International energy assistance needs and options for the Democratic People's Republic of Korea (DPRK)

Recent agreements between the Democratic People's Republic of Korea (DPRK) and the other countries involved in the six-party talks on the future of the DPRK's nuclear weapons program have focused attention on the North Korean energy sector, and, specifically, what the international community can or should do to assist the DPRK in energy sector redevelopment. During two visits to North Korea in 1998 and 2000, a team of American and North Korean researchers conducted a unique rural energy use survey in a flood-affected rural village in the DPRK—the farming village of Unhari. The information gathered during the survey has important implications on how to properly approach the ongoing rural energy crisis in the DPRK, and, more broadly, to provide overall energy sector assistance. The results of the Unhari survey are described briefly, followed by suggestions of internal policy and legal reforms, approaches to international cooperation, key and attractive energy sector technologies and processes for energy sector redevelopment in the DPRK.     

Electric power grid interconnection in Northeast Asia

In spite of regional closeness, energy cooperation in Northeast Asia has remained unexplored. However, this situation appears to be changing. The government of South Korea seems to be very enthusiastic for power grid interconnection between the Russian Far East and South Korea to overcome difficulties in finding new sites for building power facilities to meet its need for increased electricity supplies. This paper analyzes the feasibility of this electric power grid interconnection route. The issues addressed include electricity market structures; the prospects for electric power industry restructuring in the Russian Federation and South Korea; the political issues related to North Korea; the challenges for the governments involved and the obstacles anticipated in moving this project forward; project financing and the roles and concerns from multilateral and regional banks; and institutional framework for energy cooperation. While there are many technical issues that need to be resolved, we think that the great challenge lies in the financing of this commercial project. Thus, the governments of the Russian Federation and South Korea involved in the project need to foster the development of their internal capital markets and to create confidence with international investors. To this end, on energy side, this involves defining a clear energy policy implemented by independent regulators, speeding up the already started but delayed reform process of restructuring electric power industry and markets, and establishing a fair and transparent dispute resolution mechanism in order to reduce non-commercial risks to a minimum. The paper argues that establishing a framework for energy cooperation in this region will contribute positively towards that end, although views differ regarding its specific form. Finally, given that North Korea has a crucial transit role to play and faces a very unstable political situation, it is concluded that moving the project forward needs to be contingent on a resolution of the North Korea's nuclear crisis.     

Korea׳s emission trading scheme and policy design issues to achieve market-efficiency and abatement targets

In 2008, the government of Republic of Korea (Korea) announced the national abatement target aiming at 30% reductions from the Business-as-Usual projections by 2020. Accordingly, the Emission Trading Scheme (ETS) will be implemented from 2015 onwards. As ETS performance substantially depends on the structural design, it is critically important to examine the details of Korean ETS for the achievement of cost effectiveness and concurrent development of an active emission trading market. This paper addresses several policy design issues for this purpose. After providing an overview on the current framework of Korean ETS, we propose ways to achieve flexibility, consistency and market efficiency of the program in consideration of the preexisting policies. Issues in policy design are discussed by focusing on allowance allocation, market stabilization measures and price mechanism in the emission and energy markets in Korea. This paper will serve as a practical guideline for establishing sustainable and market-efficient Korean ETS that can be compatible with the international standards as in the EU ETS.     

Why is South Korea's renewable energy policy failing? A qualitative evaluation

This study explores the causes of the South Korean government's failure to successfully deploy its renewable energy policy. Despite the South Korean government’s ongoing efforts since 2002 to promote the deployment of renewable energy, the established deployment target has not been met and the share of renewable energy supply in total primary energy supply is poor compared to peer countries with a similar level of economic development. Therefore, we attempt to find the causes of this policy failure using qualitative evaluation methods. Through the analyses, conducted using focused interviews and secondary data, we found that the domination of the fossil fuel and nuclear power industry's interests, inconsistent policy shifts, policy design that lacks sufficient support schemes, poorly coordinated government activities, and unsystemic and untimely monitoring and feedback have led to the failure of renewable energy deployment policies in South Korea. To overcome these problems, we suggest that the South Korean government should set more ambitious policy goals, establish a new independent organization that focuses on energy policy issues, use a varied policy mix, and secure political support from diverse policy actors.     

