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Non-Traditional Security Issues in North Korea$

Kyung-Ae Park

Print publication date: 2013

Print ISBN-13: 9780824837396

Published to Hawaii Scholarship Online: November 2016

DOI: 10.21313/hawaii/9780824837396.001.0001

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North Korea’s Energy Security

North Korea’s Energy Security

Challenges and Assistance Approaches

Chapter:
(p.23) Chapter 2 North Korea’s Energy Security
Source:
Non-Traditional Security Issues in North Korea
Author(s):

David Von Hippel

Peter Hayes

Publisher:
University of Hawai'i Press
DOI:10.21313/hawaii/9780824837396.003.0002

Abstract and Keywords

This chapter provides a summary of the “energy insecurity” predicament of the Democratic People’s Republic of Korea (DPRK). Lack of fuels in many sectors of the DPRK economy has caused demand for energy services to go unmet. When and if supply constraints are removed, there is likely to be a surge in energy (particularly electricity) use, as residents, industries, and other consumers of fuels increase their use of energy services toward desired levels, though the magnitude of such a surge will depend on the DPRK’s developing the economy to pay for fuel supplies. Analysis of the current status of the DPRK electricity sector suggests that the thermal power generation system in the DPRK has been eroding significantly.

Keywords:   Democratic People’s Republic of Korea, DPRK, energy insecurity, electricity, DPRK electricity sector, power generation system

Energy-sector needs and requirements for energy security together constitute a critical dimension of the North Korean nuclear weapons challenge. Energy-sector issues—specifically, the difficulties of the Democratic People’s Republic of Korea (DPRK) in obtaining energy supplies and maintaining aging energy-supply infrastructure—have been a driver of its nuclear weapons policies. On the other side of the coin, addressing energy-sector needs in the DPRK has played, and will continue to play, a key role in working toward a solution of the DPRK nuclear weapons dilemma. Assuming—though it is hardly a given—that the current (as of this writing) crisis involving the sinking of the Cheonan, a naval ship belonging to the Republic of Korea (ROK), in the Korea West Sea is resolved without resorting to extensive armed conflict, the Six-Party Talks or a similar regional/international forum on the nuclear weapons program of the DPRK can be expected to eventually resume. At that point, as in past discussions on “denuclearization” of the DPRK, resolving the DPRK’s energy-sector problems and ensuring, or at least making substantial steps toward, its energy security will be a critical component of the transformation of the DPRK economy to one that is compatible with peaceful relations with other nations, is not dependent on weapons exports or illicit activities to earn hard currency, and is self-sustaining.

(p.24) The effective denuclearization of North Korea will require provision of energy assistance by the international community in a phased package that is carefully coordinated with milestones in the denuclearization process. These energy assistance options must be based on a realistic assessment of the needs and capabilities of the DPRK, noting economic and humanitarian conditions as well as political priorities in the country. In order to understand the DPRK’s energy needs and capacity to use energy-sector assistance of different types, it is necessary to understand the DPRK’s energy security situation and its impacts on its broader economy and society. In this chapter, we provide a summary of the DPRK’s “energy insecurity” predicament, starting with a brief history of the DPRK’s energy problems and continuing with a discussion of the impacts of a lack of energy security—broadly defined—on the DPRK economy and society. We note a number of key challenges in addressing DPRK energy-security issues and suggest assistance approaches that would help to start the process of improving the DPRK’s energy security while addressing other key DPRK problems and international concerns. We conclude with a summary of what we see as the key lessons that the international community should take to heart in working with the DPRK to address its energy-security needs while improving the overall security of the region as a whole by dismantling the DPRK’s nuclear weapons program.

History of “Energy Insecurity” in the DPRK

We provide here a brief introduction to the recent trends in and current status of the DPRK energy sector that have contributed to the lack of energy security and to the impacts and implications of this energy-security deficit—which we collectively call energy insecurity. Please see our more comprehensive reports on the topic for further background on the DPRK energy sector.1

The economic, if not social and political, landscape in the DPRK changed markedly during the 1990s. Although only very limited and fragmented data have been available from inside the DPRK itself, information from outside observers of the country indicates that the North (p.25) Korean economy was at best stagnating, and most probably in considerable decline, through the mid-1990s. This economic decline has been both a result and a cause of substantial changes in energy demand and supply in North Korea since 1990. Though anecdotal evidence suggests that the economy in some parts of the DPRK, particularly near Pyongyang, may have improved somewhat, albeit in selected sectors and in an up-and-down fashion, between about 2003 and today, it is not clear that the energy-supply situation has changed substantially for the better nationwide since 2000, even to this day, though some local improvements have occurred.

Among the key energy-sector changes on the supply side in the DPRK in the early 1990s was a vast drop in imports of fuels, mainly oil, from the Soviet Union and (after 1990) Russia. The DPRK has no, or at best very little, domestic crude-oil production,2 so is reliant on imports. Though China continues to supply a largely steady five hundred thousand metric tons or so of crude oil per year to the remaining one of the DPRK’s two major refineries that still operates, oil-import restrictions have reduced the availability of refined products in the DPRK. These restrictions arose primarily from North Korea’s inability to pay for oil imports with hard currency. Though domestically produced coal has traditionally been, and remains, the DPRK’s main source of energy to fuel household heating and cooking, industry, and power plants, the lack of petroleum fuels, particularly for the transport sector, has contributed to the DPRK’s economic malaise since 1990. Also contributing to the decline in the country’s economic fortunes has been the inability to obtain key spare parts for both energy infrastructure and factories, including factories built with foreign (often Soviet) technical assistance and technology in the 1970s (or earlier).

The other key changes (or continuing processes) in the energy sector since the mid-1990s include the following:

  • Continuing degradation of electricity-generation infrastructure due to lack of spare parts, maintenance not performed, or use of aggressive (high-sulfur) fuels—including, reportedly, the heavy fuel oil supplied by the Korean Peninsula Energy Development Organization (KEDO) under the terms of the 1994 Agreed Framework—in boilers designed for low-sulfur coal.

  • (p.26) Continuing degradation of key electricity transmission and distribution infrastructure, resulting in much reduced availability and quality of electricity in most parts of the country away from Pyongyang, and, in the past few years or so, significant problems in Pyongyang as well.

  • Continuing degradation of industrial facilities in general and damage to industrial electric motors from poor-quality electricity. Lack of markets (since the breakup of the USSR) for DPRK industrial goods has reduced fuel demand in those factories that actually remain operable. In our visits to the DPRK, we have observed factories being dismantled for scrap and others that appeared to be largely idle (though we visited only a few areas).

  • Evidence of significant international trade in magnesite (or magnesia—a valuable mineral used for lining furnaces) and, more recently, in coal and iron ore (trade with China) and other minerals.

  • Continuing difficulties with transport of all goods, especially coal, and reduced availability of passenger transport.

  • Difficulties in coal production related to lack of electricity as well as mine flooding (in the Anju and other regions) and lack of production and safety equipment.

  • Some economic revival has been noted periodically since 2000, but mostly, it seems, associated with foreign aid, small markets and restaurants, small export-oriented industrial facilities, trade in raw materials with China, or in other areas of the economy that are generally not energy intensive.

Figure 2.1 compares estimated final energy demand by sector (top) and by fuel (bottom) for the years 1990, 1996, 2000, 2005, and 2008.3 In addition to the marked decrease in overall energy consumption between 1990 and 2000, there are two notable features of these comparisons. The first is that, compared with 1990, the residential sector in recent years has been using a larger share of the overall energy budget, whereas the industrial-sector share has shrunk to one-third of the total. This change is the combined result of continued reduction in fuel demand in the industrial sector, relatively constant (if not expanded) use of wood and other biomass fuels in the residential sector, and reductions in the use of other residential fuels (notably coal and electricity) that are (p.27)

North Korea’s Energy SecurityChallenges and Assistance ApproachesNorth Korea’s Energy SecurityChallenges and Assistance Approaches

Figure 2.1. Estimated energy demand by sector and fuel in the DPRK, 1990, 1996, 2000, 2005, and 2008.

