Asia’s 21st Century ‘Pax ASEAN-Ameri-China’

Astute Chinese charm-offensive politics would suggest that AIIB investing in an inaugural big infrastructure project in South East Asia would burnish the new bank's credibility and build legitimacy as an emerging regional multilateral investment institution.

It would also further China's stated goal of deepening regional economic 'connectivity.' This was a big theme of China's currently completed 2014 rotating leadership of the Asia-Pacific Economic Cooperation (APEC) group.

A Pan-Asian Gas Pipeline would mark a start in building out the estimated trillions of dollars of new energy infrastructure Asia needs.

It would also generate sizable demand for goods and services in the littoral countries: Vietnam, the Philippines and Indonesia. This would spread the wealth, and increase the economic multiplier effect.

Perhaps most important, it would move Asia toward a more integrated, efficient regional energy market for natural gas. The Asian Development Bank and the International Energy Agency both have been calling for this for years now.

The knock on effect would almost certainly be the emergence of an Asian marginal supply market-clearing 'Henry Hub'-style price that could end (among other market distortions) the ridiculous oil indexation of many Asian gas trading contracts.

This 'Asian hub' price could be set in Hong Kong or Singapore. Add in carbon prices generated from, say, China's Shenzen exchange in 2016 -- and the result is a massively catalytic shift toward a more efficiently, integrated, lower carbon-emission regional 'clean energy' economy.

This is all basic economics. Climate change itself is the result of energy market distortions, primarily unpriced carbon and autarkic national markets. These date back to the Industrial Revolution. Removing these distortions through economic reform is now mankind's biggest task. Inertia benefits no one.

Replacing gunboats with rules (JDAs) and applying efficient economic allocation methods (auctions) that result in better investment signals ('Asian' hub prices) and improved security (re-purposed, cooperating navies) results in a massively synergistic positive feed back loop.

In engineering terms, a Pan-Asian Gas Pipeline is no great shakes. The coastal benthic environment is shallow. It's already densely criss-crossed by the first-mover telecommunications industry and its global trade, efficiency and innovation-boosting fiber optic cables.

These were laid as a result of the telecommunications industry's own 1990s economic reforms when the Internet came along. The parallels are striking.

Today, roughly 20 years later after the telecoms industry freed itself from Rip Van Winkle practices, it's the energy industry's turn to 'wake up' to the efficiency revolution.