Status of biogas technologies and policies in South Korea

To date, there are about 49 biogas plants in South Korea that are generally recognized as economically and technically unsuccessful due to lack of knowhow, deficient technologies and policies. There is a need to analyze the status of biogas technology and policy in South Korea from the point of view of an external biogas expert, since biogas technology in South Korea has not yet been analyzed by foreign biogas experts so far. For analyzing site investigation, literature research and interviews are performed. It was found that there are several lacks of conceptual design of biogas technology, such as plant dimension, energy balance, operation knowhow. Technical and financial support for the development of biogas technology was insufficient so far. There are some policies to support biogas technologies, however financial support from different ministries seemed not to have been used efficiently. Some policies are planned excessively so that they cannot be realized on time. Based on the general policy called “Green Growth”, the Korean government plans to establish a biogas market in South Korea in order to recover energy from organic waste. For this purpose, R&D efforts should be intensified for consulting and education in national and international networks for the transfer of knowhow and technologies. Definition of the existing restrictions on the development of biogas technology is required. By developing a biogas roadmap, the creation of a biogas market could be promoted efficiently in South Korea.     

Renewable energies: climate-change mitigation and international climate policy

Global climate change, its present control and even its future reduction have been considered. Energy has been proposed as the main feed of comprehensive development. The way for meeting energy needs which certainly affects the existing energy resources will have forceful climate consequences. The purpose of this study is to explore how, in practice, the energy requirements of sustainable development can be afforded without any climate-change aggravation. Two fundamental approaches were proposed and completely discussed: the first long-term developing approach is the use of advanced energy-productive technologies instead of the existing ones and/or implementation of hybrid processes, a combination of conventional systems with a newly low energy-consumptive and emission-reductive technology in a newly installed system. The second most sustainable scheme is the development of alternative renewable energy (RE) resources. In this case, available internationally legal documents discovering the RE policies were explored and their commitment strategies were taken into original and deliberate challenges. It was concluded that the best solution to afford energy requirements is the expansion of RE sources, excluding or rarely without any sanctions reflected on the main documents of international climate policy. Since the dominant conditions of international investments have more tendencies to the short-time cost-efficient methods, the documents have only provided a limited situation for the expansion of REs. As a result, the present weak status of REs in the documents comprises their attitude towards the long-term developing scheme (the first approach) and not to the most sustainable scheme of altering the energy resources (the second approach).     

Evaluating hydrogen risk management policy PR: Lessons learned from three hydrogen accidents in South Korea

Hydrogen energy has become a pivotal actor in achieving carbon neutrality by 2050 in the era of the climate crisis. Regardless of its importance, three consecutive hydrogen safety accidents and their aftermath in South Korea have aggravated the public's acceptance of hydrogen. Hydrogen-induced risks have always existed in our society regardless of technical improvement. Here, the task of the government is to manage the hydrogen risk to prevent hydrogen disasters. This study included three steps in its research design; 1) selecting experts through snowball sampling, 2) conducting a qualitative email survey, and 3) analyzing the qualitative answer sheet by applying semantic network analysis. We found that experts' evaluations of the Korean hydrogen PR policy were positive regarding responsiveness but negative regarding openness, guidelines, and control tower. Therefore, we suggest practical policy recommendations; the central government should play an important role in cultivating professional crisis management PR personnel and others.     

