north-east asian perspectives on the challenges to …...north-east asian perspectives on the...

North-East Asian Perspectives on the Challenges to Energy Security and the

Sustainable Use of Energy

November 12 2012

Dr. Jae-Seung Lee (Korea University)Dr. Jungmin Yu (Anyang University)

UNESCAP-Consultant Report

Disclaimer

This document was prepared for the presentation at North‐East Asia Sub‐regional Consultation Meeting for the Asia‐Pacific Energy Forum 2013,12‐13 November 2012, Incheon, Republic of Korea, organized by UN ESCAP. The contents and opinions represent the authors’ personal view. Some notes and the titles of source were abbreviated. The figures were mostly drawn from open resources in the web. Please consult with the authors for the details of contents and the sources of materials.

2UN ESCAP‐LEE/YU‐20121112

Part II.

Enhancing Energy Security and the Sustainable Use of Energy: Modalities of Cooperation

Energy Initiatives in East and North‐East Asia

Initiative Acronym Type Energy subsectorASEAN+3 through ACE ASEAN+3 Intergovernmental

Asia‐Pacific Economic Cooperation APEC IntergovernmentalAsia‐Pacific Partnership on Clean

Development and ClimateAPP‐CDC Partnership

Central Asia Regional Economic Cooperation

CAREC ProgrammeElectric power, energy

efficiency

Energy Charter Treaty ECT IntergovernmentalElectric power, energy

efficiency

Intergovernmental; Collaborative Mechanism on Energy Cooperation in

North‐East AsiaECNEA Intergovernmental

Eurasian Economic Cooperation EurAsEC IntergovernmentalElectric power, fossil

fuels

Greater Mekong Sub‐region Programme GMS Programme Programme

Greater Tumen Initiative GTI Programme Electric power

Mekong ProgrammeMekong

ProgrammeIntergovernmental Electric power

Partnership for Equitable Growth PEG Partnership Fossil fuelsRenewable Development Initiative RDI Programme Renewable energyShangai Cooperation Organization SCO Intergovernmental

Source: ESCAP, 2008


Multilateral Energy Cooperation in North‐East Asia

Note:X‐denotes membership;O‐denotes observer status. ECNEA, Five Year Strategy, p.65, Annex 8.



Intergovernmental Collaborative Mechanism on Energy Cooperation in North‐East Asia (ECNEA)

Established in 2005 after a series of UNESCAP meetings

The only initiative targeting all six member states of NEA

Two working groups (WG‐Energy Planning and Policy and WG‐Coal)

Five Year Strategy (2010‐2014)

ECNEA tries to: Lessen its dependence on energy imports from outside the region;

Optimize the economy and efficiency of supply and use of energy:

Minimize the environmental impact of energy production and consumption through improved energy mix and greater energy efficiency.

Improved energy security in North‐East Asian through energy cooperation

in a sustainable manner by 2020



Five Year Strategy (2010‐2014) Key agenda:

Development of oil, gas and coal resources;

Development of policies and regulations for energy trade through oil and gas pipelines and grid interconnection;

Investment promotion and project development for a regional energy market;

Study on the use of renewable energy and improvement of energy efficiency;

Evaluation of establishing a sub‐regional strategic oil reserve

Achievement & Limitation Continued discussion and researches among participating countries as well as

private companies in Government‐Business Dialogue.

However, two major countries of the sub‐region, China and Japan, do not officially participate in the ECNEA.

The Democratic People’s Republic of Korea (DPRK)’s participation is also limited.

With insufficient participation and contribution, available resources of ECNEA as well as its political mandate were limited.

UN ESCAP‐LEE/YU‐20121112 7

Trans‐Asia Energy System (TAES)

Definition: “Asia‐wide Integrated Energy System Linking and Synergizing Subregional Energy Systems”

Objectives: “Enhance Regional Energy Security of Asia for Sustainable Social and Economic Development in the 21st Century” Increase Regional Energy Trade through Trade Facilitation

Stabilize Market and Investment Environment through Pan‐Asian Regional Energy Agreement

Encourage Energy Cooperation to Promote Development and Sustainable Growth

Establish Pan‐Asian Energy Cooperation that Encompasses Asian Counties and Multilateral Energy Cooperation

