DPRK “Collapse” Pathways: Implications for the Energy Sector and for Strategies Redevelopment/Support
Special Report, January 18, 2011
Peter Hayes and David F. von Hippel
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CONTENTS
II. Article by Peter Hayes and David F. von Hippel
IV. Nautilus invites your responses
This paper originally presented at the conference “The Korea Project: Planning for the Long Term,” sponsored by the Korean Studies Institute, USC, and Korea Chair, CSIS. Held at the University of Southern California, Los Angeles, CA, August 20-21, 2010.
1. Introduction
- Section 2 provides a brief background on the status of the DPRK energy sector, and on Nautilus Institute’s approach to DPRK energy sector analysis in general, and to evaluating the impact of “collapse” pathways in particular.
- Section 3 presents our illustration of four potential pathways that could lead to the collapse of the government of the DPRK, ranging from a quick collapse brought on by a “shooting war” or a West-friendly coup to a collapse from continued isolation and slow decline, which could take years or decades.
- Section 4 describes our assessment of the implications of collapse pathways for the DPRK energy sector, and for provision of energy services (including energy supply and demand infrastructure) in the DPRK. For each collapse pathway, we identify key measures that the international community—including but hardly limited to the ROK and the US, would be obliged to or could take to help the DPRK transition toward eventual reunification with the ROK (whether official or de facto through economic integration).
- Section 5 summarizes key overall lessons from our preliminary analysis of collapse pathways, focusing on near-term initiatives and planning efforts that the international community might carry out and support that would help to manage, smooth, and make easier the post-collapse transition for the DPRK populace, independent of how collapse actually occurs.
2. Background: The DPRK Energy Sector since 1990, and Nautilus Analytical Approaches
- Obtain as much information as possible about the DPRK economy and energy sector from media sources, visitors to the DPRK, and other sources as available.
- Using this available information, together with comparative analysis of energy supply and demand in other nations over time, tempered by our own judgment and that of colleagues, assemble a coherent and consistent picture of the DPRK energy sector, which we summarize in the form of an “energy balance” (see Table 1 for an example balance for the year 2005 [6]).
- Think about possible future paths for DPRK energy sector/economy, what changes (national, regional, global) might bring those paths about, implication of changes for end-use, infrastructure
3. Potential “Collapse” Pathways
- War: A brief but very destructive war occurs between the DPRK and the ROK and its allies, precipitated by a military incident that rapidly escalates, and leads to essentially immediate unification
- Regime Implosion Leading to New Authoritarian Regime: A death or other event leads to regime replacement in the DPRK, with the new regime being modernizing, but leaning toward China and Russia for economic support, and away from the ROK and its Western allies.
- Regime Change by Palace Coup Leading to ROK-installed Regime: While not immediately leading to unification, this collapse path would lead to modernization that in turn would lead to at first de-facto economic unification, then, somewhat later, political unification with the ROK.
- Slow Collapse Leading to Regime Change through Internal Conflict: In this path, the Kim family and/or other leaders continue the current (largely) isolationist policies, which leads eventually, though perhaps not for many years, to the collapse of the DPRK state, with the ROK and its allies obliged to “pick up the pieces”.
- Destroy power plants wholesale, or just render plants relatively temporarily unusable with surgical strikes on key, relatively easily-replaceable components?
- Destroy the DPRK’s operating refinery, or just cut refined products supply lines?
- Destroy coal mines, or just cut power to them, rail lines from them?
4. Implications of Collapse Pathways for the DPRK Energy Sector and for Provision of Energy Services in the DPRK
- Replace virtually all substation equipment, including both equipment that was war-damaged and equipment that has simply become inoperable (or close to it) over time, as most substation transformers and related equipment are reportedly in poor condition.
- Establish emergency electricity generation, initially fueled with diesel oil or possibly liquefied petroleum gas (LPG, a mixture of propane and butane). This generation might take the form of power barges in coastal areas or where river transport is possible, and package diesel or portable combined heat and power plants in inland areas.
- Try to get major coal-fired power stations restarted, and restart or stabilize output from coal mines to supply them, while undertaking temporary transmission repairs sufficient to get electricity onto the local or regional grid on a semi-reliable basis.
- Ramp up petroleum products production in ROK refineries in order to substitute for whatever DPRK fuel production/transport capacity was destroyed in the war, with additional fuel provided to supply emergency generation facilities. ROK refining capacity is large enough that it could easily supply the ROK and the DPRK together today, though possibly not the both the ROK and DPRK at ROK per-capita levels of consumption. Given the status of DPRK fuels demand infrastructure, however, the DPRK wouldn’t reach ROK levels of consumption for many years. As such, overall refined products supplies might not be a problem in a suddenly reunified Korea (though some products will be easier to supply than others), but the infrastructure to move supplies to where they are needed in the North—port facilities, rail facilities, and roads—will need upgrading even if they not damaged by war.
