Energy and Climate Policy Institute

작성일 : 14-03-04 17:14
Enerzine No 34, 2014 Outlook - Energy and Climate Issue
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2014 Outlook
Energy and Climate Issue -
Prospects for International Situations in Energy and Climate Areas

1) Overview

◯ As the U.S. tend to move back from the role of troubleshooter in international disputes and crises, such as the one in the Middle East and the U.S. and Russia relations are bad and are continuously getting worse. So, the estimates are that ‘neo-cold war’ or the U.S. ‘neo- isolationism’ will get up (Lee & Sanghun, 2014). Even though the frame of G2 where the U.S. and China claim to support the ‘new giant relationship’ with the U.S. will be a powerful structure to deal with all kinds of international problems, the main body in charge of solving international risks will be uncertain in the situation of weak intervention capacities of the United States, limited leverage of China, and chaos in the EU. 

◯ In the case of Middle East, people’s revolution has entered the phase of stagnation followed by the ruling military’s re-entry, while the uncertainty of each countries’ circumstance will increase with the situation in Syria and Libya turmoil and with the situation around the Iranian nuclear negotiations (Korea Institute for National Security Affairs, 2014).

◯ As concerns Northeast Asia, although tension caused by a series of events that promoted collective self-defense of Japan and aligned well with the U.S., the Air Defense Identification Zone in China, and the resistance of Republic of Korea, Japan and the U.S will be continue. However, whether this situation will end in a violent collision or not is unknown because the U.S. take a strategic “rebalancing” political position. Co-movement phenomenon among the three counties: Republic of Korea, China, and Japan, as well as the one between the U.S.  and China have become clearer (Korea Institute for National Security Affairs, 2013). In North Korea, it seems that Kim Jungeun system has been stable after the purge of Jang Sungtaek. However, there are still many elements effect to systems. So, stability is influenced by the success of any economic recovery and the escape of isolation. 

◯ In 2014, many important scheduled elections include the mid-term election in the U.S, as well as European Parliament election, Brazilian presidential election, Indian general election, and Turkey general election. Moreover, there will also be the referendum on the bill for constitutional amendment in Egypt, as well as general or presidential elections in the so-called global “powder keg”, such as Afghanistan, Iraq and so on. The election results will affect not only the reforming of the political power in each of the counties, but also the global economic order. Especially the results of the European Parliament elections are expected to influence a relief loan to solve the current economic crisis of Eurozone and the future of EU (The Segye Times, 2014. 1. 2.). An approval rating of the extreme right parties, such as Front National in France, the Liberal Party in Holland, among others, which opposed European integration, has increased. Therefore, if these parties receive substantial support in the upcoming European Parliament elections in May, many integration policies previously unanimously approved by the European parliament might be put on hold (LG Economic Research Institute, 2013a).

◯ in 2014, many attempts to solve problems and issues related to transnational problems at the global governance level are expected to be discussed because there are many important international meetings scheduled, including the 3rd Nuclear Security Summit (March), Global Multi-Stakeholder Meeting on the Future of Internet Governance (April), the United Nations Environment Program (June, Nairobi), Climate Summit (September, New York), United Nations Framework Convention on Climate Change, COP20 (December, Lima).

2) Global Economic Outlook

◯ In 2014, the world economy, including the economy of the U.S., is expected to improve; furthermore, it is generally expected that the world will face new challenge for conversion caused by the low growth conditions and destabilizing factors. According to LG Economic Research Institute’s prospective, while the U.S. has made a fully-fledged recovery, Eurozone has also demonstrated a positive growth from the second quarter of 2013. They are to take the lead in the world economics. The overall growth rate of the world’s economy this year is expected to be around 3% which is similar to the 2013 value. For the U.S and Eurozone, the predicted growth rates are around 2.6% and 0.7%, respectively.

◯ The expected growth rate will however not be very high. This is so because the international interest rates will be increased again, and the fear about developing countries’ financial market will grow, followed by the implementation of exit strategies. In addition, China is trying to adjust investments to reduce the side-effects caused by the high growth, therefore, its economic growth is expected to decrease slightly from 7.6% in 2013 to 7.4% in 2014. Furthermore, the average growth rate of developing countries will approximate the 2013 values, while in the case of giant developing counties, such as BRICS, sluggish growth is expected. But export-oriented growth countries in Asia, including Republic of Korea, will not be affected because the developed countries’ ripple effect is reduced (LG Economic Research Institute, 2013a).

