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Acknowledgement
The authors would like to acknowledge that Jonathan Sinton of Lawrence Berkeley Laboratory reviewed and contributed text to section 4 of this paper.
1. Introduction
The Yalta Conference at the end of World War II resulted in the
partitioning of Korea. Though the boundary thus created was altered
slightly by the agreement that ended the Korean War, the Korean Peninsula
was left politically and economically divided. The two Korean states thus
created--the Republic of Korea (ROK), often referred to as South Korea,
and the Democratic People's Republic of Korea (DPRK), or North Korea--
went on to rebuild their shattered economic infrastructure and pursue
development in very different ways, aided by different economic partners.
The DPRK's economic rise from the ashes of war was impressive,
particularly given its political isolation from the Western world.
Recently, however, the effective end of the Cold War and the substantial
withdrawal of economic aid from the former Soviet Bloc, together with
other world and regional events, have put the DPRK's economy in what
most observers agree is either a downward spiral or, at best, a state of
stagnation.
A recent study by the authors (funded by the Alton Jones Foundation)
estimated the prospects for energy efficiency improvements in the DPRK
economy. In the process, we derived a detailed estimated supply and
demand balance for fuels used in North Korea, which is shown in Table 1. We would encourage readers interested in
a detailed discussion of how this balance was compiled to consult that
study (Von Hippel and Hayes, 1995). In this paper we touch on some of the
problems faced by DPRK in its energy sector, describe our indicative
estimates of the potential for implementation of energy efficiency and
renewable energy in the DPRK, and discuss some of the means whereby the
DPRK's energy problems can be addressed through international
cooperation.
[ Return to Top ]
2. Energy Sector Problems
In this section, we briefly discuss some of the energy sector
problems in North Korea. In some cases, evidence of these problems is
largely anecdotal, gleaned from various project descriptions and mission
reports filed by recent visitors to DPRK. In other cases, there is clearer
evidence for energy sector problems. In either case, problems in the DPRK
energy sector must be considered (and in some cases addressed) before
meaningful progress can be made on implementing energy efficiency of
renewable energy measures.
2.1. Key Resource and Technological Bottlenecks
Though the evidence for these problems is largely anecdotal, there
have been reports of "bottlenecks" in the DPRK energy system that have
the effect of impeding the flow of goods and materials. In some cases
these bottlenecks interact to form cycles that further constrict the DPRK
economy. For example, coal shortages at power plants have reportedly
(Hayes, 1993c) been caused, at least in part, by a lack of iron and steel to
maintain the rail system that brings the coal from the mines to the power
station. The iron and steel deficiency is, in turn, the result of the lack of
coal to fuel metals production, as well as rail transport difficulties in
moving ore from the mines to the mills.
Similarly, lack of spare parts for certain imported industrial
infrastructure may constrain production in some industries, and in
downstream industries that rely on the output of the upstream industries.
Lack of fuel for trucks and other transport equipment delays delivery of
parts and other inputs to factories, resulting in lower overall
productivity.
The DPRK electricity generation and distribution system is outdated,
with a fairly complex grid of 62 power plants, 58 substations, and 11
regional transmission and dispatching centers operated literally by
telephone and telex, without the aid of automation or computer systems.
This results in poor frequency control, poor power factors, and frequent
power outages[1]. The power generation
system suffers from a lack of spare parts in some instances, as well as
testing equipment for use in maintenance activities.
2.2. Low Rate of Utilization of Energy Facilities
In part because of resource bottlenecks like those above, the rate of
utilization of key energy facilities in the DPRK is reportedly relatively
low. If official DPRK electricity generation figures are correct, the
capacity factor for electricity generation facilities (computed at the
output of power plants divided by what their output would be if they
operated 100 percent of the time at full power) was on the order of 50 to
60 percent in 1990. On the other hand, if estimates by outside observers
are more accurate, capacity factors could have been in the 30 to 40
percent range, and may have been even lower in more recent years (for
example, 1991 to 1993). Capacity factors of 50 to 60 percent are low,
but not extremely so, for a modern electrical grid, while average capacity
factors of 30 to 40 percent would be quite low.
There are several different estimates of DPRK refining capacity. If
the higher estimates are correct, refining capacity in North Korea is
probably under-utilized, while the lower estimates would imply that
refineries ran at near full capacity in 1990. In either case, reportedly
lower oil imports since 1990 probably has resulted in one or both of the
DPRK's refineries being operated at sub-optimal rates, which typically
results in lower operational efficiencies (due to being operated at part
load and/or being started and stopped more often).
Industrial boilers and furnaces are probably also operated at sub-
optimal rates due to the types of feedstock and fuel constraints noted in
section 3.1. Like refineries and power plants,
these industrial devices typically perform at lower average efficiencies,
when operated at lower rates.
2.3. Under-development of Key Sub-sectors
The economic development in DPRK in the last few decades has
focussed, as indicated above, on extractive and other heavy industries.
Partly as a consequence, of this focus--and partly as a result of North
Korea's political isolation from much of the industrialized world--some
key sectors of the DPRK economy remain under-developed or produce goods
that are effectively obsolete.
Unlike many Asian countries, the DPRK does not have a
semiconductor industry. As a consequence, and because imports of
computer equipment to the DPRK are difficult at best--electronic
automation and control systems that could markedly improve the
efficiency of industrial processes, boilers, and other equipment.
The DPRK produces a number of medium and heavy trucks. Chief
among these is a 2 1/2 tonne vehicle that is apparently a crude copy of a
Soviet truck from the 1950's and 1960's. This truck reportedly has a
carburetor that wastes a considerable amount of fuel at low speeds. More
modern, efficient, and reliable truck designs would enhance efficiencies
in the transport sector and on the many other sectors of the DPRK economy
that rely on truck transport of goods.
Coal preparation, with the exception of some small-scale
manufacturing of coal briquettes, is apparently not practiced in DPRK.
The power plant and industrial boilers, and even the smaller boilers in
residential and public/commercial buildings, would be more efficient and
easily operated and maintained if they were fueled with prepared coal.
Coal preparation involves pulverizing and washing coal to reduce
impurities such as ash and sulfur.
Other key processes that have been under-developed in North Korea
include coal mining technologies--DPRK lacks the technology to mine coal
at more than moderate depths--and oil and gas exploration. There may be
oil and gas reserves in offshore areas of North Korea, but the country
lacks the technologies to effectively explore and develop these resources,
and has yet to secure an international partner to aid in such an effort.
2.4. Limits on Coal Resources
Although the DPRK has substantial coal reserves, the varying quality
of its coals, and the location of some of its better coal reserves, sets
limits on their utilization. Some of the coals mined in Korea have ash
contents as high as 65 percent, and heating values as low as 1000 kcal/kg
(roughly one-sixth the energy content of high-quality coals). Untreated
coals of this quality can be expected to have a low efficiency of
combustion, and the large volumes of bottom and fly ash generated when
these coals are burned create a disposal problem [2].
Approximately one-half of the coal reserves in the important Anju
mining area (located northwest of Pyongyang) are located under the
seabed. The DPRK currently lacks the technology to effectively and safely
extract this coal, which includes some of the higher-quality coal in the
area. In mines in the Anju district that are areas close to the sea, it is
reportedly already necessary for miners to pump six tonnes of seawater
per tonne of coal mined, due to saltwater intrusion into the low-lying coal
seams.
2.5. Low Efficiency of Energy Transforming Processes and
Equipment
The reported low efficiency of energy transforming processes and
combustion equipment has been noted earlier in this report. Low-
efficiency energy sector devices in the DPRK reportedly includes:
- Industrial boilers, which suffer from a lack of spare parts,
inadequate maintenance and control systems, sub-optimal fuel quality,
and antiquated design
- Boilers in residential and public/commercial buildings, which have
the same general problems as industrial boilers
- Utility boilers and generators, which have the same types of
efficiency problems as industrial and other boilers, but also have
problems with the electrical components of the generating facilities
(including reports of degraded insulation on generator windings) and
experience emergency power outages.
- The electricity transmission and distribution systems. Official
estimates of losses in these systems total 16 percent of generation,
which would be high for a modern system of similar size to the DPRK grid
but is not unreasonably so. Other observers, however, suggest that these
losses comprise a higher fraction of generation. In either case, it is
clear that the efficiency of the electricity transmission and distribution
system has room for marked improvement.
2.6. Fragmentation of Institutional Responsibility for Key
Parts of the Energy Sector
The fragmentation of institutional responsibility in the energy
sector inhibits efforts to upgrade the DPRK's energy systems. There is no
single institution in North Korea that is responsible for energy analysis,
integrated planning, and management. Ministries and other government
organizations involved in the energy sector include:
- The Ministry of Coal Mining (coal exploration, mining, and supply)
- The Electric Power Industry Commission (electricity generation,
dispatching, sales, and development)
- The State Planning Commission, Central Statistics Bureau, and
Commission for Science and Technology (energy statistics and energy
planning activities)
- The Transport Commission (energy use in the transport sector)
- The Ministry of Atomic Energy (nuclear energy research)
- The External Economic Affairs Commission (purchase of crude oil
and refined products, and purchase of imported equipment for use in the
energy sector)
- The Ministry of Machine Building Industry (domestic manufacturing
of power generation equipment)
- Institutes within the Academy of Sciences (research and
development activities. Research and development activities are also
carried out by the individual ministries)
- The State Committee for Energy (major decisions in the energy
sector)
- The Military (Army, Air Force, and Navy, as well as reserve units)
accounts, by our estimate, for a significant share of fuels use in the DPRK,
particularly petroleum products.
