DPRK Energy Security and US Policy Options

1

• DPRK Energy Security and US Policy Options

Briefing to US-DPRK Next Steps Workshop January
27, 2003 Peter Hayes www.nautilus.org
2
SCOPE OF PRESENTATION

• DPRK Energy Status Update
• Six Policy Options for No Rewards DPRK energy
  development and assistance

3
Truck with Coal Gasifier

• Truck with Gasifier

4
(No Transcript)
5
FrequencyVoltage Fluctuation
Nampo Hotel
Unhari Village
Frequency 50 Hz /- 4 Hz Voltage 230 V /- 35
6
DPRK ENERGY BALANCE UPDATE OTHER SUPPLY
DATA/RESULTS
7
DPRK ENERGY BALANCE UPDATE ELECTRICITY SECTOR
RESULTS
8
DPRK ENERGY BALANCE UPDATE KEDO HFO AND LWR
ISSUES

• Importance of KEDO HFO to the DPRK In calendar
  2000 we estimate that KEDO HFO...
• Accounted for 2.1 of total energy supply
• Accounted for 28 of refined products supply
  (after refinery fuel use)
• Accounted for 64 of HFO supply
• Fueled 6.9 of total electricity output
• Supplied 31 of thermal electricity fuel input
  (note that total imports from KEDO were slightly
  larger than estimated electricity HFO use)
• Importance of HFO as an electricity fuel in the
  winter was/is probably particularly significant

9
COORDINATED ASSISTANCE FOR THE DPRK ENERGY SECTOR

• Nature of the DPRK's energy sector problems, mean
  that a focus on one or several massive projects
  will not work
• Multi-pronged approach on a number of fronts is
  required a large suite of coordinated, smaller,
  incremental projects addressing needs many areas
• External experts working shoulder-shoulder most
  effective
• DPRK engineers learn fast and best by doing

10
ASSUMPTIONS

• Pu and Enriched Uranium Proliferation Moving to
  Resolution to IAEA standards
• Not substituting for LWR 2GWe of power which
  would subsidize DPRK by 0.2b/y
• Size energy aid to substitute for US HFO valued
  at about 100m/y and 500000 T of thermal energy
  equivalent of HFO 20.5 PJ/year
• Time horizons for aid flow 5 years

11

• PRIORITY 1 ENERGY SECTOR PLANNING AND TRAINING
• Assistance for Internal Policy and Legal Reforms
  to Stimulate and Sustain Energy Sector Rebuilding
  in the DPRK (APEC EWG bilaterals IBRD, ADB)
• PRIORITY 2 REHAB GRID piecemeal eg Mines for
  Missiles (Who? IBRD with Japanese reparations
  and ROK financing, possibly implemented by KEDO)
• PRIORITY 3 REHAB COAL--Coal Supply and
  Transport Systems WHO JAPANESE REPARATIONS,
  ADB/IBRD, ROK
• PRIORITY 4 REHAB DPRK POWER PLANTS THE DPRK
  DOES NOT NEED NEW COAL-FIRED POWER PLANTS
• WHO REFURBISHES? ROK, IPPS
• PRIORITY 5 REDUCE THE VAST WASTE OF SUPPLIED
  ENERGY DISTRICT HEATING SYSTEM EFFICIENCYWHO?
  Technical assistance from China, ROK, Japan,
  financing IBRD/AD
• PRIORITY 6 SMALL-SCALE RENEWABLE ENERGY AND
  ENERGY-EFFICIENCY WHO bilaterals, NGOs

12
DPRK ENERGY SECTOR PLANNING AND TRAINING
PRIORITY 1

• Assistance for Internal Policy and Legal Reforms
  to Stimulate and Sustain Energy Sector Rebuilding
  in the DPRK
• Reform of energy pricing practices, and the
  physical infrastructure to implement them
• Careful energy planning to base aid on need and
  rational objectives
• Training for energy sector actors
• Strengthening regulatory agencies and
  educational/research institutions in the DPRK
• Involving the private sector in investments and
  technology transfer
• Who APEC EWG bilaterals IBRD, ADB

13
PRIORITY 2 WHAT WILL IT TAKE TO REHAB THE GRID?

• New conductors, substation equipment, switching
  equipment
• Modern control facilities
• New towers or poles in many existing
  right-of-ways
• Labor, rebar, channel iron, cement can be
  supplied locally, but grid-quality conductor,
  even nuts and bolts may be unavailable in the
  DPRK without significant retooling of
  manufacturing industries
• Estimated overall cost of grid reconstruction
• 3 to 5 billion
• Who? IBRD with Japanese reparations and ROK
  financing, possibly implemented by KEDO

14
PRIORITY 2 START REBUILDING THE TD SYSTEM
PIECEMEAL NOW1. Work with DPRK engineers to
identify and prioritize list of TD sector
improvements and investments2. Provide limited
funding for pilot installations in a limited
areaperhaps in the Tumen River area2. Engage
the World Bank as a leader in DPRK power sector
refurbishment (with Japanese funding?)3. Focus
on projects that would help the DPRK earn foreign
exchange in acceptable manner, such as grid
repairs to allow key mines to operate
15
Mines-for-Missiles?

