research background and - keei

Korea Energy Economics Institute 1

Ⅰ. Research Background and Issues

� North Korea is facing a serious energy shortage

throughout the entire sectors.

• North Korea's energy shortage is hitting all sectors

from people's livelihood like space heating, cooking,

lighting, and electrical devices to public purposes

like industry and transportation.

- Discussions on North Korea's energy crisis tend to

focus only on power crisis.

- Most of the existing studies suggest that energy

plays a pivotal role in North Korea's economic

development. Their recommendations include

modernization of power infrastructure

such as rehabilitation of current power facilities,

construction of new power plants, distribution and

transportation systems, paying a particularly keen

attention on the electricity sector.

� Energy for people's livelihood has often been

alienated in general talks on South-North Korean

energy cooperation.

• There is a tendency to pay less attention on solving

household energy issues because the household

sector takes small share of the energy market.

- Even the North Korean government avoids to

address household energy issues. After it stopped

national distribution since long time ago, it just

lets people procure energy sources by themselves.

Instead, it tackles only the large energy-consuming

sectorssuchastransportation and industry.

2 Policy lssue Paper 13-23

• Commercial and public energyconsumption,which is

also insignificant in scale, is put on the back burner.

It is difficult to seek energy cooperation with a �

country where market-based energy trading is

unfamiliar, especially when the cooperation is

aimed at improving people's living.

• In the North Korean economy, energy consumers in

residential sector are individuals or households, so

designing a bilateral cooperation project is a very

challenging task.

- In most cases, those who want to develop

cooperative projects prefer large-scale consumers

to unspecified individuals, because the former

presents smaller risk than the latter in a non-market

economy.

- The fact that North Korean households are not

used to purchasing energy, not to mention that

they have little purchasing power, constitutes a

barrier to successful energy cooperation.

In this study, we conducted a scientific survey on �

North Korean people's energy consumption in their

living. Based on the survey result, we propose a few

short- and long-term solutions.

• By presenting empirical data on North Korean

people's energy consumption, this study seeks to

encourage more in-depth researches aimed at

promoting inter-Korean energy cooperation.

Ⅱ. Research Results

We undertook a survey on energy consumption �

behavior of North Korean civilians through interviews

with North Korean refugees living in South Korea.

• To make this survey region-specific, we divided

North Korea into three regions Pyongyang region, ：

Western-southern region covering Hwanghae Province,

Pyongan Province, and Jagang Province, and

Eastern-northern regioncoveringGangwon Province,

Hamgyeong Province, and Yanggang Province. We

prepared questionnaires asking for information of

the year 2011 for 350 respondents.

- Out of 329 responses, we identified 257 valid

samples and analyzed them.

Government distribution of fuel for households is �

practically brought to a halt. Civilians have to

purchase fuel from the market or acquire it on their

own.

• The majority of the respondents answered that they

purchased fuel from the market. Only few got fuel

from the government through rationing. From this,

we figure that fuel ration has stopped since long

ago.

- Even if there are recipients of fuel rations, they are

either high-ranking officials in Pyongyang or

employees hired by companies. Employees

sometimes get fuel from their companies.

- A significant share of responses indicated

self-supply.Themajor source of self-supply energy

was firewood and charcoal, followed by anthracite

coal and brown coal. The category of self-supply

includes fuel theft.

Region Self-Supply Purchase Rationing Total

Western-Southern76

(46.1%)80

(48.5%)9

(5.5%)165

(100.0%)

Eastern-Northern84

(41.0%)114

(55.6%)7

(3.4%)205

(100.0%)

Pyongyang24

(35.3%)30

(44.1%)14

(20.6%)68

(100.0%)

<Table 1> Fuel Supply by Region

(Multiple Answers Allowed)

Unit� energyconsumptionbyNorthKoreanhouseholds

is estimated at 0.291 TOE.

• Unit energy consumption by North Korean

households is estimated at 0.291 TOE. 51% of the

total energy consumption came from space heating,

36% from cooking, 9% from home appliances, and

3% from lighting.

- In consumption per household by source,

coal(including briquette) and woods took share of

65% and high quality energy sources such as

propane gas, oil, and electricity took 35%.


