The Prospects For Energy Efficiency Improvements in the Democratic People’s Republic of Korea: Evaluating and Exploring the Options
The authors would like to acknowledge that Jonathan Sinton of Lawrence Berkeley Laboratory reviewed and contributed text to section 4 of this paper.
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.
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. 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 .
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 .
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.
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). 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 . 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|
|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)). 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. 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 .
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 . 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 . Product modifications that result in the reduction of raw material (and thus energy) used per unit of product are also possible. 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. 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 . 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.
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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 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. 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. 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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Hayes, P, (1993c) Should the United States Supply Light Water Reactors to Pyongyang?. Nautilus Institute, Berkeley, California, USA. October 29, 1993.
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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