Korea's new energy policies are announced

The Government held the 30^th Cabinet meeting presided by President Yoon Seok-yeol on July 5 with participation of relevant ministries and laid out new energy policy goals and directions through a deliberation and resolution process.

Amid the global push for carbon neutral and escalation of Russia-Ukraine conflict and global energy supply chain uncertainties, energy security and attaining carbon neutral goals are now more critical than ever.

In response to these changes, it is imperative that new energy policy goals and directions are set so as to better accomplish carbon neutral government projects and the expansion of nuclear power.

Accordingly, the Ministry of Trade, Industry and Energy gathered opinions from industries, academia and civic groups through approximately 20 public hearings and conferences. These opinions were then incorporated into the Vice-Ministerial and Cabinet meetings' decision-making process for finalizing the new regime's energy policy directions.

The new energy policy directions of the current regime are five-fold, and as follows.

One, a feasible and reasonable energy mix must be reestablished.

This means that construction of Shin-Hanul No. 3 and No. 4 nuclear reactors is to resume with the goal of expanding the nuclear energy ratio to a minimum of 30 percent by 2030. This 30 percent hinges on the premise that nuclear plants still under construction will achieve normal operation, and that those currently in operation will achieve continued operation. Moreover, a special act for high-level radioactive waste treatment is in order, possibly installed under the prime minister.

Renewable energy supply goals must be reestablished in consideration of rational and realistic supply conditions. The specific ratio of different sources of power, such as solar and wind (offshore) energy, must be determined for optimal outcome.

Coal phase-out must be done in a rational manner, factoring in the supply-demand situation and system status. Utilization of zero carbon power sources should take technological circumstances into account.

For power grids, timely construction, system stabilization measures aligned with renewable energy generation, efficiency-focused redesign and high-tech grid construction are all key goals.

Two, legislation of a special act on resources security would be necessary in order to establish an early warning system and such preemptive and comprehensive resources security measures.

Regarding the supply chain, it should be strengthened across the entire cycle through increased strategic stockpiling, import channel diversification through international cooperation, and reutilization of critical minerals (manganese, cobalt, etc.).

For resources development, public companies should be restored of their ability to secure resources and resume normalization of management. The Government will help invigorate private entities' investment in overseas resources development.

Three, streamline energy demand and market structure on basis of market principles.

For the sake of efficiency, policies should shift from supply-centric to demand-centric. Mandating Energy Efficiency Resource Standard (EERS) and deregulation moves are some examples.

In terms of power market and rates, the priority is to establish a market that runs on the basic principles of competition and fairness. Power rates will follow cost basis principles.

The independence of governance in cost and the power market will grow stronger, and the Electricity Regulatory Committee (ERC) will grow more specialized through reinforced personnel.

Four, the regime aims to strengthen exports of new energy industries and capitalize on them as growth engines.

By 2030, the goal is to export 10 nuclear plants and develop Korea's own unique SMR (small modular reactor) reactor type (app. KRW 400 billion), and reinvigorate the nuclear energy ecosystem through early project procurement.

With regard to hydrogen, the new regime will pursue independence in core technologies and early completion of ecosystem across the entire cycle (production, distribution, utilization) by establishing a clean hydrogen supply chain and competing to nurture a world-leading hydrogen industry.

For solar and wind power, the goal is early commercialization of next generation technologies like tandem solar cell and giant wind turbines.

Strategy for new energy industries will involve nurturing innovative energy startups, especially with new technologies, as well as industry-catered development schemes.

In terms of system, the key tasks are improving the carbon emission trading system, prompting autonomous carbon reduction markets, revising the RE100, advancing climate change response system and stimulating private investment.

Five, the main issues are energy welfare and raising public receptivity to energy policies.

Energy vouchers and support for energy efficiency improvement for the low-income bracket can bolster protection for those vulnerable to "energy poverty."

Strengthening communication with residents, seeking portable renewable energy projects and heightened profit-sharing are some ways to raise residents' receptivity.

When it comes to safety, the new regime intends to establish a reliable energy foundation by strengthening the overall safety of power plants, providing hydrogen safety standards and special management of petrochemical industrial complex.

The new regime's energy policies and directions announced as above are to replace the previous government's nuclear phase-out plan, and the 30 percent ratio goal officializes the policy of increasing nuclear power utilization in view of carbon neutral and energy security.

The reconstruction of Shin-Hanul No. 3 and No. 4 nuclear reactors have been confirmed in accordance with the highest decision-making procedures of the Yoon administration, thereby securing the grounds for early execution of KRW 12 billion for new engineering jobs.

Smooth implementation of the aforementioned new energy policies will help reduce reliance on fossil fuel imports from 81.8 percent (2021) to 60 percent (2030). Furthermore, 100,000 new jobs are expected to be created by 2030 through the nurturing of new energy industries and exports.

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