Space Heating

CookingHome

ApplianceLighting Total

Briquette 0.061 0.046 - - 0.107

Coals 0.006 0.006 - - 0.012

Firewoods 0.050 0.019 - - 0.069

Propane Gas 0.004 0.020 - - 0.023

Petroleum 0.010 0.015 - - 0.025

Central Heating 0.017 - - - 0.017

Electricity - - 0.027 0.010 0.038

Total 0.148 0.105 0.027 0.010 0.291

<Table 2> Household Unit Energy Consumption

by Purpose and by Source(Unit : TOE)

The total energy consumption by North Korean �

Households in 2011 is estimated at 1,710.8

thousand TOE.

• The figure of 1,710.8 thousand TOE was calculated

by multiplying unit energy consumption by

household population.

- The amount of energy used for space heating was

51% of the total, and cooking 36.1%, which makes

heat demand 87.1%.

- 12.9% of the household energy consumption

comes from electricity, of which 72.5% is used for

electronic appliances and the rest 27.5% for

lighting.

Space Heating

CookingHome


Western-Southern 446.4 285.7 49.1 30.0 811.3

Eastern-Northern 282.0 165.1 69.7 15.5 532.2

Pyongyang 143.9 167.0 41.2 15.1 367.2

Total 872.3 617.8 160.0 60.6 1,710.8

<Table 3> Household Energy Consumption by

Region and by Purpose

(Unit Thousand TOE) ：

The most popular energy source among North �

Korean households is coal, especially briquette.

• The amount of briquette North Korean households

used was 630.1 thousand TOE(36.8% of the total),

coal was 70.1 thousand TOE(4.2%). Overall, coal

accounts for 41.0% of the entire household energy.

- Firewood and charcoal come at 404.2 thousand

TOE (23.6%) second to coal.

- The share of petroleum, including propane gas,

heavy oil, and kerosene, is found substantial as

22.5%.

• Unlike our expectation, household reliance on

petroleum was unusually high.

- This is presumably because LPG is increasingly

imported to North Korea and money-based oil

trades are quite vigorous in recent years.

- LPG is rationed to high-ranking officials in

Pyongyang. An increasing number of bottled LPG

is actively imported from China and traded in

regions near North Korean-Chinese border like

Najin and Sonbong.1)

- A black market is already formed in which

so-called 'oil seller' smuggle oil from the public or

military units. North Korean forces fail to crack

down on them and the number of illegal goods is

on the rise.2)

Space Heating

CookingHome


Briquette 359.6 270.5 - - 630.1

Coal 37.1 33.9 - - 71.0

Firewood 295.4 108.8 - - 404.2

(Propane)Gas 21.0 115.0 - - 136.0

Kerosene 60.0 89.7 - - 149.7

Heavy Oil 99.1 - - - 99.1

Electricity - - 160.0 60.6 220.6

Total 872.3 617.8 160.0 60.6 1,710.8

<Table 4> Household Energy Consumption by

Purpose and by Source


Note : 1. Coal : anthracite coal, brown coal etc. 2. Firewood : branches, shrubs, straws, and charcoal

1) Nocut News, February 3, 2009. 2) Daily NK, March 20, 2013.


Energy shortfall in North Korean household sector in �

2011 is assessed at 3,505 thousand TOE.

• To calculate shortfalls, we compared North Korea's

household energy consumption of the year 1985,

when the highest record shown, and the year 2011

to calculate shortfalls.

- If a household wants to keep the same level of

energy consumption with 1985, the total household

consumption should be 5,216 thousand TOE.

However, 2011 household energy use recorded a

mere 1,711 thousandTOE, lower by 3,505 thousand

TOE.

- To put to per capita figure, an individual should

have used energy 0.1442 TOE more in a year to

keep the 1985 level.

• North Korean people in 2011 just use 32.8% of

energy of the 1985 level, which provides clues how

grim energy shortage is.

Household Energy

Consumption (Thousand

TOE)

Energy Consumption

Per Capita (Annual

TOE/person)

Remarks

1985 4,099 0.2146 Estimated by KEEI

2011

Actual Amount (a)

1,711 0.0704 Estimated in this study

Amount Needed(b)

5,216 0.2146Calculated based on 1985 energy consumption per

capita

Shortfalls(c) 3,505 0.1442 (c )= (b) - (a)

<Table 5> North Korean Household Energy

Consumption in 2011 in Comparison with 1985

� In 2011, NorthKorea's household sector only showed

energy consumption equivalent to 7.9% of its South

Korean counterpart.

• In2011, NorthKorea's household sector only showed

energy consumption equivalent to 7.9% of its South

Korean counterpart3).

- North Korea's energy use is no more than one tenth

of that of South Korea in every energy source except

for coal. However, North Korea's coal consumption

was as high as 80% of South Korea's, recording per

capita coal consumption 0.029 TOE/person, largely

exceeding South Korea's 0.018 TOE/person.

