War required coordinated approaches to rebuilding a damaged Europe.
But while the global heft of international oil companies has long given the energy sector an international sheen, and engineering talent in the sector has proved mobile, the reality of most energy production and consumption has traditionally been highly local.
National and even sub-national policy has defined approaches to energy creation and use even in the oil-fueled transport sector, with engines in different countries designed to run on different fuels and supply chains far less fungible than they can seem to outsiders facing a single high "oil price." In the power sector the local utility dominated until the past few decades, and even in ostensibly free market economies the focus remained on reliability and building excess generation through cost-plus models to guarantee access.
Natural Gas as Change Agent
Energy demand that is growing swiftly in much of the world, and transforming through rebuilding and repurposing of infrastructure even in regions where demand growth has slowed, is creating an increasingly networked and global energy sector. The newly global present has the industry both embracing new opportunities and bracing for threats to long-insulated markets.
Natural gas and its expanded list of uses in meeting energy demand from power generation to transport, is playing the role of change agent in this shift.
Natural gas reserves in much of the world remain located far from the demand for the fuel. The biggest available and cost-effective natural gas plays are in the U.S., and while demand is set to grow there it is set to be sharper still in resource-challenged Asian countries and in heavily-populated Europe. The prospect of a globally traded fuel that could be used both for power generation and transport creates opportunities for linkages between markets that have long been balkanized.
While energy prices and availability have always helped drive manufacturing and resulting economic growth, there has never been a good way to easily compare the cost for energy in places as disparate as Detroit, Hong Kong or Paris. As the world becomes more reliant on natural gas, as major oil companies move to greater natural gas production, and as reticence to build alternative forms of generation remains high, a transparent market for "energy" may emerge.
A transparent global market for energy based on natural gas may emerge
That transparency makes coordinated international energy goals a priority of central importance for investors, regulators and consumers. Excess capacity in one country is no longer an issue just for that country and its paying consumers; it creates challenges and opportunities for more-needy or more efficient competitors elsewhere in the world.
The Solution Set
Dialogue among stakeholders is needed more than ever, World Energy Council Chairman and former Chairman and CEO of global energy giant EDF Pierre Gadonneix told AOL Energy in an interview at the Leaders' Summit.
"Each country has developed its own strategies, but the objectives of the policies are often the same," said Gadonneix. "It is very complex for a nation to anticipate consequences and design an energy policy on its own."
"There is a worldwide understanding that the market cannot give investors the right signal," Gadonneix said, pointing out the long-term issues around such expensive and complex investments and the multitude of parameters any project faces in the increasingly networked global energy sector.
Supply chains and investment consortia have already crossed borders in new ways even beyond swiftly-evolving natural gas markets. The role of Chinese solar panels in propelling a huge drop in unit prices awoke the ire of industry complaints, with a filing by competing nations with the World Trade Organization signaling renewable energy's first signs of a possible trade war.
In building generating capacity, international groups operating across borders are taking the lead as Turkey's two newest nuclear projects demonstrate - the first is built and owned entirely by Russia's nuclear operator Rosatom selling into the Turkish power market and the proposed second plant, announced at the Istanbul Summit, will include Canadian technology, Turkish power distribution, a Chinese construction company and likely funding from a fourth country.
Disputes are inevitable in the new global energy economy, but the resolution of those disputes does not have to repeat the history of oil-influenced wars, embargoes and economic crises.
Gadonneix says WEC has a role to play as it works with other international bodies.
"There is a great opportunity now to make WEC more visible and more useful insofar as energy issues are becoming more visible for all stakeholders in all countries," Gadonneix said.
For more on the World Energy Leadership Summit from AOL Energy, click here.
Start your workday the right way with the news that matters most. Learn more