In the United States, attention toward recent improvements in South Korea-Japan relations focuses heavily on hard security cooperation vis-à-vis China. Indeed, the Biden administration has worked hard to encourage this. But closer Korea-Japan interaction—if sustained—could also have significant consequences in other areas, especially energy.

Few relationships are as complex and nuanced as the one between South Korea and Japan. The peoples of the Korean Peninsula and the Japanese Archipelago have interacted culturally and economically since ancient times. Nonetheless, Imperial Japan’s invasion and occupation of the peninsula (1910–1945) left behind many unresolved issues and painful historical memories for the Korean inhabitants.

The relationship between South Korea and Japan is bound to change as time passes. A 2022 poll conducted by Korea’s East Asia Institute and Japan’s Genron NGO has shown a sizable shift in opinion since South Korean president Yoon Suk Yeol’s government took office in 2022. Compared to the previous year, respondents in both countries are more likely to express willingness to overcome problems in bilateral relations.

In addition, respondents in another poll said that the United States, Japan, and South Korea should strengthen military cooperation. This is due to the intensified nuclear threat from North Korea and the increased sensitivity to various challenges from China. Now, more people in the two countries believe that increased cooperation between Korea and Japan benefits the balance of power in Northeast Asia.

President Yoon and Japanese prime minister Fumio Kishida have reinstated so-called “shuttle diplomacy,” and follow-up consultations are underway at the working level. Beyond security discussions, talks on cooperation in the energy sector have resumed after a five-year hiatus; the last Korea-Japan bilateral energy dialogue was in 2018.

Lee Wonju, Director General for Energy Policy from South Korea’s MOTIE (Ministry of Trade, Industry, and Energy), and Minami Ryo, Deputy Commissioner for International Policy on Carbon Neutrality from Japan’s METI (Ministry of Economy, Trade, and Industry), held a policy meeting on May 25, on the occasion of the World Climate Industry Expo 2023 in Busan. The officials discussed the need to strengthen energy policy coordination between the two countries, which share high dependence on energy imports and similar energy consumption patterns.

Seoul and Tokyo recognize the need to strengthen energy security and carbon neutrality measures amid the recent unstable energy market. Therefore, the two countries exchanged views on expanding carbon-free energy (CFE) and cooperation in strengthening stable energy supply chains for natural gas and minerals. METI announced the two sides had agreed to continue close communication to expand energy cooperation to various fields.

Korea and Japan have very similar energy concerns and dilemmas. Most importantly, Korea and Japan have built their economies through export-driven manufacturing. Since each country has minimal natural resources, their economic structures have made them highly dependent on imported energy and minerals. Therefore, any external energy crisis would seriously impact both countries. The two oil crises in the 1970s weakened their economies, and since then, both countries have been trying to diversify their energy sources by using natural gas and nuclear power. Nevertheless, maintaining a stable supply of imported energy remains a vital issue for both countries.

Second, both countries declared “2050 carbon neutrality” goals in October 2020 and legislated this goal domestically. Korea’s NDC (Nationally Determined Contribution) under the Paris climate agreement calls for a 40 percent reduction in greenhouse gas emissions from 2018 levels by 2030. Japan has committed to reducing its emissions by 46 percent from 2013 levels in 2030. However, both countries have similar structural problems that will make meeting these targets quite difficult.

As mentioned above, both countries have manufacturing-oriented economies that are necessarily energy-intensive. Both depend heavily on fossil fuels for power generation and manufacturing, particularly in the steel sector. Korea relied on coal for 36 percent of its electricity generation and natural gas for 26 percent as of 2022. Japan also relies on coal and gas for over 70 percent of its electricity generation. Decarbonizing the power sector is an urgent task for both countries, which they can only accomplish by constructing more renewable or low-carbon power sources.