Coordination between the various institutions involved in energy
sector activities is apparently less than optimal, and should be improved
to enable North Korea to take advantage of the energy efficiency
opportunities and energy planning resources that could become available
(through bilateral and multi-lateral aid, for example) in the near future.
2.7. Demographic and Work-force Issues
The North Korean workforce is literate, disciplined, and hard-
working; these attributes have been key in allowing the DPRK to make the
economic strides that it did in (particularly) the two decades following
the Korean War. The DPRK workforce, however, suffers from a lack of
technological training as a result of North Korea's political isolation. In
addition, the relatively low rate of growth of the population means that
the workforce is aging. This may cause average workforce productivity to
decline over the long term (all else being equal, as the ratio of active
workers to retirees declines), and may present problems in retraining
workers for new, higher-technology jobs (for example, to make goods that
would be competitive in the export market). Academics and engineers
involved in the basic sciences and in applied research and development
probably also suffer lower productivity due to limited and tightly-
controlled contact with their peers in other countries.
Another workforce issue is the significant fraction (probably on the
order of 17 percent) of potentially economically active males that are in
the armed forces of DPRK. While soldiers apparently participate in public
works projects and in some other civilian economic activities (such as
harvesting of crops), the proportion of workers in the active armed forces
(and the time spent by the 5 million reservists in military training)
undoubtedly acts as a drain on the overall DPRK economy [3].
2.8. Suppressed and Latent Demand for Energy Services
Lack of fuels in many sectors of the DPRK economy has apparently
caused demand for energy services to go unmet. Electricity outages are
one obvious source of unmet demand, but there are also reports, for
example, that portions of the North Korean fishing fleet have been idled
for lack of diesel fuel. Residential heating is reportedly restricted in the
winter to conserve fuel, resulting in uncomfortably cool inside
temperatures.
The problem posed by suppressed and latent demand for energy
services is that when and if supply constraints are removed there is likely
to be a surge in energy use, as residents, industries, and other consumers
of fuels increase their use of energy services toward desired levels. This
probable surge in energy use makes it even more important to enhance the
energy efficiency of equipment and appliances in the DPRK as much as
possible, but will limit any net savings in fuels.
Compounding the risk of a surge in the use of energy services is the
virtual lack of energy product markets in the DPRK. Without fuel pricing
reforms, there will be few incentives for households and other energy
users to adopt energy efficiency measures.
Energy consumers are also unlikely, without a massive and well-
coordinated program of education about energy use and energy efficiency,
to have the technical know-how to choose and make good use of energy
efficiency technologies.
[ Return to Top ]
3. Potential for Energy Efficiency and Renewable Energy in
the DPRK
In a recent study (Von Hippel and Hayes, 1995) we describe an
estimated energy supply and demand balance for North Korea (Table 1); the previous section of this Chapter
related some of the energy sector problems facing the country. In this
section we use the estimated energy balance as a starting point for a
indicative--though quite admittedly very approximate and not at all
exhaustive--quantitative analysis of some of the energy efficiency and
renewable energy options that could be implemented in the DPRK, as well
as a more qualitative discussion of some of the alternatives available.
In the text that follows, we describe the goals of our analysis,
present the approaches and data sources used, describe the overall results
of the analysis, and present the specific assumptions used and study
results for the key subsectors and end-uses addressed.
3.1. Goal of the Study
The preparation of a full-fledged analysis of the energy efficiency
and renewable energy opportunities for a country like the DPRK is a large
undertaking, and is not only well beyond the scope of this study, but even
further beyond the limitations of the data on the North Korean energy
situation that we have had available to work with. As a consequence, our
much more modest goal was to prepare indicative quantitative analyses of
energy efficiency options for a number of key sectors and subsectors.
Although these analyses are necessarily built on a number of assumptions,
they are designed to provide order-of-magnitude estimates for the energy
savings potentially available, and of the costs of achieving those savings.
In addition, we hope that this analysis will help to indicate fertile areas
where additional work is needed to evaluate energy efficiency and
renewable energy opportunities in North Korea, while suggesting specific
near- and medium-term opportunities for energy efficiency measures.
3.2. Approach and Data Sources
Our general approach to preparing the analysis of energy efficiency
opportunities can be described as follows:
- Use the estimated DPRK energy balance data as a guide to indicate
key sectors and subsectors where fuel demand could be significantly
reduced by energy efficiency measures.
- Use the energy balance results, together with data from the
international energy literature and where necessary (that is, often) rough
estimates of key parameters to estimate end-use shares for key
technologies.
- Use cost and performance data on energy efficiency and renewable
energy technologies data from international literature sources to
estimate the potential achievable fuel savings available in key
subsectors, and the investment costs required to achieve those savings.
In many cases, we have been fortunate to be able to draw on the large body
of work on energy efficiency programs in the People's Republic of China
that has been published by the by the Energy Analysis Program of
Lawrence Berkeley National Laboratory (LBNL or LBL) and their Chinese
collaborators. In many of these cases, the cost and performance data are
based on actual Chinese experience obtained during the 1980's.
- A full-fledged analysis of the achievable potential for energy
efficiency measures requires a host of assumptions about the future.
Population growth rates, economic growth rates, and underlying, ongoing
structural changes such as changes in the housing stock, shifts in
industrial output, and changing patterns of personal consumption (among
many others) form the backdrop against which energy efficiency
opportunities should be considered. For this analysis, however, and for a
variety of reasons, we have chosen, for the quantitative portion of our
analysis, to let our estimate of potential energy sector improvements
stand for the achievable savings over the next 10 years. Our reasons for
this assumption, in addition to the paucity of reliable data that the reader
will by now recognize is endemic to our topic, include:
- Since our study is based on a 1990 energy balance, and the
North Korean economy has been reportedly been either static or in decline
in the years since 1995, it would seem that even an immediate turnaround
would be unlikely to result in 1990-to-2005 fuel consumption levels that,
on average, greatly exceed 1990 levels. Realistically, political
considerations would appear to make a complete and immediate
turnaround less likely than a slow recovery.
- Though complete implementation of a particular energy
efficiency measure in a subsector is unlikely, we feel that the pathways
for technology dissemination in North Korea, if there is committed
support from national leaders and the financial and technical support from
the international community, have the potential to allow the rapid
implementation of energy efficiency measures.
- We believe that our assumptions as to the energy savings
achievable from the technologies we address (quantitatively) are more
likely to prove to be under- than over-estimated. This belief is informed
by the large number of anecdotal reports of vast waste of energy in the
DPRK, even when compared with early 1980's conditions in China.
- Evaluate and aggregate the potential impacts and costs of the energy
efficiency and renewable energy technologies quantified, and suggest
other key measures that are likely to be broadly applicable in North Korea.
- Evaluate, briefly, the potential environmental and other impacts of
implementing energy efficiency measures.
3.3. Overall Results for Energy Efficiency Measures
Evaluated
We chose the following set of energy efficiency and renewable
energy measures for our initial analysis:
- Measures that Save Coal
- Industrial boiler improvements
- Residential (multi-family) and public/commercial military
boiler improvements
- Domestic coal stove/heater improvements
- Residential (multi-family) and public/commercial/military
building shell improvements
- Electric Utility boiler improvements
- Measures that Save (or Generate) Electricity
- Industrial electric motor improvements
- Electric motor improvements in other sectors
- Residential Lighting improvements
- Non-residential Lighting improvements
- Reduction in "Own Use" at coal-fired Electric Utility plants
- Reduction in "Emergency Losses" at coal-fired Electric Utility
plants
- Reduction in electricity transmission and distribution losses
- Wind powered electricity generation
- A Measure to Save Petroleum Products
- Replacement of the existing fleet of 2 1/2 tonne trucks
The details of the process we used in estimating the impacts and
costs of these measures are provided in the study mentioned previously
(Von Hippel and Hayes, 1995).
Table 2 shows the overall results of our
evaluation of these measures. We have assumed that under an aggressive
program with both strong leadership commitment inside the DPRK and
technical and financial cooperation from other countries, these measures
(or some of these measures and others with similar per-unit costs and
impacts) could be implemented over the next 10 years. In total (that is, in
year 10 of a crash program), they save approximately 390/yr Petajoules
(PJ[4)] of coal (about 29 percent of 1990
DPRK coal supply) at a cost of about $US 1.3 billion (1990 dollars), plus
over 50 PJ/yr (about 25 percent of 1990 generation) of electricity supply
(electricity saved plus new wind-powered generation) at a cost of
approximately $1.7 billion. Replacement of the DPRK fleet of 2 1/2 tonne
trucks, as we have modelled it, is unlikely to be cost effective (for
reasons explained in the next section), but would save approximately 4.4
PJ of refined products (somewhat under 4 percent of total national use
and 18 percent of road transport use as we have estimated it) at an
investment cost of $0.82 billion.
