Transition through gas em
- 1. A Natural Grid for the Eastern Mediterranean Transition through Gas Chris Cook 23 April 2013
- 2. 21st Century problems cannot be solved with 20th century solutions.........
- 3. Introduction - Resilience Resilience - the enduring power of a body or bodies for transformation, renewal and recovery through the flux of interactions and flow of events Resource Resilience – Natural Grid Financial Resilience – Open Capital
- 4. Natural Grid – Resource Resilience Since 1980 Denmark's GDP rose 78%, while energy use has been stable and carbon fuel use declined How? Mandate - minimum carbon fuel input for a given output of electricity, heat or power Least energy cost policy; not Least DK (or €, $, £) Cost Massive investment in renewables, heat, energy efficiency, transport Outcome – decentralisation – trend to a Natural Grid
- 5. Open Capital – Financial Resilience 300 year Market 2.0 paradigm of 'closed' proprietary finance capital and 'for profit' intermediation - Debt (Banks) and Equity (Joint Stock Company) - October 2008 the Market 2.0 paradigm broke Market 3.0 - emerging networked market paradigm Open Capital - neutral, collaborative framework - Capital Partnership - prepayment for production or use over time - Prepay
- 6. Application - Eastern Mediterranean Eastern Mediterranean Nondominium - neutral framework for East Med energy co-operation - Gas Pool of future production, Gas Grid, Gas Hub /Balancing Point benchmark East Med gas Prepay instrument - gas clearing union (mutual guarantee) - direct 'gas loan' investment by energy investors, especially gas consumers
- 7. Eastern Mediterranean Nondominium Stakeholders - Custodian – Clearing Union of Littoral Nations - Producers and Consumers – Littoral Nations - Manager – private sector service providers - Investor – energy funds & energy users
- 8. Joint Custodian % Investor Energy Funds/Users Manager Service Providers % Littoral Nations Prepay
- 9. Nondominium – What it is and is not Nondominium is neither an Organisation (eg Energy Charter) nor a Trust (eg UK North Sea Master Deed) - consists of 2 parallel collaborative agreements Clearing Union - agreement between stakeholders jointly - governs & guarantees prepay unit issuance, exchange & return Capital Partnership - agreement between stakeholders individually - governs allocation of flows of production
- 10. Nondominium – How it Works All existing legal rights transferred to Clearing Union as joint Custodian Production shared by nations and service providers in accordance with project-specific 'enterprise agreements' within Capital Partnership framework Balance of production available to create and issue prepay units to Investors No nation or stakeholder has dominant rights Stakeholders have agreed rights of veto
- 11. Nondominium – Outcomes Neutrality – no sharing of sovereignty as in Condominium – takes politics out of energy Equity – ethical sharing of risk and reward Stability – no stakeholder has an interest in volatility Resilience – risk is distributed Complementary – not alternative but addition to existing agreements eg Law of the Sea, Energy Charter
- 13. Gas Prepay – What it is & How it Works Undated credit returnable in payment for gas supplied Prepay unit issued & sold by gas producers at discount $1.00's worth of gas sold for 80c gives absolute return of 25% Rate of Return - rate over time at which prepay unit returnable to issuer in payment for gas supplied Rate not fixed - depends on existence & amount of flow No right to supply – accepted in payment for supply
- 14. Gas Loans Prepay - direct investment in future gas production or gas savings - the earlier the investment, the greater the risk, and the greater the discount - return in energy: no $ paid for the use of $
- 15. Gas Loans – Value proposition Producer - sells gas forward and locks in price - interest-free gas loan until unit returned against supply Consumer - prepays for gas and locks in price Investor - direct 'inflation hedge' investment in energy - Consumers buy units from Investors at best price below physical gas price & return them against supply
- 16. Outcomes East Med Benchmark – gas unit could become energy standard unit for East Med energy investment Carbon Currency – denominated in energy, not $ Energy Subsidy - energy dividend of prepay units - incentive to save energy, & exchange units for value East Med energy pool fund East Med Green Deal – energy loans invested directly in renewable energy and energy saving projects
- 17. …....21st century solutions pre-date modern finance