(p.28) not as severe as the reductions experienced in the industrial sector. Second, and for similar reasons, the importance of wood/biomass fuels to the energy budget as a whole is estimated to have increased dramatically over the course of the 1990s, persisting through the first decade of the twenty-first century, while the importance of commercial fuels has decreased. Increased use of wood and other stresses have resulted in significant deforestation and degradation of forest lands in the DPRK.

Lack of fuels in many sectors of the DPRK economy has caused demand for energy services to go unmet. When and if supply constraints are removed, there is likely to be a surge in energy (probably particularly electricity) use, as residents, industries, and other consumers of fuels increase their use of energy services toward desired levels, though the magnitude of such a surge will depend on the DPRK’s developing the economy to pay for fuel supplies.

The DPRK electricity sector is often a focus of interest, for both the impact that the sector has on the economy of the DPRK and on the daily lives of its citizens, and because the status of the electricity sector had (and may again have) important political implications related to the former KEDO Light Water Reactor (LWR) Project and to electricity grid interconnection options.4 Analysis of the current status of the DPRK electricity sector suggests that the thermal power generation system in the DPRK has been eroding significantly. In virtually all the large power stations, only selected boilers and turbines are operating, and those that are still in use operate mostly at low efficiency and low capacity factors5 due to maintenance problems and lack of fuel. As a consequence of the difficulties with thermal power plants, hydroelectric plants have shouldered the burden of power generation in the DPRK. Hydroelectric output is limited by maintenance problems and, equally important, the seasonal nature of river flows in the DPRK, but construction of hydro-electric plants of various sizes—small plants for local areas and plants up to a few hundred megawatts for regional grids—is a recent focus of DPRK energy policies.

The total estimated supply of electricity decreased substantially between 1990 (46 terawatt-hours, or TWh)6 and 1996 (23 TWh) and fell still further (by our estimate) by 2000 (to 13 TWh) before increasing somewhat to an estimated 16.6 TWh in 2005. We are still completing an analysis of electricity generation in the DPRK in recent years but (p.29) thus far have no reason to think that the output of the sector was significantly different nationwide in, for example, 2008 than in 2005.

Impacts of Energy Insecurity on the DPRK

Working with colleagues in Northeast Asia, Nautilus has adopted a definition of “energy security” that goes beyond the traditional fuel supply/fuel cost focus to include elements of energy supply, economics and economic impacts, environmental impacts and environmental security, technological security, social and political security, and military security.7 In the case of the DPRK, the past two decades have seen a profound erosion of energy security in both the narrow and broad senses, with significant impacts on the DPRK’s economy, society, and environment. A few examples of these impacts include the following:

  • Lack of consistent supplies of coal and electricity for industry have idled many, perhaps most of the DPRK’s industrial capacity, leaving the former workers at those largely state-owned facilities also idled, though they may nominally continue to hold their jobs. The relationship between energy supplies and the industrial sector in the DPRK is complicated, however, because when the Soviet Union was dissolved in 1990, the DPRK lost not only its major supplier of crude oil and parts for its (in many cases Soviet-built) power plants and factories but also the markets for the bulk of the goods that its factories were designed to produce. It is thus difficult to fully understand what fraction of the decline of the DPRK industrial sector is due to a lack of energy and which part is due to a lack of markets, though presumably with sufficient energy supplies, coupled with funds for investment in new capital equipment (and access to international markets to purchase equipment), DPRK factories would be able to retool to provide goods needed at home and in markets abroad.

  • Lack of energy for transport, including gasoline and diesel fuel for trucks, buses, and cars, and electricity for trains and trams, exacerbated by energy-related problems with obtaining spare parts for (p.30) vehicles and transport systems, has decreased the amount of passenger and freight transport available. This in turn has affected a number of other sectors, including agriculture, and electricity generation, since, with the exception of a few large power plants that are located next to coal mines, the lack of energy for transportation systems keeps coal from being distributed to power and central-heating plants. In particular, the lack of transportation fuels means that in many areas, particularly away from cities, most North Koreans are obliged to walk, ride bicycles, or use animal carts to get where they are going and transport goods, or to hitch rides on (mostly military) trucks when they can. Apart from the burden to individuals, the lack of sufficient passenger transport in most areas means that time that people could be spending on productive activities is spent in getting from place to place. This mostly human-powered transport also uses calories in a country where food shortages have been frequent in recent years.

  • In the agriculture sector the lack of commercial fuels—specifically electricity and diesel fuel—increases the requirement for human and (where available) animal labor to plow fields, cultivate, weed, harvest, and transport crops. This has, in part, resulted in the use of urban workers to help in agricultural activities. It is entirely possible (though we have not confirmed this) that lack of fuel for key end uses such as land preparation and planting have reduced crop yields, but a number of sources have indicated that lack of energy and equipment for proper and timely postharvest processing (threshing, drying, and cleaning of rice, for example) have caused crop losses on the order of 15 percent, with additional losses of up to 5 percent from crops harvested too early.8 In addition, and as further evidence of the many ways in which energy shortages in one sector of the DPRK economy affect other sectors, lack of energy in the industrial sector has resulted in shortages of fertilizer, which have further depressed crop yields, and in shortages of spare parts for domestically produced agricultural equipment, further reducing the availability of motive power for agriculture. The lack of availability of electricity for water pumping for irrigation, including flooding of rice fields, was previously a serious problem but has become somewhat less of an issue in several growing (p.31) areas of the DPRK as a result of the recent completion of major irrigation canals providing water by gravity flow. The first of these, the Kaechon–Taesong Lake irrigation canal, was completed in 2002 and provides water to one hundred thousand hectares of land along the western coast of the DPRK.9 Another key factor inhibiting agricultural production in many areas is soil erosion caused by deforestation, which itself has been the result largely of the use of wood and other biomass in recent years in homes as substitutes for other fuels.

  • Residences and even, in some areas, military units suffer from lack of commercial fuel, largely coal, for cooking and heating of living space. The result—again varying in severity by region—has been increased use of wood and other biomass fuels, which have in many areas been harvested beyond the levels of sustainable yields as well as on slopes, where the result has been significant erosion, often with potentially long-term effects on soil fertility. In cities, lack of fuel for central heating plants and/or lack of spare parts for those plants result in reduced or no provision of heat to apartment blocks, leaving those residences without heat or with small amounts of other fuels when available—kerosene, coal, or biomass, for example—to make up for the lack of heat from central heating plants. Lack of heat in winter combined with often inadequate diets makes residents more susceptible to disease and less productive when they are able to work. Office buildings, even in Pyongyang, are reported by visitors to be often barely heated during the winter, exacerbating productivity problems. Lack of electricity—outages range from occasional in places like Pyongyang to chronic in more isolated areas—means that residents must either do without light or use poor substitutes, such as lamps (in our experience, sometimes makeshift) burning diesel fuel or battery-powered lanterns. Lack of light makes it difficult or impossible for students to study and also affects other educational, social, and productive activities.