3) Energy Outlook

◯ Even though global economics has turned into an increase trend, due to the developing countries’ having experienced a low economic growth and currency depreciation, the world’s oil demand has not increased significantly. Oil supply, however, has considerably enlarged with the shale gas development of the U.S. and the international oil price is expected to be stable around 100$. Major energy agencies, such as International Energy Agency (IEA), Energy Information Administration (EIA) and so on, estimate an increase of 2.25 million b/d of oil supply capacity with mainly non-OPEC countries and expend 1.15 million b/d of world oil demand. However, in several situations, supply disruption in some of the oil- producing countries, OPEC’s supply control, and high production costs of non-traditional oil production will be the factors to block the decrease of oil prices. 

◯ Moreover, while the general geopolitical risk has been moderated, a structure seems to be unstable continuously. While previously oil price could be continuously pushed caused by the apprehensive conditions between Libya and Iraq, the pressure will be released with the decreasing possibility of attack on Syria from the Occident and the uncertainty of risks. Decrease in the amount of oil produce in the Republic of Venezuela, however, the world 11th oil-producing country, is worrying. Natural gas also affect the shale gas revolution in various areas and applications. Coal price is expected to be stable with the excess supply of metallurgical coal market (LG Economic Research Institute, 2013a).
◯ Renewable energy’s competitiveness has been on the slow-down with the economic instability and shrinking in Eurozone, run-down in the international agreement on the reduction of greenhouse gas, and increase in shale gas production. However, electricity generation from major renewable energy resources such as sunlight and wind has continuously increased in the U.S., China, and the EU. As the social consensus on climate change and energy crisis has been reached throughout the world, the spectrum of renewable energy used in each country will be influenced by the political intervention and will be highly variable. The International Renewable Energy Agency (IRENA) pointed out that through the recently released new world energy road map it might be possible to double the renewable energy rate by 2030 (up to 36% from the total energy consumption); however, achieving this will require many international and national efforts (IRENA, 2014).

◯ In particular, long-term impact of shale renovation to peak oil and energy supply-demand needs to be closely monitored for energy outlook from now on. Political importance of the Middle East will decrease due to the pre-emptive shale gas development in the U.S. and the competition for energy hegemony between the U.S. and China will accelerate. In addition, the conception of North-South gas line which would bring natural gas from the Far East, such as Russia, to Republic of Korea via Democratic People's Republic of Korea (DPRK) might be a far-away prospect for now.

4) International Politics on Climate Change // Nuclear Phase-Out

◯ This winter, there are many weather catastrophes, such as uncommon cold in North America. These situations are mentioned a part of climate change. At this point, there is a possibility of an increase in public interest towards the politics on climate change and the surrounding issues of the reduction of greenhouse gas production and the mitigation of greenhouse effect. The 5th IPCC report released in 2013 mentions that the average global temperature rise is lower than the one mentioned in the 4th report, up to 4.8 degree. However, IPCC’s arousing public opinion on energy consumption is most important, as they also stressed that there is “very definite” relation between increasing of global temperature and human activity

◯ Even though the negotiations on climate change at the UN level is currently at a standstill, governments of many countries already try to reduce greenhouse gas emission and seek for counter-measures against natural calamities. There is a possibility of reinforcement of environmental regulation and policies of expending renewable energy in each of the countries or at the local level before international climate governance reaches a practical progress. 

◯ Even on 3 years after the Fukushima nuclear accident, this catastrophe has not been resolved yet and various danger factors remain. This accident will affect not only Japan but also international nuclear industry and energy politics. The power plant in the first nuclear plant which melted down has not yet been stopped and emits tons of radioactive water. This nuclear plant will cause huge costs and heated debates until the plant’s closure is complete. At the same time, the risk of exposure to radiation influences the nuclear phase-out policies in the nearby countries.


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