- Try to get major Hydro facilities restarted, including required transmission repairs and/or repairs to dams.
- Provide critical power and fuel for agriculture. The urgency of doing so will, of course, depend on the season in which the conflict occurs, but planning for supporting DPRK agriculture as much as possible will be a priority in any circumstance in order to reduce the quantity of food aid that will inevitably be required.
- Plan for and start to build an integrated ROK/DPRK grid, probably starting with extending ROK grid into areas in the southern part of the (current) DPRK, and building local/regional grids in other areas for eventual hook-up to national grid.
- Make sure to replace damaged (or otherwise unserviceable) energy demand infrastructure with the most energy-efficient devices available, so as to lessen the requirements for new or rebuilt energy supply infrastructure.
- Make sure to choose energy-efficient devices for all of the new housing, commercial, and industrial developments that will be built as the North’s economy and living standards start to gain on those of the South.
- Evaluate which industrial facilities need to be developed (or in rare cases, rebuilt), and plan for evolving supply systems for fuels (such as electricity, gas, heat) to serve the evolving economy. In this case, serving the “evolving economy” means, for example, putting supply systems where people will be, factoring in elements like re-mechanization of agriculture and shifts in economic composition toward the services sectors, and away from heavy industry, and probably toward cities and away from the countryside. That is, don’t plan to necessarily put facilities where the people happen to be located now (or shortly after collapse) as they work in the planned economy and survival-level cottage industries.
- Work with the Russians to reconstruct–or, more likely, construct a new–Sonbong refinery, related port facilities, and the combined heat and power facilities associated with and serving the refinery and the local area.
- Work with the Russians to bring gas supplies and gas transmission and distribution infrastructure into and through DPRK to the ROK, and/or develop new liquefied natural gas (LNG) import, storage, and regasification facilities (again, with associated gas T&D facilities) somewhere near the 38th Parallel (for example, in or near Nampo in the DPRK). LNG facilities would likely be shared to serve both the North and South.
- Making a full assessment of the status of the North Korean electricity grid (T&D and generation) and other major energy and related infrastructure, including mines, refineries, rail facilities, and ports.
- Replacing virtually all electrical substation equipment, starting with failed and failing units.
- Establishing emergency electricity generation, initially with diesel or possibly LPG-power barges in coastal areas, and package diesel or combined heat and power plants in inland areas, focusing where power supply is particularly inadequate, in order to build social stability in those areas and stem out-migration.
- Where possible, applying quick repairs to keep the best of the major coal-fired power stations going for a few years while the national power grid is being replaced.
- Look for ways to upgrade existing hydroelectric facilities to improve their safety of operation, efficiency, and generation capacity.
- Ramping up ROK refined products production to supply currently unmet demand for transport fuels in the DPRK, plus diesel fuel needs for temporary generation.
- Providing critical power, fuel, and equipment for farming.
5. Lessons from Collapse Pathways for Near-term Initiatives and Planning Efforts
- Do capacity building on lots of topics whenever possible. It is cheap, useful, and necessary in any path, and has many ancillary benefits. Required capacity building topics include technical training in electricity generation, energy efficiency, oil refining, renewable energy, environmental remediation, waste treatment, reforestation, and other similar disciplines. In addition, training will be needed in running commercial enterprises, including economic analysis, building and operating regulatory and legal systems, and many other organizational topics. Ancillary benefits of capacity building include engagement on the individual and organizational level, opening minds to new ways of thinking, increasing the availability of competence and personal connections for application at key movements of transition, as well as availability of in-country trainers for to rapidly expand training as needed.
- Plan now for the wholesale rebuilding of the transmission and distribution system. Doing so will be necessary sooner or later An initial step might be to stockpile key components, such as transformers and substation switchgear, for rapid installation as needed
- Assess the ROK’s current refining capacity versus the petroleum products needs of a reunified (in fact if not in deed) Korea. Start talking with Russians about possibility of rebuilding and expanding the Sonbong refinery so as to be ready to rapidly start a refinery project when conditions permit.
- In order to reduce the burden on energy supply infrastructure (including reducing the amount of new energy supply infrastructure needed), have the discipline to provide high-efficiency energy demand (and supply) devices when rebuilding the DPRK economy. Provide high-efficiency demand and supply devices rather than, for example, marketing secondhand appliances, industrial motors, power plants, automobiles, and other devices to the DPRK, so as to make sure that the DPRK has a better chance of “catching up” with technology in the South, yielding better outcomes from social, resource conservation, environmental, economic/infrastructure integration perspectives.
- Think through how markets for energy goods can be established so as to spur private sector investments.
- Plan integrated energy infrastructure/economic development demonstration projects, for example, on a county scale, and try to get some integrated projects implemented even before collapse.
- Network with other interested parties to provide the best assessment possible of DPRK energy sector status and needs, and collaborate on concrete plans so as to be able to swiftly and effectively address those needs when an opening occurs.
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