Expected Outcome Advance Knowledge, Information and Actual Projects

Inter‐subregional Cooperation

Economies of Scale

Strengthen Investment Relationships

Build Energy Infrastructures


Trans‐Asia Energy System (TAES)

Agenda‐Setting

Identify Key Priority Agendas

Integrate Elements of Sustainable Development More Involvement of Stakeholders

“Securitized Regionalism”

Realize Limitations to Develop Agenda that fit Purposes & Capacity


Natural Gas PipelineElectricity Grid Networks

Oil Supply/Demand

Hard Agenda Soft Agenda

Energy EfficiencyRenewable EnergyBiofeuls/Biomass

Clean Coal TechnologyEnergy Policies R&D Partnership

The Constraints of Effective Energy Cooperation in North‐East Asia

A number of economic and geopolitical constraints in NEA energy cooperation

A gap between the number of initiatives and the level of coordinated action in NEA energy cooperation. Why?

Potential mutual benefits from energy cooperation have not been clearly visualized.

The sense of urgency has not been strong enough

Unfavorable political and security environments

Potential sources of territorial and political disputes

Political trust is uncertain, and historical antipathy

Different scope and focus of energy security of participating countries

Insufficient level of momentum for the achievement of active regional energy cooperation.

Unilateral pursuit of energy supply and development, which in turn diminishes the necessity of regional energy cooperation.

A careful agenda‐setting supported by political and institutional support would be crucial.


Guiding Principles of Agenda‐Setting for NEA Energy Cooperation

Sample Agenda Reducing transaction costs,

Building norms and rules of energy transaction and investment to increase transparency

Enhancing energy efficiency,

Jointly managing strategic stockpiling,

Jointly conducting R&D projects,

Energy infrastructure safety (offshore, onshore),

Prevention and management of disaster‐related energy security,

Coordinating climate change agendas such as GHGs mitigation, Clean Development Measures (CDMs),

Capacity‐building and technical assistance,

Energy welfare and energy service

Five year strategy (ECNEA) suggested:

Shall be acceptable to all member states

Set realistic goals and identify action‐oriented programs /projects

Contribute to the creation of an enabling environment for energy trade, investment and sub‐regional cooperation at large

Be based on the accomplishments of activities implemented under the Collaborative Mechanism.


Public‐goods‐oriented energy agenda

The propulsion of politically non‐sensitive agenda

Soft energy agenda

Reinforcing relation with other regional energy / economic cooperation initiatives.

Political Commitments (I)

1. Invigorating political mandate for further energy cooperation A ministerial level meeting such as the one proposed at APEF

APEF could produce a new ministerial declaration or agreement on sub‐regional energy cooperation

North‐East Asian Energy Summit could be envisaged in due course.

2. Sustainable development and public‐goods oriented agenda‐setting for more inclusive sustainable energy cooperation emphasize alternative energy issues including low‐carbon growth, capacity

building and energy welfare.

accommodate the interests of member countries in diverse economic and energy settings.

North‐East Asian energy cooperation, at least in the short‐ and medium‐term, needs to be devoid of unnecessary politics. This can only happen if the political leadership in the sub‐region agrees to a politically neutral approach to energy cooperation.


Political Commitments (II)

3. Effective institutional design based on a renewed political momentum from member states. A new energy cooperation architecture in NEA could either update and

enlarge existing institutions or create a new institution.

4. Linking energy cooperation with bilateral and multilateral regional cooperation in East and North‐East Asia The constructive restoration of bilateral relationships would be a political

prerequisite to effective multilateral energy cooperation.

Networking with other regional multilateral institutions such as APEC, ASEAN+3, and ADB

Reducing political cost as well as start‐up cost

Maximizing the earlier efforts of regional energy cooperation


Proposed Actions: 1. Institutional Modality

Strengthening political back‐up at the higher level Introducing North‐East Asian Energy Ministers’ Meeting (NEA‐EMM), Senior

Energy Officers’ Meeting (NEA‐SEOM), Working Group (NEA‐EWG)

Endorsement of all six NEA countries (Russia, China, Japan, Republic of Korea, Democratic People’s Republic of Korea, Mongolia).

Preparing for a Ministerial declaration which will bestow political mandate for NEA energy cooperation initiatives in the APEF.