As noted in below, the key assumption that we have made in
estimating the costs and performance of most of the coal- or electricity-
saving energy efficiency measures is that the costs and performance of
these measures, when implemented in the DPRK, will be similar to the
cost and performance of the measures as experienced in the People's
Republic of China during energy efficiency programs carried out there in
the 1980's. It could be argued that the costs of the measures in China
might be lower than in the DPRK, due to lower labor rates and a larger
manufacturing base in China. It could in our opinion, however, equally be
argued that the opportunities for savings with the measures we have
evaluated are likely to be greater in the DPRK than they were in China, due
to the older capital stock in the DPRK.
The transfer of LWR (Light Water Reactor) technology is, at present,
a political prerequisite to starting bi-lateral or multi-lateral initiatives
in energy efficiency (or other types of projects and trade, for that matter)
with the DPRK. We cannot resist the temptation, however, to compare the
costs and impacts of our list of measures with the costs and impacts of
the proposed nuclear power plants. A pair of LWRs with a combined
electricity generation capacity of 2 GW (two gigawatts or two billion
watts, the current LWR transfer proposal) would produce, if run
reasonably efficiently, roughly 12,000 GWh/yr of electricity. This is
about 44 PJ/yr of electricity supply. The cost of the reactors, probably
about $4.5 billion US (1995 dollars), would be a bit less than 50 percent
higher than our estimates for the costs of both the electricity and coal
saving measures we evaluated (factoring in inflation to our cost
estimates in 1990 dollars)[5]. Like the
energy efficiency and renewable energy measures, the LWR would likely
take nearly 10 years to provide its full capacity, even if construction
were to start today (1995). Unlike the energy efficiency options,
however, none of the LWR capacity will available until the year that the
plants are complete and fueled, while some of the energy efficiency
savings will be available in the first year of the program (with more
available each year thereafter).
Not coincidentally, the energy efficiency and renewable energy
measures that we have evaluated will also reduce greenhouse gas
emissions per unit of energy service provided [6]. Based on the emissions calculations
detailed in the study referenced earlier, we estimate that GHG savings
(and costs per tonne of carbon reduced) would be as follows:
Measures |
GHG Savings |
Cost: $US 1990/(te/yr) |
Measures to Save Coal |
36 million te CO2 |
$35 |
|
210,000 te Methane | $6090 |
Measures to Save Electricity |
9.7 million te CO2 | $165 |
In reviewing the cost figures presented above, the reader is urged to
keep several considerations in mind:
- The CO2 cost figures are expressed in dollars per tonne of carbon
dioxide, not per tonne of saved carbon (as is also common in the
literature). To express these figures in dollars per tonne of saved carbon,
one would multiply by 44/12.
- The cost figures are expressed as total investment (over ten years)
per tonne of annual emission reduction. In order to express these figures
in terms of dollars per tonne of total emission reduction, one would
probably divide them by a factor of 10 to 20 (to account for the fact that
savings continue over 10 to 20 years--assuming a low, zero, or negative
discount rate is applied to future GHG emissions).
- The cost figures are given on a gross basis, and are thus not
adjusted for the fuel, operations and maintenance, and other types of
economic and environmental benefits that would accrue from the energy
efficiency and renewable energy investments we have evaluated.
- The costs for carbon dioxide and methane savings shown for coal-
saving measures are not additive. The same efficiency investment outlay
provides savings of both gases.
- In estimating the GHG savings from electricity generation measures,
we have assumed that the electricity saved would have been generated by
the combination of coal-fired, hydroelectric, and oil-fired plants
currently operating in DPRK. If the thermal plants would be "on the
margin"--if electricity savings through efficiency measures and
renewable sources displaced electricity generated by coal- and/or oil-
fired plants first--then GHG emissions savings would be greater (and
their costs lower) than shown above.
3.4. Sectoral Results
Here we present our performance and cost assumptions for those
energy efficiency and renewable energy measures that we have evaluated
quantitatively, and discuss other measures that could be applied (and
should be evaluated in a more detailed study) in the various sectors and
subsectors of the DPRK energy economy.
Electricity Generation Sector Measures
Our quantitative analysis of efficiency and renewable energy
measures in the electricity generation sector of the DPRK includes the
following measures:
- Electric Utility coal-fired boiler improvements: Utility
boilers in the DPRK reportedly have minimal (if any) insulation, are poorly
operated, suffer from steam tube cracks and other maintenance problems,
and are often antiquated. We assumed that a combination of measures
that have been applied to industrial boilers in China can be applied to
utility boilers in the DPRK at similar costs to obtain similar results. We
have assumed that a combination of microcomputer boiler control,
insulation of piping, and renovation of boilers can raise the average boiler
efficiency (heat energy output divided by fuel energy input) from about 60
percent to near 85 percent, reducing coal consumption by about 30 percent
(Levine and Xueyi, 1990; Yande, 1992; Levine et al, 1992). We assumed
that these measures are available for about the same cost as similar
industrial boiler improvements in China--approximately $3.86 per annual
GJ of coal saved ($/(GJ/yr))[7]. In fact,
economies of scale may make efficiency improvements for utility boilers
less costly, per unit of energy saved, than similar measures for generally
smaller industrial boilers.
- Reduction in "Own Use" at coal-fired Electric Utility
plants: We have assumed that the in-station use of electricity at
coal-fired power plants is 7.2 percent of gross generation. Based on cost
and savings estimates from Sathaye (1992), we estimate that own use can
be reduced to 4.5 percent at a cost of $46.3 per GJ/yr of electricity saved.
- Reduction in electricity transmission and distribution (T&D)
losses: Official DPRK estimates place transmission and
distribution losses of electricity at 16 percent of net generation
(electricity leaving the power plant), although, as noted earlier, this
figure may well be low. We have assumed, again based on performance
and cost data in Sathaye, 1992, that will be possible through a
combination of measures to reduce combined T&D losses to 10 percent of
net generation at an average cost of 29.2 $/(GJ/yr). T&D improvements
would include better system control facilities, improved transformers,
and the addition of capacitance to the system and other measure to
improve power factors and reduce voltage fluctuations.
- Reduction in "Emergency Losses" at coal-fired Electric Utility
plants: We have assumed, based on anecdotal reports, that
emergency losses of power at coal fired power plants in the DPRK average
about 7 percent of gross generation. We assume that these losses can be
reduced by 90 percent through the application of measures available at a
cost per unit energy saved similar to that for T&D improvements. It may
well be, however, that the combination of boiler improvements and T&D
improvements will by themselves reduce or eliminate emergency losses,
with little or no additional efficiency investments required.
- Wind powered electricity generation: Wind power is
one of the major renewable resources readily available to the DPRK,
though the wind resources in the country remain, to our knowledge, largely
unmapped[8]. We have assumed that 500
MW of wind generation capacity (for example, 500 machines per year of
100 kW, or 250 200 kW machines per year) could be installed in the DPRK
over the next 10 years (with machines manufactured in the DPRK and/or
imported), and that the average capital costs of the machines would be
similar to those for wind machines produced in joint ventures in Eastern
Europe, about $400/kW. We assumed a capacity factor of 25 percent for
machines installed in the DPRK, yielding an investment cost of
$51/(GJ/yr) of electricity generated. Note that this cost does not include
fixed or variable operating and maintenance costs, but these are typically
a small fraction of annualized capital cost for wind power generation.
Other potential energy efficiency improvements addressing the
electricity generation sector that seem promising but which we have been
unable to evaluate quantitatively include:
- Coal Preparation: Grinding and washing coal to remove
ash and sulfur will improve the efficiency of coal combustion in utility
boilers. Such preparation will reduce the load of ash in the bottom of
boilers and provide a more homogeneous coal particle size, allowing for
cleaner and more complete combustion. The environmental benefits of
such measures (including reduced particulate and sulfur oxide emissions
to the air) could be considerable, and byproducts of coal cleaning (inert
material removed from coal, and elemental sulfur) could be used in the
building and other industries. In addition, coal preparation, if done near
the coal mines, should reduce coal transport costs by increasing the
energy content of the coal per unit mass.
- Expansion of Electricity Metering: At present there is
reportedly little or no metering of electricity consumption in North Korea.
Metering the electricity used by industrial facilities, residences, and
buildings would not only provide valuable information on the use of
electricity in the DPRK, it would also, if coupled with per-unit electricity
pricing, provide electricity users with an incentive to use electricity
efficiently.
- Cogeneration: The energy literature on China and the
former Soviet Union (for example, Levine and Xueyi, 1990) cites examples
of industrial boilers and furnaces that have very high exhaust gas
temperatures, indicating the availability of a substantial amount of waste
heat. Assuming that such situations are also common in North Korea, the
waste heat from industrial and other large boilers could be used to
generate electricity.
