Central Asia's ECO wants
energy ties, just not on oil, gas
By Chris Cook
Under the calm surface of the formal protocols and the stylized prose of the Tehran Declaration which emerged on March 6 at the Third Energy Ministerial Meeting of the 10-member Economic Co-operation Organization of Central Asian states, there were some interesting under-currents. [1]
Firstly, there was the fact that the meeting took place at all, after being postponed last October, and even more remarkably, that all of the ECO nations - the Central Asia states plus Afghanistan Azerbaijan, Iran, Pakistan, and Turkey - were represented, including even Turkmenistan. That being the case, the chair was taken by the powerful Iranian Oil Minister Rostam Qasemi, rather than his more junior colleague, Iran's Minister for Power.
Energy co-operation
The principal theme of the meeting was ECO energy co-operation, and it rapidly became clear that there was no appetite at all for Iran's proposal for an ECO Energy Charter.
Now, that concept was my idea in the first place, but unfortunately those oil ministry officials who advanced the proposal did not and do not understand the concept and presented a fundamentally flawed document. Worse than that, the fact that this strategic energy policy framework was named the ECO Energy Charter led to exactly the confusion with the Energy Charter Treaty and Organization which I suggested should be avoided by using the term ECO Energy Accord instead.
So the cool reception should have come as no surprise: but fortunately, all was not lost.
Natural grid
The basis of my ECO Energy Accord proposal was that the ECO nations should take steps towards the Danish approach to strategic energy policy, which has seen Danish GDP increase by 78% since 1980, while energy use has remained flat, and their carbon fuel use, remarkably, actually declined.
The Danes mandate the least possible use of carbon fuels for a given output of electricity, heat or power, and this has led to massive investment in renewable energy, and in decentralized community level combined heat and power schemes, heat storage, and other infrastructure.
I describe the resulting ''least energy cost'' decentralized architecture for energy production and transmission as a ''Natural Grid'', as distinct from the centralized ''least dollar cost'' national grid energy networks and centralized production that have led to over-dependence on cheap carbon fuels and increasing energy insecurity in consumer nations.
It is therefore interesting to be able to report that despite the absence of agreement in respect of co-operation covering oil and gas production there was - unusually - complete agreement among the ECO nations in respect of energy co-operation covering power production and transmission generally, and a focus on gas-fired power production specifically.
Moreover, and again completely consistent with the policy I advocate, there was agreement in respect of the need for co-operation in respect of massive ECO investment in energy efficiency.
The same systemic issues and structural problems which afflict investment in oil and gas infrastructure are even worse in the fields of renewable energy and energy efficiency. It was also agreed that the level of subsidies in ECO nations, particularly in ECO producer nations, has become unsustainable.
That being so, one of the subjects for urgent study by the ECO Secretariat will be the development of suitable frameworks for investment and financial instruments which facilitate both investment on the one hand, and the reduction of subsidies on the other.
The result of this wave of agreement was therefore that a major embarrassment was averted for the hosts, and that ECO can look forward to some truly meaningful energy co-operation in the next 10 years.
Note:
1. ECO member states are Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.
Chris Cook is a former director of the International Petroleum Exchange. He is now a strategic market consultant, entrepreneur and commentator.
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