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Moving Toward Greater Collaboration: Challenges and Tasks of Energy Cooperation in Northeast Asia

Sungkyu Lee and Ahhyun Park


EXECUTIVE SUMMARY

This paper assesses the potential and prospects for strengthening regional energy cooperation in Northeast Asia and offers recommendations for moving forward.

Main Findings

While regional energy cooperation in Northeast Asia has shown relatively slow progress when compared with other parts of the world, the environment for such cooperation has changed in light of major shifts in world energy markets. The region is now paying more attention to the issue than ever before, and South Korea, China, Japan, Russia, and Mongolia are already pursuing a wide range of collaborative efforts on issues such as constructing cross-border infrastructure and expanding bilateral and multilateral trading mechanisms. However, a number of challenges remain for fostering closer ties, such as addressing varying interests in engagement, financial capacities, and domestic politics. Key stakeholders in Northeast Asia should make a concerted effort to narrow such gaps by coordinating their policies, strengthening financing options, and finding realizable multilateral cooperative projects.

Policy Implications

  • Addressing concerns about high oil and gas prices and about energy security will remain key issues for Northeast Asia. To date, governments and institutions within China, Japan, and South Korea have discussed action plans for easing the so-called “Asian Price Premium” on oil and gas supplies. These countries have also formed and managed bilateral and multilateral frameworks for cooperation with other countries. The region stands to benefit from continued cooperation on these concerns and from a review of both regional pricing mechanisms and of oil and gas import conditions.
  • Establishing an integrated energy market in Northeast Asia could yield significant energy and economic benefits to the region as a whole. Yet in addition to requiring close regional coordination and significant, large-scale investments, policymakers and industry leaders should be aware that maintaining the integrity of such a network will likely be even more challenging than its construction and require ongoing engagement.
  • Strengthening overall institutional frameworks for cooperation on energy challenges through changing the region’s energy security paradigm and building political trust
  • Since its establishment, the so-called Collaborative Mechanism has attained some recognition as an important initiative for enhancing energy cooperation in the region. To date, the Collaborative Mechanism has provided information to policymakers, stimulated collaboration, and involved energy industry representative and experts in policy dialogues, but its activities still remain restricted and could be enhanced.


This working paper was commissioned for the 2014 Pacific Energy Summit, held in Seoul, South Korea, to discuss the market trends, geopolitical developments, policy decisions, and technological innovations that will play a critical role in determining the energy and environmental outlook for the Asia-Pacific. Learn more.


Sungkyu Lee is a Research Fellow at the Korea Energy Economics Institute.

Ahhyun Park is a Researcher at the Korea Energy Economics Institute.

General Information

Clara Gillispie
Senior Director of Trade, Economic, and Energy Affairs
+1.202.347.9767
pacificenergy@nbr.org