- Gasification-Combined Cycle Electricity
Generation/Retrofits: The efficiency of electricity generation from
coal could be increased dramatically in the DPRK by first converting the
coal into a gas, combusting the gas in a turbine that turns a generator, and
then routing the exhaust gasses from the turbine to a boiler to raise
steam for a second cycle of electricity generation. Gasifiers could be
added as "front ends" to existing (renovated) coal-fired boilers in the
DPRK. The efficiency of gasification-combined cycle plants can be over
40 percent (Williams and Larson, 1993), a vast increase from the probable
20 to 25 percent efficiency in existing DPRK plants. There should also be
substantial emissions benefits from employing this technology. Coal
preparation may be a prerequisite for implementing this technology in
North Korea. Repowering of the DPRK's oil-fired utility boilers (over 200
MW) to make them combined-cycle plants is also a strong possibility [9].
Industrial Sector Measures
Our quantitative analysis of efficiency and renewable energy
measures in the industrial sector of the DPRK includes the following
measures:
- Improvements in industrial coal-fired boiler and
furnaces: Like utility boilers, industrial boilers and furnaces in the
DPRK reportedly have very low average efficiencies, perhaps as low as 50
percent for boilers. Using the same set of improvements assumed for
utility boilers (see above), we assumed that the average boiler efficiency
could be raised from about 50 percent to about 80 percent, reducing coal
consumption by about 37.5 percent (Levine and Xueyi, 1990; Yande, 1992;
Levine et al, 1992). We assumed that these measures are available for
approximately the same cost as similar industrial boiler improvements in
China--approximately $3.86 per GJ/yr.
- Improvements in industrial electric motors: Electric
motors in DPRK may be made domestically, imported from China, or a
combination. In any case, the stock of motors in the DPRK is highly likely
to be both aging and inefficient. We have attached rough estimates of the
fraction of electricity use, by subsector, is consumed in motors and
drives. These estimates vary from as low as 50 percent, for subsectors
where we felt electricity was likely to be used intensively in end uses
other than motive power (such as electrolytic refining of metals) to as
high as 95 percent for subsectors (such as the Cement industry) where we
felt that motor-driven applications such as grinding and sizing of cement
"clinker" would likely be the dominant use of electricity. As a point of
reference, note that 65 percent of the electricity used in the entire
Chinese economy has been estimated to be consumed in electric motors.
Based again on Chinese experience, we have assumed that it will be
possible to increase the average motor efficiency from approximately 75
percent to approximately 88 percent (Sathaye, 1992). The latter
efficiency (which corresponds to higher efficiency new motors produced
in China as of 1990) is similar to that for standard new electric motors
sold in the US and Japan, so efficiency improvements beyond what we have
assumed are definitely possible [10]. We
have assumed that the cost of this efficiency improvement would be on
the order of $39 per GJ/yr of electricity savings.
- Industrial lighting improvements: We have assumed that
lighting accounts for a relatively modest 5 percent of electricity use in
the DPRK. Based on the cost and performance of non-residential lighting
improvements in industrialized countries, we have estimated that it will
be possible to save 50 percent of the industrial lighting electricity used
through a variety of measures (including improved bulbs and ballasts,
more efficient fixtures, replacement of incandescent lamps with
fluorescent lamps, and lighting controls) at a cost of about $28 per GJ/yr
of electricity saved (Von Hippel and Verzola, 1994).
As in the electricity generation sector, there are a wealth of
opportunities for saving energy in the industrial sector that we have not
been able to quantitatively evaluate. These include:
- Industrial process improvements: It is likely that a
considerable amount of electricity and coal could be saved by
improvements in industrial processes. These opportunities are available
in many subsectors. In the DPRK cement industry, for example, the coal
consumption per unit output is 6.9 GJ per tonne of "clinker" (raw cement;
data from document in authors' files [CE1]). This can be compared with an
average coal use of 6.1 GJ/te in China in 1980, 5.2 GJ/te in China in 1992
(Sinton, 1995) and 3 GJ/te in modern plants in industrialized countries,
and implies that coal use in the cement subsectors could be reduced by 12
to more than 50 percent. Similar opportunities exist in the iron and
steel, other metals, fertilizer, textiles, and other industrial subsectors.
In the important iron and steel subsector, possible process improvements
include integrating steel production and forming processes (thus
eliminating the need to cool and reheat the steel, continuous casting and
forming, electricity generation using top pressure in blast furnaces, use
of coal gas for electricity generation, and other technologies (Liu, et al,
1994). Generic efficiency improvements applicable to many industries
include insulating product pipelines, using better refractory materials
(special ceramics used as, for example, furnace linings) that last longer
and have better insulating properties, using variable-speed drives to
reduce the electricity used in electric motors, modifications to reduce
friction in piping, valves, and conveyance systems, and using harder,
longer lasting materials in cutting and grinding applications.
Note that process improvements can be geared to not only improving
the efficiency of fuel use, but also in reducing materials waste.
Improving chemical reactors so that there is less waste of reactants,
using better-quality raw materials to improve product yield, and recycling
waste materials from production processes and product refining can
reduce both waste and energy consumption [11]. Product modifications that result in the
reduction of raw material (and thus energy) used per unit of product are
also possible[12]. Not coincidentally,
these improvements also typically reduce process effluents to the
environment.
Process improvements could also be directed toward the 30 percent
of DPRK petroleum demand that is reportedly used in carbide
manufacturing. As we at this point know little about how this petroleum
is used in carbide manufacture (if the report is in fact correct), it is
impossible to say what the prospects for savings are.
- Coal processing: As for electricity generation, coal
washing and other methods of coal preparation could help to dramatically
improve the combustion efficiency of coal-fired boilers and furnaces in
the industrial and other sectors. It is likely that coal processing could
also improve the efficiency of industrial processes where coal is used as
a feedstock--including fertilizer (ammonium) and synthetic fiber
manufacture.
- Construction industry modifications: The massive scale
of construction projects in the DPRK, coupled with the use of manual
design and construction methods, results in a wastage of building
material relative to more updated methods. Considerable savings in steel
and cement--and thus savings in the energy needed to produce these
materials--are possible through the use of improved construction
practices (Document from authors' files).
Residential and Public/Commercial/Military Sector
Measures
Our quantitative analysis included four efficiency measures for the
residential sector:
- Boiler improvements: For small and medium-sized
space heating (and possibly water heating, in some instances) boilers of
the type found in urban residential and other buildings, we assumed,
based roughly on the same sources we used for our industrial boiler
measure estimates, that a 15 percent improvement in efficiency (starting
from an average boiler efficiency of 50 percent; thus a 23 percent
reduction in coal use) is available for approximately $2.15/(GJ/yr) of coal
saved. Note that the boiler improvements included here are unlikely to
exhaust the opportunities for improving boiler energy efficiency through
equipment upgrades and improved operations and maintenance.
- Building envelope improvements: We have included two
simple building envelope improvement measures in our estimate of
possible energy efficiency savings. A combination of A) application of a
30 mm coat of concreted containing perlite--a lightweight mineral with
insulating properties--to the inside of the typical concrete slab walls of
residential and other buildings, and B) double glazing of windows are
together estimated, based on simulations for Chinese buildings, to save 20
percent of heating energy (Lang et al, 1992). The cost of these savings
are estimated at slightly under $2 per GJ/yr. Note that in applying this
measure to coal use in buildings, we have assumed that boiler
improvements take place before (or at the same time as) building envelope
improvements, that is, the savings fraction for building envelope
improvements was applied to the total energy use after boiler efficiency
improvements had been factored in.
The two building envelope improvements can be considered a minimal
simple start to the list of potential measures of this type. Other
measures include caulking and weatherstripping to reduce air infiltration,
insulation of water piping, improved radiator controls (in fact, visitors to
the DPRK report that the only heat control measure available to residents
of typical North Korean apartment buildings is the opening and closing of
windows and doors), interior and exterior wall and roof insulation, roof
coatings, and others.
- Rural residential coal stove/heater improvements: We
have assumed that the average residential stove/heater can be improved
from an average of 30 percent efficiency to 40 percent efficiency, thus
saving 25 percent of initial coal use. This is a rough estimate on our
part. The estimates that we have found of coal stove efficiency in the
DPRK and China range from 20 to 50 percent, 30 percent was cited as an
estimate for DPRK by an informed visitor to the country (Document in
authors' files [R1]). We have assumed that this efficiency improvement is
available for the same cost cited for coal stove improvements in China
(Levine et al, 1992), namely $0.72/(GJ/yr).
- Electric motor improvements in urban residential and non-
residential buildings: Electric motors are typically used in multi-
family apartment buildings and in non-residential buildings for a variety
of uses, including ventilation, refrigeration, and water pumping (for
heating and potable water), We have assumed that 10 percent of the
electricity used in the urban residential subsector, and 30 percent of that
used in the Public/Commercial and Military sectors, is used in electric
motors. These estimates are admittedly rough guesses at best, but are
lower than the fraction of electricity used in motors in similar sectors in
many other countries. We have assumed that the average cost and
performance of measures that increase the efficiency of these motors is
roughly the same as in the industrial sector.
- Improvements in residential and non-residential
lighting: We have assumed that the fraction of residential
electricity used in lighting end-uses is 40 percent. This is somewhat
higher than lighting electricity fractions quoted for, for example, Thailand
and the former Soviet Union (28 and 33 percent, respectively), but both of
those societies use electricity for end uses--including air conditioning
and water heating--that reportedly are little used in DPRK residences.
