South Korea’s Energy Mix and Its 10th Basic Energy Plan
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13 February 2023 – by Viktor Tachev
Fossil fuels widely dominate South Korea’s energy mix. The country’s decarbonisation progress is insufficient, and its 2050 carbon neutrality target looks increasingly out of reach. Furthermore, South Korea is a major energy importer, which recently led to the most significant electricity rate hike since the 1980s. And while renewables can provide a way out of this dependency, the country seems to be looking to move in another direction.
South Korea’s 10th Basic Energy Plan for Electricity Supply and Demand
On January 11, South Korea’s Ministry of Trade, Industry and Energy (MOTIE) finalised its 10th Basic Energy Plan’s main content.
The major highlight is that, in the coming years, South Korea will prioritise a shift back to nuclear energy. This removes former President Moon Jae-in’s policy, which was adopted in relation to Japan’s 2011 Fukushima Daiichi accident.
MOTIE outlines several priorities that it hopes to address through the plan, including:
- prioritising a steady electric power supply for energy security,
- ensuring a more balanced power mix,
- focusing on coal and ammonia co-firing and blue hydrogen to reduce emissions,
- accommodating renewable energy storage through an investment of around USD 36 billion and
- expanding the grid.
The plan covers 2022-2036, with a revision every two years.
South Korea Energy Mix
As per the targets, South Korea’s energy mix by 2030 and 2036 are as follows:
The Risks of Proposed Energy Mix of South Korea
Despite being one of the most innovative countries, South Korea is a climate laggard. The share of renewable energy in the energy mix of South Korea is just 9% as of 2021. Compared to other G20 countries, South Korea is phasing out coal much more slowly. Climate Action Tracker ranks the country’s overall climate efforts as “highly insufficient.
The proposed South Korean energy mix for 2030 and 2036 won’t help address those issues. On top of them, it might also surface additional risks, including:
Falling Short of the 2030 and 2050 Net-Zero Targets
South Korea has a net-zero target by 2050. The country’s nationally determined contribution (NDC) includes a goal of slashing greenhouse gas emissions by 40% by 2030. In the upcoming weeks, the government will have to publish the pathway it intends to follow to achieve its 2030 goals, which will clarify how realistic those targets are.
However, judging by the proposed energy mix, the country is likely to still be massively relying on fossil fuels by 2030. South Korea risks failing to reach its 2030 emissions reduction target without establishing more ambitious short-term targets.
Going Against Its Pledges
At COP26, South Korea joined the Global Coal to Clean Power Transition, aiming to phase out coal power. The country also joined the Global Methane Pledge, which targets a 30% reduction of methane emissions by 2030. Furthermore, under the Powering Past Coal Alliance, which Seoul is a part of, members aim to phase out coal use by 2030.
The proposed 2030 and 2036 energy mix scenarios will still have coal power generation and liquefied natural gas (LNG) responsible for over 40% and 24% of electricity generation, respectively. Furthermore, the country’s latest “Green Taxonomy” considers gas a green fuel.
Korean businesses have joined the RE100 initiative en masse in the past few years. Even companies criticised for their climate commitments, like Samsung, are now a part of the global movement. Samsung, South Korea’s leading electricity consumer, even plans to “voice industry-wide concerns” regarding the high clean energy costs in the country.
At the start of the year, six companies that are part of SK Group also joined the initiative. Together, they consume 5% of South Korea’s total electricity use.
As of the end of November 2022, 28 South Korean companies are part of the RE100 initiative. Korean corporations have repeatedly been calling for more ambitious clean energy policies and governmental support. However, the country’s 10th Basic Energy Plan fails to address this.
Towards a More Ambitious Renewable Energy Target
While the 21.6% clean energy target by 2030 is achievable, it is unambitious. The country needs to aim for a 30% share of renewables by 2030, as planned initially. Research suggests that a 30% renewable energy target by 2030 is necessary to achieve carbon neutrality by 2050. Other studies suggest pursuing targets of 53% by 2030 to enable net-zero by the middle of the century.
How Can South Korea Achieve Its Climate Goals?
To achieve its climate goals, South Korea can start by streamlining licensing and approvals. According to estimates, reducing the average distance of separation for solar installations from 300 to 100 m would free up 438 GW of solar power potential.
On top of that, the country should educate its population on the benefits of clean energy and unite public opinion. This is a significant issue that has recently led to the cancellation or rejection of projects.
The RE100 also suggests an increased focus on enabling the rapid scaling up of the domestic clean energy supply. To do that, the country should improve grid flexibility and ensure fair compensation and equal grid access for power generators.
While unlikely to undergo significant changes before its official launch in March, South Korea’s 10th Basic Energy Plan leaves room for further improvement. First, it will be revised every two years, which makes it very flexible for incorporating new interim targets or refining existing ones. Moreover, the eighth and ninth editions of the Basic Energy Plan were updated on the go to reflect an enhanced NDC and a 2050 carbon neutrality roadmap.
In fact, the Ministry of Energy and the Green Growth Committee recently requested that MOTIE increase its 21.6% clean energy target in the energy plan draft. However, at the time, MOTIE rejected the request. This clearly indicates that the country’s leadership recognises the need for more ambitious renewable energy targets, which might lead to revisions in the near future.
The Benefits of More Ambitious Renewable Energy Targets
If South Korea’s leadership improves the 21.6% renewable energy target for 2030, it can expect various benefits, including:
Satisfying the Corporate Sector’s Demands
As the RE100 notes, South Korea is among the most challenging areas for procuring renewable electricity. Korean companies currently consume just 2% of electricity from renewable sources.
Pushing ahead with more clean energy capacity addition will address the growing demand for renewables by leading Korean businesses, their customers, investors and stewardship service providers. It would also ensure a better position for Korean corporations in a world moving towards decarbonisation and a more competitive business environment.
Bigger Energy Independence and More Affordable Power
Around two-thirds of the renewable power added in 2021 had lower costs than the cheapest coal-fired options in G20 countries. Moreover, the levelised cost of renewables continues to go down. BNEF finds that new onshore wind and solar projects are 40% cheaper than new coal and gas. TransitionZero estimates that the LCOE from renewables plus storage in South Korea is already well below the cost of gas-fired power.
Aside from the notable economic benefits, scrapping the massive LNG expansion plans in the country for solar and wind will also ensure that South Korea won’t be at the mercy of fossil fuel suppliers.
Can South Korea Transition Fast Enough?
While South Korea has accelerated efforts to decarbonise its energy mix, it still lags behind most developed countries. And, in its current form, the 10th Basic Energy Plan won’t change that.
Considering that authorities might likely face pressure from corporations for more ambitious clean energy targets, South Korea’s energy policies are likely to change in the following months.
Given that the country has the potential to lead the world in offshore wind power generation, it would simply be a waste not to capitalise on this.
by Viktor Tachev
Viktor has years of experience in financial markets and energy finance, working as a marketing consultant and content creator for leading institutions, NGOs, and tech startups. He is a regular contributor to knowledge hubs and magazines, tackling the latest trends in sustainability and green energy.Read more