Moving into the third and last of our "diamond dialectics," we now turn to the subject of Tipping Points, a concept we borrow from Malcolm Gladwell’s recent book by the same name.*

In a nutshell, we’re employing the term tipping point to mean a pinnacle moment in the adoption of a new understanding or perception (i.e., a paradigm shift), beyond which we can speak about a "new rule set" becoming thoroughly embedded in a country’s (or region’s) political and economic culture.

To illustrate this point, we employ the imagery of Sisyphus (see following slides), the legendary king of Corinth who was condemned, according to Greek myth, to roll a heavy rock up a hill in Hades only to have it roll down again as it nears the top—ad infinitum. While not wanting to insinuate that these tipping points are, by any stretch of the imagination, unachievable, we do want to impress upon the reader our sense that these "journeys" will not be easy ones.

We will propose six tipping points, corresponding to our six global lenses.

* Malcolm Gladwell, The Tipping Point: How Little Things Can Make a Big Difference (New York: Little Brown & Co., 2000).

Our first tipping point involves the perception of oil’s dominant standing in the economics of global energy markets, when in reality, the current struggle across Asia is between coal (the past) and natural gas (the future). Oil as a percentage of energy source is predicted to decline across most Asian states through the 2020 timeframe. This is because oil’s importance to the economy is increasingly limited to transportation, which, as a whole, is rather underdeveloped in Asia compared to the West. The biggest driver for energy growth in Asia is electricity, and there we’re talking about the choice between coal-fired and gas-fired plants, since oil is little used in this regard anymore.

As a tipping point, we thus propose the pinnacle moment when Asia (and the world) moves from thinking of oil as THE energy to thinking about natural gas as THE energy. We consider this shift important not only in signaling the planet’s further progression down the "decarbonization chain," but likewise in highlighting the first half of the 21st Century as the Age of Gas.

The measure we choose to express this shift from "medium carb" oil to "low carb" gas is to note the point at which a country’s percentage share of oil is equaled by the combined share of gas and "Other" low-carb (or no-carb) renewables such as nuclear, hydroelectric, solar, and wind. The U.S. is already close to achieving this tipping point, as DOE data from 1999 displays: oil’s 41 percent share is only slightly higher than "gas + other" (23 + 15 = 38%).* As shown in the inset above, most of Asia (India is a notable exception) will experience a similar shift away from oil to lower-carb energies, with the "gap" for Asia as a whole dropping from 22 percentage points in 1999 to 15 in 2020.

Our third tipping point involves the perception of technology as a source of environmental problems versus technology as a solution for environmental problems.

It is said that the U.S. government in general, and the Environmental Protection Agency in particular, underwent a paradigm shift on the technology:environment nexus over the past generation. Where, for example, in the 1970s, EPA sought to tame technology and its environmental damage through regulations, sanctions, and prohibitions, by the 1990s EPA has come to view technology as less the question (How do we tame it?) and more the answer (How do we employ it?). A big part of this is shifting from regulatory regimes to trading regimes, or from rules against undesirable behavior to markets that reward desirable behavior by allowing players to bank their efficiencies (e.g., my factory stays under my emission ceiling and so I can sell my unused credits to a less-efficient factory).

Asia, unfortunately, hasn’t advanced much even up the regulatory chain, tending to pursue technology purely for growth’s sake and let the environment be damned. But bills are coming due, especially in terms of healthcare, water, and damaged forests, so that even a vigorous pursuit of regulatory regimes wouldn’t—at this late date—prove decisive in and of itself.*  Leap-frogging ahead to a new paradigm that lets markets reward firms for technological advances in defense of the environment must become a large part of Asia’s "green growth" solution set. So we choose as a pinnacle moment the shift from ineffective and poorly enforced regulatory regimes to market-incentivized trading regimes that allow efficiencies to be monetized.

Our fourth tipping point involves the perception of energy as a key component of national security. Throughout the Cold War, energy security was pursued by most states in terms of strategic bilateral relationships where both amounts and price were largely a function of government negotiations. Markets were, in many respects, rather closed affairs where the drives of demand and supply took a back seat to definitions of national security. In sum, to feel secure, most states wanted to "own the barrel" the second the oil came out of the ground.

In the post-Cold War era, advanced economies have largely come to realize that oil is now bought and sold under truly global market conditions, where price—and not state relationships—determines access. Risk is redefined from disruption of supply to "disruption" of cost. This paradigm shift is an enormous one, for it takes a key commodity that for decades has been viewed by state governments as a choice for autonomy and a trigger for confrontation and turns it into yet another medium through which market-based interdependency spreads, transforming oil into "just another commodity" that is traded on a daily basis all over the world.

