Is economic survival incompatible with carbon neutrality? This is the issue facing South Korea as it embarks on its second energy policy revision in five years. As the world’s 10th largest, but resource-poor, economy that derives over 85% of its energy needs from fossil fuels, and imports 98% of those, the transition to non-fossil fuels was always going to be precarious.

Like other East Asian countries its power generation is heavily coal reliant. The national electricity grid is isolated so, unlike European countries, expansion of intermittent renewable energy means that backup power for load balancing needs cannot be imported.

The crux of the energy argument is whether the transition to carbon neutrality is led by nuclear or renewables. All sides aim for a major hydrogen component. But whether hydrogen is imported, created from steam-reformed imported methane, or from nuclear-powered water electrolysis, remains an open question. While Seoul’s streets boast more than 2,000 hydrogen fuel cell cars, with shipping and other vehicles next in line for hydrogen fuel cell development, public scepticism about the costs of a hydrogen economy is growing.

At present roughly 36% of Korea’s power generation is coal-fired, 26% is gas-fired, 27% is nuclear-powered, while just over 6% is from renewables. The remaining power generation comes from oil and hydro.

New administration
Elected in May this year, President Yoon Suk-Yeol plans to reverse his predecessor Moon Jae-in's policy of phasing out nuclear energy and restricting coal power generation in favour of renewables and LNG. Yoon aims for a nuclear-generated hydrogen economy.

Elected in 2017, Moon wanted 70% of Korea’s power generation to come from renewables by 2050. This policy followed widespread public unease about nuclear safety in the aftermath of the 2011 Fukushima Daiichi nuclear plant accident in Japan.

But Moon’s policy of removing nuclear and coal from the national energy mix, while failing to contract long-term gas supplies during a low-price period, was a potential economic catastrophe, according to Hong-Jong Cho, Economics Professor at Jongin-based Dankook University. ‘It risked all the fortunes of the country to achieve carbon neutrality,’ Cho says. Closed coal plants were not converted to LNG as planned, and coal-related unemployment surged.

President Yoon was elected on a razor-thin 0.73% margin and saw his own ratings plummeting just a few months after assuming office. A former prosecutor rather than career politician, he appointed other prosecutors to government offices, prompting accusations of cronyism and tense relations with his own People Power Party. So, has Yoon’s power to pursue his nuclear-friendly energy policy weakened?

‘I don’t see these issues having a significant effect on the pursuit of policy. If they persist, they are just an ongoing domestic drama,’ says Scott Snyder, Senior Fellow for Korea Studies at Washington DC-based Council for Foreign Relations. The significant issues, Snyder thinks, are the ‘transition towards a different mix of energy security priorities’.

President Yoon Suk-Yeol plans to reverse his predecessor’s policy of phasing out nuclear energy and restricting coal power generation in favour of renewables and LNG – aiming to produce a nuclear-generated hydrogen economy.

Priorities
One of these priorities is to develop a larger presence in the international nuclear energy market. Korea has been building and operating nuclear reactors since the 1960s. Some 23 reactors that provide nuclear power are located close to industrial and highly populated areas, particularly in the south-east where the Wolsong, Hanbit and Kori plants are located. At 5.9 GW installed capacity, Hanbit is the world’s fifth largest nuclear plant.

Over 100 local firms form a strong supply chain with some of the world’s lowest construction costs. Prices were kept low because Korean policy was to build plants according to the same template rather than customise designs to each location. This was the policy adopted over the same period in the former Soviet Union. It created safety concerns following the 1986 Chernobyl accident and was one of the reasons former President Moon was able to garner support for his anti-nuclear stance.

Seismic risks
Geologically, South Korea is located on a stable continental region. But the seismicity of subduction zones some 400 km away from the peninsula pose long-period risks to sensitive structures such as power plants and high-rise buildings.

Anti-nuclear protests gathered pace in September 2016 following a magnitude 5.8 earthquake that hit Geongjiu, just north of Ulsan in the south-east. Seismic engineers said that the horizontal ground acceleration caused by this earthquake was recorded as 0.2 g (g is the gravitational constant). The nearby Kori nuclear plant was designed to withstand a maximum ground acceleration of 0.3 g.

The 2011 Tohoku earthquake in Japan caused a 0.5 g ground acceleration at the Fukushima plant. Despite the public outcry in Korea, no serious damage occurred in 2016. But the event did highlight that Korean historical seismicity and deep geological structure still needs considerable work, both technically and in terms of public relations.