We have assumed that 80 percent of lighting electricity use in residences
in DPRK powers incandescent bulbs, that compact fluorescent (CFL) bulbs
can save 75 percent of the electricity used by incandescent bulbs (while
providing similar or enhanced light output), and that compact fluorescent
bulbs can reasonably be substituted for incandescent bulbs for 80 percent
(by energy) of lighting uses. Taken together, these three assumptions
result in a 48 percent reduction in electricity use in residential lighting.
As an estimate of costs, we have assumed that, as other authors have
suggested for China, a factory producing 3 million CFL bulbs per year could
be built in North Korea at a cost of $5 million (Sathaye, 1992). The cost
of conserving electricity by producing and using these bulbs is
approximately $39/(GJ/yr). We should note that since the lifetime of
CFLs is shortened if they are operated on a grid with fluctuating voltage
and low power factors, thus transmission and distribution improvements
would probably have to go hand in hand with introduction of CFLs in the
DPRK.
Our assumption for non-residential buildings is that 50 percent of
the electricity consumed is used in lighting. As for industrial lighting,
we assume that 50 percent of this amount can be saved by a package of
lighting energy efficiency measures, at a cost of about $28 per GJ/yr.
Since these costs and savings estimates are based on figures for
industrialized countries, our guess is that similar improvement will cost
less and save more in the DPRK, particularly if production of quality
lighting components can be done with a substantial contribution of
domestic (versus imported) labor and materials.
Other possible energy efficiency measures for the residential and
non-residential buildings sectors include:
- Improvements in electric appliances: The fraction of
residences in the DPRK with refrigerators is unknown, but likely to be
small. What refrigerators are in use in the DPRK are likely similar to
Chinese models, and thus up to 50 percent less efficient than those
manufactured in industrialized countries. Liu et al (1992) report that
Chinese refrigerators in the 200 liter size range consumed 365 kWh per
year, while South Korean models of similar capacity used 240 kWh per
year. To the extent that refrigeration is used in buildings other than
private residences (for example, in communal kitchen facilities), similar
savings may be possible. Improvement of the efficiency of refrigerators
manufactured in or available to DPRK could be increasingly important, as a
refrigerator is probably one of the first appliances that households will
invest in if economic conditions in North Korea begin to markedly improve.
A substantial fraction of households in DPRK have either television
or radio, or both. Recent improvements in electronics technology that the
DPRK does not currently have access to has reduced the hourly energy
consumption of these devices markedly, though the aggregate amount of
electricity saved by such improvements may be small due to the limited
power consumption of radios and small televisions . Other improvements
in appliance efficiency in North Korea may well be possible, but their
evaluation must await better information on the stock of electricity-
using appliances in the household and other sectors. Microwave ovens, for
example, accomplish many cooking tasks more efficiently than simple
electric resistance burners, but the penetration of the latter in the DPRK
residential housing stock is currently unknown (we assume that
penetration of microwaves in North Korea is near zero).
- Improvements in cooking efficiency (non-coal fuels):
Urban households in the DPRK reportedly use charcoal, LPG, and kerosene
stoves for cooking in addition to coal stoves. Rural households use wood
and other types of biomass for cooking and heating. Efficiency
improvements in all of these technologies are possible, though the
percentage improvements (and the aggregate amount of fuel savings) is
likely considerably higher for devices using solid fuels. Reduction in the
use of wood and biomass fuels through the use of more efficient stoves
and heaters would help to make wood and biomass available for other
applications and/or reduce harvest pressures on forests.
- District Heating: District heating of homes and other
buildings using heat from power plants, industrial facilities, and stand-
alone central steam plants is apparently practiced in North Korea (as it is
throughout Eastern Europe), but the extent to which it is practiced is
unknown. Switching to an efficiency district heating network from a
system of dispersed small boilers and stoves can result in substantial
coal savings.
- Building shell improvements in rural homes: Potential
improvements include caulking and weatherstripping, insulation, and
glazing, but any definitive list of measures will have to wait until a
better description of the rural housing stock in DPRK is in hand.
- Use of biogas: Biogas produced via anaerobic
fermentation of human night soil, animal manures, and agricultural
wastes could be used as a clean cooking fuel in rural areas, or could
contribute to small-scale power production (with cogenerated heat for
agricultural processing or other applications). The biogas production
process also has the potential to yield important by-products such as
animal bedding, soil amendments, and organic fertilizer, as well as
potentially (depending on the state of current waste disposal practices)
reducing environmental impacts.
Transport and Other Sector Measures
We have evaluated only one energy efficiency measure in the
transport sector in a quantitative manner:
- Replacement of medium-duty trucks: Two and one-half tonne trucks
are the workhorses of the military ground transport fleet in the DPRK, and
are reportedly widely used in civilian goods as well. We have assumed
that all of the gasoline used for civilian freight transport by road in the
DPRK is used in such trucks, and assuming that the freight transport
provided by each vehicle is on the order of 30,000 tonne-km per year, we
calculate that there are slightly under 60,000 civilian 2 1/2 tonne trucks
to go along with a similar number of military trucks in active service. If
the most heavily used two-thirds of these trucks (which we assumed to
use 90 percent of the fuel) were replaced with new vehicles similar to the
Isuzu FRR model, a fuel savings of about 43 percent would result. We have
assumed that these vehicles could be manufactured in DPRK at a cost of
$10,000[13]. At this cost, however,
replacement of the truck fleet is not likely to be cost-effective. Note,
however, that we have assumed that the existing trucks will be replaced
whether they are at the end of their useful life or not. If one assumes
only an incremental cost for the trucks (the difference between the costs
of producing a standard DPRK truck and one similar to the Isuzu model),
and/or if one assumed a substantially heavier usage (in te-km/yr) for the
new trucks, this measure would appear more cost-effective. Whether
these changes would make this measure sufficiently cost-effective to
pursue is not possible, with the data at hand, to ascertain.
Other potential improvements in the transport and other sectors
might include:
- Electric motor and drive improvements for electric
locomotive: Electrified rail is the backbone of the DPRK transit
system. Though we have no data on the efficiency of electric locomotives
in North Korea, potential efficiency improvements on the order of those
described above for industrial motors seem plausible.
Substantial improvements in electric rail efficiency may come about
simply as a result of transmission and distribution improvements on the
electric grid as a whole. Other options for increasing rail efficiency
might include updated rail control and scheduling systems, track
improvements to reduce friction (and forced halts), and optimizing freight
loads.
- Updating other transport fleets: Updating the road
passenger transport, water transport (including the fishing fleet), and air
transport fleets may as much as double their efficiency, but any fuel
savings is highly likely to be offset by increased use of these transport
modes as they become more efficient and reliable.
- Biofuels for transport: The DPRK government has
expressed an interest, in various documents, in increasing self-reliance
by replacing petroleum-based transport fuels with liquid fuels derived
from biomass. While the GHG and pollutant reduction benefits of such a
program are important, we are reluctant to enthusiastically endorse this
idea at present because 1) all DPRK agricultural land appears to be needed
and fully employed just to feed people, thus production of motor fuels
from agricultural crops such as corn would appear to be ruled out; and 2)
there appears to be relatively little extra wood or crop wastes available
for use as cellulosic feedstocks for biofuels production (via either
fermentation or thermal liquefaction). If the biomass resource situation
changes in the future, however, biofuels would become a more attractive
option.
- Improving agricultural tractors: Specific fuel
consumption in tractors in China, reported to be 195 grams/hp-hr in the
1980's was some 10 percent greater than for similar tractors in
industrialized countries (Liu et al, 1992). Tractors in the DPRK are
unlikely to be more efficient than the Chinese average, and are likely to be
worse.
- Reducing fertilizer use: Fertilizer application in North
Korea is reported to be excessive for some crops. On rice, for example, it
has been suggested that the typical-practice nitrogen fertilizer
application in the DPRK could be reduced by 25 percent [14]. If so, significant reductions in energy
use in the energy-intensive ammonia manufacturing industry in DPRK
should be possible, as well as (probably minor) reductions in the need for
tractor fuel for fertilizer application.
[ Return to Top ]
4. Institutional Issues and Policies Affecting Implementation
of Energy Efficiency Measures
If simply estimating the potential for energy efficiency
improvements for an economy was all one had to do to convince policy
makers to implement such measures, fuel use in the world would be
markedly less than it is now. As it turns out, however, there are a number
of institutional issues and national policies that affect the
implementation of energy efficiency and renewable energy measures in
any country. North Korea, while presenting a situation that is unique in
many ways, is no exception. In this section we:
- Discuss some of the types of institutional and policy issues that
affect implementation of energy efficiency measures;
- Review some of the recent lessons learned from nascent and ongoing
energy efficiency programs in Eastern Europe, China, and the Former
Soviet Union;
- Examine some of the existing bi-lateral and multi-lateral energy
efficiency-related initiatives underway in the northeast Asia region;
- Present some potential strategies and mechanisms for the
implementation of such measures in the DPRK;
- Put forward suggestions as to how to build and strengthen North
Korean institutions so as to enhance their ability to carry out energy
efficiency, renewable energy, environmental protection, and other
sustainable development-related activities.