- When it comes to energy mix, natural gas was the

most popular source accounting for 46.8%(10,125

thousand TOE) in South Korea, followed by

electricity(24.5%) and petroleum(17.3%). In North

Korea, coal was the major source accounting for

41.0% and firewood and petroleum came next

representing respectively 23.6% and 22.5%.

North Korea South Korea

Coal 701 871

(%) (41.0%) (4.0%)

Petroleum 385 3,735

(%) (22.5%) (17.3%)

Electricity 221 5,295

(%) (12.9%) (24.5%)

Others 404 11,720

(%) (23.6%) (54.2%)

Total 1,711 21,621

(%) (100.0%) (100.0%)

<Table 6> Comparison of Household Energy

Consumption Between South and North Koreas


Note：1. Petroleum : Petroleum products including (propane)gas 2. Others : Firewood, charcoal, city gas and other thermal energy sources Source Figures of South Korea from Annual Energy Statistics, ： KEEI, 2012

• A comparison of energy consumption to income

between two Koreas indicates that financial burden

imposed on North Koreans is three times bigger

than it is on South Koreans. South Koreans use

0.017TOE/KRW million whereas North Koreans

0.053TOE/KRW million.

- In terms of energy consumption per household,

South Korea was 1.222 TOE/household and North

Korea was 0.291 TOE/household, a mere one

fourth of South Korea.

- In terms of energy consumption per capita, North

Korea was 0.070 TOE/person, below one sixth of

South Korea's 0.434 TOE/person.

This study took a poll among North Korea refugees �

3) Annual Energy Statistics, KEEI, 2012


in South Korea to acquire information about energy

use in the commercial and public sectors.

• We designed questionnaire asking mostly about

stores in survey participants' neighborhoods. Based

on their responses, we could identify unit energy

consumption by the commercial sector.

- According to our estimation, department stores'

unit energy consumption was 338.4 TOE,

restaurants 0.55 TOE, convenient stores 0.69TOE,

sauna 1.0TOE, and hotels and inns 0.77 TOE.

Business Type

Department Store

RestaurantConvenient

StoreSauna

Hotel and Inn

Other Service

Providers

Coal 1.56 0.40 0.46 0.83 0.62 0.49

Petroleum 127.30 0.00 0.01 0.01 0.01 0.00

Electricity 191.35 0.04 0.04 0.04 0.05 0.03

Others 18.16 0.10 0.19 0.12 0.09 0.12

Total 338.36 0.55 0.69 1.00 0.77 0.64

<Table 7> Estimated Unit Energy Consumption by

Business Type of Stores in North Korea(Unit TOE)：

• The opinion survey did not give us reliable

information about the public sector that is not

covered by the commercial sector. Therefore, we did

calculations using data on South Korea's historical

energy consumption of the time when then

economy scale and income per capita were as small

as current North Korea's.

- We found that the North Korean economy and

income per capita of 2011 is close to those of

South Korea in 1981. We used South Korea's

energy data of 1981 to estimate unit energy

consumption of North Korea's non-commercial

buildings and annual energy consumption made

by one non-commercial building.

Business Type Coal Petroleum Electricity Others Total

Hotel 17.1 41.10 86.17 14.46 158.74

Community Health Care Center

0.25 0.05 0.11 0.12 0.53

District, Municipal, or National Hospital

0.60 3.56 13.91 1.35 19.43

Kindergarten 3.01 0.01 0.08 0.18 3.29

Elementary School 4.05 0.02 0.35 0.05 4.47

Middle School 5.51 0.03 0.48 0.05 6.06

College 24.55 40.21 174.64 10.25 249.65

Revolution Research Center

4.01 0.04 0.35 0.04 4.45

Administration or Others

0.62 2.98 10.68 0.13 14.41

<Table 8> Estimated Unite Energy Consumption of

Non-Commercial Buildings

(Unit TOE)：

Source： Values for community health care center and kindergarten were calculated based on the data from DPRK Renewable Energy, Nautilus Institute, 1999.

Note : 1. Coal anthracite coal, brown coal etc.：2. Petroleum : Petroleum products including (propane)gas3. Others Firewood, charcoal, city gas and other thermal ：

energy sources

We summed up all the values in the table above and �

categor ized them into commerc ia l and

non-commercial, which we later named commercial

and public, respectively.