Beyond these direct or interrelated impacts—on the economy, the environment, and human health and well-being—of the lack of access to fuels, there are indirect, political impacts. Lack of domestic oil and shortages of other fuels, coupled with limited opportunities to earn (p.32) the hard currencies needed to pay for imported fuel, are arguably one factor in the DPRK’s use of sales or barter of weapons, as well as other, sometimes illicit, activities, to earn hard currency. Imports of significant amounts of crude oil to the DPRK from Libya and Iran in the early 1990s, for example, were thought to have been as a result of sales or barter of weapons, including missiles, to those countries. Shortages of energy are also part of why the DPRK uses the threat of military action to try to induce the international community to meet its demands. Lacking the fuels to run a modern economy, it has few other options.

We would also argue that the DPRK’s lack of energy security has a keen impact on the DPRK’s military security and thus that of its neighbors as well. It needs to be remembered that with about 5 percent of its populace in the armed forces and perhaps a quarter of its residents in the armed forces reserves, the military plays a huge role in the DPRK economy. As such, when the economy itself is short of fuel, the military is as well. Though military-related manufacturing probably gets preferential access to what fuels are available, it seems certain that it suffers from some of the same energy shortages that affect the broader economy as well as a similar lack of, for example, spare parts for industrial infrastructure.

Another military-security consideration affected by national energy security is related to fuel supply to the military in the event of a large-scale conflict on the Korean Peninsula. Several years ago, we carried out an admittedly rough calculation that suggested that it would take about three months of DPRK refinery output, at current levels, to resupply the gasoline and diesel fuel that the military would use in the first month of an active conflict. By the end of the first month of conflict, it would take about two months of total refinery production plus imports (assuming current levels of production and imports, which is hardly a given in a conflict scenario) of gasoline and diesel to operate the DPRK’s remaining (i.e., those not yet destroyed in the conflict) military vehicles and armaments for one month. Though this calculation includes several simplifying assumptions, each with significant to considerable degrees of uncertainty, the essential finding is that the DPRK military would quickly—in a matter of weeks or certainly months—run short of fuel in any major armed conflict. This in turn implies that the DPRK must depend on strategies other than prolonged conflict to (p.33) prevail. The “other strategies” that seem, given current circumstances, to be implied are either overwhelming first-strike capability in conventional or nuclear weapons or the use of its own “nuclear umbrella” to support deterrence of attack or coercive use of force by adversaries. This further underlines the need to address the DPRK’s energy insecurity as a necessary, though not sufficient, condition for addressing the DPRK nuclear weapons issues that have had such a profound effect on military security in Northeast Asia.

Challenges in Improving DPRK Energy Security

Improving the DPRK’s energy security is clearly a requirement of improving the security situation on the Korean Peninsula and in the region as a whole. Measures designed to improve the DPRK’s energy security, however, including measures undertaken with assistance from groups in other nations, will and do face an array of challenges that must be fully appreciated and reflected in assistance plans. These challenges range from technical challenges related to DPRK infrastructure to institutional challenges related to the structure of the energy sector in the DPRK, to challenges related to lack of human capacity. A sampling (but hardly a complete list) of key challenges that assistance activities must address is provided below.

Problems with the DPRK economy’s physical infrastructure, and most notably its energy infrastructure, pose a challenge to getting energy assistance under way. Much of the energy-using infrastructure in the DPRK is reportedly antiquated and poorly maintained, including heating systems (including district heating systems) in residential and other buildings. Industrial, power supply, and other facilities are likewise aging and based on outdated technology and often (particularly in recent years) are operated at less-than-optimal capacities (from an energy-efficiency point of view). The North Korean electricity system, though it is nominally a nationwide transmission and distribution grid, is in effect a patchwork of a few regional and some local grids, centered around major and smaller power plants. Most of the large thermal (almost all coal fired) power plants are only partially in operation due to damage of (p.34) various kinds to one or more generating units and/or to transformers, substations, or other parts of the transmission and distribution system. This means that even if large amounts of fuel for power plants or supplies of electricity from outside the country10 were suddenly to be available to the DPRK, distribution of that energy would be problematic.

The combination of erosion in its energy system and industrial infrastructure and similar erosion in its transport infrastructure in many areas and lack of investment capital means that the DPRK will not be able to reconstitute, or, perhaps more accurately, redevelop, its energy system and economy in general without outside help. Rebuilding power plants—most of which, remember, were built with major components imported from the USSR or elsewhere—could not be done, at least for many years, using materials “made from scratch” in the DPRK because the industrial infrastructure to make the required power-plant components either is no longer operating or, in fact, was never present in the DPRK. Similarly, decades of relative isolation have left the DPRK substantially without the capabilities in modern metallurgy, electronics, and other fields that would allow it to develop new industries. This means that the DPRK cannot redevelop its infrastructure sufficiently to develop a sustainable, peaceful economy without outside help.

There is a suppressed and latent demand for energy services in the DPRK economy. Lack of fuels in many sectors of the DPRK economy has apparently caused demand for energy services—lighting, heating, and transportation of people and goods among them—to go unmet. When and if supply constraints are removed, there is likely to be a surge in energy (probably particularly electricity) use, as residents, industries, and other consumers of fuels increase their use of energy services toward desired levels. This means that as energy infrastructure is established or rebuilt, it will need to accommodate or otherwise manage this surge in demand. In addition, key energy-sector measures such as energy-efficiency improvements—sorely needed in virtually all sectors of the DPRK economy—will not appear as effective as anticipated because a significant portion of the energy saved will be absorbed by previously latent demand.

The DPRK substantially lacks markets for energy products. Compounding the risk of a surge in the use of energy services is the virtual lack of energy-product markets in the DPRK. With a few small (p.35) exceptions, most electricity is provided to residents and organizations for a flat monthly fee per connection, if it is priced at all. Other fuels are more typically allocated to end users rather than sold in markets. Although markets for some goods and services have started to develop, sometimes haltingly, in the DPRK in recent years, input factors for goods, including energy goods, are still not priced at market levels, which makes determining market prices that will cover costs of production difficult. Without fuel-pricing reforms, there will be few incentives for households and other energy users to adopt energy-efficiency measures or otherwise control their fuel consumption, and no guarantee that electricity generators, coal mines, and other fuel suppliers will recover through energy sales sufficient funds to cover their costs of production, let alone to reinvest in further supply expansions or other upgrades. The lack of a rational pricing system also deters outside lenders and investors from supporting energy-sector improvements because there is no guarantee that, for example, electricity generators will be able to recover their costs, including costs of financing infrastructure investments, from consumers. Anecdotal indications are that some pricing reforms are under way in the DPRK economy, including, for example, some experiments with card-based metering systems in the Pyongyang area, but it is not yet clear (to us) to what extent pricing reforms have been broadly implemented in the energy sector.

A lack of human capacity in many fields in the DPRK will need to be overcome to implement most types of measures to improve the DPRK’s energy security. DPRK citizens generally have a strong basic education in reading, writing, math, and science and are among the hardest working, most disciplined people on the planet. In working directly with North Koreans, we have found our colleagues to have good fundamental engineering skills and to be quick and eager to learn. Decades of relative isolation, however, have made human capacity scarce in the DPRK in such fields as advanced science and engineering (particularly with respect to the use of modern tools and analytical methods), economics and finance, regulation, and policy development. Lack of expertise and understanding in these and related areas among DPRK engineers, technicians, and officials will therefore constrain, at least until capacity-building programs bear fruit, the rate at which measures to improve energy security can be implemented

(p.36) An institutional lack of capacity to usefully absorb aid, including energy aid, is also an important challenge to be overcome as the DPRK energy system and economy are rebuilt. At present, the DPRK’s political structure is set up such that a limited number of DPRK officials can come into contact with foreigners. These limits on interactions with the outside world currently constrain the number of projects that the DPRK can be involved with at any given time. In addition, the compartmentalization of the DPRK’s dealings with foreigners means that it is often difficult for foreigners working on projects with the DPRK to contact and be allowed to work freely with the right people in the DPRK. For example, the political officers controlling a cooperation project may limit foreigners’ access to the technical people in the DPRK with the knowledge and expertise who could help design a new energy system that would work with existing DPRK infrastructure. Even when the right people to work with can be identified and are made available, decisions on how to proceed may be made as much on political grounds as with regard to practical considerations, sometimes with suboptimal results in terms of project impacts. Finally, an existing culture where graft and patronage are commonplace means that it is highly likely that providing too much aid too soon—particularly in the form of very large projects with necessarily complex management structures—will result in inefficient use of resources and, at worst, failure of the projects altogether.

