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GEI - An idea whose time has come

GEI - An idea whose time has come

Georg Kell

Founding Executive Director of United Nations Global Compact Chairman of Arabesque

Senior Advisor of GEIDCO

About the author

Global Energy Interconnection (GEI) is a bold venture for the generation, transmission, and use of clean energy, applying a smart grid as well as ultra-high voltage transmissions to transport renewable energy over long distances and with minimal losses. Through its organizational arm, the Global Energy Interconnection Development Cooperation Organization (GEIDCO), GEI pursues two complimentary goals: accelerating the transformation of energy systems towards clean energy; and enabling access to energy for people still locked in energy poverty. GEI has thus the potential to be a key player in implementing the UN Sustainable Development Goals 2030 Agenda and the 2015 Paris Climate Agreement by reducing emissions and giving access to modern and clean energy to the many people who are still locked in energy poverty.

Starting with the industrial revolution some 200 years ago, humanity has seen enormous improvements in living standards. Especially over the past decades we have witnessed tremendous progress - hundreds of millions of people have escaped poverty and are leading healthier and longer lives. And in the years to come many more people stand a good chance of escaping poverty and enjoying the fruits of industrialization. However, we know with scientific certainty that our current business practices are not sustainable. The human impact on the natural environment has already caused enormous damage. We are poisoning and polluting the very foundation of life on earth - water, soil, and the air - and we are destroying biodiversity on a massive scale. The destruction of the natural environment and the consequences of climate change are negatively affecting living conditions across all regions of the world. Today, air pollution is the main cause of premature death, ahead of malnutrition. Scientists tell us that that if current business practices continue, we are not on track to keep the rise of global temperatures below 2 degrees Celsius as governments pledged at the 2015 Paris Climate Summit. To avoid irreversible and possibly catastrophic damage to life on earth, we need to decarbonize economies and reduce harmful greenhouse gas emissions. In addition, we need to make greater efforts to tackle energy poverty, as over one billion of the world’s population still have no access to modern energy. All government agreed on this, as well, when they adopted the United Nations Sustainable Development Goals and the Paris Climate Agreement in 2015.

Transforming the energy system is at the heart of the challenge. Building an energy infrastructure that allows for the rapid replacement of fossil fuels with clean energy sources while simultaneously electrifying economic sectors such as transport, industry and heat production will drastically reduce emissions and at the same time give more people access to clean energy. The technology for doing so is available, but all too often the political will and the economic incentives to make this transformation happen are lacking. This is where GEI can play a catalytic and historical role. Backed by Chinese President XI Jinping, GEI enjoys strong political support. GEIDCO, the organization dedicated to GEI’s advancement, under the chairmanship of Mr. Liu Zhenya, has already achieved enormous progress by building alliances in all regions of the world and by forming partnerships with all relevant stakeholders, governments, businesses, civil society, and the scientific community since its launch in March 2016.

At a recent major event held at the United Nations Headquarters in New York City on 1 November 2017, an impressive fellowship of like-minded organizations from many countries and different sectors of society affirmed their alignment with GEI and its Action Plan for implementing the 2030 Agenda and the Paris Agreement. GEI’s Action Plan consists of Ten Actions and Five Cooperation Mechanisms.

The Ten Actions include:

• concept promotion

• clean development

• universal access to electricity

• power grid interconnection

• electricity replacement

• smart grids

• capacity building

• and policy support

The Five Cooperation Mechanisms include

• global power grid planning

• transnational project construction

• global electricity trade

• interconnected power grid coordination

• collaboration in technical standards

The challenge of transforming energy systems and decarbonizing markets is enormous. Progress has been slow so far, despite many efforts and technological advances. There is a clear urgency to accelerate the pace of change. Take, for example, the - quite spectacular - rise of renewable energy sources. Yes, the cost of solar and wind power generation declined by about 70% between the years 2000 and 2016; investments in renewable source-based power generation have surpassed fossil fuel-based investments; and the share of renewables in electricity generation in some countries has risen above 30% and continues to rise. Nevertheless, economic growth and demographic changes will continue to increase the demand for energy significantly in the coming decades and demand may have doubled by 2050. The International Energy Agency predicts that fossil fuels will continue to account for a major share in the future, and that total energy consumption in 2040 will still be 75% as compared to 80% today.

Such predictions are sobering and underscore the urgency to accelerate the pace of change. For GEI to play a catalytic role, it would seem helpful to align with global trends that support the energy transformation and to navigate the barriers that hold back progress while at the same time advancing GEI’s mission in critical markets.