Levelized cost of electricity (LCOE) of renewable energies and required subsidies in China

The development and utilization of renewable energy (RE), a strategic choice for energy structural adjustment, is an important measure of carbon emissions reduction in China. High cost is a main restriction element for large-scale development of RE, and accurate cost estimation of renewable power generation is urgently necessary. This is the first systemic study on the levelized cost of electricity (LCOE) of RE in China. Results indicate that feed-in-tariff (FIT) of RE should be improved and dynamically adjusted based on the LCOE to provide a better support of the development of RE. The current FIT in China can only cover the LCOE of wind (onshore) and solar photovoltaic energy (PV) at a discount rate of 5%. Subsidies to renewables-based electricity generation, except biomass energy, still need to be increased at higher discount rates. Main conclusions are drawn as follows: (1) Government policy should focus on solving the financing problem of RE projects because fixed capital investment exerts considerable influence over the LCOE; and (2) the problem of high cost could be solved by providing subsidies in the short term and more importantly, by reforming electricity price in the mid-and long-term to make the RE competitive.     

Energy efficiency,security of supply and the environment in South Africa: Moving beyond the strategy documents

Energy efficiency is one of the most potent and cost effective ways of meeting the demands of sustainable development. It has in fact been referred to as the best energy resource. Way back in 2005 the South African Department of Minerals and Energy (DME) published its Energy Efficiency Strategy in support of some of the objectives enlisted in the 1998 White Paper on Energy Policy. The Strategy set a national target for energy efficiency improvement of 12% by 2015 against the baseline year 2000. The document further predicted that, with a business as usual model of energy usage, at the projected rate of national economic development, there would be a need to invest in new power generating capacity by around 2007. Despite the policy foresight and seemingly enthusiastic efforts, though, the dawn of 2008 saw the country gripped in an electric power crisis, with a capacity shortfall of over 10%. This paper looks at what could have gone wrong, examines energy efficiency policies and measures in other countries and how these lessons could be adopted to the South African context.     

Effect of building regulation on energy consumption in residential buildings in Korea

According to the International Energy Agency (IEA), the energy demand for the building sector constituted about 25.3% of the final energy use in South Korea. The energy demand for residential buildings counts for 50.3% of the building sector and has also increased by 2.9 percent every year. The Korean government has shifted focus and is now promoting energy efficiency within the building sector and has set long-term energy conservation goals.Despite these efforts to minimize building energy, the Korean government has changed the building regulation to allow remodeling of the balcony space as a living space. Remodeling the balcony space to become an indoor space means that a buffer space for the outdoor environment is lost, causing thermal discomfort and discomfort glare and moreover, increasing the heating and cooling energy demand in residential buildings. Also, it results in an increase in building energy demand in South Korea.In this study, the effect of the alteration of balcony space on the indoor thermal environment and the heating and cooling energy demand of residential buildings in Korea were investigated by field measurement and simulation. From the measurement results, the indoor temperature of the condition without a balcony was 0.8 °C lower than that with a balcony. The heating and cooling load of the unit without the balcony space was 39% and 22% higher, respectively, than that of the unit with the balcony space. This increase results in considerable energy loss in the national scale and the ratio will be 0.3% of the final energy use in Korea. Also, it represents about 1.3% of the final energy use within the building sector of Korea.     

Barriers and strategies of hydrogen fuel cell power generation based on expert survey in South Korea

Recently, South Korea has become a pioneer in implementing hydrogen fuel cell energy production; however, sustainable development of hydrogen fuel cell as an energy source in South Korea remains limited. Hence, it is necessary to address these challenges that hinder such development. This study aims to identify the barriers to developing hydrogen fuel cell energy in South Korea and classify them. We used the combined qualitative methodology, which includes both expert Delphi surveys and Analytic Hierarchy Process techniques. Five factors were identified, each of which has three sub-factors derived for the Delphi survey. The results show that the most serious barriers are institutional and political factors; in addition, the cost of the unit and infrastructure of the fuel cell are significant barriers.     

Asian renewables: Asia targets RE expansion - regional overview

Since the mid-1990s many countries in Asia have reviewed their energy development programmes and have given greater emphasis to the use of renewable energy. For some countries developing renewable energy is simply an extension of their existing energy policy. For others, however, particularly Asia's more economically developed countries that lack indigenous energy reserves, the decision to promote renewable energy is a costly choice and forms part of their Kyoto protocol pledges. In the first part of a two-part feature, David Hayes Refocus correspondent takes a look at renewable energy development and potential in Asian countries starting with China, India, South Korea and Japan.     