Taken together, these constraints on the capacity to absorb aid and the other, generic challenges to energy projects in the DPRK drive our advice to focus, especially in the first years of energy-sector assistance, on small, fast, cheap, and local energy projects with significant demonstration value. This aid approach is reflected in the list of areas for assistance and assistance-phasing suggestions provided below.

Assistance Approaches to Improve DPRK Energy Security

Agreements reached in 2005 and 2007 under the Six-Party Talks framework addressing the DPRK’s nuclear weapons programs included general consideration of options by which the international community could assist the DPRK in improving its energy security. In the short (p.37) run, however, these agreements resulted primarily in the provision of heavy fuel oil, a fuel of limited utility (though also of limited military diversion potential) to the DPRK, plus some provision of requested materials for repairs to energy infrastructure. Although these actions provided a start on engagement with the DPRK on energy-security issues, much more is needed. Assistance options need to be informed by consideration of the DPRK’s energy problems, economic needs, and constraints in making use of assistance, as well as the resources that the DPRK would bring to assistance programs.

Key economic resources for the DPRK include a large, well-trained, disciplined, and eager workforce, an effective system for disseminating technologies, the ability to rapidly mount massive public works projects (or, in fact, any project, large or small, requiring hands and shovels) by mobilizing military and other labor, and extensive reserves of minerals. What the DPRK lacks is modern tools and manufacturing methods, adequate supplies of fuel, reliable transport and energy infrastructure, sufficient arable land to reliably feed its populace, and above all investment capital to enable the import and/or manufacture and development of tools, equipment, materials, and know-how to fill these key gaps. As a consequence, a coordinated program of assistance from the international community that builds upon these attributes will be needed. Providing key assistance in a timely manner will enhance security in Northeast Asia, accelerate (or, given recent events, help to reestablish) the process of North Korean rapprochement with its neighbors, and help to position countries and firms as major suppliers for the DPRK rebuilding process.

The nature of the DPRK’s energy-sector problems, however, means that an approach that focuses on one or several massive projects—such as a single large power plant—will not work.11 A multipronged approach on a number of fronts is required, with a large suite of coordinated, smaller, incremental projects addressing needs in a variety of areas. Below we identify priority areas where we see DPRK energy-sector assistance as both necessary and in the best interests of all parties. These energy-sector initiatives will assist the process of rapprochement with the DPRK, help the DPRK to get its economy and energy sector working in a sustainable (and peaceful) manner, and help pave the way for additional cooperative activities in the energy sector. In addition, (p.38) all these interventions would put foreign engineers and other program staff in direct contact with their DPRK counterparts and with DPRK energy end users. In general, these initiatives can be thought of as projects that could be part of an overall program to provide incentives for and spur a DPRK denuclearization process (i.e., freezing of the DPRK’s nuclear weapons program, followed eventually by dismantling of the program and, ultimately, removal of nuclear weapons and related materials from the Korean Peninsula). In some cases, however, these initiatives could be started unilaterally, though perhaps in limited ways, by foreign governmental or nongovernmental organizations working with DPRK counterparts.

  • Assistance for internal policy and legal reforms to stimulate and sustain energy-sector rebuilding in the DPRK. This could include reform of energy-pricing practices, development of energy markets and the physical infrastructure to implement both, capacity building for careful energy planning to allow aid to be based on need and rational objectives, training for energy-sector actors, strengthening regulatory agencies and educational and research institutions in the DPRK, and involving the private sector in investments and technology transfer.

  • Work to open opportunities for private companies to work in the DPRK. Grants or loans from foreign governments cannot begin to fill the needs for energy infrastructure in the DPRK, but the U.S., ROK, European, and other governments can help to facilitate the efforts of private companies (including independent power producers) from abroad in the DPRK energy sector. One key, in the medium and longer term, to facilitating the involvement of private companies is to, as just noted, provide assistance for policy and legal reforms in the DPRK needed to make it possible, or at least more straightforward, for private companies to work there.

  • Rebuilding of the electricity transmission and distribution (T&D) system. The need for refurbishment or rebuilding of the DPRK T&D system has been touched upon earlier in this chapter as a key challenge. The most cost-effective approach for international and ROK assistance in this area will be to start by working with DPRK engineers to identify and prioritize a list of T&D-sector improvements (p.39) and investments and to provide limited funding for pilot installations in a limited area—perhaps in the area of a special economic zone or in a “demonstration” county.

  • Rehabilitation of power plants and other coal-using infrastructure. An initial focus should be on improvements in small, medium, and district heating boilers for humanitarian end uses such as residential heating, as well as in small institutional settings such as schools and hospitals.

  • Rehabilitation of coal supply and coal transport systems. Strengthening of the coal supply and transport systems must go hand in hand with boiler rehabilitation if the amount of useful energy available in the DPRK is to increase. Coal supply system rehabilitation will require provision of basic systems in mines for providing ventilation, light, and motive power for water pumping and extraction of coal, as well as improvements in mine safety. Coal may or may not be the fuel of the future for the DPRK, but it is the fuel of the present, and it is hard to conceive of an economic improvement in the DPRK, at least in the short to medium term, that does not substantially rely on coal.

  • Development of alternative sources of small-scale energy and implementation of energy-efficiency measures. The North Koreans we have worked with have expressed a keen interest in renewable energy and energy-efficiency technologies.12 This interest is completely consistent with both the overall DPRK philosophy of self-sufficiency (juche) and the practical necessities of providing power and energy services to local areas when national-level energy-supply systems are unreliable at best. Such projects should be fast, small, and cheap and should (especially initially) emphasize agricultural and humanitarian applications. Included here would be the provision of technical and institutional assistance in implementing energy-efficiency measures and cooperation in technology transfer for energy efficiency and renewable-energy applications. Focusing in particular on energy efficiency, regional cooperation would be useful in providing the DPRK with access to energy-efficient products, materials, and parts; pursuing sector-based implementation of energy-efficiency measures; and carrying out demonstration projects.

  • (p.40) Rehabilitation of rural infrastructure. The goal of a rural energy rehabilitation program would be to provide the modern energy inputs necessary to allow North Korean agriculture to recover a sustainable production level and meet the basic needs of the rural population.

  • Begin transition to gas use in the DPRK with liquefied petroleum gas (LPG) networks. LPG is more expensive than natural gas, but the infrastructure to import LPG, relative to liquefied natural gas (LNG), is much easier, quicker, and less expensive to develop and allows imports in smaller quantities. LPG is also clean burning, has limited military-diversion potential, and setting up LPG networks can be a first step toward the use of natural gas in the DPRK—if done with a future transition to natural gas use in mind. Ultimately, natural-gas pipelines and LNG terminals, shared with neighboring countries, can serve as a step toward economic development coupled with regional energy and economic integration.

