South Korea’s heavy reliance on fossil fuel imports is unsustainable from energy security and environmental perspectives, and it is incompatible with the country’s objective of reaching carbon neutrality by 2050, a new report from Japan's Renewable Energy Institute (REI) finds.
South Korea is one of the world’s largest economies and energy consumers: in 2022, it ranked 11th in terms of gross domestic product and 8th in total primary energy consumption. The country has also set an objective of reaching carbon neutrality by 2050.
However, according to a new report, “South Korea: Low Renewable Energy Ambitions Result in High Nuclear and Fossil Power Dependencies“, released by Japan-based non-profit think tank Renewable Energy Institute (REI), South Korea’s weakness is its heavy dependence on fossil fuel imports.
This reliance is unsustainable from energy security and environmental perspectives, and it is incompatible with the country’s objective of reaching carbon neutrality by 2050.
Focusing on the power sector, the report describes South Korea’s slow renewable energy progress and lack of ambitions. It then presents implemented policy mechanisms supporting renewable energy, as well as the commitments of pioneering South Korean corporate buyers to procure 100 percent of their electricity needs from renewable energy.
With this publication, the REI aims to provide practical information about the latest key developments in South Korea’s power sector as it may be of particular interest to Japanese stakeholders on account of the geographical proximity between the two countries, and because the energy policy of the two shares striking similarities.
Nuclear and renewables
In South Korea, the two main solutions pursued for the decarbonization of the power sector are nuclear and renewables.
While the country has managed to establish itself as a world leader in nuclear power, it has not yet succeeded in significantly expanding renewable electricity.
In 2022, whereas the share of nuclear power in South Korea’s electricity generation mix was 29.6 percent, that of renewable energy, including bioenergy and renewable wastes, was only 8.9 percent.
In January 2023, the South Korean government released its biennial master plan, the so-called “Basic Plan for Long-Term Electricity Supply and Demand” (10th edition).
With targeted renewable energy shares of 21.6 percent by 2030 and 30.6 percent by 2036, this plan is, the REI report concludes “unambitious.”
Functional policy mechanisms
Despite these “unambitious targets”, the report notes that there are several implemented policy mechanisms supporting renewable energy such as the Renewable Portfolio Standard (RPS) and Renewable Energy Certificates (RECs).
Introduced in 2012, the RPS mandates power generators with installed capacity ≥500 MW to increase the share of renewables in their electricity to 25 percent by 2030.
In April 2021, the previous government decided to increase the RPS requirement for 2022 from 10 percent to 12.5 percent in an effort to accelerate RE growth.
The obligation set by the RPS can be met either by generating renewable electricity or by buying RECs, a tradable commodity that is created by generating 1 MWh of renewable electricity.
Failing to comply with the RPS requirement may result in administrative fines amounting to 1.5 times the average trading price of RECs.
RECs are thus both a source of income for renewable power generators and, according to REI, a useful way to promote various renewable energy technologies by using multipliers ranging from 0.25 to 2. Thus renewable power developers can issue RECs by multiplying the volume of renewable power they generate by the corresponding multiplier, and sell these on the market.
Corporate buyers can use purchased RECs after the weight is adjusted which ensures that actual electricity consumption and actual renewable electricity generation are exactly matched.
A low multiplier (lower than 1) is granted to technologies that are deemed to be economically competitive, have a low potential for greenhouse gas (GHG) emissions reduction, face social acceptance issues, or are technically mature.
For instance, in the case of bioenergy, unused biomass from domestic forests is currently weighted at 2, co-firing of unused biomass from domestic forests at 1.5, biogas at 1, imported woodchips and wood pellets at 0.5, and black liquor from the pulp and paper industry is weighted at 0.25.