JUNE 9, 1998 WORKING DRAFT: Synthesis Report for the Pacific Asia Regional Energy Security (PARES) Project, Phase 1 AA FFrraammeewwoorrkk ffoorr EEnneerrggyy SSeeccuurriittyy AAnnaallyyssiiss aanndd AApppplliiccaattiioonn ttoo aa CCaassee SSttuuddyy ooff JJaappaann Prepared By: Technical Researchers: Dr. Tatsujiro Suzuki, Dr. David Von Hippel, Dr. Ken Wilkening, and Dr. James Nickum Working Group Chairmen: Ambassador Ryukichi Imai and Prof. Marvin Miller Working Group Members: Jusen Asuka, Yoshiki Ogawa, Haruki Tsuchiya, Kenji Yamaji, Yasuhide Yamanouchi, Frans Berkhout, Peter Hayes, Larry Lidsky, Thomas L. Neff, and Hossein Razavi NAUTILUS INSTITUTE FOR SECURITY AND SUSTAINABLE DEVELOPMENT 125 University Avenue, Berkeley, CA 94710 USA www.nautilus.org TABLE OF CONTENTS 1. INTRODUCTION.....................................................................................................................1 1.1. BACKGROUND AND PROJECT GOALS ........................................................................................1 1.2. EVALUATING ENERGY SECURITY..............................................................................................2 1.3. ROAD MAP OF DOCUMENT .......................................................................................................4 2. THE HISTORICAL BACKGROUND AND SIGNIFICANCE OF ENERGY SECURITY IN JAPAN .............................................................................................................6 2.1. THE HISTORY OF ENERGY USE IN JAPAN...................................................................................6 2.2. ENERGY SUPPLY AND DEMAND IN JAPAN AS OF THE MID-1990S .............................................10 2.3. CURRENT ENERGY POLICY IN JAPAN ......................................................................................11 2.4. NATIONAL IMPLICATIONS OF JAPAN’S ENERGY POLICY...........................................................12 2.5. INTERNATIONAL IMPLICATIONS OF JAPAN’S ENERGY POLICY ..................................................12 2.6. IMPLICATIONS OF CHANGING PARADIGMS ON ENERGY SECURITY AND POLICY IN JAPAN .........12 3. THE CONCEPT OF “ENERGY SECURITY”......................................................................14 3.1. THREE KEY COMPONENTS AND FIVE PRINCIPLES OF SECURITY ...............................................14 3.2. ENERGY SECURITY: THE CONVENTIONAL VIEW......................................................................15 3.3. DIFFERENCES IN ENERGY SECURITY POLICIES.........................................................................17 3.4. EMERGING PARADIGM: TOWARD COMPREHENSIVE ENERGY SECURITY...................................20 3.5. HISTORY OF ENERGY SECURITY IN JAPAN...............................................................................23 3.6. GENERAL FRAMEWORK OF COMPREHENSIVE ENERGY SECURITY IN JAPAN..............................24 3.7. POSSIBLE NEW POLICY MEASURES TO MAXIMIZE JAPAN’S ENERGY SECURITY........................28 3.8. SUMMARY OF ALTERNATIVE DEFINITIONS OF ENERGY SECURITY............................................32 4. ENVIRONMENTAL SECURITY..........................................................................................37 4.1. INTRODUCTION ......................................................................................................................37 4.2. HISTORY AND PRESENT STATE OF THE CONCEPT OF ENVIRONMENTAL SECURITY.....................37 4.3. DEFINITIONS OF ENVIRONMENTAL SECURITY..........................................................................41 4.3.1. The Environment Affects Security....................................................................................41 4.3.2. Security Institutions Affect Environment..........................................................................42 4.3.3. Influence of Environmental Security Ideas ......................................................................43 4.4. A DEFINITION OF ENVIRONMENTAL SECURITY........................................................................44 4.5. ENVIRONMENTAL SECURITY RESEARCH IN JAPAN...................................................................44 4.6. ENERGY SECURITY AND ENVIRONMENTAL SECURITY .............................................................45 5. ANALYTICAL APPROACHES TO THE ASSESSMENT OF COMPREHENSIVE ENERGY SECURITY ............................................................................................................50 5.1. INTRODUCTION ......................................................................................................................50 5.2. PROBLEMS IN MEASURING ENERGY SECURITY........................................................................50 5.3. EXISTING ANALYTICAL METHODS AND APPROACHES