When hundreds of policymakers, industrialists, researchers, academics and NGO representatives met in Seoul for the Global Green Growth Summit 2012 on May 10 and 11, it was no wonder that the Asian region was well represented ― not only because of the location, but also due to the region’s interest in energy developments.
Positive developments, like the success of Korea’s green growth policy, contributed to that interest. Challenges, like the tragedy of Fukushima, served as a stark reminder of the need to readjust energy policies. But interest was also driven by the rising demand for energy in East Asia’s rapidly growing markets.
Given that this conference was one of the major environmental policy events of this year, this focus means that energy questions are taking center stage regarding the green growth initiative and that East Asia is of particular interest as a region where this challenge has been recognized, though not yet tackled.
Two questions in particular are related to this challenge: First, how can today’s nationally confined energy grids be linked? The CEO of Japan’s Softbank and founder of the Japan Renewable Energy Foundation forwarded the idea of connecting a regional grid, and ultimately the creation of an Asian super-grid, referencing Europe’s increasingly integrated energy grids and similar plans in Europe in the so-called Desertec initiative. There were also earlier plans in Northeast Asia (under the Gobitec initiative). Such a grid promises a number of advantages, among them an improved balance between energy demand and supply, smoothing of energy demand (if peak times differ) and diversification of energy sources.
Closely connected is the second issue: how to “green” up the energy supply. This refers to the integration of renewable energy sources, originating from wind, water, solar and geothermal power, into the energy grid.
The related challenges are not only technological in nature, but also economic and of a regulatory nature. This has been well recognized among the participants of the Global Green Growth Summit and beyond.
It is astonishing, nevertheless, to see how few real preparations for taking up the regulatory challenge have been made until now in Northeast Asia and to what extent also the economic challenge has been a non-issue, compared to the more technological issues, which have been widely addressed.
In the trilateral cooperation with China and Japan, renewable energy does not feature prominently. Naturally, given the challenges of bilateral (with China, and maybe Japan) and trilateral free trade or the issue of North Korea this might not have been the first policy to think of in the past.
But given the challenges outlined above, it should soon come to center stage. The vision of an integrated energy grid, the “Asian supergrid,” needs a sound political framework, if it is ever to become a reality.
Here is why: while market forces will eventually react through investment, they will do so only under two conditions. One is that the government guarantees a sufficient price, like a feed-in tariff. This is tricky, since the resulting price, while designed to remedy the problem of diverging private and social costs, is arbitrary. It can lead to gross deviations from market prices and unwanted developments, as in Germany, where the feed-in tariff has caused financial concerns.
Alternatively, the government creates a framework which makes long-term investment in the industry viable, in particular into the infrastructure it requires. This promises a more careful, but also more long-term approach and benefit.
One of the great promises here lays in a quite unlikely location: the Northeast Asian deserts, and in particular the southern belt of the Gobi desert. Unlimited solar energy might be a key to solving the energy thirst of the region, in the form of large-scale photovoltaic fields and, even more promising in the future, concentrated solar power (CSP), a technology able to store solar energy and that can be coupled to desalination projects, thereby contributing to greening the desert.
CSP, while still too expensive to be used in East Asiaon a large-scale, is one of several developments a masterplan for renewable energy should include. There is a CSP model plant in Daegu, allowing Korea to participate in researching this technology.
But, as said above, rather than focusing on technology only and supporting research (which the Korean government does), a comprehensive view is necessary, understanding renewable energy as policy challenge and business challenge. Administrative preparations, in which Korea used to excel, are scarce.
Trilateral cooperation with Japan and China is a good starting point, because it can rely on existing (or, at least nascent) institutions and platforms, and it includes the two other economic giants of the region.
But a comprehensive view should certainly include Mongolia, a major potential producer of solar energy, Russia and its vast resources of natural gas, an inevitable bridging energy, and Southeast Asia and Australasia.
What can be the outcome of such cooperation? The medium-term vision could be the foundation of a Northeast Asian Renewable Energy Association (NARA), which could not only tackle the energy challenge, but furthermore become the rallying point for stronger Northeast Asian economic and political cooperation across the board.
The foremost challenge for NARA would be the opening of formerly national and often monopolized markets, leading to the integration of energy markets. As the European case of energy market liberalization shows, this alone can bring about dramatic increases in efficiency.
Second, a framework for the access of renewable energy to the grid should be jointly determined, tackling issues like grid stability, energy transfer during peak times, and long-term investment in large-scale renewable energy projects, including a code of conduct on energy subsidies and on local content regulation.
This last point is one where possible policy spill-overs come to mind, since this policy coordination can well be applied also to other industries. By this, NARA could show how to develop a much more comprehensive cooperation.
At the same time, in terms of international relations, a Northeast Asian agreement might give important impulses to worldwide sustainable energy agreements under the WTO to keep markets open ― a precondition for growth in China, Japan and Korea.
Green growth is not a luxury, but it is often, also still in Korea, handled as one. The Korean administration, known for its efficiency in handling policy issues, should view it as the next pressing issue on the agenda.
By Bernhard Seliger
Bernhard Seliger is resident representative of Hanns Seidel Foundation in Korea. In 2009, he initiated a proposal for regional renewable energy cooperation under the “Gobitec Initiative” (www.gobitec.org). From mid-2012, Hanns Seidel Foundation Korea started to carry out a feasibility study on the political preconditions for grid integration and renewable energy cooperation in Northeast Asia. The author can be reached at: email@example.com. ― Ed.