IEEJ：August ©IEEJ 2023
Special Bulletin
A Japanese Perspective on the International Energy Landscape (650)

August 18, 2023

Participating in 2023 Pacific Energy Summit
Ken Koyama, PhD
Chief Economist, Senior Managing Director
The Institute of Energy Economics, Japan
On August 17-18, the 2023 Pacific Energy Summit took place in the western U.S. city ofSeattle. The conference has been sponsored by the National Bureau of Asian Research, a U.S. thinktank, almost annually in the Asia-Pacific region since the first meeting in Tokyo in 2009. After themilestone 10th meeting was held again in Tokyo in 2019, a Kuala Lumpur meeting came on aface-to-face basis in 2022 for the first time in three years in the wake of the COVID-19 pandemic.
This year's meeting was timed to follow a conference of Asia-Pacific Economic Cooperation Energy
Ministers in Seattle on August 15-16.
At the Summit, government and industry officials and experts from the United States as
the host country, Japan, South Korea, Indonesia, other Southeast Asian countries, etc. gathered todiscuss the overall theme of "International Trade and the Energy Transition." They spoke on how
international trade and economic policies influence energy security and energy transition towards
decarbonization in the Indo-Pacific region. The international situation surrounding this year's
conference highlights that the importance of energy security has increased dramatically due to theUkraine crisis, making it difficult and complex to strike a balance between energy security anddecarbonization. An even more important fact is that the division of the world, symbolized by thedeepening confrontation between the United States and China and between the West and theChina-Russia group, has led countries around the world to place importance on overall securityincluding economic security. Another important change is the significant increase in the geopoliticalimportance of the Global South under the division of the world. Given these points, the discussions
at the Summit under the theme of "International Trade and the Energy Transition" were extremelytimely.
Although I participated in the Summit only on the first day, August 17, I had a valuable
opportunity to hold talks with various experts and policy planners in Seattle for two days before themeeting. In the following, I would like to summarize important points that impressed me regardingthese discussions.
First, I would like to point out that as the world becomes more divided, the importance ofstrengthening alliances and cooperation through alliances has once again been greatly highlighted.
The importance of Japan-U.S. cooperation in addressing energy and climate change issues in theIndo-Pacific region was pointed out frequently in the discussions. In the field of energy, thesignificance of the bilateral cooperation in natural gas and LNG, nuclear power, and hydrogen andammonia were emphasized. Japan-U.S. cooperation in the field of critical minerals was often
discussed. The discussions in Seattle indicated that it will become even more important for Japanand the United States to cooperate within the Group of Seven, in addressing problems with Chinaand Russia and dealing with the Global South and Asian countries.
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In this respect, the importance of Japan’s cooperation with South Korea was mentioned invarious ways as the bilateral relations were being improved rapidly under South Korea’s Yoon Suk
Yeol government. Ahead of the Japan-U.S.-South Korea summit in Camp David on August 18, thedeepening of cooperation among the three countries in light of the geopolitical situation in East Asia
was attracting a great deal of attention. Various possibilities for cooperation will be further exploredin the fields of energy and climate change between Japan and South Korea, between the UnitedStates and South Korea, and among the three countries. The three are required to enhance initiatives
to promote cooperation in a timely manner in response to the changes of the times.
Meanwhile, participants in the Summit were aware of the risk of policy changes
accompanying government changes to which democratic countries are vulnerable. Depending on theoutcome of the U.S. presidential election next year, U.S. energy and climate change policies could be
dramatically different. Since various changes and impacts may occur in foreign and national security
policies, any situational change accompanying a government transition in the superpower UnitedStates will be a grave challenge for allies. Although the current South Korean government isexpected to improve relations with Japan and the United States, the situation may turn around if thenext presidential election leads to a regime change. It cannot be ruled out that foreign and security
policies, as well as energy and climate change policies, may change dramatically. While being awareof the risks of such major changes, the current governments in the three countries will promote
policies and strategies that emphasize current alliances.
Second, the Summit gave me an opportunity to hear many arguments that were consciousof the gap or deviation between the ideal and reality regarding the future energy transition. The
deviation is widening between what is happening in the real world and the future image, whichshows how the world must change to achieve future goals in a backcasting approach. Of course, suchdeviation has existed in the past. As future goals have become more ambitious, with the internationalenergy market being shaken by the Ukraine crisis, however, the deviation is expanding even further.
While the deviation between the ideal and reality widens, it seems that arguments or opinions arediverging, instead of converging. As the deviation between the ideal and reality becomes larger, it
seems that a conflict is intensifying between those willing to enhance efforts for achieving ideal
goals and to recognize reality and take pragmatic approaches.
From the perspective of the Global South or developing countries, a stable supply andaffordability of energy, and energy access issues are crucial in the real world. While trying to pursue
the ideal, developing countries make greater or more difficult efforts to come to terms with reality
than developed countries. That is why developed countries such as Japan and the United States arerequired to adhere to and materialize the policy agreed upon at the G7 Hiroshima Summit (and thePreceding Meeting of G7 Energy, Climate, and Environment Ministers) to stand close to the Global
South by recognizing “various paths” meeting national circumstances toward common goals, insteadof imposing a single path on developing countries in a condescending manner.
Third, I would like to point out that participants at the Summit provided various argumentsemphasizing the roles of governments and policies in advancing the energy transition, reflecting
today's international situation and geopolitical environment. For example, government roles wereemphasized in addressing the issue of critical minerals, which was a major topic at the Summit. It isnatural that resource endowment and costs for developing and refining resources differ depending
not only on geological and deposit conditions but also on environmental conservation costs
accompanying development and the presence and intensity of various regulations and constraints. If
everything is left to the market, it is natural for supply to concentrate in low-cost producers. The2IEEJ：August ©IEEJ 2023
problem is the risk of excessive dependence on specific supply sources of strategic commodities
such as critical minerals. How serious this problem is having been indicated by the oil crisis 50 years
ago and the current Ukraine crisis. In such a case, there may be a growing recognition that strong
policies must be taken as necessary to reduce such risk, instead of leaving everything to the market.
From the perspective of economic security, it is now considered right to take strategic measures even
if they cost more. This trend is reflected in the idea that strong industrial policies should be
implemented to promote innovation as the key to the energy transition. We must pay close attention
to moves to rebuild the relationship between the government and the market.

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