Many of these options, or elements of them, are included in the following recommended suites of assistance opportunities matched to phases of assistance that might be matched to progress in denuclearization discussions. More detailed descriptions of these options are provided in previous reports by the authors.13

In the short term, the key goal is for the parties to restart dialogue and to begin substantive negotiation on issues related to the DPRK weapons program. Energy-assistance options offered as inducements for the DPRK to join and continue in productive negotiations with the United States and other partners will need to be easy to deliver (with a lead time of a few months or less to mobilize), generally modest in cost and scope, and, ideally, have significant symbolic and confidence-building value to both the North Koreans and those on the other side of the table. Short-term assistance options include provision of fuels such as coal and heavy fuel oil for input to power generation and district heating facilities and possibly to mineral-export-oriented industrial plants; provision of diesel engine–generator sets and agricultural equipment such as tractors, threshing and milling equipment, and pumps, necessarily including diesel fuel, as well as parts and maintenance supplies, for the “gensets” and other equipment for probably several years; and (p.41) initial efforts at building human capacity in the DPRK to move its energy system forward. Capacity-building efforts in the short term could include study tours of DPRK officials, engineers, and technicians to the United States and other countries on topics including energy efficiency, renewable energy, power-systems design, energy markets, and training by experts from elsewhere on similar topics for groups in the DPRK. Involvement of DPRK students in existing university-based short courses on energy-related topics in other countries is also a possibility. Setting up capacity-building efforts such as those above would involve at least limited interactions with officials from a wide range of ministries and from institutes operating under ministries, but the deepest and most effective interactions would be with the individual trainees—themselves academics, officials from ministries or related institutions, or engineers and technicians nominated for participation by officials.

In the medium term, the objective of talks will be to make progress on getting the DPRK to disable and dismantle, or re-disable, its nuclear fuel–cycle facilities for producing fissile material for weapons and to allow the international community to set up and run monitoring facilities to ensure that facilities remain dismantled and that nuclear materials remaining in the country stay secure. In this phase, which could last months or years, energy-assistance options would include ongoing aid in the form of fuel supply but would also shift to at least starting, perhaps on a local or county or provincial scale, to address infrastructure and human-capacity issues related to the DPRK’s energy economy.

Refurbishing of selected major energy facilities in the medium term involves projects to rebuild, and in some cases replace, a few key individual large energy facilities. In many cases, these individual refurbishment efforts could effectively be first projects to demonstrate and work out technical, logistic, financing, and other details of infrastructure rebuilding on a broader scale in the longer term. For coal-fired plants for power generation and heating, such measures could include replacing and repairing boilers and steam systems, installing modern control and environmental-monitoring systems, better insulation of steam lines and boilers, improved or rebuilt heat exchangers, and better coal-preparation systems. Assistance with refurbishing one or a few larger (say, 50 to 400 MW) hydropower plants, including repairing dams to reduce leakage (and danger of failure), dredging reservoirs to improve (p.42) or restore capacity, and replacing or repairing turbines and generators to restore and, in some cases, add capacity to hydro systems is also a possible class of energy facilities refurbishment to be carried out selectively in the medium term, as is assistance with rebuilding coal-supply infrastructure in one or a few key mines, including advice on the refurbishment of selected existing mines with long-term economic potential, providing mining equipment (including electricity supply, water pumps, air supply, and other crucial inputs), helping with evaluating new coal seams, and assisting with rebuilding coal-transport infrastructure.

Integrated energy supply, grid refurbishment, and economic development assistance constitutes another class of medium-term options, potentially including mini-hydro and biomass-fired plants for new or rebuilt mini-grids and modest-size coastal LPG terminals (delivery and distribution points for LPG) and gas-fired power generation, again with new or rebuilt mini-grids, to start the development of gas-distribution infrastructure and use for an export-oriented (nonweapons) factory complex, mine, or agricultural development (for example) at a local level, such as a DPRK county.

Additional capacity building and related pilot or demonstration projects, distinguished from short-term capacity building in that they involve a broadened scope, could include training for many more North Koreans through enterprise-level training, training within DPRK universities and institutes with the ultimate goal of international experts providing training of trainers for much broader knowledge dissemination, and training of DPRK undergraduate and graduate students, as well as specialized postgraduate training, in universities around the world. Training and pilot or demonstration applications would be needed to support all types of energy-sector activities in the DPRK but would ideally also include humanitarian applications of renewable and other energy systems in health care, education, and water-treatment facilities, guided by international experts but with considerable hands-on work by DPRK technicians.

Reforestation of areas degraded by the overuse of land for agriculture or wood harvesting for fuel in lieu of coal addresses another key energy-security need with impacts well beyond the energy sector. This medium- (and longer-) term activity will need to be coupled, in many (p.43) cases, with provision of fuel supplies for local cooking and heating end uses in order to (help) ensure that reforested areas grow mature trees.

The ultimate goal of negotiations, once existing nuclear fuel–cycle facilities are dismantled, is to induce the DPRK to give up its nuclear weapons, including dismantling its existing nuclear warheads and handing over to the international community for proper disposal its existing plutonium inventory. In recognition that this agreement on the part of the DPRK means giving up a significant military—and thus, through its effect on the military budget, economic—asset, energy-sector assistance in the longer term will need to have considerable economic and symbolic value and be of a nature that demonstrably upgrades the capabilities of the DPRK’s energy sector.

In the longer term, perhaps three or so years to ten or more years from now, the DPRK will expect a significant level of economic and energy-sector assistance as well as implicit (through integration into international activities) and explicit security guarantees in exchange for divesting itself of its nuclear weapons and fissile-material inventory. Some of the categories of long-term options include the following:

  • Completion of one or both of the Kumho light water nuclear reactors. As unappealing as this option may be to some in the United States and elsewhere, it is an important issue of national pride to the DPRK, having been negotiated by Kim Il Sung as part of the 1994 Agreed Framework. The DPRK’s recent announcement that it is moving forward with its own domestic program to build smaller (probably on the order of 50 to 400 MWe) LWR units is emblematic of the importance that the DPRK government places on nuclear-energy technology.14 There are also a number of reasons, related to its own nuclear-energy sector and to the energy system in an eventual reunified Korea, why this option is also appealing to the ROK. Completion of the LWRs would probably, in fact, be a topic of discussion from the very early days of reconvened negotiations, though likely at the DPRK’s insistence, not that of the other parties, and implementation phases—including, for example, training in adherence to International Atomic Energy Agency protocols and nonproliferation measures, assessment of the current status of reactor construction (including any degradation of work completed through (p.44) 2003 due to exposure to the elements or vandalism), and planning for restarting of construction—would likely start in the medium term. The nuclear components of a revived Kumho project, however, would not be delivered for many years, that is, not until just before an on-line date that would probably, even with early and absolute agreement and cooperation from all involved, not be before 2018. Alternatively (or in addition to one LWR unit), a LWR-equivalent “package” of a variety of energy-sector-assistance options could be provided that offers the same net “value” to the DPRK as an LWR unit.15

  • Larger national and international infrastructure projects, candidates for which include a smaller LNG receiving facility (shared between the ROK and DPRK), more extensive—relative to initiatives undertaken in the medium term—national electrical-grid reconstruction, assistance with building natural-gas grids (and marketing and metering systems) in conjunction with regional gas-trade initiatives bringing pipeline natural gas from the Russian Far East to the DPRK, and (for most of the pipeline volume) through the DPRK to the ROK, and more extensive assistance with coal-supply infrastructure, offering more extensive development and modernization of the largest key mines, completion of long-term refurbishment of major mines damaged by floods over the past fifteen years,16 and provision of electricity supplies to mines in order to power safety and mechanized mining equipment. These large infrastructure projects will be of benefit to the DPRK economy and, in some cases, to the environment and will also help with integration of the DPRK into the regional and global economies.