- Hint at ways in which organizations inside and outside North Korea
might lend support to the implementation of energy efficiency and
renewable energy measures in the DPRK.
4.1. Introduction: Issues in Implementing Energy Efficiency
and Renewable Energy in the DPRK
A host of issues--some unique to North Korea, and some generic to
the situation in many countries--affect which energy efficiency programs
and measures[15] are implemented, as well
as how they are implemented and on what time frame. We discuss some of
these issues briefly below.
- Institutional Weaknesses and Fragmentation: The
institutional arrangements in the energy sector are complicated and
reflect a high degree of functional fragmentation (Hayes, 1993b). Since
there is no single specialized institutional authority or ministry that is
responsible for energy analysis, integrated planning, and overall energy
sector management, it is difficult to know which of the many
institutional players in the DPRK energy sector should be responsible for
implementing energy efficiency programs. While many energy efficiency
programs could be restricted in scope to, for example, a single economic
sector, the need to coordinate activities by both suppliers and consumers
of energy argues that a single authority (or coordinated consortium of
authorities) must be created in the DPRK if effective programs are to be
implemented. China's experience in coordinating planning and policy
organs with line ministries to achieve energy efficiency goals is relevant
in this respect.
- Lack of Information: One universal barrier to
implementing energy efficiency measures is the lack of information--on
the part of residential customers, industrial plant managers, building
superintendents, transport decision-makers, mid-level bureaucrats in
energy sector institutions, upper-level government officials, and others--
as to the benefits, relative costs, and potential impacts of these
technologies (Reddy, 1991).
- Lack of Energy Markets: The lack of meaningful pricing
of most energy commodities in the DPRK, combined with the insensitivity
to prices common to planned economies, creates an indifference to energy
efficiency measures. If, for example, coal for an industrial plant is
supplied as a matter of course according to a fixed allocation schedule,
the plant manager has relatively little incentive to try and increase
energy efficiency. While true market pricing of goods, especially energy
goods, is probably at the very least several years away in North Korea,
some sort of pricing reform will be necessary to encourage energy users
to increase their efficiency of energy use.
- Access to Funding: Though they result in cost savings
in the medium-to-long term, many energy efficiency measures will
require an initial outlay of capital. For the DPRK, this capital will be
needed to either import efficient equipment, or to retool its industries to
produce efficient equipment. In either case, internal DPRK funds will be
hard pressed to meet the needs of an aggressive energy efficiency program
like the effort we have described. While some countries--Thailand and
China are examples--have set aside significant sums for energy efficiency
programs, North Korea, which lacks the vibrant economic growth of some
other developing nations in the region, would have difficulty doing the
same, and external sources of initial funding would have to be provided.
On the other hand, China began funding its energy efficiency programs at
the beginning of the 1980s, at a time when the leadership was laying the
groundwork for economic growth, but before the current phase of rapid
growth had been established. Such experience highlights the difference
that a committed leadership can make, even when money is tight.
- Access to Technology: In countries with open trade
policies, access to funding is most of what it takes to have access to
technology. In the case of DPRK, however, the issue is a bit more complex,
as some nations with energy efficient technologies to export--the United
States is an example--have less-than-open policies with regard to
exports to North Korea. The thawing of the DPRK's political relations
with the US, South Korea, and others, however, could fairly quickly change
this situation. In the mean time, China may be a good source of
inexpensive and easily-adopted technologies that, while not the most
advanced, would represent significant improvements over those currently
in use in North Korea.
- Institutional Motivation: Effective implementation of
energy efficiency measures in DPRK will require that officials at all
levels of government perceive a mandate for energy efficiency and a
benefit to themselves or their institutions. This means that 1) a clear and
detailed mandate to aggressively implement energy efficiency measures
must be issued at the highest level of the North Korean government; 2)
any institutional disincentives to energy efficiency must be dismantled;
3) a system of clear, verifiable (to the extent practicable) energy
efficiency goals must be set up to reward officials for program
performance; and 4) the status of energy efficiency activities in the
rankings of institutional activities must be high enough to encourage
officials to aggressively pursue their targets.
- Energy Supply Bias: Many officials and other decision-
makers in developing nations (and developed nations, for that matter) see
energy sector problems as primarily a matter of ensuring adequate supply
of fuels, rather than simply providing energy services in the most
efficient manner available. As a consequence, officials may tend to be
either blind to or suspicious of the benefits of energy efficiency measures
(Reddy, 1991). Efforts must be made to persuade key individuals that
efficiency improvements are complementary to supply expansion.
- Project Scale Bias: Unlike energy supply projects,
which tend to be large in scale (and large-scale undertakings are a North
Korean specialty), energy efficiency project vary widely in scale, but
often involve many small installations. The incremental nature of these
investments may appear unfamiliar and thus daunting, from the
bureaucratic and/or job prestige perspectives, to the officials who would
be charged with implementing them.
- Lack of Skills and Training--Government Level:
Effective implementation of energy efficiency programs will require that
government energy planners be well-versed in the concepts of energy
efficiency. This is almost certainly not the case in the DPRK at present.
Even in countries where officials can be expected to be technically
competent, continued training and exposure to new developments is
desirable.
- Lack of Skills and Training--Program Implementation
Level: In addition to the government officials who must support,
sanction, and guide the implementation of energy efficiency programs, a
cadre of trained engineers and technicians will be required to survey pre-
installation energy performance and to actually design, install, and
monitor applications of energy efficiency equipment. This cadre of skilled
individuals probably does not exist in DPRK at present, though there are
doubtless many trained people in the DPRK with sufficient basic skills in
engineering and technology to learn the "trade" relatively rapidly.
Training these people, or training the trainers who will run in-country
courses, will be necessary before energy efficiency measures can be
implemented on a broad scale.
- Relative Status of Sectors: If resources to implement
energy efficiency and renewable energy programs in the DPRK become
available, and assuming that the issues presented here can be adequately
resolved, there will remain a question of which energy efficiency
measures are implemented first. While yardsticks such as fairness across
sectors and overall cost-effectiveness ("bang-for-the-won") may be
considered, it is likely that the political status of different ministries
(and even that of industries within a given ministry) and the personal
status within the governmental hierarchy of key officials will influence
the selection of projects for implementation.
- Prospects for Reunification: An additional layer of
complexity in deciding which DPRK sectors and subsectors to target for
energy efficiency improvements is posed by the prospects for and possible
modes of reunification of North and South Korea. For example, would it
make sense to undertake energy efficiency modifications in the North
Korean motor vehicle industry when South Korea's infrastructure in the
subsector is both much more modern and probably adequate for both
Koreas? Would it not make more sense to target industries that are
complementary to the industrial strengths of the South? These questions
unfortunately cannot be answered in a straightforward and academic
fashion, as they are inextricably linked to political issues such as
national sovereignty, self-reliance, and pre-reunification military
sustenance.
Many of these issues are covered in a generic and much more
complete fashion in "Barriers to Improvements in Energy Efficiency", by
Prof. Amulya Reddy (1991).
4.2. Lessons From Ongoing Examples of Energy Efficiency
Technology Transfer
Given the unique nature of North Korean society, one could expect
that implementing energy efficiency measures in the DPRK would require
somewhat different techniques and approaches than those appropriate to
promoting energy efficiency in a Western nation or in a developing market
economy. Happily, research on the implementation of energy efficiency
measures in the Republics of the former Soviet Union, in Eastern Europe,
and in China provide some insight into what sorts of approaches appear to
be effective in countries with some economic, political, and
infrastructural similarities with North Korea. The brief review of these
lessons and insights presented in this section leans heavily on the work of
the researchers in the Energy Analysis Program at the Lawrence Berkeley
National Laboratory (LBNL; Berkeley, California, USA), and the reader is
urged to consult the LBNL work for further elaboration on the topic
(Schipper and Martinot, 1993; Martinot, 1994; Levine et al., 1992; Liu et
al., 1994; Wang and Sinton, forthcoming).
The approaches and insights from efforts to implement energy
efficiency and renewable energy measures in other countries that are
likely to be applicable, in our view, to the DPRK as well, include the
following:
- Promote changes in physical infrastructure that will
facilitate energy decision-making. We have discussed at some
length elsewhere in this report the types of energy-using equipment and
other infrastructure in the DPRK that could be targeted for replacement or
rehabilitation. What has been emphasized relatively less, but is at least
as important, is the need to invest in equipment that allows flows of
energy to be controlled and quantified adequately. Such equipment
includes electricity, heat, and hot water meters; steam and process
control valves and shunts; and dimmers and other equipment for
controlling lighting. Applications for such equipment exist throughout the
residential, commercial/public/military, and industrial sectors. Without
such equipment--which typically is inexpensive and relatively easy to
install and operate--any attempt to institute price signals in energy
markets, or even to reward reduced energy use in other ways, will be
futile, as end-users will lack the ability to control energy flows, the
quantitative feedback that tells them whether efforts to reduce energy
use have succeeded, or--worst of all--both.