Nuclear waste
Yoon plans that nuclear energy will become the principal power source, its share of national power generation rising to 33% by 2030. Six new nuclear plants will be constructed. But the problem is nuclear waste disposal. Korea does not even have an interim storage facility because of public opposition to selected sites. Waste is piling up in temporary facilities at plant sites that are expected to be full by 2031.

In July, the government promised to invest $1.1bn on nuclear waste treatment through 2060, find a deep interim facility by 2043, and a 500–800 metre depth final repository by 2060.

International deals
In August, Korea Hydro and Nuclear Power (KHNP), a subsidiary of state-controlled power generator and transmission and distribution monopoly Kepco, won a $2.25bn order to construct turbines at El Dabaa, Egypt’s first nuclear plant. Located 300 km north-west of Cairo, the El Dabaa project is led by Russian Rosatom’s subsidiary Atomstroyexport. The deal was possible as SWIFT, the global payment network, did not ban Russian energy transactions following Russia’s invasion of Ukraine.

Korea’s first nuclear export deal was in 2009, to build the Barakah nuclear plant in the United Arab Emirates. The new goal is to export 10 plants by 2030, alongside simultaneous exports of hydrogen and defence technologies. Israel, the Czech Republic, Poland and the UK are potential export markets.

Coal
Coal is central to the energy mix argument. South Korea is the world’s fourth largest coal importer and 71% of coal demand is in combined heat and power (CHP) generation. Coal consumption has doubled from 72mn tonnes in 2000 to 137mn tonnes in 2018. Seung-Hoon Yoo, Energy Policy Professor at Seoul National University of Science and Technology, examined the period 1968–2000 and concluded that coal consumption is directly related to economic growth.

Local analysts expect coal’s share of power generation to rise significantly towards the end of the year, perhaps accounting for half of the national power generation. Coal generation also increases whenever nuclear reactors are offline for scheduled maintenance. Up to this year, 17% of coal imports were from Russia. Following the Ukraine war, these have now decreased in favour of imports from Australia and Indonesia, even though Russian coal prices are lower.

Renewables
Although all governments have promised a larger role for renewables, imponderables remain.

The Yoon administration expects renewable energy to account for 22% of national energy needs by 2030. This is a decrease of 8.7% on the Moon administration’s targets for that year, notwithstanding its more ambitious 2050 target. The new renewables target faces the same political and technical problems as the previous version. Land scarcity, lack of investor incentives and public antipathy have proved to be serious obstacles to renewables growth.

Local analysts estimated that nearly 40% of proposed renewable power generation projects were stranded or changed due to local opposition. In September, reports emerged of local government corruption in the disbursement of state funds for renewables projects. Renewable sector companies claim that the so-called ‘nuclear mafia’ is briefing against them in the media.

Grid management
An increase in intermittent renewable energy supply will require a different management of Korea’s isolated grid system.

A January 2022 study by engineers from the Daejean-based Korea Advanced Institute for Science and Technology (KAIST) indicated that a 20% renewables’ share in power generation in 2030 would mean that periods of highest intermittent solar and wind generation would occur in spring and autumn, when electricity demand decreases. Such oversupply could push the electricity frequency beyond its normal range and lead to system wide blackouts. This has been a problem in the European Union grid.

KAIST engineers concluded that a flexible operation of coal and nuclear, together with LNG and pumped storage hydro plants, could solve this problem. But it means higher consumer tariffs as balancing costs in the Korean system are passed directly to consumers. Overall tariffs have remained low to date as Kepco, as well as state energy companies Korea Gas Corporation (Kogas) and Korea Coal Corporation, have absorbed world energy commodity prices increases.

According to Seung-Hoon Lee, a former Chairman of the Korean Electricity Commission, a regulatory agency, Kepco’s low prices supported the industrialisation of Korea.

The result is that in September Kepco had a corporate debt of $119bn, of which $22bn was added in the year to September 2022. Unsurprisingly, the company then announced it would slash investment in renewables by $1.5bn over the next five years. Kepco also faces increased insurance costs from less financially secure insurance providers as major international insurers, conscious of their environmental reputations, drop coal-fired power generation coverage.

For South Korea, it seems that there is little choice between moving to carbon neutrality or maintaining the status quo. Both carry the same costs and include fossil fuels.