Energy Assistance to North Korea

On February 13th, 2007, North Korea agreed to dismantle its nuclear program in exchange for security guarantees and energy assistance. As a part of the strict give-and-take denuclearization process, the Feburary 13th agreement stipulates energy assistance up to the “equivalent of one million tons of heavy fuel oil”. Noting the critical phrase, “equivalent of”, this study analyzes the various energy assistance options available through domestic and international politics analysis and economic cost-benefit analysis; it includes health and environmental externalities in the economics, thus incorporating the latent social costs. The research finds that a comprehensive energy assistance package that consists of renewable energy assistance, including wind, small-hydro, and tidal power, combined with the rehabilitation of hydro power plants and the grid system in place of heavy fuel oil, would benefit the North Korean energy sector and its economy in a sustainable manner. In the medium-term, light water nuclear reactors emerge as an unfortunate imperative in putting a definite end to the dismantlement process. In the longer South-North Korea economic cooperation, however, as the benefits of renewable energies increase over time, a diverse portfolio of renewable energies would contribute to reviving the economy while allowing for the health of the people and of the environment. To shed light on an example of a country aligning itself toward a sustainable trajectory, the Cuban example of overcoming a food and energy crisis is introduced to grant lessons for policymakers.