- Implement institutional changes to spur the adoption of
energy-efficiency measures. At present, the prices for energy
commodities in the DPRK, to the extent that they are priced at all, need
not bear any resemblance to their cost of production. While pricing
reform in the energy sector is perhaps farther off in the DPRK than in the
economies of Eastern Europe, the former Soviet Union, and China, some
revision in the way that fuels are distributed will clearly be necessary.
Schipper and Martinot (1993) also cite the example of energy quotas that
may work against energy efficiency in that a factory (for example) that
implements energy efficiency measures to the extent that it uses less
than its energy quota may simply have its quota reduced by the utility,
forcing it to reduce output and de-valuing its efficiency investment. This
"ratchet effect" was found to be a barrier to efficiency improvements in
China as well. It was at least partially addressed through modifications
to the incentive system, e.g., preventing the ratcheting downward of
energy allocations to enterprises that successfully improved efficiency,
allowing such enterprises to resell unused allocations or awarding them a
portion of the cost of saved energy, and providing efficient enterprises
with preferential access to material and energy inputs and investment
funds. While it is not clear to us exactly how energy quota systems work
in the DPRK, similar issues are likely to arise there.
Standards for specific energy consumption (that is, the amount of
energy needed to produce a unit of physical output) have long been used in
China to gauge performance of and within industrial and other enterprises.
Issued nationally, and often tailored to conditions specific to individual
enterprises, these standards have been used to measure progress in
improving efficiency, and have formed the basis of a system of financial
and other awards. It is, in effect, a system of performance evaluation
that parallels that based on output levels and product quality. This
system is losing its effectiveness as China's transition to a market-
oriented economy progresses and the central planning apparatus weakens,
but it may still be quite appropriate for North Korea at this time.
Another necessary institutional change concerns access to energy-
efficient products, materials and parts. Since these items will probably,
at least initially, be imported, this will entail a loosening of restrictions
on imports. China, already one of North Korea's largest trading partners,
would be a good source of efficient technologies and equipment that may
be more easily absorbed (and more affordable) than those available from
already developed countries. China has been a major energy supplier to
North Korea in the past, and may have an interest not only in marketing
equipment, but in reducing North Korea's dependence on energy imports.
Changing energy policies to shift from a focus on maintaining and
increasing fuel supplies to increasing energy efficiency while maintaining
or increasing energy services will also be necessary. Although the DPRK
government has released a general statement of support for energy
efficiency (published as "Let Us Further Strengthen the Struggle to
Conserve Power" in Nodong Sinmun, 21 January, 1995), these policies
should be expressed in more concrete terms.
- Make available government-backed loans and grants for
energy-efficiency improvements. Organizations in North Korea--
factories or local housing authorities, for example--will need access to
capital or credits that will enable them to obtain energy-efficient
equipment and devices. The success in the 1980s of energy efficiency and
conservation projects in China is attributable at least in part to the
availability of substantial amounts of money for energy efficiency
investments from the central government (Levine and Xueyi, 1990; Wang
and Sinton, forthcoming). Originally in the form of grants, such funding
gradually gave way to low interest loans, matched by funds from local
governments and enterprises that leveraged limited central government
monies. Funding was targeted at measures the central government wished
to demonstrate. Once end-users saw the benefits to be gained from
adopting measures so demonstrated (and became willing to adopt them
without further encouragement from the government) funding was then
shifted to other priority technologies.
- Provide training and information on energy efficiency
measures and technology. The decentralized nature of energy
efficiency investments, as pointed out by Schipper and Martinot (1993),
requires that adequate information and training be provided in a timely
manner to all of the various government officials, plant operators,
ministry planners, equipment suppliers and installers, and others that
must help to bring energy efficiency measures from the planning, program
delivery and measure installation phases. Among the major tasks of
China's network of over 200 Energy Conservation Service Centers are the
training of officials, plant personnel, and auditors in energy measurement
and management techniques, and the dissemination of information on the
availability, application, and operation of various classes of energy
efficient equipment. In the DPRK, personnel will need to be trained for the
(probably) entirely new (to North Korea) classifications of energy
auditors, equipment installers, demand-side management planners,
equipment operators, maintenance personnel for specific energy-
efficiency technologies, and, last but certainly not least, teachers to
train all of the types of personnel just mentioned. As in China and the
former East Bloc, this training must be provided to people working at the
operational level. Unlike much of present-day Eastern Europe, however,
decision-making in North Korea remains a centralized activity, therefore
it is essential to provide as much information and training to high-level
government officials as the latter will allow.
- Obtain quantitative and qualitative information on existing
"energy markets". While we are confident that there exists in
North Korea a great deal of energy data that we (and probably anyone else
outside of the DPRK) have not had access to, it is virtually certain that
the specific energy end-use data that are required for accurate planning
and evaluation of energy-efficiency options have not been collected
(and/or gleaned from existing information). As a consequence, extensive
energy demand surveys and equipment audits will be required in every
sector before energy efficiency programs on a broad scale can be
implemented in the DPRK. This assumes the availability of trained people
who can carry out audits and surveys, and evaluate their results (see
above).
- Pursue sector-based implementation of energy efficiency
measures. One point made forcefully by Schipper and Martinot is
the need to pursue energy efficiency opportunities on a sector-by-sector
basis, as opposed to through an overarching "Least Cost Planning"-style of
analysis as has been practiced for electric and gas utility service areas[16]. It is people at the sectoral level who
must work with energy-using equipment daily to do their jobs, rather than
planners in a central ministry, who are most likely to be interested in
energy-efficiency opportunities.
One way to gain support for energy efficiency measures is to
emphasize those that achieve multiple goals. Energy-efficient
technologies can be combined with building retrofits that increase the
comfort of residents, the rebuilding of factories to improve output, the
renovation of power plants to cut down on forced outages, and other
upgrading efforts that have little--explicitly--to do with energy
efficiency. China, in the 1980s, introduced a major process improvement
to the steel industry--continuous casting--primarily as an energy
efficiency measure, and supported its introduction with funding from the
national program of efficiency investments. In China's other energy-
intensive industries, such as chemicals and cement manufacturing,
measures to increase energy efficiency have typically resulted in greater
output and higher quality as well, resulting in high rates of adoption.
To the ultimate users of energy efficiency measures, the relative
costs per unit of energy savings of the various possible industrial
process, transport, and energy supply improvements is less than
meaningful--what matters is how energy efficiency opportunities stack
to up to other potential uses for the investment funds that they have
available (for example, investment funds allocated from the central
government). In addition, it is likely to be a mistake to place personnel
from the typically supply-oriented energy sector in charge of equipment
decisions--energy-related though they may be--in other sectors of the
economy, since they would bring with them a strong supply-side bias.
- Carry out demonstration projects. The most effective
way to convince decision-makers in the DPRK--both at the national and
local levels--that energy efficiency measures and programs are
worthwhile will be to show that they work in specific North Korean
situations. Carefully designed, effective demonstrations of energy
efficiency and renewable energy technologies that involve local actors as
much as possible are likely to catch the interest of North Koreans. Given
the good system for technology dissemination in the DPRK, this is likely
to lead to the adoption of energy efficiency measures into the North
Korean way of doing things. One word of caution here is to make sure that
any demonstration projects carried out can be replicated elsewhere in the
DPRK--measures unique to one or a few specific industrial plants, for
example, are not likely to be widely replicated.
- Promote domestic production of energy-efficient
products. This will involve ventures such as establishment of
foreign-owned factories for making appliances, lighting products, and
other types of energy-efficiency equipment, as well as joint ventures
between foreign companies and North Korean concerns (probably state-
owned, but perhaps eventually parastatal or private) in which foreign
technology is licensed to North Koreans. Examples of foreign-owned
factories and licensing of technologies abound in the developing world,
including a number of ventures in Eastern Europe and the Former Soviet
Union (Martinot, 1994) and in China. It is likely that the earliest examples
of such technology transfer to the DPRK will come in the context of
ventures in the Tumen River Economic Development Area. If they do,
efforts will probably have to be made to ensure that a significant portion
of the output of energy-efficient devices remains in the country for use by
North Koreans, rather than simply being exported to generate (much
needed) hard currency.
4.3. Potential Strategies for Implementation of Energy
Efficiency Measures in North Korea
Building on the experience and research in similar countries, as well
as on the ongoing energy sector-related projects involving the DPRK, we
present below our suggestions for key strategies to promote the
implementation of energy efficiency and renewable energy measures in
the DPRK. Some of these strategies will, quite admittedly, take time to
implement (or even to start), and some are more likely to gain the
approval of DPRK officials than others.
- Provide information and general training in the concepts and
technologies of energy efficiency and renewable energy to high-level
government officials. Getting energy efficiency programs off the
ground in the DPRK will be impossible without top officials embracing the
concept, as virtually all policy changes in North Korea, at present, must
have clear direction from the very top. Consequently, the advantages and
local/international opportunities provided by energy efficiency and
renewable energy programs and measures must be presented to top
officials in a manner that is both forceful and forthright.
- Provide specific information and training to local
actors. Training of a very specific and practical nature must be
provided to personnel at the local level. Examples here are factory energy
plant managers, boiler operators in residential and commercial buildings,
power plant and heating system operators, and new job classifications
such as energy-efficiency equipment installers and energy auditors.
