Korea Update: New Government’s Energy Policy Directions

Nuclear Energy Ratio Increases to 30% The Korean government presented new energy policy goals and directions through deliberation and resolution of the “New Government’s Energy Policy Directions” (the “Policy”) at the 30th Cabinet meeting presided over by President Yoon Suk-yeol on July 5, 2022 with participation of relevant ministries and agencies. The press release on the Policy (English version) can be found on the website of the Ministry of Trade, Industry and Energy.

Background

The new government put forward the proposal purporting to achieve energy security and carbon neutrality goals in light of the global push for carbon neutrality and increasing global energy supply chain instability caused by the Russia-Ukraine crisis. In response to the proposal, the Ministry of Trade, Industry and Energy has held 20 different sessions of roundtables and debates – including the public hearing on June 21, 2022 and the National Energy Committee Meeting on June 23, 2022 – to gather public opinions and concerns regarding the proposal. On July 5, the Ministry announced the Policy based on the proposal and public opinions.

The purpose of the Policy, as described by the Ministry, is to set objectives and directions of the new energy policy during the period where effective energy policies can play various crucial roles so that the government can readily respond to changes in and outside of the country, and carry out government tasks relating to energy and carbon neutrality (e.g., increasing the contribution of nuclear power in the country’s energy mix).

Five Major Objectives of the Policy

The Policy creates a framework for the national energy and climate plan by setting forth the following five major objectives:

(1) To adjust the country’s energy mix by resuming construction of the two nuclear power reactors, Shin Hanul Nos. 3 and 4, and lifting nuclear power’s contribution in the energy mix to 30% or more by 2030;

(2) To enact a special act on resource security in order to (i) set up a pre-emptive and comprehensive resource security system, and (ii) achieve energy and resource security by managing imported resources and restoring the pre-eminence of domestic industries;

(3) To optimize energy supply and consumption in various industries, on an individual level, and the transportation sector, and to set up a market structure based on market principles by establishing (i) the electricity market based on the principle of competition and fairness, and (ii) practices of pricing electricity based on the cost of the electricity;

(4) To increase, and incentivize growth of, energy exports by newly emerging industries by boosting the role of nuclear energy, developing a clean hydrogen supply chain and nurturing of the hydrogen industry, and supporting energy start-ups in conjunction with the promotion of the Fourth Industrial Revolution technologies; and

(5) To improve policy on energy poverty (e.g., reinforcing support for energy-poor communities and households).

Significance and Implication of the Policy

Major countries around the world are resetting their energy policies to strengthen national security in response to the crises in global energy supply chains, and are actively nurturing new energy industries. Meanwhile, the importance of nuclear energy is also drawing attention due to a growing demand for decarbonization from private sectors in accordance with the continuing global drive for carbon neutrality. In this regard, the Policy is consistent with the global trend in that it aims to transition to the green economy through carbon neutrality implementation plan, which includes strengthening of the nuclear industry, establishment of energy security, and creation of new energy industrial market.

According to the Policy, Korea’s reliance on fossil fuel imports will be reduced from 81.8 percent in 2021 to 60 percent by 2030, and the fossil fuel imports will be reduced by approximately 40 million TOE (Ton of Oil Equivalent) in 2030 compared to those in 2021. In addition, the number of energy start-ups is expected to increase from 2,500 in 2020 to 5,000 by 2030, thereby creating approximately 100,000 new jobs. The government intends to implement and make the Policy more concrete through the 10th Basic Power Supply and Demand Plan and the National Basic Plan for Carbon Neutrality and Green Growth.

By Yulchon, Korea, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact korea@transatlanticlaw.com 

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