Rising Energy Competition and Energy Security in Northeast Asia: Issues for U.S. Policy

Publication Date: May 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy

Type:

Coverage: China Japan Korea (South)

Abstract:

Asia has become a principal driver in world energy markets, largely due to China's remarkable growth in demand. As the gap between consumption and production levels in Asia expands, the region's economic powers appear to be increasingly anxious about their energy security, concerned that tight supplies and consequent high prices may constrain economic growth. Rising energy competition in East Asia promises to impact U.S. policy in many ways, from contributing to price spikes because of China's rapidly increasing demand to altering the geostrategic landscape in the years to come as regional powers struggle to secure access to energy supplies. This report analyzes the short-term and long-term impact on U.S. interests of alternatives being pursued by China, Japan, and South Korea to bolster their energy security. It also examines decisions being made by Asian states now that will significantly shape global affairs in the future, how these decisions might play out, and how Congress and the executive branch might play a role in those decisions.

China, Japan, and South Korea have been moving aggressively to shore up partnerships with existing suppliers and pursue new energy investments overseas, often downplaying doubts about the technical feasibility and economic profitability of new development. This report outlines the energy portfolios and strategies of the three countries, including their pursuit of alternatives to petroleum.

The Russian Far East, with vast proven energy reserves and relative geographical proximity to northeast Asian markets, is already an arena for competition between the Asian powers. The current struggle between China and Japan over access to Russian oil via a pipeline from Siberia may be indicative of more conflicts ahead. If Russia continues to attract commercial and political overtures to gain access to its resources, Moscow stands to gain considerably more power in international affairs.

The possible implications of the surge in energy competition are wide-ranging, from provoking military conflict among great powers to spurring unprecedented regional cooperation. Depending on how events unfold, the U.S. alliances with Japan and South Korea, as well as our relationships with Russia and China, could be challenged to adapt to changing conditions.

Many analysts concur that it is in the interest of the United States for the governments of China, Japan, and South Korea to approach energy policy from a market perspective. They believe that if Beijing, Tokyo, and Seoul instead link energy supply with overall security, the potential for conflict and instability is heightened. The report concludes with a number of options, including those that U.S. policymakers might pursue to encourage a trend towards cooperation and the depoliticization of energy policy.

This report will not be updated.