Japan and South Korea have a lot at stake in a free and open South China Sea
China has so far not acted in an aggressive manner toward shipping in the South China Sea, but the very potential of action creates a clear threat to the economies of Japan and South Korea.
Kazuhiro Nogi | AFP | Getty Images
The following commentary is from Kevin Klowden, chief global strategist of Milken Institute.
News coverage of the weekend’s Group of Seven meetings focused on Ukraine, but China’s rising global presence was the other big topic on the G7 agenda. For two of East Asia’s biggest economies, in particular, the implications of that rise are critically important.
China wants to be the great military and political power of East Asia. Nowhere is that more evident than in President Xi Jinping’s “nine-dash” declaration, through which Beijing claims sovereignty over almost all the South China Sea. And of all the countries with cause to be concerned about that claim, perhaps none have more on the line than Japan and South Korea.
Most of the world is focused on the resource and military implications of Chinese claims to the islands in the region, and Beijing’s development of what is becoming the world’s largest navy. For Japan and South Korea, the threat to their supply chains and energy imports is a far more real and present issue.
In particular, Japan and South Korea are concerned about Chinese declarations which invoke not only the right to inspect cargo, but also the ability to restrict traffic. Neither Japan nor South Korea has any political interest in the ownership of the Spratly Islands, or in China replacing the United States as a dominant naval power. However, they have a strong economic stake in moving their energy imports and manufacturing components without fear of restriction. Even in a non-wartime situation, China has taken the position that the South China Sea is a controlled territory rather than open international waters under Chinese guardianship.
China has so far not acted in an aggressive manner toward shipping in the sea, but the very potential of action creates a clear threat to the economies of Japan and South Korea. China wouldn’t even have to directly stop vessels — it could merely electronically track specific cargo, or carry out inspections or diversions. Such actions would raise the specter of unpredictability and significantly rising costs.
For Japan and South Korea, the role taken by the United States in the post-World War II period was far less disruptive, not only because of their alliance but, more importantly, because the United States acted as a guarantor of free trade and protected movement through the corridor.
Linking the two countries to trading partners in Southeast Asia, India, and beyond is going to increase rather than decrease in importance.
Kevin Klowden
Milken Institute
Few people outside Japan or South Korea focus on or understand just how significant the South China Sea is when it comes to regional and even global energy supplies. Significantly, the sea is estimated to carry 30% of the world’s crude oil, supplying China and providing a vital lifeline for the energy-dependent economies of South Korea and Japan.
For Japan, the 2011 Tohoku earthquake and subsequent nuclear accident at Fukushima only exacerbated that dependence. The resulting curtailment of Japan’s nuclear program has left the country dependent on energy imports, with as much as 98% of Japanese oil coming from the Middle East.
In many ways, South Korea is even more dependent on energy imports than Japan, making oil and natural gas imports especially significant.
The South China Sea is important in more than just energy. It also serves as a key passageway for Japan and South Korea’s global supply chains. Estimates suggest that the sea carries between 20% and 33% of global trade; for Japan, that figure reaches as much as 40%.
As global supply chains regionalize, the role of the South China Sea in the Japanese and South Korean economies will only grow. Linking the two countries to trading partners in Southeast Asia, India, and beyond is going to increase rather than decrease in importance.
Japan and South Korea have been able to rely on the stability of the South China Sea as a conduit for driving their economic growth, even as the global political situation has changed over the decades. Significant shifts, including the Vietnam War and the end of the Cold War, haven’t stopped trade in the sea from growing more and more important.
As the United States balances commitments in Europe, Asia and elsewhere, the three strongest economies of East Asia — China included — all have a vested interest in ensuring the stability of trade, supply chains and energy flows.
For South Korea and Japan, trade remains stable in the South China Sea for now. But with China increasingly looking to assert itself and change the status quo in its favor, it’s essential that both countries ask themselves: How much are they willing and able to concede to China in the region before it becomes untenable? And are they prepared with alternatives that will allow them to compete economically?
Knowing the answers to those questions and being prepared for a more Chinese-dominant future in the South China Sea is important for all three countries — even if the status quo holds for now.
