South Korea is putting innovation and technology at the heart of its clean energy transition, a policy review by the International Energy Agency (IEA) has found, with moves in the hydrogen sector in the offing.

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The Asian nation recently set a target of reaching carbon neutrality by 2050 to steer its energy sector away from fossil fuel dominance and heavy reliance on costly imports.

To accelerate the transition to low-carbon energy, the government is committed to substantially increasing the share of renewable energy sources in the electricity supply, gradually phasing out coal, significantly improving energy efficiency and fostering the country’s nascent hydrogen industry.

Energy security a factor

“Many of these measures will help Korea not only to advance its energy transition but also to improve its energy security — a high priority given the country’s limited domestic energy production,” said IEA executive director, Fatih Birol.

The South Korean government in July announced a new green deal for the next five years, pledging to invest 73.4 trillion won ($67.6 billion) for eco-friendly and low-carbon initiatives, Joo Young-joon, Deputy Minister for Energy & Resources at the Korean Ministry of Trade, Industry and Energy, said via a translator at an IEA webinar hosted late last month to coincide with the release of the policy review.

“We are going to achieve a sustainable and safe energy mix, smart and resilient energy delivery structures, and efficient energy consumption and we will announce specific strategies to achieve these,” said Joo.

Going greener

The Seoul administration has set a target of increasing the share of renewable energy in the power mix to 20% by 2030 from the very low 4% today.

Birol said the IEA would like to see the South Korean government “push a couple of buttons” to see a stronger penetration of renewables, including via taxation and the speeding up of licensing for such projects.

The IEA suggested the government may consider energy taxation for all fuels to reflect their external costs — including carbon content and air pollution — to accelerate the switch to lower-emission technologies.

The nation’s renewable energy capacity has been increasing for the past three years, and the rate of increase has been higher than expected because of the Covid-19 pandemic.

“Investment has been affected but renewables-related investments have been increasing in Korea,” noted Joo.

Much work to do

South Korea in 2015 became the first nation in North Asia to introduce a nationwide emissions-trading system that sets a best practice example for other countries to follow.

However, more needs to be done to reduce the carbon intensity of its energy supply, which is above the IEA average because of the high share of coal-fired power generation, according to the Paris-based agency.

Plans by the government to shut in ageing coal-fired plants are said to reflect growing concerns among the population over climate change and local air pollution.

The government can leverage this public support to swiftly introduce its planned environmentally friendly energy tax programme that will complement other policy measures, according to the IEA report.

“Korea can draw on its technological expertise by addressing regulatory and institutional barriers in its energy markets and by fostering more active consumer engagement,” added Birol.

“This can improve the way the energy markets operate, enhance competition and encourage the emergence of new business models.”

Hydrogen targets

However, the focus of South Korea’s energy transition needs to go beyond power generation and target emissions from the industrial and transportation sectors, the IEA policy review said.

The industrial sector is emissions-intensive, accounting for more than half of the nation’s final energy consumption despite the notable improvement in energy efficiency over the last decade.

The nation has set ambitious goals for the roll-out of electric mobility and also to establish itself as a leading exporter of hydrogen and fuel cell vehicles by 2040 and to quickly increase the number of charging stations and refilling stations for hydrogen.

“The latter will require very strong engagement with the population to convince them that having a hydro station [nearby] is a positive thing,” Joo admitted.

“I know that the government has a very strong hydrogen target and we hope to see the world, like Korea, move in the right direction -— not only putting the targets but investments and the necessary measures to reach those targets,” said Birol.

Fossil fuels today dominate South Korea’s energy mix, with an 85% share, while industry consumes upwards of half of all energy.

The diversification of import sources of crude is a main pillar of South Korea’s oil security policy and the nation now receives volumes from producers including the US, UK, Kazakhstan and Mexico in addition to its main supplier, the Middle East.

South Korea currently has no international gas pipeline connections and imports all natural gas as liquefied natural gas.

“We are planning to increase the share of renewables going forward and in pushing for renewables we're going to communicate with local residents very early on so that they can understand the reasons for these renewable projects, and they can have better acceptance,” said Joo.