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North Korea: Witness to Transformation

North Korea and the Clean Development Mechanism

by | February 4th, 2014 | 07:00 am
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We missed an interesting post by Benjamin Habib on the East Asia Forum last November on North Korea’s participation in the Framework Convention on Climate Change. North Korea ratified the Convention in 1994 and the Kyoto Protocol in 2005. Habib notes that North Korea has expressed an interest in “capacity building,” a euphemism for aid, but it now also has six projects under the Clean Development Mechanism (CDM).

The CDM is a market-based mechanism to assist the advanced industrial states (Annex 1 countries) in meeting their emission limitation and reduction commitments under the treaty. The CDM allows countries—and firms within them—to meet commitments by buying Certified Emission Reduction (CER) units, which in turn are generated by CDM emission reduction projects in developing countries (non-Annex 1 countries, which do not have obligations under the Convention). The projects and the issue of CERs arising out of them are subject to approval and monitoring to ensure not only that they are real but that they are  “additional”: that they do not reflect projects that would have taken place in any case. Given the difficulties North Korea has had with other types of monitoring, it will be interesting to see how it fares in meeting not only initial project requirements, but ongoing ones as well.

Habib’s post links through to two spreadsheets, one on the number of CDM projects (.xls download), the other on total carbon credits (.xls download). The spreadsheet shows that North Korea has six projects, all of them registered in 2012; Curtis Melvin at North Korea Economy Watch has been on the story and provides links to details. All are small hydro projects.

The counterparty on these projects is Topič Energo, a Czech company. So who is Topič Energo, anyway? It turns out that Bloomberg tracked this one down last year. Topič Energo is essentially a broker; its owner, Miroslav Blasek, lined up the deals with North Korea, noting in the Bloomberg interview that the North Koreans “immediately grasped that this is a way to make money.” Ironically, the firm that needed the offset was an unnamed Chinese company with production in Europe.

The Korean projects are listed as generating about 200,000 CER’s. Emission prices have been falling steadily, and Habib estimates the annual return at only $1 million. But for a government strapped for cash, we can imagine this as an appealing way to turn corvee labor around small dams into hard currency. Who knows? In addition to their small carbon reduction function, such projects might contribute to mitigating the country’s myriad energy problems as well; for an overview, see a comprehensive new report of possible energy futures for the DPRK by David von Hippell and Peter Hayes at Nautilus.

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Comments (7)

Adam, concerning the geothermal development I would add, that the DPRK overcame some difficulties in exhausting needed water resources underneath the power production aerea. Now, water is pumped back into earth to earn a circulatory effect. First example of that new technology was heating the main building of ministery of health.

Roland February 5, 2014 | 1:32 am

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Sometimes one has to read a post four or five times to “get it,” so thanks, Stephan, for the documentation in the original post on the Czech stuff!

Adam Cathcart February 4, 2014 | 6:41 pm

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Not that every claim requires verifying, R., but is perhaps the geothermal aspect of everyone’s favorite non-skiing tourist destination (Munsu) perhaps too good to be true? For those of us who, sadly, are unable to follow in the noble footsteps of ex-NBA and Mongolian Presidential delegations and check the place out in person in the coming few months, this is one of those cases where a painless (if not effortless) back at the colonial period might reveal whether or not there has been previous documentation of such a springs in that location. The Japanese were pretty good at that sort of thing, and Kim Il Sung was also quite clever; in fact he cooked his own eggs in the hot springs of Mt. Paektu, and did quite a bit of digging in Pyongyang out of necessity during and after the Korean War. So if it is a completely new discovery, that would be extraordinary. But we all agree that it is an extraordinary land, capable of great feats. Anyway, as regards Munsu in our present post-Chollima era, there was an awful of a lot of digging of large pipes pretty distant from the project — but decidedly for Munsu — that KPA conscripts were slaving away at (excuse me, patriotically doing their duty to construct and embody the byungjin line, certainly free of any nefarious interference from the corrupt Jang Song-taek) way back when the thing was under construction.

By “dramatic upturn” in LED use I take it you mean “actually occurring.” I also hope you appreciated that the “everyone conserve energy” Rodong Sinmun editorials kicked off as the same day as the images of the snowmakers at Masik Pass, as that was not simply clever, but probably intentional: Save your Kilowatts, because we have Chinese Ambassadors to impress. And they were most impressed!

As to the wind farms, seems there is a small “demonstration wind farm” funded by UNDP outside of Pyongyang; Nautilus helped put one up in about 2000, not sure what that has spawned or if it continues, but again David von Hippel is the man to ask.

Adam Cathcart February 4, 2014 | 6:37 pm

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So the people that are making up “Climate Change” to tell free market countries they are evil are helping the last Stalinist dictatorship earn money and a modicum of international respect….

Zachary T February 4, 2014 | 4:52 pm

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New energy strategy of the DPRK focusses on renewables. Beneath expansion of hydro-power, efforts are concentrated on solar, wind energy and geothermal power. The two existing wind energy factories are expanding and new build Munsu water park is one of the envisaging examples being powered by geothermal energy.
Further an economizing campaign has started; among other things production of LED lamps is in an dramatic upturn.

Roland February 4, 2014 | 1:01 pm

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Great piece; three quick responses:

Curtis Melvin was kind enough to point out recently that DPRK has a small wind turbine factory: https://twitter.com/CurtisMelvin/status/430467110678974465

One additional point from Ben Habib:

“It is estimated that North Korea could earn up to US$1 million annually [...] through carbon credit trading on international markets, assuming a carbon price of US$26 per ton.”

http://sinonk.com/2012/09/08/north-korea-climate-mitigation-and-the-global-atmospheric-commons/

The only individual I know who has done fieldwork into environmental bureaucracies in says DPRK found a Czech bio-mass dealer (Topic Energo) to buy some of North Korea’s carbon credits, but it’s anybody’s guess if that is ongoing or went through.

Adam Cathcart February 4, 2014 | 10:46 am

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I’m guessing that NK power plants are not very clean, but the night lights image says it all about the impact or reunification on climate change.

Fred Zimmerman February 4, 2014 | 10:35 am

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