The ICAS Lectures

No. 2003-0214-MWG

The North Korea's Energy Issue: An Alternative Approach

Mark W Grobmyer

ICAS Spring Symposium &
Humanity, Peace and Security
February 14, 2003 12:00 PM - 5:50 PM.
U.S. Senate Dirksen Office Building Room 106
Capitol Hill
Washington, D. C.

Institute for Corean-American Studies, Inc.

965 Clover Court, Blue Bell, PA 19422

Tel : (610) 277-9989; (610) 277-0149
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Biographic Sketch & Links: Mark W. Grobmyer

The North Korea's Energy Issue: An Alternative Approach

Mark W Grobmyer
Vice Chairman CDX International
Chairman & CEO
Commerce International, Inc.

1. Before 1950, what is now North Korea provided about 90% of the energy in the entire Korean Peninsula due to its abundant coal and hydro power.

2. Since the 1970s the DPRK has been building more coal based power plants at locations near industrial and population centers which also happen to be in areas where there is substantial coal.

3. In April of 2001 US Representative Edward Markey suggested, at the Nuclear Control Institute, that the G-8 should turn their attention from nuclear reactor building of KEDO to helping DPRK increase and improve its coal mining and help finance the building of more coal fired power plants.

4. Some of the biggest problems related to this very interesting solution concern (i) the environmental problems for North Korea, Japan and the rest of the world, associated with more coal burning and (ii) the fact that much of the remaining deep coal in Korea is difficult to mine.

5. The idea of utilizing an existing DPRK asset to generate a much needed energy supply is very compelling for several reasons, including (i) fact that DPRK funds will not have to be paid to foreign suppliers for outside fuel thus freeing more funding for economic development, (ii) it would be much less expensive than nuclear plant construction and (iii) it creates a new incentive to eliminate proliferation problems (since it is new, no party has to back down from existing positions--each saves face by just accepting this new solution that was not possible before.)

6. With the increased coal option not being readily available the only other current solutions to the acute energy shortage were (i) the importation of expensive oil or (ii) outside LNG gas or (iii) the Nuclear option.

7. However, due to recent advances in technology an entirely new option is available CDX GAS has developed a technology which can extract, from the existing valuable DPRK coal, clean burning natural gas known as CBM.

8. The amount of gas that can be produced is quite large since North Korea has the 5th largest coal reserves in Asia and the 21st largest in the world, with a population of less than 25 million. The amount of hard coal is estimated to be between 1.8 billion tons and 4.7 billion tons. Much of it is believed to contain large amounts of gas that can be released by CDX. technology.

9. Since the North Koreans already own the coal it is not necessary for them to spend large sums of money on nuclear power or be held hostage to foreign oil.

10. If they will renounce their nuclear capabilities and agree to certain standards they can acquire the assistance of CDX to extract the clean burning gas to solve much of their power problems for at least the next 20 years. 11. Because each CDX well can replace up to 16 conventional gas wells and produce gas much more quickly than conventional technology, it is an economical way to produce energy.

12. The CDX technology can also produce vast amounts of water as a byproduct of extracting the gas. Most coal acts as an aquifer for underground water. This is very important in North Korea as much of the normal water supply is adversely affected by pollution and several years of droughts.

13. Another benefit of the CDX technology relates to the fact that once the gas and water is extracted, CO2 and other greenhouse gases can be injected into depleted CDX wells. This creates the ability for North Korea to capture the emissions from their coal fired power plants and perhaps earn valuable greenhouse gas credits that can be traded and sold to earn foreign reserves.

14. With the ending of the Korean Crisis through the CDX Initiative, North Korea will have abundant and clean domestic energy and might be in a position to even sell gas and water to China and South Korea, as well as earn funds from greenhouse gas credit sales. This makes it unnecessary for them to export weapons to other countries since they could have new sources of foreign currency income.

15. The CDX Initiative has other benefits as well, such as providing the energy to help improve living standards and dramatically improve the environment for the people of North Korea.

16. Because of the environmental and global security benefits involved, it is assumed that the international community would redirect some of its KEDO related nuclear funding to help finance the production of this gas -- if the DPRK cooperates by agreeing to accept this new technology as a replacement for its old policies that have brought it much international criticism.