  • Continued training, technology transfer, and other multifaceted assistance in energy efficiency and renewable energy. This might extend the capacity-building and related activities in earlier phases of assistance to include establishing major degree programs at North Korean universities, for example, or facilitating (through such mechanisms as loan guarantees) investment by companies from outside the DPRK in production facilities for solar water heaters, solar photovoltaic panels, wind power, insulation materials, high-performance windows, and other devices with markets both inside the DPRK and beyond. This type of assistance builds the human (p.45) infrastructure for the DPRK to address its energy and economic problems in the longer term, including problems (such as climate-change mitigation) not unique to the DPRK. Building a renewable energy and energy-efficiency industry in the DPRK may help the whole region to move toward a low-carbon future, as well as being consistent with stated DPRK desires for the evolution of their own energy future.

Conclusion: Key Lessons for Working to Improve DPRK Energy Security

The DPRK’s energy insecurity has its roots in a complex combination of historical economic dependencies, resource endowment, policy choices by the North Korean regime, and international responses to those policy choices. The DPRK’s lack of energy security is manifest in a considerable drop-off in energy supplies—of in particular imported crude oil and petroleum fuels and electricity, but also domestic coal—since 1990, the result not only of a simple deficit of fuels but also of interrelated difficulties in the industrial, transport, and energy sectors exacerbated by the DPRK’s political isolation. The impacts of energy insecurity in the DPRK affect every sector and profoundly affect industrial output, the availability of transport services, agricultural production, military posture, and, in many different ways, human welfare.

Challenges for the international community in working with the DPRK to address its energy-security problems are many and range from lack of sound physical infrastructure to reliably distribute fuels to lack of institutional infrastructure—markets, meters, and regulatory authorities, for example—to make sure that fuels are distributed efficiently and to make it possible to attract investment, to lack of trained personnel in key areas needed to build a sustainable, peaceful modern economy.

Carefully considered energy assistance to the DPRK in a broad suite of areas is needed, and that assistance must be coordinated both with steps in addressing the DPRK’s nuclear weapons issue and with economic assistance of various types. Though the DPRK’s energy-sector (p.46) needs are many and varied, possible energy-aid options for the DPRK require consideration from many points of view or risk unintended consequences when applied. In addition, assistance must also be internally coordinated and phased so that the types of energy aid offered work well together and that the DPRK’s human and organizational capacities are developed so as to allow the people of the DPRK to use and benefit optimally from outside assistance and investment. For example, options that involve energy efficiency and renewable-energy initiatives are generally robust for application in the DPRK, fulfilling many different considerations with few downsides. One aspect of such options that should not be overlooked, however, is that they will require a good deal of organization and coordination per unit of cost—relative, say, to work on a single major power plant or provision of tankers of heavy fuel oil. This requirement has many benefits, in terms of capacity building and intercultural interactions, but will need good communications between the groups providing assistance and between those groups and their DPRK counterparts to be effectively implemented and administered.

Assistance in forms that help induce the DPRK to reengage in regional energy and economic cooperation projects—such as the Greater Tumen Initiative,17 gas pipelines, or power-line interconnections—can help to complement grassroots-level engagement offered by smaller projects with national-level engagement opportunities. Considering the energy import and export needs and goals of regional players—such as the Russian Far East, China, and the ROK—will help planners understand how to best integrate the DPRK into the regional energy economy and avoid problems in doing so.

Larger-scale options that contribute to regional economic integration, as well as economic integration of the Koreas, may have significant benefits but will likely be candidates for longer-term application, set up by smaller, local projects and extensive human capacity building that can ultimately be linked together in a more substantial change.

Providing, or at least helping the DPRK toward, a sustainable solution to its long-term energy problems is a necessary, though not sufficient, condition for enduring success in getting the DPRK to give up its nuclear weapons, nuclear materials, and nuclear weapons programs. Conversely, failing to address the DPRK’s underlying needs for energy (p.47) services now unmet (or poorly met) will virtually guarantee that any solution to the nuclear weapons issue will be unsustainable.

Notes

(1.) For details on the estimates provided in these figures and for related information, see David von Hippel and Peter Hayes, “Fueling DPRK Energy Futures and Energy Security: 2005 Energy Balance, Engagement Options, and Future Paths,” Nautilus Institute Special Report, 2007, http://nautilus.org/wp-content/uploads/2011/12/07042DPRKEnergyBalance.pdf (accessed June 12, 2011). An update to this analysis is currently under way. Other related articles by the authors include David von Hippel and Peter Hayes, “Energy Security for North Korea,” Science 316, no. 5829 (2007): 1288–1289; David von Hippel and Peter Hayes, “Growth in Energy Needs in Northeast Asia: Projections, Consequences, and Opportunities” (paper presented at the “2008 Northeast Asia Energy Outlook Seminar,” Korea Economic Institute Policy Forum, Washington, DC, May 6, 2008), http://s3.amazonaws.com/zanran_storage/www.keia.org/ContentPages/44539229.pdf (accessed June 27, 2012).

(2.) There have been reports, however, of potential oil resources in onshore and offshore areas of the DPRK. The Anglo-Irish oil exploration company Aminex has been negotiating with the DPRK for over a decade for the rights to explore and develop oil resources off the coast of the DPRK. The signing of an agreement on production sharing between the DPRK and Aminex was recently announced (C. Oliver and K. Brown, “Anglo-Irish Group Seeks North Korean Oil,” Financial Times, June 1, 2010, http://www.ft.com/cms/s/0/03026d26–6d05–11df-921a-00144feab49a.html [accessed June 12, 2011]). Whether or not this arrangement ultimately results in substantial crude-oil production, this news vividly underscores perhaps the prime requirement for outside organizations in working with the DPRK: patience.

(3.) The Nautilus Institute is updating its DPRK energy-sector analysis from a 2005 to a 2008 base year, so the values shown in figure 1 for 2008 should be considered preliminary. The slow growth of the DPRK economy, coupled with the ending of the heavy fuel oil imports under Phase 2 of the Six-Party Talks and our initial review of available data on, for example, China-DPRK energy trade, suggests, however, that the 2008 figures will, as shown, be likely to be sufficiently similar to 2005 figures for energy (p.48) supply and demand that the general conclusions of this chapter will not be affected. In particular, customs data on Chinese crude-oil and oil products exports to the DPRK in 2005 through 2009 show little year-to-year variation in quantities shipped.

(4.) For a more thorough discussion of this issue, see David von Hippel, Peter Hayes, Masami Nakata, Timothy Savage, and Chris Greacen, “Modernizing the US-DPRK Agreed Framework: The Energy Imperative,” Nautilus Institute Report, February 16, 2001, http://oldsite.nautilus.org/DPRKbriefingbook/agreedFramework/ModernizingAF.pdf (accessed June 27, 2012).

(5.) The “capacity factor” of a power plant refers to the equivalent fraction of time (for example, during a year) that the power plant is producing its full rated output.

(6.) One terawatt-hour is equal to 3,600 terajoules, 3.6 million gigajoules, or one billion kilowatt-hours. By way of comparison, the amount of electricity use in the South Korean region of Daegu alone was about 13 TWh in 2007 (Korea Energy Economics Institute [KEEI], Yearbook of Energy Statistics, 2008 [Seoul, KEEI/Ministry of Knowledge Economy, 2008]), which was perhaps a little more, after accounting for losses in electricity transmission and distribution, than the whole of the DPRK used in 2005.