• In 1995,
• the DPRK provided the USG with a list of 8
• mining investment
• development opportunities

16
PRIORITY 3 HELP TO REHABILITATE COAL SUPPLY AND
COAL TRANSPORT SYSTEMS COAL IS IN SCARCE SUPPLY
WHEREAS COAL FIRED POWER PLANTS ARE NOT 1.
Boiler rehabilitation, especially small-medium
sized boilers that keep people warm in winter
2. Assist with evaluating and upgrading coal
mines in the DPRK, including-Improvements in
mining technologies-Evaluation of coal
resources-Mine ventilation systems, mine
safety-Rehabilitation of the coal transport
network-Rail infrastructure/parts, fuel supply
for trainsWHO JAPANESE REPARATIONS, ADB/IBRD
17
DPRK ENERGY SYSTEM PRIORITY 4 DPRK POWER PLANTS

• Total installed capacity 10 gigawatts,
  approximately half hydroelectric, half thermal
• Except for one 200 MWe HFO-fired plant,
  essentially all of the thermal power is
  coal-fired
• About 10 large thermal plants and 20 large hydro
  plants account for over 60 percent of capacity
• Lack of spare parts, maintenance difficulties,
  TD constraints, fuel supply constraints, and
  damage from natural disasters have reduced actual
  operable capacity to 2 to 3 GWe at present
  leaving 7-8 GWe to be refurbished
• THE DPRK DOES NOT NEED NEW COAL-FIRED POWER
  PLANTS
• WHO REFURBISHES? ROK, IPPS

18
DPRK ENERGY SYSTEM PRIORITY 5REDUCE THE VAST
WASTE OF SUPPLIED ENERGY

• Domestically-produced electric and electronic
  devices often use 1940s, 50s, and 60s modern
  alloys and casting methods for motors lacking
• Coal-fired boilers efficiency less than 50
  percent
• Industrial plants are even less efficient than
  Soviet counterparts on which they were based
• Steam distribution systems likely porous
• THE FASTEST WAY TO INCREASE
• EFFECTIVE POWER AND COAL SUPPLY
• IS BY REDUCING WASTE,
• eg DISTRICT HEATING SYSTEM EFFICIENCY
• WHO? Technical assistance from China, ROK,
  Japan, RFE
• Financing PNL, IBRD/ADB

19
Priority 5 Increase end use efficiency1.
Improve efficiency in industrial boilers, and
smaller boilers to conserve coal, reduce
pollution, improve reliability2. Provide
training, materials, assistance to set up and
finance energy efficient manufacturing
concerns3. Focus on humanitarian
applicationsfor example, electricity for urban
sewage systems4. Weatherize DPRK building
stock, especially hospitals, schools, orphanages
20
Priority 6 Alternative Sources of Small-Scale
Renewable Energy and Energy-efficiency
Measures1. DPRK has a keen interest in
renewable energy, and energy-efficiency
technologies2. Focus on fast, small and cheap
technologies that couple appropriate technology
with humanitarian assistance, provide services in
areas of the DPRK poorly served by existing
systems
21
Example Tractor diesel use and lack of starter
motors
22
Tackle the Link between Rural Energy and Famine

• Priority 5 Alternative Sources of
  Small-Scale Energy, Energy-efficiency Measures
• Small hydro turbine-generator manufacturing
• Suits both DPRK topography and government
  instructions for local authorities
• Wind power dissemination of wind turbines
• National goal, and of keen interest to
  individuals, but DPRK technology is inadequate.
  First phase might be manufacture of water-pumping
  windmills
• Agricultural equipment efficiency measures to
  help North Koreans to feed themselves
• Who? EU aid program NGOs

23
ROUGH SUMS TO ITERATE

• Energy planning and capacity building 5m/y
• Rehab grid 30m/y (0.6GWe/y avoided G or about
  6PJ/y)
• Rehab coal supply 10m/y ( to 2.1PJ/y)
• Rehab generation 20m/y ( to 4.2 PJ/y)
• Reduce enduse waste 20m/y ( 4.2 PJ/y)
• Small-scale, rural and renewable energy 15m/y
  (3.2 PJ/y)
• (1/2 million T/y HFO 21 PJ/y)

24
REALISM

• Cooperate DPRK energy insecurity without
  rewarding bad behavior
• Size it to HFO
• Terrorist listing
• Licensing private firms in JVs
• DPRK absorptive constraints (institutional and
  material)
• Diminishing returns