• The commercial sector embraces hotels, department

stores, restaurants, saunas, inns, convenient stores,

and other service providing units. The public sector

covers hospitals(community health care centers,

district- or larger-level hospitals), schools

(kindergartens, elementary schools, middle schools,

colleges, revolution research centers), and other

administrative institutions.

• Energy consumption in the commercial sector is

estimated at 22.6 thousand TOE.

- Coal was the largest source of the commercial sector

amounting to 8.3 thousand TOE(37%), and electricity

followed in second place at 7.5 thousand TOE(33%).

Coal and electricity altogether equal more than 70%

of the commercial energy consumption.

• The public sector uses 456.2 thousand TOE of

energy, 20 times larger than the commercial sector

does. If put the public and commercial sectors into


one category, the public part's share reaches 95%.

- Electricity is the most preferred source in the public

sector, being used 21.3 thousand TOE(48.4%). Coal

is the second largest source, being used 166.1

thousand TOE(36%).

　 Coal Petroleum Electricity Others Total Proportion

Commercial 8,373 4,154 7,475 2,591 22,5924.7%

(%) (37.1%) (18.4%) (33.1%) (11.5%) (100.0%)

Public 166,097 56,349 221,308 13,466 457,22195.3%

(%) (36.3%) (12.3%) (48.4%) (2.9%) (100.0%)

Total 174,471 60,503 228,783 16,057 479,813100.0%

(%) (36.4%) (12.6%) (47.7%) (3.3%) (100.0%)

<Table 9> Estimated Energy Consumption by

Commercial and Public Sectors(Unit TOE)：

Note : 1. Coal : anthracite coal, brown coal etc. 2. Petroleum Petroleum products including (propane)gas：

3. Others Firewood, charcoal, city gas and other thermal ：energy sources

Ⅲ. Policy Recommendations

Systematic and thorough data acquisition and �

analyses are the prerequisite for program planning.

• Without extensive studies and surveys on North

Korean civilians' energy consumption, designing of

humanitarian energy assistance program may as

well be defected.

- Concrete data on energy consumption by region,

source, and purpose provides a sound platform to

prepare scientific and efficient humanitarian

support for North Korea.

- Studies and analyses should be done on a regular

basis in a scientific and systematical manner. In

order to do so, researchers should come up with a

study framework customized to this field.

North Korean defectors living in South Korea are the �

very alive source of information. We should not

waste the source neglecting to build industry-

academy-research consortium which collects and

manages information from them.

- The population of North Korean defectors in South

Korea reaches more than 25,000. Still many keep

fleeing the North each year, so there is the

necessity to provide them with good care and to

acquire updated information from them.

- It is advisable that inter-Korean relations research,

ministries, and government agencies cooperate to

build a system of collecting information from the

defectors. Single researcher alone would not

effectively conduct a thorough survey.

This study identifies the basic approach and things �

to remember when building a humanitarian energy

assistance system for North Korea.

• One who takes charge in building a humanitarian

energy assistance system for North Korea should

keep in mind:

- Excluding energy source that is highly likely to be

used for military purposes. Therefore, energy

sources like oil and electricity should not be

considered in the early stage of aid programs.

Strategic material may as well be considered, only

when the South and the North integrate their

economies, providing

- Making region-specific assistance. Assistance is

better to be given first to regions with the poorest

energy situation. Regions of good access to energy

such as coal mine areas, Pyongyang and other

major cities are at the bottom of the list.

Determining candidate regions for the energy

support should be based on objective data.

- Giving a careful thought whether to choose energy

products or energy facilities. Energy products are

preferred in the early stage of support programs.

As time goes by, support will grow to energy

facilities, such as cookers, ovens, boilers, and

power generators using hydro, coal and gas, and

new and renewable energy in the mid-and

long-term.

- Choosing the right size of aid. In order to do so,

one should know the size of energy consumption

of recipients first. Therefore, it is important to

think how to identify unit energy consumption by a

household. Questions like 'how large a household's

energy consumption per day and 'how many


percents of the unit energy consumption should

be covered by aid' are critical to decide on scale of

aid. Regions, durations, and aid items should be

fixed based on planned budgets.

- Pre-setting support principles. Principles are

mostly about scale of aid per household, number

of aid provision, duration, and so on. Once fixed,

they should be respected with no exception. It is

highly likely that a substantial amount of the

products doled out to civilians are smuggled into

markets or other regions, so supporters should

make it very clear that in that case, compensation

will not be made for materials that were not

consumed in households.