- Implement practical, specific energy and environmental
standards, and provide the means to enforce them. DPRK officials
have made general statements about their support for energy efficiency
and environmental protection. The next step is to codify these in terms of
quantitative standards for the efficiency of new appliances and
equipment, as well as effluent standards for new--and perhaps eventually,
existing--factories, power plants, residential heating boilers, vehicles
and other major sources of pollution. Once standards are set, it will be
necessary to create the capability to enforce them by recruiting and
training enforcement personnel and supplying them with the tools
necessary to do their job (testing equipment and adequately equipped labs,
for example) and the high-level administrative support needed for credible
implementation of sanctions.
- Establish a program of grants and concessional loans for
energy efficiency projects. Experience in China has shown that
such a program in itself can have a significant positive impact in overall
sectoral energy efficiency. The benefits of institutionalizing support for
efficiency, however, would go beyond those obtained through the various
individual projects themselves. Creating a government agency or
corporation with its own budget would signal a strong commitment to
efficiency on the part of the government, and would create a constituency
within official circles for promoting energy efficiency goals[17]. Moreover, by establishing a pool of
funds for which government ministries, sectors, and/or individual
enterprises could compete, it would stimulate at all levels awareness of
energy efficiency potential, methods, and technologies. Eliciting
proposals would encourage end users (including those whose proposals
were ultimately rejected) to translate general concepts of energy
efficiency into actual changes in equipment and operating procedures, thus
bringing them one step closer to practical implementation.
- Modify existing incentives facing plant managers and relevant
officials to encourage more efficient use of energy. Despite some
problems, quota management and administrative measures were key to
China's success in eliminating many of the worst energy inefficiencies in
its industrial sector, and in stimulating adoption of relatively more
advanced techniques and technologies. While inappropriate to a market
economy, a well-designed program of administrative measures would
effectively utilize the strengths of North Korea's current form of
government.
- Reform energy pricing. Before market forces of any
kind can help to spur the implementation of energy efficiency measures,
the prices for energy products in the DPRK must be adjusted towards their
actual costs of production. This, of course, includes products that are
currently not priced at all. Pricing of some energy products, particularly
electricity, will require the implementation of metering and billing
systems. To be effective, parallel reforms that sensitize local decision-
makers to prices (i.e., that allow them to benefit from cost savings) must
be implemented.
- Promote joint ventures, licensing agreements, and other means
of manufacturing energy-efficient products in the DPRK. The
government of the DPRK, and other interested parties, should promote
joint ventures and licensing agreements between DPRK concerns
(governmental or otherwise) and foreign firms with energy-efficient
technologies to produce. Compact fluorescent light bulb factories are a
commonly-cited example of potential energy technology transfers
(Sathaye et al, 1994). A wide variety of efficient industrial equipment
and controls (including adjustable speed drive motors and improved
industrial and utility boilers), efficient household appliances and
components, and efficient building technologies have already been
introduced to China through commercial channels are being or will be
manufactured there. Wind turbine-generators are another intriguing
possibility, given the apparent success of such ventures in former East-
bloc nations (Martinot, 1994) and the North Koreans' historical emphasis
on machinery manufacture. Foreign firms that have successfully
transferred efficient and renewable technologies to China, Russia, and
Eastern European nations represent a valuable repository of experience
that could be applied to similar efforts in North Korea. Depending on how
fast the Tumen River Economic Development Zone develops (infrastructure
in the area is not yet adequate to support major industry), this area could
be the location most acceptable to the DPRK for the first such ventures.
It is likely that the first few foreign companies to participate in joint
ventures in the DPRK will require guarantees not only from the DPRK
government, but also from their own government or another
industrialized-nation or a multilateral donor.
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Endnotes:
1. A UNDP-funded project, "Electric Power Management System" will only address control systems at four critical power plants and four substations. Return to Paper
2. Combustion efficiencies decline in part because a large volume of inert material (ash) must be heated up by the burning coal. "Fly ash" denotes that fraction of coal ash that leaves the boiler with the hot
exhaust gases and is trapped by ash collection devices or emitted to the atmosphere. "Bottom ash" is that
fraction of the inert material in the coal that remains in the bottom of the boiler after the coal is combusted.. Return to Paper
3. This in addition to the direct financial outlays for maintenance of the armed forces. Return to Paper
4. A Petajoule (PJ) is equal to 1015 (one million billion) joules. By way of comparison, a tonne of crude oil (one tonne of oil equivalent) is equal to approximately 41.8 billion joules (gigajoules, or GJ), thus one petajoule is the energetic equivalent of approximately 24 thousand tonnes of oil. Return to Paper
5. This comparison is admittedly simplistic, as it leaves out operating and maintenance (O&M) costs for both the LWR and the energy efficiency/renewable energy options, as well as fuel- and decommissioning-
related costs for the LWR. If all of these costs were included, however, the comparison would probably
be even more favorable to the energy efficiency options, since the incremental O&M costs of energy
efficiency options are likely to be low (perhaps negative in many instances), while the O&M costs for the
reactor are decidedly non-negligible. Also, the lifetimes of the energy efficiency technologies and the
lifetime of the LWR are likely different, although many of the energy efficiency investments--boiler
improvements, for example, may ultimately have lifetimes approaching that of the LWR. As one final
note, it is probable that some of the energy improvements on our list--the transmission and distribution
improvements, at least--may well be necessary in order to be able to effectively operate an LWR on the
DPRK grid. Return to Paper
6. Although net greenhouse gas emissions may not be reduced to the same extent, as the consumption of energy services in the DPRK will probably increase as energy efficiency measures effectively increase the
supply of fuel available. Return to Paper
7. We have used a conversion rate of 4.755 1990 Chinese Yuan to the 1990 US dollar (Microsoft Encarta, 1994) to convert quoted costs for Chinese energy efficiency investments to $US. As the Yuan was not as
of 1990 a floating currency, this assumption may introduces some inaccuracy in converting Chinese costs. Return to Paper
8. An official description of the wind resource in DPRK (document in the author's files, 1993 [EE1]) mentions the Chinese border area and offshore islands as the only likely sites for wind energy
development, but it appears from the context of the description that this assessment considered wind-
generated electricity to be primarily an off-grid resource. Our assessment that wind is probably an
attractive resource for the DPRK is based on the country's rugged topography and strong seasonal
(winter/summer) weather patterns. Return to Paper
9. Repowering existing 20 to 30 year-old oil-fired boilers to create combined-cycle plants figures prominently in the future plans, for example, of the major electricity utility in Hawaii. Return to Paper
10. Note that motor efficiencies vary by size class, with larger motors (for example, 100 to 200 hp or 75 to 150 kW) having efficiencies generally a few percent higher than smaller motors of similar types. The
efficiencies presented here can be thought of as rough weighted averages over the stock of electric motors
in use. Return to Paper
11. For example, valuable metals such as gold, zinc, and cadmium can be recovered from the flue gases and liquid effluents of metal smelting industries, and sulfuric acid could be recovered from steel and non-
ferrous metal plants. The latter modification would not only remove SOx from flue gases, but would also
serve as a source of sulfuric acid for the chemical industry, reducing energy use in that subsector. Return to Paper
12. As an example (though one unlikely to be directly germane to North Korea at presents, by carefully controlling the aluminum rolling and forming process, US manufacturers have been able to markedly
reduce the thickness and weight of aluminum cans. Return to Paper
13. This figure is based on the fact that the Isuzu truck model cited is available in the US for roughly $30,000 (retail). Assuming A) that a large portion of this cost is dealer profit, profit for Isuzu, import
costs and duties, and other non-product costs, and B) such trucks could be built in the DPRK at DPRK
labor rates, but with Japanese technology (presumably under license), we have guessed at a DPRK
production cost of $10,000. Return to Paper
14. Personal communications with UN agricultural sector expert with experience in DPRK. Return to Paper
15. Here we distinguish between energy efficiency programs, which are institutional arrangements for implementing energy efficiency measures. Energy efficiency measures can be thought of as the
technologies or techniques that can be used to increase the efficiency with which fuels are used. Return to Paper
16. Schipper and Martinot also point out two disadvantages of least-cost planning in the context of the former Soviet Union that are probably equally relevant to North Korea. First, stable energy markets and
prices (which are inputs to Least Cost Planning) do not exist as they do (for the most part) in the West, and
data on energy end-uses, as noted above, as well as cost data for domestic and imported equipment, are
problematic. Second, Least-cost planning is sufficiently similar to the system of planning formerly in use
in the USSR (and still used in the DPRK) that it would provide a comfortable and familiar retreat for
central planners, and thus could be considered a step away from, rather than towards, economic reform. Return to Paper
17. Bringing together a large number of relatively small-scale demand side projects under the umbrella of a single program may also go some way towards mitigating the bias towards large-scale projects. Return to Paper
Commissioned by The Nautilus Institute for Security and Sustainable Development
Energy, Security and Environment in Northeast Asia Project (esena@nautilus.org)
Ken Wilkening, Program Officer
125 University Avenue, Berkeley, CA 94710-1616 USA
(510) 204-9296 * Fax (510) 204-9298 * Web: http://www.nautilus.org
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