About the East Asia
Energy Futures Project
Project Background
The East Asia Energy Futures (EAEF)
project is designed to encourage the collaborative elaboration and evaluation
of national and regional energy futures for Northeast Asia. Northeast Asia—broadly defined to include
China, the Democratic Peoples' Republic of Korea, the Republic of Korea, Japan,
the Russian Far East, and Mongolia—will make large energy-sector investments in the coming decade.
Currently, two of the primary technological alternatives for future energy
supply in the region are perceived to be coal and nuclear power. These options are problematic on both
environmental and security grounds.
Pursuing energy development that is based primarily on coal and/or
nuclear power may also be sub-optimal on financial grounds compared to
alternative "paths" for energy sector development that are based on
waste minimization and on increasing fuel supply diversity, including the use
of stringent emissions controls, fuel switching, and energy efficiency. Given large capital requirements for energy
sector investments, and the relative scarcity of available capital in some
countries the region, incentives will be strong to optimize investment by
selecting least-cost energy development paths.
There are four components of a true
least-cost calculus:
1.
Up-front
investment and operating capital requirements;
2.
Other
fuel-cycle costs (including the cost of fuel supply technologies, the costs of
fuel extraction, decommissioning costs, and other elements);
3.
The
costs of environmental and security externalities; and
4.
Dynamic
opportunity costs, which compare likely future prices stemming from
technological trajectories.
Most estimates of the "cost" of energy supply
expansion in Northeast Asia are partial and do not include both fuel-cycle
costs and externalities. More inclusive
cost estimates could find that, even without adding in environmental and
security externalities, implementing some of the technological options
conventionally considered is relatively more costly than implementing
"alternative" paths. Adding
consideration of environmental and security externalities could point further
toward adopting lower-waste alternative energy development paths as least-cost
strategies.
Developing a more inclusive least-cost calculus, and using
the calculus to prepare quantitative estimates of the costs and benefits of
different energy paths is, however, only the first step in evaluating the
feasibility of different means of providing energy services in Northeast Asia.
A second step is to consider and overcome institutional obstacles to investment
in least-cost alternatives by developing innovative financing mechanisms. It is crucial that such analysis be conducted
on a regional and preferably collaborative basis. Pursuing the analysis in this manner will help to make sure that
all of the relevant actors are included and all of the relevant regional
resource options are considered, as well as helping to broaden regional views
as to which energy technologies are "modern" and desirable.
The Nautilus Institute is developing a
set of alternative future energy "paths" as a part of its East Asia
Energy Futures (EAEF) project. The EAEF
project is funded by the US Department of Energy and the W. Alton. Jones
Foundation (WAJF). These energy paths are built upon detailed data sets that
describe energy supply and demand, and track the energy, economic,
environmental, and military-security-related aspects of different energy paths
for each of the countries of the region. These national energy paths have been
designed to illustrate and highlight the choices to be made with respect to
energy security on the one hand, and environmental impacts such as acid rain
and climate change on the other. The
energy modeling work that underlies the energy paths analysis has been carried
out using the LEAP (Long-range
Energy Alternatives Planning system)
software. LEAP has also been used by
Nautilus Institute as an analytical tool in collaborative work with regional
partners, both in the context of the EAEF project itself and in a variety of
other Nautilus projects. Two such
projects, the Energy, Security and Environment in Northeast Asia (ESENA)
Project and the Pacific Asia Regional Energy
Security (PARES) Project, are described briefly below.
The ESENAproject
was a three-year policy-oriented dialogue between U.S. and Japanese experts on
the nexus of energy, environmental, and security issues in Northeast Asia. The aims of the project were to:
1)
outline
an integrative policy framework to assist policymakers in thinking about the
linkages between energy, environmental and security issues; and
2)
generate
recommendations for small-scale, joint U.S.-Japan initiatives promoting
regional energy and environmental security in Northeast Asia.
In its first year, the ESENA project focused on
energy-related transboundary air pollution in Northeast Asia, specifically acid
rain. In year two, the focus in ESENA
was on energy-related marine issues in the regional seas of Northeast
Asia. In its third year, the focus of
the dialogue was on innovative financing mechanisms that could promote
sustainable energy investment, with a specific emphasis on investment in
advanced clean coal technologies in China.
A regional workshop for the ESENA project also marked the
first use by Nautilus of scenario-driven
techniques for holding strategic conversations between policymakers,
scientists, and others from different countries and/or backgrounds. These scenario methods are applicable in
workshops, publications, on-line discussions, and project collaborations.
Scenario methods of this type can be used to complement Nautilus' analytical
approach to projecting alternative energy paths and futures (as described above).
Building on this strong foundation of analysis and
collaborative research, the Nautilus Institute has, with WAJF funding, launched
a related but separate activity on regional energy security called the Pacific
Asia Regional Energy Security (PARES) project.
The PARES Project has included the exploration and development of
methodologies for use in analyzing the impacts of energy-sector choices on
energy security—broadly defined—in the Pacific Asia region.
In its initial phase, the PARES project involved a working
group of experts from both Japan and the United States. An initial analytical framework was
developed and applied to Japan. The Japanese case study examined the energy
security implications of two different energy paths from 1995 to 2020: a
"Business as Usual" path in which recent trends continue; and an
"Alternative" path in which an aggressive policy effort accelerates
implementation of energy efficiency, renewable energy, natural gas, and other
technologies. An initial analysis of the
risks to Japan of loss of energy supply by geographic region and fuel type
showed that it is advantageous to Japan from economic, environmental, and
security perspectives to adopt the "Alternative" path as opposed to a
"Business-as-Usual" path.