- How to expand spatial coverage of support. Support

programs should start as small pilot projects and

evolve in terms of covering areas, materials, and

amount of support.

• Humanitarian energy assistance for North Koreans

can be categorized into relief measures for disasters

and accidents and aids to enhance people's

livelihoods.

- The former includes relief activities in regions

which are hit by natural disasters like floods,

droughts, and cold waves, or man-made disasters

like explosion on Yongcheon4). Materials to be

provided are energy for cooking, heating, and

lighting for the displaced, and energy for

restoration, such as oil and asphalt.

- We should make support scenarios in preparation

of disasters with special focus on formulated

process and support materials. We propose two

scenarios a scenario for a time when North Korea ：

goes through a certain size of disasters and

accepts South Korea's help, and another scenario

for a time when North Korea asks for aid regardless

of scale of disasters. For both scenarios, support

program designers should draw up administrative

and decision making processes in advance.

- Type of materials is better to be pre-fixed. Factors

to consider include South Korea's capacity and cost

of delivering materials to the North in no time,

producing more energy to help out, collecting and

transporting energy from each plant to the North.

Whether individual-level or household-level is

better should be analyzed.

• When it comes to energy assistance for people's

livelihoods, a keen attention must be paid on

deciding who can be beneficiaries and how to scale

up aid.

- What kind of materials should be given to people?

In a short-term support program, suitable are

candles, solar PV flashlights, portable stoves,

butane gas, solar cookers, and bottled LPGs. Of

course, in-depth data collection and simulative

approaches are essential in studying the South's

procurement conditions, transportation, budget,

and barriers.

- We should not settle in one-off or short-term

programs. It is necessary to design extensive,

fundamental, and sustainable long-term support

programs as well. Working with the private sector

is probably a good idea in order to make programs

more profitable and lasting. If support programs

can reap returns, they would fall in one of

inter-Korean energy cooperation businesses.

- To prove one strong point, this study suggests a

business model which can have humanitarian aid

impact and create returns at the same time. In this

business model, South Korea develops and

modernizes North Korea's major coal mines and

builds briquette factories near the mines. This

model is practically a project for economic recovery

because it would not just improve people's lives

but also boost growth of communities, industries,

and national power capacity.

- Let's say coal mines are modernized. Thanks to the

mines, residents will have better access to energy

for heating and cooking. In addition, power plants

will be able to produce electricity in a reliable

manner based on stable fuel supply, thus leading

to economic recovery of the region eventually.

4) A large-sclae explosion occurred in the Yongcheon station, Pyongan Province in Apr. 22, 2004


Ⅳ. Expected Achievements

Collected data of North Korean people's energy �

consumption will serve as a scientific platform for

future research to organize humanitarian energy

assistance programs for North Korea.

• Our analysis will be helpful to future researchers

who will build frameworks to give energy assistance

or to increase energy capacity of the North.

• It is recommended that short-term and long-term

strategies take different approaches in tackling

North Korean civilians' energy crisis.

- Short-term aid programs should be in the form of

relief measures which help the distressed in

natural or man-made disasters.

- Mid- or long-term support programs are to adopt

business partner approach. They should seek

inter-Korean cooperation at both public and

private levels, covering the domains of regional,

resource, and industrial development. In these

programs, the North is the South's business

partner, instead of aid beneficiary.

• This study is expected to provide basic data to those

who will map out solutions to North Korean people's

energy crunch and ways to promote inter-Korean

energy cooperation.

North Korean defectors are a good source of �

information on North Korea. This study chose to

take an opinion poll among them, and this

methodology turns out to be very effective. We

encourage other studies on North Korea, even in

other areas than energy, to take the same

methodology.

• We wish that future North Korea-related research

will take lessons from our output.

●

References●

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•동 보, 1990 1월 1 • Daily NK, 2013. 3. 20•통 신 , 2010. 7. 5 •통 신 , 2013. 3. 5•뉴 리, 2011. 1. 27 • 컷뉴스, 2013. 1. 22

Policy Issue Paper 13-23

Analysis on the Energy Consuming Behavior in North Korea

: Household, Commercial, and Public SectorsPrinted on August 30, 2015Issued on August 30, 2015

Author Kyung-Sool Kim et al.Publisher Joo-Heon Park

Published by Korea Energy Economics Institute, (Address) 405-11, Jongga-ro, Jung-gu, Ulsan, 44543, Korea, (Phone) +82-52-714-2114, (Fax) +82-52-714-2028

Registered on December 7, 1992Korea Energy Economics Institute, 2015

research background and - keei

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