Keynote Speech
by
H.E. Cho Tae-yul
Vice Minister of Foreign Affairs
of
the Republic of Korea
at the 2014 Pacific Energy Summit

June 30, 2014
JW Marriot Hotel
 

Honorable Ministers,
Admiral Blair, Chairman of Pacific Energy Summit,
Dr. Sohn Yang-hoon, President of the Korea Energy Economics Institute,
Mr. Richard Ellings, President of the National Bureau of Asian Research, 
Distinguished Guests,
Ladies and Gentlemen,

Thank you for joining us this morning at the 2014 Pacific Energy Summit. I am especially grateful to those of you who have traveled all the way to Seoul to attend this meaningful event, including in particular the distinguished Ministers and senior officials from Mongolia, Indonesia, Myanmar, and Cambodia.

I would also like to express my sincere appreciation to the NBR and the KEEI for jointly organizing this event with the Ministry of Foreign Affairs of the Republic of Korea.

Today’s event is designed to offer an invaluable platform for government and business leaders to discuss policy options and market solutions for charting the course to a secure and clean energy in the Asia-Pacific.

The Asia-Pacific region, an engine for global economic growth, accounts for 40% of the world’s total energy consumption. This figure is expected to increase continuously in the coming years.

The IEA predicts that global energy demand will increase by one third from 2010 to 2035 while China and India combine to account for 50 percent of the growth. Moreover, the region's dominant energy source is fossil fuel.

Given the urgent need of enhancing energy security and responding to climate change under these regional circumstances, this event is very timely indeed.

The Role of Renewable Energy

Distinguished Guests,

As climate change is a matter of human survival, we must be united in our efforts to address this global challenge. Many countries have tried to promote renewable energy as an alternative energy source. However, the goal of a sufficient deployment of renewable energy across the globe has yet to be achieved.

To accelerate the world-wide use of renewable energy, there is a need for governments in both developed and developing countries to work together, providing financial and political support and facilitating technology transfer. Private sector should also come into play and work together with governments.

To increase the use of renewable energy in the domestic market, the Korean Government has set a target of raising the share of renewable energy in the energy mix to 11% by 2035 from 3.2% of this year. In order to achieve this target, we have increased investment in the field of R&D, and pursued the replacement of fossil fuels with renewable sources of energy in the housing sector.

We have also made our contribution to the international efforts for the increased use of renewable energy around the world. In particular, Korea has been an active participant in the work of the International Renewable Energy Agency or IREA, the world’s largest international organization focusing on renewable energy, as its Council Member since its inception.

Despite its huge potential, renewable energy has its own limit that makes it insufficient to fully replace fossil fuels. Natural gas and nuclear energy are considered to be realistic alternatives to bridge the gap between fossil fuels and renewable energy.

The Role of Natural Gas

Natural gas is a major energy source in the Asia-Pacific region and the demand for natural gas continues to grow. It is expected to play an increasingly important role, especially given the fact that public concerns are growing over nuclear power in the aftermath of the Fukushima accident in 2011.

Natural gas is much more affordable than renewable energy in terms of price, while emitting relatively less greenhouse gases than other fossil fuels. China has a plan to use more natural gas so as to tackle its serious air pollution resulting from the massive use of coal. 

Gas reserves have also rapidly increased due to the advances in shale technology. According to the IEA, increased shale production will bring about a global golden age of gas, pushing prices down and increasing demand by more than 50% from 2010 to 2035.  

Here, I would like to point out one serious problem. Asian importers have been facing an ‘Asian Gas Premium’ which keeps prices much higher than those in other markets, such as the United States and Europe. Presumably, the premium may be attributed to rigid import contracts, oil-linked long-term pricing mechanisms and limited supply sources. For this reason, discussion continues over the development of alternative pricing mechanisms.

The IEA has pointed to the need for a regional gas trading hub where prices more accurately reflect the local supply and demand. The trading hub is also expected to facilitate intra-regional gas trade.

It is one of the policy priorities of the Korean Government to turn Korea into a regional hub for both gas and oil trading. We plan to build a large-scale oil storage facility of which the estimated value totals 1.9 billion U.S. dollars. With this project completed, Korea will have become one of the four major oil trading hubs along with the United States, Northern Europe, and Singapore.