FOR MEASURING SECURITY COSTS AND BENEFITS........................................................................................................................51 5.3.1. Tools used to evaluate selected energy security impacts of energy policies......................52 5.3.2. Diversity indices as tools for evaluating aspects of energy security .................................53 5.3.3. Multiple-attribute analysis and trade-off analysis............................................................54 i 5.4. EVALUATING ENERGY SECURITY IN THE BROAD SENSE—A DRAFT FRAMEWORK...................55 5.4.1. Overall steps in approach................................................................................................55 5.4.2. Objective and subjective measures of energy security......................................................56 5.4.3. Candidate Energy Paths..................................................................................................57 5.4.4. Evaluate measures of energy security..............................................................................58 5.4.5. Incorporation of the elements of risk ...............................................................................58 5.4.6. Comparison of path results: quantitative and qualitative comparisons ............................58 5.4.7. Elimination of paths that are clearly unacceptable or sub-optimal ..................................59 5.5. PLACING ENERGY PATHS/POLICIES IN BROADER CONTEXT .....................................................59 5.6. OTHER QUESTIONS AND TOPICS FOR FURTHER RESEARCH.......................................................59 6. ENERGY DEMAND/SUPPLY MODEL AND PATHS FOR JAPAN..................................61 6.1. INTRODUCTION ......................................................................................................................61 6.2. SOFTWARE TOOLS USED FOR PATH ELABORATION AND EVALUATION .....................................61 6.3. ENERGY SECTOR MODEL FOR JAPAN: BASE YEAR VALUES, AND COMMON ASSUMPTIONS ......62 6.4. DESCRIPTION OF ASSUMPTIONS FOR BUSINESS-AS-USUAL PATH THROUGH 2020 .....................66 6.4.1. Energy Demand in the BAU path ....................................................................................66 6.4.2. Energy Transformation (Fuel Supply) in the BAU path ...................................................71 6.4.3. Measures to address energy supply risks in the BAU path ...............................................73 6.4.4. Measures to address economic risks in the BAU path......................................................74 6.4.5. Measures to address technological risks in the BAU path................................................75 6.4.6. Measures to address environmental risks in the BAU path...............................................75 6.4.7. Measures to address socio-cultural risks in the BAU path ...............................................76 6.4.8. Measures to address military-security risks in the BAU path ...........................................76 6.5. DESCRIPTION OF ASSUMPTIONS FOR “ALTERNATIVE” PATH THROUGH 2020............................77 6.5.1. Energy Demand in the Alternative path...........................................................................77 6.5.2. Energy Transformation (Fuel Supply) in the Alternative path..........................................84 6.5.3. Measures to address energy supply risks in the Alternative path......................................85 6.5.4. Measures to address economic risks in the Alternative path ............................................86 6.5.5. Measures to address technological risks in the Alternative path ......................................87 6.5.6. Measures to address environmental risks in the Alternative path.....................................87 6.5.7. Measures to address socio-cultural risks in the Alternative path......................................88 6.5.8. Measures to address military-security risks in the Alternative path..................................89 6.6. TESTING THE PERFORMANCE OF THE BAU AND ALTERNATIVE PATHS UNDER MAJOR PERTURBATIONS ....................................................................................................................89 7. RESULTS OF ANALYSIS .....................................................................................................91 7.1. INTRODUCTION ......................................................................................................................91 7.2. ENERGY DEMAND AND SUPPLY UNDER THE BAU AND ALTERNATIVE PATHS ..........................92 7.2.1. Energy demand and supply: overall results .....................................................................92 7.2.2. Key results by sector,