Asia’s tremendous expansion of energy demand over the next two decades will force key regional powers such as India and China to accept far greater levels of cross-border energy dependency, and this will constitute a new cultural mindset for leaders long accustomed to viewing energy primarily as a security vulnerability. As such, we choose as our pinnacle moment the shift from buying natural gas via LNG ships to erecting permanent pipelines that create long-term energy interdependencies.

Our fifth tipping point involves the perception of the environment as a defined public, or collective good that’s worth preserving in and of itself, not only in terms of quality-of-life issues for the society as a whole, but because it is perceived—in a long-term sense—as an essential input to continued economic growth and sustainable development.

Much of Asia’s economic development of the past several decades has focused on extensive growth, meaning more resource inputs and outputs, increased infrastructure, and an increased percentage of the population working. In this model, the environment is viewed as a relatively inexhaustible source of material, to be exploited to the full extent possible. Shifting to intensive growth means a greater focus on more efficient use of resources, more sophisticated and responsive infrastructure, and a smarter, more productive labor pool. In this post-industrial model, the environment is something to be sustained like a trust, whereby the "principle" is maintained at all cost so that the "interest" can be drained off in a dependable fashion. The definition of risk, therefore, shifts from environmental fall-out (and clean-up) to loss of principle stock (i.e., that which is defined as required for sustainable use).

Asia cannot achieve the economic or energy growth currently envisioned while treating the environment as a bottom-of-the-list lesser-included. Green issues must rise to the level of defined public goods, for which political leaders are willing to spend political capital in exchange for assuring long-term economic growth potential. Therefore we choose as a our pinnacle moment the shift from green movements (which are often fairly non-partisan) to green candidates (who define their partisanship by these issues), and we point to the experience of Western Europe over the past generation as proof that green parties can have substantial impact on a country’s political and economic agenda (e.g., Germany today, where environmentalism is the consensus).

Our sixth tipping point involves the perception of energy as a key component of U.S. national interest in the Persian Gulf. Of the six tipping points, this is the only one that focuses on a paradigm shift within the U.S. government vice those in Asia, and that’s because, as we noted earlier, the U.S. military truly plays the role of regional Leviathan in Asia via its bilateral security ties with all of the major players.

U.S. national security policy began a slow but pronounced shift of geographic focus from Southeast Asia to Southwest Asia following the end of the Vietnam Conflict in 1975. By the time Central Command was established in the early 1980s, U.S. deployments and crisis response activity had been dramatically concentrated around the Eastern Mediterranean, the Arabian Sea, and the Persian Gulf, with a key instigator being tanker escort operations connected with the lengthy Iran-Iraq War (Earnest Will being the most well-known operation). By the end of the 1980s, for example, the U.S. Navy was spending three out of every four "crisis" operation days in the Mideast theater, meaning the underlying "oil equation" accounted for roughly three-quarters of our global security interest.*  Soon after we went to war with Iraq in 1991 to protect Western access to Gulf oil, opening us up to the charge of "blood for oil."

Moving into the future, however, we see that such a presentation of U.S. security interests in the Gulf will become largely untenable—at least in a direct sense. The next war in the Gulf will not be about protecting Western economies, but those of the East, and while there are still very good rationales for doing so, the causality chain will not only grow longer in explanation, but far more complex. As such, we choose as our pinnacle moment the shift from the "blood for oil" charge to one of "blood for globalization."

Shifting from Tipping Points to signs of what life might be like in the There and Then of Asia’s energy future as the region approaches the year 2020, we present on the following slide a series of paired examples (Good Signs plus Bad Signs) of newspaper headlines we might encounter in downstream scenario pathways.

These headlines were generated by the workshop participants as a way of populating a series of outcome scenarios (to be presented subsequently). Of the several hundred notional headlines provided, we selected twelve that we felt captured the lion’s share of our participants’ concerns and/or desires regarding Asia’s future energy paths.

Having outlined the four outcome scenarios, we now present how our participants’ voted in terms of Kto Kovo--or, to loosely paraphrase, who ends up where?

Again, these calls are far from predictions, and need to be considered within the context of the day’s events. In short, they represent the participants’ gut reactions after a long day of debating a very wide range of issues.

Our participants displayed a real sense of differentiation in their calls--to wit, their treatment of the Koreas question:

Of the major powers in the region:

* Lee Kuan Yew was prime minister of Singapore for 31 years (1959-1990). Following his resignation in 1990, he remained in the government as a senior minister in the premier’s office. Many Asian experts believe he is still the "power behind the throne."

** On Indonesia, see Brian Barry, "A Survey of Indonesia: The Faltering Firefighter," The Economist, 8 July 2000, pp. 1-16.