For the second time, a judge strikes down Elon Musk’s $55 billion Tesla CEO pay package as the company struggles to avoid seeing its sales slip year over year for the first time. Plus: an all-new look for Jaguar this Giving Tuesday on Quick Charge!
We’ve also got record EV sales from both Kia and Hyundai, with the latter seeing IONIQ 5 sales double over last year, more Tesla discounts in China AND North America, and more.
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“Tesla could not meet program standards” on Oklahoma’s NEVI EV charger installation program, so EVgo took over.
As Electrek originally reported in April, Oklahoma approved more than $8 million in federal funds for Tesla, Love’s Travel Stops, and Francis Energy to build DC fast chargers along its interstates.
The three companies were to provide a combined $7 million in private funding match to build 13 DC fast charging stations. The first round of awards would complete the buildout of I-35, I-40, and I-44 as Alternative Fuel Corridors.
Tesla was supposed to install three Superchargers at the I-44 exit 240 in Catoosa, the I-40 exit 240B in Henryetta, and the I-44 exit 125B in Oklahoma City. In order to qualify for National Electric Vehicle Infrastructure (NEVI) Formula Program funding, they had to be equipped with Magic Docks – that is, CCS compatibility.
However, OK Energy Today reports that Oklahoma Transportation Commissioners unanimously approved replacing Tesla with second-place EVgo yesterday.
Jared Schennesen, multi-modal division manager to the nine commissioners, said:
Tesla could not meet program standards for the gap awarded along I-44 in Oklahoma City.
Due to not meeting the program requirements, ODOT required that the award be revoked from Tesla as direct[ed] by state procurement rules and awarded to second-place finisher EVgo for this gap.
Schennesen didn’t specify exactly how Tesla couldn’t meet the program standards, but the article goes on to note that EVgo reduced its costs considerably compared to what Tesla’s project costs were:
EVgo won the award for a total of $519,740, and Schennesen said it reduced the total project cost by $317,932. The federal share of the project will increase by $201,781 bringing the final total to $801,780.
EVgo has more than 1,000 DC fast charging locations in 40 states and serves over 65 metropolitan areas.
Oklahoma’s NEVI EV charger installation program, EVOK, is responsible for spending $66 million from 2022-27 in NEVI Formula Program funds to create a state EV charging network. The federal NEVI program allocates $5 billion over five years to help US states create a network of EV charging stations. The funding comes from the Bipartisan Infrastructure Law.
The NEVI program requires EV charging stations to be available every 50 miles and within one travel mile of the Alternative Fuel Corridor. EV charging stations must include at least four ports with connectors capable of simultaneously charging four EVs at 150 kilowatts (kW) each, with a total station power capacity of 600 kW or more.
The charging stations must have 24-hour public accessibility and provide amenities like restrooms, food and beverage, and shelter.
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The US Department of Energy (DOE) says it will loan up to $7.54 billion to a Stellantis and Samsung SDI joint venture to help build two EV lithium-ion battery plants in Indiana.
Stellantis + Samsung EV battery plants loan
The joint venture is called StarPlus Energy LLC, and its huge project will create huge job growth: at least 2,800 jobs at the plants, plus hundreds more for parts suppliers at a nearby park.
At full capacity, the plants will produce about 67 GWh of batteries for Stellantis EVs in Kokomo, enough to supply about 670,000 vehicles annually, the DOE’s Loan Programs Office said. Stellantis said yesterday that the first plant will open in early 2025 and the second in 2027.
To secure the loan, StarPlus needs to implement its Community Benefits Plan, which includes working with community and labor leaders to create well-paying jobs. It’s unclear whether the loan will be able to be finalized before Donald Trump takes office on January 20, but according to the Associated Press, the DOE said “it would be irresponsible for ‘any government to turn its back on private sector partners, states, and communities that are benefiting from lower energy costs and new economic opportunities’ from the loans.”
Electrek’s Take
Since Trump is threatening tariffs all over the place to stimulate domestic manufacturing, it would be pretty dumb if he attempted to kill this loan. The DOE anticipates this and makes a point of saying in its announcement that “the project will greatly expand EV battery manufacturing capacity in North America and reduce America’s reliance on adversarial foreign nations like China, as well as other foreign sourcing of EV batteries.”
If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
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