Energy technology roadmap for the next 10 years: The case of Korea

The Korea Institute of Energy Research (KIER), the only government-sponsored research institute specialized in the development of energy technology and policy, has established a long-term strategic energy technology roadmap (ETRM) for the period spanning from 2006 to 2015. Taking into account such variables as the energy environment, economic spin-off, and commercial potential, the ETRM was classified into 3 sectors, namely high oil prices, the UNFCCC, and the hydrogen economy. The ETRM not only represents a milestone in terms of the development of national energy technology in Korea, but also serves to identify the primary energy technologies which should be developed. The ETRM also supplies energy policymakers with successful R&D alternatives vis-à-vis the development of energy technologies under the current Korean energy environment.     

Effect of increased wind penetration on system prices in Korea's electricity markets

In this paper, we examine the effect of increased wind penetration on system marginal prices (SMPs) in South Korea's electricity market. Korea's renewable portfolio standard (RPS) went into effect in 2012, with a goal of increasing the share of renewable generation to 10% of the total load by 2022. We examine the output of wind installations across the Korean peninsula and simulate an increase in wind penetration consistent with Korea's RPS targets. Under a variety of assumptions on demand elasticity, we find that higher shares of wind generation in total supply reduce both the average SMP and its variation. In particular, we find that wind energy output on the Korean peninsula is more correlated with peak electricity demand than has been reported for other regions. The per‐unit value of wind energy to owners of wind assets is thus higher for South Korea than would be the case for European or North American locations with a similar mix of fuels other than wind. Copyright © 2013 John Wiley & Sons, Ltd.     

Renewable energy and the environment in South Africa: A way forward

The need to mitigate the adverse environmental impacts of fossil fuel usage, the volatility of fuel prices and enhancement of national energy security, have largely driven a phenomenal growth, around the world, in renewable energy (RE) generation (particularly grid-connected), over the past two decades. The necessity to apply policy support instruments to promote the dissemination of these technologies is now a universally accepted norm. Different countries and societies depending on the prevailing socio-economic environment draft and apply their policy frameworks differently and debates abound as to which mechanisms should have been most suitable under which circumstance. Most of these debates, however, assume the existence of an intrinsic political environment in favour of the process. In South Africa the current political environment is not very conducive to the development of a sustainable RE industry. This paper explores some of the anomalies and barriers and suggests possible options for a way forward to a viable RE industry in the country.     

Contents

The peak power demand in Korea in 1999 was 37.3 GW, and the total generating capacity was 44.4 GW. Compared with the peak demand of 5.4 GW in 1979, peak demand has increased about seven-fold. This means that the annual rate of increase over the past 20 years has been about 10%. This is unlikely to be found in any other country. Furthermore, according to the long-term plan, peak demand is expected to double during the next 15 years. In addition to such a high rate of increase in power demand, there are associated difficulties in developing generating plants and expanding transmission and distribution systems. These associated difficulties are: about 98% of primary energy is imported; about 70% of the country is mountainous; political and military tension exists between South and North Korea; and load centers are far from generating sites. Under such circumstances, every effort until now has been focused on maintaining an appropriate adequacy and security of supply, but it has become more difficult to site new generating plants and transmission lines. This is likely to damage the adequacy and security of the supply. In order to solve such problems, new technology such as FACTS, wide-area management systems (WAMS), HVDC, renewable energy, and dispersed generation is considered to be the best way. This new technology has been already applied or is under study.     