Major trends that support GEI's mission include:

1) Cross-industry innovation andcollaboration

The rapid spread of the digital economythat is disrupting industry after industry offers opportunities to showcase how smart grids and market connectivity can be enablers for smart applications. Identifying winning solutions and showing how GEI can accelerate their spread may offer new opportunities for energy interconnectedness on the basis of mutually beneficial partnerships. This may be relevant both in advanced countries, where smart home appliances and the internet favor electrification and smart grids, as well as in less-advanced regions, such as Africa, where decentralized solar power generator sare spreading. Forming specific partnerships that demonstrate how GEI can help to scale such solutions would offer powerful examples that might inspire further actions.

2) Sectoral integration

As some countries are now embarking on the next generation of energy transformation there is increased focus on redesigning policy frameworks and creating and enabling an environment for electrification and a holistic rethinking of sector interdependencies. This will enable GEI to show how "Smart Grid" + UHV Grid + Clean Energy is an essential infrastructural component to make the integration of different sectors possible.

3) Building of partnerships

The electrification of the transport system may offer specific opportunities for mutually beneficial partnerships. The spread of electric vehicles (EVs) will be a huge game changer and has been happening much faster than was predicted. It will significantly drive demand for electricity produced by renewable energy sources and involve the need for major new infrastructure investments such as charging stations. For example, the world's largest volume producer, VW, has now firm plans to invest US $40 billion in the electrification and digitalization of its products within the next four years. Fifty all-electric vehicles are in the pipeline. In China alone, VW and its Chinese partners will invest US $12 billion by 2025 and launch twenty-five electric vehicles between 2020 and 2025, in addition to the 15 electric models VW is already planning to roll out in China by 2020.  As China is leading the world in this fast-growing market, this presents a unique opportunity to build partnerships.

4) Supporting policies that driveelectrification

There is also a clear role for thought leadership for GEI to shape smart policies that support energy transformation. As the decarbonization of markets is bound to gain urgency - mother nature will with scientific certainty drive that message home - the case for realigning valuations and price signals is of ever greater importance and will in turn help build the political will and the social consent to embark on infrastructure investments as advocated by GEI. Economists everywhere agree that the most effective way to stimulate decarbonization is by pricing emissions and carbon. Following the Paris Agreement, 80 countries initiated some sort of carbon pricing orreduced subsidies for fossil fuels and hundreds of multinational corporations introduced internal carbon prices far above market rates in order to steer investments into cleaner and more future-fit domains. But these efforts have not yet reached a critical threshold. Supporting movements and policy changes that lead to raising carbon prices high enough to affect investment decisions will greatly stimulate the shift away from burning fossil fuels and support electrification of all sectors of the economy.

5) Collaboration with the business community

GEI is well aligned with the global corporate sustainability movement. Thousands of companies are now on a journey to green their energy supply, to act with greater integrity, and to rethink their processes and products based on good environmental stewardship and respect for fundamental principles of workers' rights, with a view to improving and protecting their brand and financial bottom line while mitigating risks. These corporations are natural allies of GEI. Fostering this alignment will help GEI to make the case with the corporate community everywhere. Many of them have taken on the issue of decarbonization and are looking for cross-industry partners to implement low carbon strategies throughout their global operations.

6) Steering finance to invest in GEI

It is also encouraging that finance is now waking up and starting to integrate environmental, social and governance (ESG) considerations into their analysis and decision making. Climate risks are increasingly factored into investment analysis and decision making. The rapid spread of sustainable investing in combination with big data analysis as pioneered by Arabesque and its S-Ray product will increasingly steer private finance towards more sustainable companies and thus improve the framework conditions for GEI and facilitate access to finance. The alignment of sustainable finance with corporate sustainability will redirect capital towards cleaner segments of the economy and by doing so will help to accelerate energy transformations. This may open up new opportunities for GEI to build partnerships that will facilitate the financing of infrastructure.

GEI is directly contributing to the advancement of the United Nations 2030 Agenda and the implementation of the Paris Climate Accord. These accords encourage international cooperation and collaboration between different sectors of societies based on the recognition that commerce, peace, and prosperity are the foundation of human progress. While some countries turn away from international cooperation, the reality is that people everywhere today depend on each other more than ever before and the big challenges humanity is facing today can only be solved through cooperation. As the urgency for action is bound to grow over time, there is no doubt that in our interdependent world there will be a growing premium on collaboration between and within countries. Access to sustainable energy is a universal desire that people aspire to everywhere and the impacts of pollution and global warming do not respect national boundaries. As the urgency to transform energy systems is bound to grow over time the mission of GEI is well positioned to build the required infrastructure that will enable a cleaner, healthier, and more prosperous future for humankind.

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