We envisage that there would be a synergy between the two hubs, once the plan is successfully implemented.

In the meantime, the Korean Government will work together with other Asian consumers to diversify gas suppliers, taking advantage of North American shale gas in particular which is expected to be cheaper in price and more flexible in contract terms.

Last month, China and Russia signed a historic mega gas deal worth about 400 billion U.S. dollars. Russia will provide 38 billion cubic meters of natural gas per year through pipelines. It has implications not only for global energy market, but also for geopolitical landscape. Russia’s entering into the Northeast Asia gas market will be a new game changer along with North America’s with its shale gas.

We hope that an expanded pipeline infrastructure will contribute to increased connectivity and diversified supply sources in the region.

The Role of Nuclear Energy

Nuclear energy also plays a key role in ensuring the stable supply of electricity and in reducing greenhouse gas emissions. Nuclear energy is a major source of power generation in Korea which accounts for 30% of its total generation.

Although there have been growing concerns over nuclear power especially following the Fukushima accident in Japan, the use of nuclear power is inevitable in order to meet the growing energy demand in Korea. It is all the more so due to its economic and environmental benefits. Therefore, we are attaching a greater importance to the safety in the operation of nuclear power plants.

There is a saying that a nuclear accident anywhere is a nuclear accident everywhere. Given that Northeast Asia is home to the highest number of nuclear power plants in the world, strengthening cooperation on nuclear safety is a task of paramount importance.

Korea will continue to work closely with other countries in the region to promote regional nuclear safety. During the 6th Top Regulators Meeting, which was held in China last November, the TRM member countries agreed to establish a new TRM+ Mechanism in the form of a workshop or symposium to strengthen technical communication. Korea will host the TRM+ symposium by the end of this year.   

Northeast Asia Peace and Cooperation Initiative and Regional Energy cooperation

Distinguished Guests,

None of us can tackle all these challenges alone. All the stakeholders, public and private sectors alike, should work together to ensure a secure and clean energy future in the region.

The need for this kind of regional cooperation is greater than other regions in Northeast Asia, a region where there is a mismatch between growing economic interdependence on the one hand, and backward political and security cooperation on the other. This is what we call “the Asia Paradox”.

The root cause of this paradox is a deficit of trust in the region. In order to overcome this paradox and build an infrastructure of trust, President Park Geun-hye proposed an Initiative for Northeast Asia Peace and Cooperation. The initiative seeks to accumulate small but significant interactions on non-traditional, soft issues such as environment, disaster relief, nuclear safety and energy security so that they turn into a habit of cooperation among the countries in the region.

I believe that energy cooperation among countries in Northeast Asia could contribute to creating an environment conducive to regional peace and security as it could help to build trust in the region. In particular, nuclear safety and energy security could be priority areas where a tangible progress could be made without much difficulty given that regional cooperation in these areas is not only feasible but also timely and relevant. The Korean Government is committed to actively participating in the regional efforts to address these and other issues, thereby contributing to further enhancing regional peace and security.

Eurasian Initiative and Regional Energy Cooperation

The Eurasian Initiative is another main pillar of Park Geun-hye government’s foreign policy to enhance regional cooperation. The initiative is a grand plan to transform Eurasia into a continent of peace and prosperity by connecting the economies in the north and south of the continent with the Korean peninsula in between through, among others, the integration and expansion of Eurasia’s intricate web of energy, transportation and logistics.

As you know, Eurasia is home to the world’s leading producers and consumers of energy. Cooperation in linking energy infrastructure including electricity grids, gas and oil pipelines and co-developing shale gas in China and oil and gas in Eastern Siberia will clearly be a win-win approach for countries in Eurasia. 

I hope that the countries in the region will come together to embark on many projects that will dismantle the barriers created by security concerns and signal the start of the Eurasian era. Working together with other countries in the region, Korea is firmly committed to actively participate in all of the activities towards this end. Government and business leaders gathered here today are kindly invited to join these efforts.

Conclusion
  
Distinguished Guests,

There is a saying that the path to greatness is a road to be traveled with others. I sincerely hope that the Summit will serve as a catalyst in encouraging all stakeholders in the Asia-Pacific to join their hands to build a future of more secure and clean energy.

Thank you very much. /END/