Solar energy trial in Folovhodwe South Africa: Lessons for policy and decision-makers

In Mutale Local Authority of South Africa, a photovoltaic pilot project was commissioned to provide off-grid electricity to 582 households residing in Folovhodwe village. The aim was to try a renewable source of energy supply in a rural settlement area. The Beneficiaries Assessment method was used to assess the problems of the implementation and operation of the solar energy project in Folovhodwe. The project initiators did not realize that there would be the problem of the sustainable implementation of the project. The problem of sustainability was related to the inadequate definition of the role of each stakeholder. For example the end users were not taught how to properly operate and repair faulty equipment because it was not built into the planning and implementation stages of the project. Skill acquisition through capacity building for the end users can promote the sustainability of the project on a long-term basis. In Folovhodwe, improper planning and implementation of the project was responsible for the failure of the project. The project initiators did not foresee the problem of theft of materials, problems related to the procurement of spare parts and who would bear the cost of maintenance of the facilities. The failure of the project was also related to the inability of the policy makers to tackle the question of the role that each stakeholder should play to ensure the success of the project in a rural setting. The suggestion to policy and decision-makers is that pilot projects with relatively new technology input in a rural area should reconsider the importance of culture, capacity development and the level of income of the end users at the initial planning stage and implementation.     

Oil price volatility and stock price fluctuations in an emerging market: Evidence from South Korea

How important are oil price fluctuations and oil price volatility on equity market performance? What are the policy implications if volatility turns out to be significant? We assess this issue in an economics/finance nexus for Korea using a VEC model including interest rates, economic activity, real stock returns, real oil prices and oil price volatility. Our main aim is to capture the effects of crude oil prices on the Korean economy thoroughly covering the period of the Asian Financial Crisis of 1997, which heavily affected the country, and the oil price hikes in the early 1990s after the Gulf War. South Korea was the country most hit by the financial crisis together with Indonesia and Thailand. Results indicate the dominance of oil price volatility on real stock returns and emphasize how this has increased over time. Oil price volatility can have profound effect on the time horizon of investment and firms need adjust their risk management procedures accordingly. This increase in dependency has been found in other net oil importing emerging equity markets. We test the relationship between oil price movements and economic activity by using modern time series techniques in a cointegrating framework. We expand the standard error correction model by examining the dynamics of out of sample causality through the generalized variance decomposition and impulse response function techniques. The evidence from persistence profiles also gives important guidelines based on how fast the entire system adjusts back to equilibrium. In addition, we find the cointegrating relationship to be stable and find that the linear error correction model to be more favorable than an asymmetric 2 period Markov switching model.     

Analysis of long-range clean energy investment scenarios for Eritrea,East Africa

We discuss energy efficiency and renewable energy (EE/RE) investments in Eritrea from the strategic long-term economic perspective of meeting Eritrea's sustainable development goals and reducing greenhouse gas emissions. EE/RE are potentially important contributors to national productive capital accumulation, enhancement of the environment, expansion of energy services, increases in household standard of living, and improvements in health. In this study, we develop a spreadsheet model for calculating some of the national benefits and costs of different levels of investment in EE/RE. We then present the results of the model in terms of investment demand and investment scenario curves. These curves express the contribution that efficiency and renewable energy projects can make in terms of reduced energy sector operating expenses, and reduced carbon emissions. We provide demand and supply curves that show the rate of return, the cost of carbon emissions reductions vs. supply, and the evolution of the marginal carbon emissions per dollar of GDP for different investment levels and different fuel-type subsectors.     

Renewable energy policy evaluation using real option model — The case of Taiwan

This study presents a policy benefit evaluation model that integrates cost efficiency curve information on renewable power generation technologies into real options analysis (ROA) methods. The proposed model evaluates quantitatively the policy value provided by developing renewable energy (RE) in the face of uncertain fossil fuel prices and RE policy-related factors. The economic intuition underlying the policy-making process is elucidated, while empirical analysis illustrates the option value embedded in the current development policy in Taiwan for wind power. In addition to revealing the benefits that RE development provides when considering real options, analytical results indicate that ROA is a highly effective means of quantifying how policy planning uncertainty including managerial flexibility influences RE development. In addition to assessing the policy value of current RE development policy, this study also compares policy values in terms of internalized external costs and varying feed-in tariff (FIT). Simulation results demonstrate that the RE development policy with internalized CO₂ emission costs is appropriate policy planning from sustainability point of view. Furthermore, relationship between varying FIT and policy values can be shown quantitatively and appropriate FIT level could be determined accordingly.