Korea’s new president, Yoon Suk-yeol, has announced a shift from the previous president’s energy policy. New policy initiatives provide massive scope for engagement in Korea by western corporations. Korea Partners Hannes Humala and Sean Han, Asian Insiders partners in Korea discuss Korea’s 2050 carbon-neutral policy and what the future holds for energy in Korea.
In a significant policy shift President Yoon Suk-yeol is relying more on nuclear power over green energies for Korea’s carbon neutral strategy. This is a major change to ex-President Moon Jae-in’s green plans to reduce nuclear power, following the 2011 nuclear disaster in Japan. The goals of the 2050 carbon-neutral Korea plan in total have not changed, as the new policy only changes the relative share of the overall energy mix. President Yoon backed the return to nuclear power as recently as January 16th, 2023 during his visit to UAE.
In contrast, the previous government’s mid-term goal was to increase Korea’s capacity for solar and wind power to 30 gigawatts by 2025, the target was then adjusted to 43 gigawatts, as ex-President Moon Jae-in’s Green New Deal initiative was expected to add 13 gigawatts.
What does this mean in raw numbers?
President Yoon’s administration planned to increase the nuclear power’s share to 30 percent of Korea’s energy mix by 2030. This was further increased to 32% by Ministry of Industry, Trade and Energy on
11 January 2023. This means a 9.5 percentage point increase over the earlier target for nationally determined contributions (NDC) of 24 percent by 2030.
Currently Korea has 25 nuclear reactors, of which two are under maintenance, and three are under construction. On 14 December Korea completed its 27th nuclear reactor, the Shin-Haneul APR-1400 unit.
Industries are reshaping – the shipping industry making a move to de-carbonize
On 22 February 2023 the Ministry of Oceans and Fisheries (MOF), in a pre-emptive response to stricter decarbonisation regulations by the International Maritime Organisation (IMO), announced its strategy to decarbonise the shipping sector by 2050. MOF sees “significant ripple effects” stemming from the tighter regulations on the shipping industry, since charging a certain amount for each tonne of carbon emitted will directly raise transportation costs for shipping firms. Consequently, it seems likely inevitable that shipping firms will switch to carbon-neutral fuels in order to stay competitive.
Korea is targeting to convert 110 out of 867 designated vessels (over 5,000GT) to be converted into eco-friendly ships by 2030. 100 percent of Korea’s outbound domestic vessels are to be eco-friendly by 2050.
Korea’s Carbon-neutral strategy
The South-Korean government has issued its strategy for carbon-neutral Korea by 2050, initially under President Moon as a drive towards renewable energy production and amended last year by President Yoon to focus more on nuclear power production.
Though the previous government’s mid-term goal was to increase Korea’s capacity for solar and wind power to 30 gigawatts by 2025, the target has been adjusted to 43 gigawatts, as ex-President Moon Jae-in’s Green New Deal initiative was expected to add 13 gigawatts. The effects of President Yoon’s policies are not yet clear.
The previous government’s Green New Deal will invest a total of USD 145 billion to create 1.9 million jobs by 2025, with a focus on renewable energy, green infrastructure, and the industrial sector. Some of the massive projects initiated by this plan, have faced difficulties in financing :
- Korea will install rooftop solar installations in all schools and public buildings.
- Multiple megawatt-scale floating solar plants.
- Korea is aiming to install 31 GW of solar generation capacity by 2030.
- Busan port 100-megawatt rooftop solar project by KOSPO
- World’s largest offshore wind farm (8 GW) on SW coast, composed of 20 separate ventures.
- Total of 12 gigawatts of offshore power by 2030 from the current 0.2GW
- Joint inland wind-solar projects increasing.
- Interest for offshore floating wind farms increasing.
Many of these massive projects will need solutions, components, and services from a range of qualified companies, domestic and foreign. Korean engineering and EPC firms are developing consortiums to paticipate in many of these sizeable projects, for example Norwegian Aker Solutions has joined forces with EDP Renewables, Principle Power, and Windpower Korea in floating offshore wind farms. Norwegian floating PV specialist Ocean Sun and South Korean energy company EN Technologies are developing pilot projects related to the 2.1 GW floating mega solar plant. For the same project, the consortium led by Korean Hanwha Q-Cell is the preferred bidder to provide their special panels. Another Korea’s major conglomerate SK Group is also active in other parts of the
2.1 GW Saemangeum solar complex project.
What long term changes will all this lead to in Korea?
- Transportation transformation from combustion engine to EV and hydrogen engines.
- Energy storage transition
- Circular economy and life-cycle concept deeply considered in investment decision-making.
- Digital transformation in energy, data, government, and infrastructures
Opportunities for energy in carbon-neutral Korea today
Opportunities for foreign corporate engagement in energy in Korea lie at both primary and secondary levels. Primary business opportunities include equipment, machinery, services and financial solutions directly required for these major projects. These include, for example, power structure manufacturers and engineering companies, rotor blade manufacturing, engineering and testing companies, gearbox manufacturers and engineering companies, rotor hub manufacturers and engineering companies, generator manufacturers, power converter manufacturers and engineering companies. Secondary business opportunities are present for any company providing materials, solutions, components or services to any company in the direct business category. New manufacturing plants need to be constructed, new supply chains need to be built and new service providers need to be contacted.
For the long-term raw materials, solutions and technologies for EV and especially hydrogen vehicles will be critical for Korea as the country transitions away from combustible engines and reliance on crude oil imports.
Long-term changes that will occur in Korea include a transformation from combustion engine to electric and hydrogen engines for transportation, energy storage transition, deeper involvement of circular economy and life-cycle concepts in investment decision-making, and digital transformation in energy, data, government, and infrastructures. Companies have the opportunity to take advantage of the carbon-neutral Korea drive by offering equipment, machinery, services, and financial solutions required for these projects.
Asian Insiders stand ready to assist our clients with research, insight and direct connection to any of these opportunities. Years of collective experience in Korea is available with a no-obligation call to Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com or to Hannes Humala, Korea Partner: hannes.humala(at)asianinsiders.com