(7.) See, for example, David von Hippel, Tatsujiro Suzuki, James H. Williams, Timothy Savage, and Peter Hayes, “Energy Security and Sustainability in Northeast Asia,” Energy Policy 39, no. 11 (November 2011): 6719–6730, http://dx.doi.org/10.1016/j.enpol.2009.07.001 (accessed June 12, 2011); David von Hippel, Timothy Savage, and Peter Hayes, “Introduction to the Asian Energy Security Project: Project Organization and Methodologies,” Energy Policy 39, no. 11 (November 2011): 6712–6718, http://dx.doi.org/10.1016/j.enpol.2008.01.010 (accessed June 12, 2011). See also David von Hippel, Tatsujiro Suzuki, James H. Williams, Timothy Savage, and Peter Hayes, “Evaluating the Energy Security Impacts of Energy Policies,” in The Routledge Handbook of Energy Security, ed. Benjamin K. Sovacool, 74–95 (Abingdon, UK: Routledge, 2011).

(8.) Hugh Bentley, “Trends in the DPRK Agricultural Sector and Implications for Energy Use” (paper presented at the “DPRK Energy Experts Working Group Meeting,” San Francisco, June 26, 27, 2006), based in part on experiences during the United Nations Agricultural Rehabilitation and Environmental Protection Programme in the DPRK, 1998–1999; see also James H. Williams, David von Hippel, and Peter. Hayes, Fuel and Famine: Rural Energy Crisis in the DPRK (Berkeley: Nautilus Institute, (p.49) 2000), published as a policy paper for the Institute on Global Conflict and Cooperation, University of California, San Diego; available at http://igcc.ucsd.edu/assets/001/501195.pdf (accessed June 12, 2011).

(9.) Randall Ireson, “Why North Korea Could Feed Itself,” 38 North, May 1, 2010, www.38north.org/?p=533 (accessed June 12, 2011).

(10.) For example, in 2005 the ROK government proposed sending 2 GW of power across the DMZ to make up (in part) for the suspended KEDO LWR concept and to revive denuclearization talks. In fact, it would have taken (and would take, if the offer were to be made today) many years of rehabilitation of the T&D grid and of end-use equipment to allow 2 GW of power coming in from the ROK to be used in the DPRK, and it would have taken on the order of two to three years to prepare the necessary infrastructure in the ROK to supply that much power to the North. See, for example, Peter Hayes, David von Hippel, Jungmin Kang, Tatsujiro Suzuki, Richard Tanter, and Scott Bruce, “South Korea’s Power Play at the Six-Party Talks,” Japan Focus, 33-2-05 (2005).

(11.) This argument should not, however, be interpreted to mean that the former KEDO LWR project must be totally abandoned (at least without the negotiated agreement of the DPRK). For all its many faults, the reactor project, when active, was one of the few avenues for constructive communication with the DPRK, and it remains a political priority for the DPRK and thus a past-and-future main point of negotiation in the Six-Party Talks.

(12.) See, for example, DPRK Delegation, “The Status of the Building Energy Sector in DPR Korea” (paper presented at the “Building Energy Efficiency Technology Training Workshop,” Beijing, March 9, 2008).

(13.) For example, David von Hippel and Peter Hayes, “DPRK Energy Sector Development Priorities: Options and Preferences,” Energy Policy 39, no. 11 (November 2011): 6781–6789, http://dx.doi.org/10.1016/j.enpol.2009.11.068 (accessed June 12, 2011); David von Hippel and Peter Hayes, “Fueling DPRK Energy Futures and Energy Security: 2005 Energy Balance, Engagement Options, and Future Paths,” Nautilus Institute Report, June 2007; David von Hippel and Peter Hayes, “Energy Security for North Korea,” Science 316, no. 5829 (June 1, 2007): 1288–1289; DOI: 10.1126/science.1142090; David von Hippel, Peter Hayes, James H. Williams, Chris Greacen, Mick Sagrillo, and Timothy Savage, “International Energy Assistance Needs and Options for the Democratic People’s Republic of Korea (DPRK),” Energy Policy 36, no. 2 (February 2008): 541–552; David von Hippel and Peter Hayes, “DPRK Energy Sector Assistance to Accompany Progress in Denuclearization Discussions: Options (p.50) and Considerations” (paper produced as part of the project Improving Regional Security and Denuclearizing the Korean Peninsula: U.S. Policy Interests and Options, organized by Joel Wit, Weatherhead Institute for East Asia, Columbia University, and the U.S.-Korea Institute, School of Advanced International Studies, Johns Hopkins University, Washington, DC); available at http://www.nautilus.org/projects/dprk-policy/vonHippel.pdf (accessed June 12, 2011).

(14.) See, for example, David von Hippel and Peter Hayes, “Engaging the DPRK Enrichment and Small LWR Program: What Would It Take?” Nautilus Institute Special Report, December 23, 2010, http://www.nautilus.org/publications/essays/napsnet/reports/vonHippelHayesLWR.pdf (accessed June 12, 2011).

(15.) We estimate this value to be a total of about $600 million in discounted 2010 dollars, though this is of course a very rough estimate. See Peter Hayes and David von Hippel, “The Six-Party Talks, Energy Assistance, and Korea’s Energy Security” (paper presented at the IPUS conference “The Future of North Korea and Global Cooperation,” Seoul, March 13, 2009).

(16.) Some key DPRK coal mines located near the sea were flooded in the 1990s. Since then, the lack of sustained availability of electricity has kept these mines from being fully pumped out and restarted.

(17.) For example, the DPRK has recently withdrawn from its long-standing (since the early 1990s) participation in the Greater Tumen Initiative (formerly the Tumen River Area Development Programme), which is now a four-country (formerly five, with the DPRK) effort to sustainably code-velop energy, transport, tourism, trade, and environmental resources in the Tumen River area around the common borders of Russia, China, the DPRK, and Mongolia, with the ROK involved as well. See http://www.tumenprogramme.org/ (accessed June 12, 2011).

Notes:

(1.) For details on the estimates provided in these figures and for related information, see David von Hippel and Peter Hayes, “Fueling DPRK Energy Futures and Energy Security: 2005 Energy Balance, Engagement Options, and Future Paths,” Nautilus Institute Special Report, 2007, http://nautilus.org/wp-content/uploads/2011/12/07042DPRKEnergyBalance.pdf (accessed June 12, 2011). An update to this analysis is currently under way. Other related articles by the authors include David von Hippel and Peter Hayes, “Energy Security for North Korea,” Science 316, no. 5829 (2007): 1288–1289; David von Hippel and Peter Hayes, “Growth in Energy Needs in Northeast Asia: Projections, Consequences, and Opportunities” (paper presented at the “2008 Northeast Asia Energy Outlook Seminar,” Korea Economic Institute Policy Forum, Washington, DC, May 6, 2008), http://s3.amazonaws.com/zanran_storage/www.keia.org/ContentPages/44539229.pdf (accessed June 27, 2012).

(2.) There have been reports, however, of potential oil resources in onshore and offshore areas of the DPRK. The Anglo-Irish oil exploration company Aminex has been negotiating with the DPRK for over a decade for the rights to explore and develop oil resources off the coast of the DPRK. The signing of an agreement on production sharing between the DPRK and Aminex was recently announced (C. Oliver and K. Brown, “Anglo-Irish Group Seeks North Korean Oil,” Financial Times, June 1, 2010, http://www.ft.com/cms/s/0/03026d26–6d05–11df-921a-00144feab49a.html [accessed June 12, 2011]). Whether or not this arrangement ultimately results in substantial crude-oil production, this news vividly underscores perhaps the prime requirement for outside organizations in working with the DPRK: patience.

