East Asia Energy Futures Project
thursday, february 14, 2002
Northeast Asia will make large energy investments in the coming decade. Currently, the primary technology alternatives are perceived to be coal and nuclear power. Both are deeply problematic on both environmental and security grounds. They may also be sub-optimal on financial grounds compared to a third alternative based on waste minimization: coal with sulfur emission controls; fuel switching; and energy efficiency. Given large capital requirements -- and scarcity -- incentives will be strong to optimize investment by selecting least-cost projects.

The Nautilus Institute has received funding from the The W. Alton Jones Foundation to build the intellectual foundation for a policy shift toward the waste minimization alternative. The project has three tasks:

  1. Analyze the interrelationships between energy, security -- especially in relation to nuclear weapons -- and environment in Northeast Asia (China, Japan, North Korea, South Korea, and the Russian Far East);

  2. Generate an analytical framework and quantitative estimates of the capital requirements and total costs of the three energy alternatives in each of the five target countries;

  3. Analyze institutional obstacles to financing least-cost energy investment and consider innovative financing mechanisms.

Under any policy and technology scenario, the capital requirements of meeting expected energy demand will be very high and will outstrip capital, providing strong incentives to optimize investment in financial terms. Optimizing scarce capital requires choosing energy development projects which are least-cost.

There are four components of a least-cost calculus:

  1. up-front investment and operating capital requirements

  2. total fuel-cycle costs

  3. total costs, including environmental and security externalities

  4. dynamic opportunity costs, which compare likely future prices stemming from technological trajectories.

Most estimates of the "cost" of energy expansion in Northeast Asia are partial and do not include both fuel-cycle costs and externalities. More robust estimates could find that, even without adding in environmental and security externalities, nuclear power and dirty coal are relatively more costly. Adding them in would likely point toward the "third way" as the least-cost strategy. Developing the least-cost calculus and developing the quantitative estimates, however, is only the first step. The second step is to consider and overcome institutional obstacles to investment in least-cost alternatives by developing innovative financing mechanisms. It is crucial that such analysis be conducted on a regional and preferably collaborative basis, to avoid finger-pointing and to shift normative expectations as to what technologies are modern and desirable.

Project Updates

* NEW! Third Workshop on East Asia Energy Futures
January 28 to February 1, 2002
Go to Workshop Site

* First Beijing Workshop
June 14-15, 2000
Go to Workshop Site

* Nautilus Receives DOE Grant
June 14, 1999
Read the Article

Recent Postings

* Dilemmas of Energy Choice
Nautilus Institute
Go to Essay


* "Innovative Approaches to Financing Environmentally Sustainable Energy Development in Northeast Asia"
Hossein Razavi, The World Bank
Go to Paper | PFO# 97-07

* "Global Dimensions of Energy Growth Projections in Northeast Asia"
David Von Hippel, Nautilus Insitute
Go to Paper

* "Technological Alternatives to Reduce Emissions from Energy Production in Northeast Asia"
David Von Hippel, Nautilus Insitute
Go to Paper. | PFO# 97-04

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