Innovation and advancements in grid and storage technologies are needed too. In South Korea, privatization rules power generation, but KEPCO (Korea Electric Power Corporation) still monopolizes distribution. However, KEPCO’s accumulated astronomical deficits (due in part to artificially low electricity prices) make it difficult to reinvest and innovate. Japan has struggled to restart its nuclear reactors since the infamous 2011 Fukushima meltdown.

Third, both countries share common demographic and socio-structural challenges, such as aged societies, low birth rates, declining populations, increasing single-person households, and rural decline. In South Korea, the proportion of single-person households exceeded 40 percent. In Japan, the number of single-person households is also increasing while the population is decreasing. As a result of these demographic shifts, the types of housing and energy consumption behaviors have changed significantly from the past. In addition, the gap between metropolitan and rural areas in both countries is widening, leading to social conflicts and problems in areas such as education and public health. The declining population in Korea and Japan accelerates the so-called “rural extinction” phenomenon. In such a desperate demographic situation, assuming high economic growth in formulating policy is impossible.

Given the above, Korea and Japan are suitable partners to share energy policy ideas and pursue cooperation. The most promising areas are natural gas, recycling and energy efficiency, nuclear safety, and new areas like hydrogen and smart grids.

Natural gas emits fewer harmful air pollutants than coal, and neither Korea nor Japan is likely to reduce consumption substantially anytime soon. Russia’s invasion of Ukraine last year increased fuel price volatility and concerns about the security of gas supplies. Korea and Japan have been paying the so-called “Asian premium,” buying gas at higher prices than the rest of the world, and are among the largest importers of Liquefied Natural Gas (LNG) from their ally, the United States. Japan is more dependent on Russian LNG than South Korea because of its involvement in the Sakhalin project, where two major Japanese firms remain as investors. While Japan has joined the post-war sanctions against Russia, its firms have not withdrawn from the Sakhalin project, citing energy security.

But the competition for gas is becoming increasingly fierce. European countries seeking to escape Russia have significantly increased their imports of American LNG and LNG from the Middle East. Korea Gas Corporation and Mitsubishi Corporation of Japan have regrettably clashed over the Senoro gas field in Indonesia. However, the discussion should not stop there but rather continue to discuss ways to cooperate by learning from past failures. Korea and Japan, which have similar situations, need to work together to diversify their gas imports and find ways to increase their leverage with suppliers.

Therefore, since stable gas supplies are a crucial energy security matter for both countries, there is a high possibility that they will continue to compete. Still, it is worth trying to structure this competition and institutionalize bilateral cooperation to increase the bargaining power of the two countries vis-à-vis suppliers.

Resource recycling and energy efficiency are also areas where Korea and Japan can cooperate. In Europe, the so-called “battery passport” system, which digitizes information on the entire life cycle of batteries, is being promoted to increase the recycling rate of batteries from a circular economy perspective. This is also an area where Korea and Japan could exchange ideas and share policy approaches.

Furthermore, Korea and Japan can identify common areas for collaboration, such as nuclear safety, smart grids, future cities, and green hydrogen and ammonia supply chains. Hydrogen and ammonia will likely be essential for reducing emissions from each nation’s manufacturing sector.

For these collaborations to be possible, rebuilding trust between the two countries is essential. In particular, it is worth noting that the discharge of the Fukushima nuclear wastewater is prompting a raging political conflict in South Korea. This is, of course, because the political landscape is very divided and polarized. However, the fact that there is opposition in Korea, China, and even Japan shows that the Japanese nuclear industry and regulators have lost a lot of credibility. Korea is one of the most exemplary nuclear operating countries, so if Korea and Japan can further build trust and set high standards, starting with the nuclear sector, it will positively impact Northeast Asia and beyond.

Given the historic nature of the relationship between the two countries and the differences in the structure of their energy markets, it may be challenging to accelerate cooperation. However, if the two countries are willing to share policy ideas on common concerns and identify policy synergies, they can contribute to peace and economic prosperity in the region.

Eunjung Lim is an associate professor at the Division of International Studies, Kongju National University and a board member of the Korea Institute of Nuclear Nonproliferation and Control.

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