(3.) The Nautilus Institute is updating its DPRK energy-sector analysis from a 2005 to a 2008 base year, so the values shown in figure 1 for 2008 should be considered preliminary. The slow growth of the DPRK economy, coupled with the ending of the heavy fuel oil imports under Phase 2 of the Six-Party Talks and our initial review of available data on, for example, China-DPRK energy trade, suggests, however, that the 2008 figures will, as shown, be likely to be sufficiently similar to 2005 figures for energy (p.48) supply and demand that the general conclusions of this chapter will not be affected. In particular, customs data on Chinese crude-oil and oil products exports to the DPRK in 2005 through 2009 show little year-to-year variation in quantities shipped.

(4.) For a more thorough discussion of this issue, see David von Hippel, Peter Hayes, Masami Nakata, Timothy Savage, and Chris Greacen, “Modernizing the US-DPRK Agreed Framework: The Energy Imperative,” Nautilus Institute Report, February 16, 2001, http://oldsite.nautilus.org/DPRKbriefingbook/agreedFramework/ModernizingAF.pdf (accessed June 27, 2012).

(5.) The “capacity factor” of a power plant refers to the equivalent fraction of time (for example, during a year) that the power plant is producing its full rated output.

(6.) One terawatt-hour is equal to 3,600 terajoules, 3.6 million gigajoules, or one billion kilowatt-hours. By way of comparison, the amount of electricity use in the South Korean region of Daegu alone was about 13 TWh in 2007 (Korea Energy Economics Institute [KEEI], Yearbook of Energy Statistics, 2008 [Seoul, KEEI/Ministry of Knowledge Economy, 2008]), which was perhaps a little more, after accounting for losses in electricity transmission and distribution, than the whole of the DPRK used in 2005.

(7.) See, for example, David von Hippel, Tatsujiro Suzuki, James H. Williams, Timothy Savage, and Peter Hayes, “Energy Security and Sustainability in Northeast Asia,” Energy Policy 39, no. 11 (November 2011): 6719–6730, http://dx.doi.org/10.1016/j.enpol.2009.07.001 (accessed June 12, 2011); David von Hippel, Timothy Savage, and Peter Hayes, “Introduction to the Asian Energy Security Project: Project Organization and Methodologies,” Energy Policy 39, no. 11 (November 2011): 6712–6718, http://dx.doi.org/10.1016/j.enpol.2008.01.010 (accessed June 12, 2011). See also David von Hippel, Tatsujiro Suzuki, James H. Williams, Timothy Savage, and Peter Hayes, “Evaluating the Energy Security Impacts of Energy Policies,” in The Routledge Handbook of Energy Security, ed. Benjamin K. Sovacool, 74–95 (Abingdon, UK: Routledge, 2011).

(8.) Hugh Bentley, “Trends in the DPRK Agricultural Sector and Implications for Energy Use” (paper presented at the “DPRK Energy Experts Working Group Meeting,” San Francisco, June 26, 27, 2006), based in part on experiences during the United Nations Agricultural Rehabilitation and Environmental Protection Programme in the DPRK, 1998–1999; see also James H. Williams, David von Hippel, and Peter. Hayes, Fuel and Famine: Rural Energy Crisis in the DPRK (Berkeley: Nautilus Institute, (p.49) 2000), published as a policy paper for the Institute on Global Conflict and Cooperation, University of California, San Diego; available at http://igcc.ucsd.edu/assets/001/501195.pdf (accessed June 12, 2011).

(9.) Randall Ireson, “Why North Korea Could Feed Itself,” 38 North, May 1, 2010, www.38north.org/?p=533 (accessed June 12, 2011).

(10.) For example, in 2005 the ROK government proposed sending 2 GW of power across the DMZ to make up (in part) for the suspended KEDO LWR concept and to revive denuclearization talks. In fact, it would have taken (and would take, if the offer were to be made today) many years of rehabilitation of the T&D grid and of end-use equipment to allow 2 GW of power coming in from the ROK to be used in the DPRK, and it would have taken on the order of two to three years to prepare the necessary infrastructure in the ROK to supply that much power to the North. See, for example, Peter Hayes, David von Hippel, Jungmin Kang, Tatsujiro Suzuki, Richard Tanter, and Scott Bruce, “South Korea’s Power Play at the Six-Party Talks,” Japan Focus, 33-2-05 (2005).

(11.) This argument should not, however, be interpreted to mean that the former KEDO LWR project must be totally abandoned (at least without the negotiated agreement of the DPRK). For all its many faults, the reactor project, when active, was one of the few avenues for constructive communication with the DPRK, and it remains a political priority for the DPRK and thus a past-and-future main point of negotiation in the Six-Party Talks.

(12.) See, for example, DPRK Delegation, “The Status of the Building Energy Sector in DPR Korea” (paper presented at the “Building Energy Efficiency Technology Training Workshop,” Beijing, March 9, 2008).

(13.) For example, David von Hippel and Peter Hayes, “DPRK Energy Sector Development Priorities: Options and Preferences,” Energy Policy 39, no. 11 (November 2011): 6781–6789, http://dx.doi.org/10.1016/j.enpol.2009.11.068 (accessed June 12, 2011); David von Hippel and Peter Hayes, “Fueling DPRK Energy Futures and Energy Security: 2005 Energy Balance, Engagement Options, and Future Paths,” Nautilus Institute Report, June 2007; David von Hippel and Peter Hayes, “Energy Security for North Korea,” Science 316, no. 5829 (June 1, 2007): 1288–1289; DOI: 10.1126/science.1142090; David von Hippel, Peter Hayes, James H. Williams, Chris Greacen, Mick Sagrillo, and Timothy Savage, “International Energy Assistance Needs and Options for the Democratic People’s Republic of Korea (DPRK),” Energy Policy 36, no. 2 (February 2008): 541–552; David von Hippel and Peter Hayes, “DPRK Energy Sector Assistance to Accompany Progress in Denuclearization Discussions: Options (p.50) and Considerations” (paper produced as part of the project Improving Regional Security and Denuclearizing the Korean Peninsula: U.S. Policy Interests and Options, organized by Joel Wit, Weatherhead Institute for East Asia, Columbia University, and the U.S.-Korea Institute, School of Advanced International Studies, Johns Hopkins University, Washington, DC); available at http://www.nautilus.org/projects/dprk-policy/vonHippel.pdf (accessed June 12, 2011).

(14.) See, for example, David von Hippel and Peter Hayes, “Engaging the DPRK Enrichment and Small LWR Program: What Would It Take?” Nautilus Institute Special Report, December 23, 2010, http://www.nautilus.org/publications/essays/napsnet/reports/vonHippelHayesLWR.pdf (accessed June 12, 2011).

(15.) We estimate this value to be a total of about $600 million in discounted 2010 dollars, though this is of course a very rough estimate. See Peter Hayes and David von Hippel, “The Six-Party Talks, Energy Assistance, and Korea’s Energy Security” (paper presented at the IPUS conference “The Future of North Korea and Global Cooperation,” Seoul, March 13, 2009).

(16.) Some key DPRK coal mines located near the sea were flooded in the 1990s. Since then, the lack of sustained availability of electricity has kept these mines from being fully pumped out and restarted.

(17.) For example, the DPRK has recently withdrawn from its long-standing (since the early 1990s) participation in the Greater Tumen Initiative (formerly the Tumen River Area Development Programme), which is now a four-country (formerly five, with the DPRK) effort to sustainably code-velop energy, transport, tourism, trade, and environmental resources in the Tumen River area around the common borders of Russia, China, the DPRK, and Mongolia, with the ROK involved as well. See http://www.tumenprogramme.org/ (accessed June 12, 2011).