At a later stage, NEA‐EMM could be advanced to NEA Energy Summit (NEA‐ES)

North‐East Asia Energy Fund (NEA‐EF, tentatively titled) Institution for project‐oriented activities

Both for upstream/ interconnection projects and sustainable energy projects

Strengthening Secretariat function: UNESCAP‐SRO‐ENEA + @, @=volunteering member state

The involvement of UN ESCAP, especially in an earlier stage, will facilitate the participation of all six member countries.


Proposed Actions: 1. Institutional Modality

Institutional networking Taking full advantage of earlier efforts of energy cooperation and to avoid

possible duplication of resources

Networking partner institutions would include: IEA; The Renewable Energy & Energy Efficiency Partnership (REEEP); The Energy Charter Secretariat; Asia‐Pacific Network for Energy Technology (APNet); APEC Peer Review Mechanism on Energy Efficiency (PREE); International Atomic Energy Agency (IAEA) / Asian Nuclear Safety Network (ANSN); OECD‐Nuclear Energy Agency (NEA); International Renewable Energy Agency (IRENA); Global Carbon Fund (GCF) and Global Green Growth Institute (GGGI)

APEC’s energy agenda would be useful for NEA energy cooperation.


The St. Petersburg Declaration of APEC’s 10th EMM (June 24‐25, 2012) adopted following policy objectives:

Enhance and balance the share of natural gas in the energy mix Develop renewable energy sources Ensure the safe and secure use of nuclear energy Boost energy end‐use efficiency

Proposed Actions: 2. Agenda‐Setting

Targeted agenda‐setting: Instead of horizontal and comprehensive grand plan, a more targeted agenda‐

setting is needed.

Previous energy cooperation initiatives often discussed too broad agenda with insufficient institutional capabilities.

Re‐balancing the agenda : Between upstream / interconnection projects and sustainable energy projects

(soft energy agenda)

Giving more short‐term focus on the latter.

Strengthening low‐carbon growth mechanisms: CDMs, energy efficiency, renewable energy projects

The reduction of energy intensity as a barometer


Proposed Actions: 2. Agenda‐Setting

Strengthening sustainable development agenda: Energy aid, energy welfare, capacity‐building and technical assistance to less‐

benefited population in NEA.

Collaboration with other international/regional institutions.

Strengthening infrastructure safety: Environment‐ and disaster‐related energy infrastructure security

Offshore oil, gas, renewable energy facilities, Power‐grid

Nuclear safety

Supporting energy development and interconnection: Gas, oil, electricity projects

Both at the bilateral and multilateral level

Facilitation measures for energy trade In connection with other trade agenda


Proposed Actions: 3. Implementation stage

Preliminary stage (1‐2 years) Political mandate for NEA‐EMM, NEA‐SOM, NEA‐WG (action‐oriented)

Agenda / project selection

Funding commitment

Secretariat: UNESCAP SRO‐ENEA + @

Stage I: (3‐5 years) Regular NEA‐EMM, SOM, WG

Soft/Sustainable Energy Agenda > Upstream agenda

Capacity‐building, technical assistance & training

Funding enlargement

Introduction of low carbon growth mechanism (efficiency enhancement, etc)

Secretariat: UNESCAP SRO‐ENEA + @

Stage II: (~ ) NEA‐EMM / NEA‐Energy Summit

Soft/Sustainable Energy Agenda = Upstream agenda

Enhancing low‐carbon growth mechanism

More interconnection / co‐development projects : e.g. NEA power‐grid

Secretariat: Independent


Proposed Actions: 4. Expected Outcomes

Enhancing energy connectivity and interdependence in NEA

More inclusive regional energy cooperation scheme

Building a regional low‐carbon growth mechanism

Enhancing energy welfare and services

Building foundation for future comprehensive energy cooperation in NEA

Building capacity to deal with energy crisis in the region with: increased internal response mechanism

increased intra‐regional energy supply system

lessened dependence on imported fossil fuels from outside the region.


Conclusion

The rationale for enhanced political momentum for NEA energy cooperation at this stage

Breakthrough for political confrontation in the region

New political setting from new leadership(s) in the member countries

Rising importance of renewable energy and low‐carbon development agenda in the post‐Kyoto Protocol era (2013‐)

Urgent need for a more inclusive mechanism to less‐benefited population in the region with energy aid and services


Q & A

The End

UN ESCAP‐LEE/YU‐2012111221

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