LNG power generation poses dilemma for Korea’s energy policy
|Bank of England|
By Kim Bo-eun
The Moon Jae-in administration is moving towards phasing out coal-fired power generation and nuclear power plants.
As the transition takes place towards renewable energies, the government has made liquefied natural gas (LNG) an important source of electricity generation.
The government supports LNG because it is more environmentally friendly, with lower carbon emission levels than other energy sources. LNG is known to emit about half of the greenhouse gases emitted by coal when it is burned to generate electricity.
LNG became the country’s largest source of electricity generation in April of this year. The government has unveiled plans to expand the scale of LNG power generation to 59,096 megawatts by 2034. This represents an increase from 39,655 megawatts in 2019. If the planned transition takes place, the LNG will become the second source of electricity production that year, or 30.6%, after renewable energies which will occupy 40.3%.
The plan is to reduce the proportion of the power generation capacity of coal-fired power plants among that of all power plants to 15% in 2034 from 29.5% in 2019 and to reduce the share occupied by nuclear power plants by 18, 5% to 10.1%.
The government plans to build 19 more LNG power plants by 2030 to enable the transition.
But the high cost of LNG fuel poses a dilemma – it is more than 10 times higher than that of operating nuclear power plants.
Another risk is that Korea depends on LNG imports from the United States and Middle Eastern countries such as Qatar and Oman. The Ministry of Trade, Industry and Energy is rushing to enter into long-term supply contracts to meet growing demand due to the increased use of LNG. Demand is expected to reach 4,797 tonnes by 2034, up from 4,169 tonnes this year, according to the ministry’s plan. This presents a challenge, as Korea will have to make additional contracts with other countries.
Dependence on imports presents risks, as the inability to secure long-term contracts will force the government to resort to short-term contracts, which would likely further increase costs and potentially lead to higher bills. electricity.