Some of the advantages of the alternative path accrue through an
increase in the diversity of fuel supply, thus reducing loss-of-energy-supply
risks.
Results from application of the methodologies developed in
the first phase of the PARES project are being used to catalyze widespread
acceptance of a well-grounded concept of energy security that can become the
basis for safe, secure, and sustainable energy policies in Northeast Asia. The PARES project has brought together key
officials and researchers in the region to explore new and comprehensive
definitions of energy security, and to develop an analytical framework that can
be used to evaluate the degree to which different energy "paths" -
sets of energy- and non-energy-related policies and measures enhance or detract
from energy security.
As a part of the East Asia Energy Futures Project, the calculus developed under the PARES project will
be applied, with collaborative input from researchers and others across
Northeast Asia to the region as a whole, and especially to China. A central goal of this application of the
PARES methodologies will be to determine what happens to regional energy
interdependence when each country optimizes energy policy in order to minimize
risk.
Objectives of the EAEF Project
The specific overall objectives of the EAEF project are to:
·
Develop
a new operational paradigm of energy security for states in the Northeast Asian
region by engaging key energy analysts and planners in the region in
collaborative, conceptual, and applied work with American counterparts. This element builds on the conceptual
foundations laid down in the Nautilus Institute's Energy, Security, and
Environment in Northeast Asia (ESENA) and Pacific Asia Regional Energy Security
(PARES) projects.
·
Work
collaboratively to construct alternative energy futures from energy plans and
projections in each country.
Projections for energy supplies and demands will be placed in a common
software framework to make assumptions and data sources transparent. In this activity, national analysts will be
commissioned to conduct energy security analyses in the common framework. Use
of a common framework, including common time horizons for analysis, will assure
that the studies produced in each nation can be readily understood by researchers
and policymakers in other countries of the region, as well as by outside
observers. The use of a common
analytical framework will also simplify the collaborative task of combining
national energy futures into a coherent, consistent set of energy futures for
the region as a whole.
·
Train
national counterparts who will participate in the construction of common
databases and regional projections of energy supply and demand based on
bottom-up (energy end-use-based) national estimates. The counterparts will use
a common energy-economy modeling software framework.
·
Conduct
missions to review the institutional framework for energy planning and energy
policy implementation in each country in the region, and to work with
(including, as needed, providing on-site training for) key energy planning
experts in each country. The energy
planning experts will be chosen for their ability and potential to influence
national energy planning in their nation, and specifically, for their interest
in working toward improving energy security in the broad sense on both the
national and regional level.
·
Establish
clear and open means of communication between national counterparts, Nautilus
researchers, and others, in order to assist and catalyze the process of
collaborative energy paths analysis. In
addition to the missions described above, it is anticipated that EAEF workshops
that bring together project participants will be held in the region on a
periodic basis (once or twice per year—plus a combination of a World-wide Web
site for the project, e-mail list-servers, and other communications means—will
be employed to help keep researchers in contact.
·
Maintain
and extend the Institute's existing modeling of the energy economy of each
country in the Northeast Asian region. This internal modeling capability will
be used to provide reference benchmarks for the work of national counterparts
in the regional project. As a part of
this modeling work, Nautilus will continue to collate data sets from each country at a highly disaggregated level, and
incorporate these data into a common software framework. Although this type of
work is necessarily very data-intensive, it will provide enhanced transparency
to the countries of the region and other observers as to the underlying logic
of national, regional, and global sources of energy security.
·
Through
the collaborative activities described above, establish a collective core of
active and interactive energy researchers in the North East Asia region who
build a stock of consensual knowledge about energy, environment, and security
issues.
·
Through
the collaborating energy researchers and through timely and targeted release of
project reports and briefings, help the United States, China, and other
countries within and outside of Northeast Asia to identify ways to cooperate in
grappling with and resolving energy development problems in the countries of
the region.
Near-term
Activities of the EAEF Project
In the year 2000, activities undertaken or initiated under
the EAEF project will include:
·
Creation
of a regional energy database with data sets from each country. The
goal will be to present and to collect energy data that are as highly
disaggregated (in terms of fuel types and end-use structure) as possible, and
to incorporate these data sets into a common software framework (LEAP).
The use of the common software framework allows for the display of the underlying assumptions and trends in a comparative
way, and simplifies the generation of graphs and figures to illustrate the
results and conclusions of the analysis for policy makers.
·
Generate
an analytical framework capable of providing quantitative estimates of the
capital requirements and total costs of the alternative energy paths in each of
the target countries, and use the framework to prepare preliminary cost
estimates.
·
Conduct
a regional energy workshop (see more detailed description below) involving
energy researchers from the Northeast Asian region. Workshop participants will present national analyses of regional
energy futures, and discuss the interrelationships between energy, security and
environment in Northeast Asia. As a
part of the preparations for this workshop, Nautilus is commissioning selected
researchers in the region to prepare papers on specific topics relating to
energy futures and energy security in their countries. Nautilus is also
commissioning reviews by researchers from China of a draft paper prepared by
Nautilus on the topic of energy futures in China.
·
Continue
the process of identifying and linking up with partner institutions and
researchers in the countries of the region, and begin the process of
familiarizing collaborating researchers in the tools and methods of energy
security analysis.
·
Continue
the analysis, as begun under the Nautilus ESENA project described above, of
institutional obstacles to financing least-cost energy investment, and continue
the consideration of innovative financing mechanisms that can help to overcome
those obstacles.