17. Perhaps a CDX "partnership" with KEPCO, in the KEDO framework, would be a good way to implement this Initiative. CDX International is willing to explore this option as well as other ways the initiative could be implemented. 18. It is important to note that production of gas, using CDX, could begin in less than six months from the time all necessary agreements are reached.


CDX International is very pleased to have been invited by ICAS to outline this possible alternative approach to address the North Korean Energy Issue.

CDX stands ready to continue this new dialogue that CDX technology makes possible.


From Ruters News Service 2/14/03

PYONGYANG - Even in daylight, the effects of power and heating shortages bring untold misery to the hundreds of students bundled up in heavy winter coats at the People's Study Hall in the North Korean capital.

As the students pore assiduously over the teachings of former North Korean leader Kim Il-sung or those of his son and current leader, Kim Jong-il, their breath clouds the air over the textbooks in the biting chill. Severe power shortages are having an increasingly devastating impact on the lives of North Koreans, in temperatures that do not rise to freezing point even at noon, and are wreaking havoc on the fragile economy, a senior government official said.

North Korea's energy crisis was the reason behind Pyongyang's decision last October to restart a mothballed nuclear power plant, the official said in an interview this week.

That move, along with Pyongyang's withdrawal from the Nuclear Nonproliferation Treaty and its expulsion of U.N. nuclear inspectors, put the country on a collision course with the United States - which has labeled North Korea part of an "axis of evil" along with Iraq and Iran.

Washington has said the North has already built at least one or two nuclear weapons using plutonium derived from earlier activities at its Yongbyon research reactor, which the North has said it is preparing to restart.

Pyongyang is adamant the recommissioning is purely to stem big shortfalls in its electricity supply.

"This is why we must construct and operate nuclear power plants. These nuclear power plants are meant only for power generation for the Korean people," Kim Myong Chol a senior official at the Ministry for Electricity and Coal, told Reuters.

North Korea said last week it had put the atomic facilities at Yongbyon, at the center of its suspected weapons program, "on a normal footing".


But Kim said North Korea has been suffering serious electricity shortfalls since it closed Yongbyon in 1994 under an agreement with the United States.

The terms of that deal, signed amid concerns the plant could produce weapons-grade plutonium, called for a U.S.-led consortium to build light-water reactors for North Korea and provide 500,000 tonnes of heavy fuel oil a year to make up any power shortfall.

Light-water reactors cannot produce weapons-grade material.

But Pyongyang says Washington failed to honor the agreement by delaying the construction of the reactors and by failing to deliver on promises of fuel oil.

A Foreign Ministry official told Reuters the fuel oil deliveries had been sporadic - either not appearing at all or arriving in such quantities they overburdened storage capacity - before they were suspended entirely last December.

The suspension - prompted by a U.S. belief that North Korea was developing nuclear weapons in breach of the 1994 agreement - has compounded a power shortage that is having an impact at all levels of North Korean society.

"This is totally due to the U.S. side and a lot of people have serious grievances against the U.S. because of the power," said Kim.

"Because of this - we are failing to give our people electricity for lighting," said Kim. "You can easily imagine how uncomfortable it is without lights."


Hence the frosty scene at the Study Hall, an imposing 100,000 square metre (1.076 million sq ft), marble-clad building in the heart of the capital, and elsewhere in Pyongyang.

Many of the city's 2.8 million people live in high-rise apartment blocks which, without electricity, become almost unbearable to live in, said Kim.

"Without electricity we cannot pump drinking water to the high floors and when there is no power there are no lifts," he said.

Outside the city, the crisis is biting just as hard.

No power means no water can be pumped into irrigation ditches already parched by drought. The power cuts stop trains on the electrified system.

Factories reliant on the rail system for raw materials are further hampered or even closed by the patchy power supply, and coal mines, digging out the raw material to produce more power, grind to a halt.

North Korea's government has grown accustomed to rationing power, although Kim would not be drawn on details of how the authorities decide who gets how much of the little electricity available.

"If you only have a small amount of food and I ask you 'Who are you feeding - your wife, your children, your parents?' This is a very awkward question," he said.


This page last updated 2/23/2003 jdb

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