Energy policies of IEA countries. The Republic of Korea 2012 review

140 Pages·2012·2.021 MB·English

by  International Energy Agency., Organisation for Economic Co-operation and Development.

Please note that this PDF is subject to
specific restrictions that limit its use and
distribution. The terms and conditions are
available online at http://www.iea.org/
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Energy Policies of IEA Countries
The Republic of Korea

2012
Review
Energy Policies of IEA Countries
Republic of Korea
Korea, the world’s thirteenth-largest economy and the seventh-largest
exporter, is an energy-intensive nation. In 2008, the country adopted a
long-term “green growth” strategy to foster economic development by
means of low-carbon technologies and clean energy; since then, the
government has implemented many policies to support these goals.
In 2012, Korea announced an emissions-trading scheme -- the first of
its kind in Asia -- which will be implemented in 2015. This represents
a major step towards achieving its target of a 30% reduction in
greenhouse gas emissions by 2020. Strong energy efficiency policies
have been developed to complement the emissions-reduction target.
Korea has made efforts to enhance energy security by taking measures
to diversify energy sources, reduce the use of fossil fuels and foster
the development of renewable energy alongside the expansion of
its nuclear energy programme. Government expenditure on energy-
related RD&D is among the highest in the OECD.
Progress in some sectors has been slower, and the lack of a clear,
long-term vision for its electricity and natural gas markets is one of
the greatest energy-policy challenges facing the Korean government.
Energy markets are dominated by incumbents and have been slow to
open up to competition.
This review analyses the energy-policy challenges facing Korea and
provides sector-based assessments and recommendations for further
policy improvements. It is intended to help guide the country towards
a more secure and sustainable energy future.
-:HSTCQE=V\VZUX:
(61 2012 05 1P1)
978-92-64-17150-3 €75
Energy Policies of IEA Countries
The Republic of Korea

2012
Review
INTERNATIONAL ENERGY AGENCY
The International Energy Agency (IEA), an autonomous agency, was established in November 1974.
Its primary mandate was – and is – two-fold: to promote energy security amongst its member
countries through collective response to physical disruptions in oil supply, and provide authoritative
research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member
countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among
its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.
The Agency’s aims include the following objectives:
n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular,
through maintaining effective emergency response capabilities in case of oil supply disruptions.
n Promote sustainable energy policies that spur economic growth and environmental protection
in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute
to climate change.
n Improve transparency of international markets through collection and analysis of
energy data.
n Support global collaboration on energy technology to secure future energy supplies
and mitigate their environmental impact, including through improved energy
efficiency and development and deployment of low-carbon technologies.
n Find solutions to global energy challenges through engagement and
dialogue with non-member countries, industry, international
organisations and other stakeholders.
IEA member countries:
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Korea (Republic of)
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
© OECD/IEA, 2012 Spain
International Energy Agency Sweden
9 rue de la Fédération Switzerland
75739 Paris Cedex 15, France Turkey
www.iea.org United Kingdom
United States
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Table of contents
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS .......................................................................... 9
Executive summary ...................................................................................................................... 9
Maintaining progress ................................................................................................................... 9
Nuclear energy ...........................................................................................................................10
Reforming electricity and natural gas markets ..........................................................................11
Design of the emissions trading scheme ...................................................................................12
Energy efficiency policy ..............................................................................................................13
Key recommendations ...............................................................................................................14
PART I POLICY ANALYSIS .....................................................................................................15
2. GENERAL ENERGY POLICY......................................................................................................................17
Country overview .......................................................................................................................17
supply and demand ....................................................................................................................18
Energy administration and institutions ......................................................................................19
Key energy policies.....................................................................................................................20
Planning and forecasting ............................................................................................................23
Energy security ...........................................................................................................................24
Taxation ......................................................................................................................................25
Critique .......................................................................................................................................26
Recommendations .....................................................................................................................28
3. CLIMATE CHANGE ..................................................................................................................................29
Overview ....................................................................................................................................29
GHG emissions profile ................................................................................................................29
Institutions .................................................................................................................................31
Policies and measures ................................................................................................................32
Critique .......................................................................................................................................35
Recommendations .....................................................................................................................37
4. ENERGY EFFICIENCY ...............................................................................................................................39
Overview ....................................................................................................................................39
Final consumption of energy .....................................................................................................39
Institutions .................................................................................................................................41
Policies and measures ................................................................................................................41

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Table of contents
Critique .......................................................................................................................................45
Recommendations .....................................................................................................................48
PART II SECTOR ANALYSIS ...................................................................................................49
5. NATURAL GAS ........................................................................................................................................51
Overview ....................................................................................................................................51
Supply and demand ...................................................................................................................51
Market structure ........................................................................................................................54
Infrastructure .............................................................................................................................55
Security of natural gas supply ....................................................................................................58
Retail market and tariffs ............................................................................................................59
Critique .......................................................................................................................................60
Recommendations .....................................................................................................................62
6. OIL ..........................................................................................................................................................63
Overview ....................................................................................................................................63
Supply and demand ...................................................................................................................63
Industry structure ......................................................................................................................65
Refining and oil supply infrastructure ........................................................................................69
Critique .......................................................................................................................................71
Recommendations .....................................................................................................................72
7. COAL ......................................................................................................................................................73
Overview ....................................................................................................................................73
Supply and demand ...................................................................................................................73
Domestic production and reserves ............................................................................................74
subsidies .....................................................................................................................................75
Carbon capture and storage ......................................................................................................75
Critique .......................................................................................................................................76
Recommendations .....................................................................................................................76
8. ELECTRICITY ...........................................................................................................................................77
Overview ....................................................................................................................................77
Supply and demand ...................................................................................................................77
Institutions .................................................................................................................................78
Industry structure ......................................................................................................................81
Market reform and regulatory framework ................................................................................85
Security of supply .......................................................................................................................86
Prices and tariffs ........................................................................................................................87
Critique .......................................................................................................................................90
Recommendations .....................................................................................................................91

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Table of contents
9. NEW AND RENEWABLE ENERGY............................................................................................................93
Overview ....................................................................................................................................93
New and renewable energy supply ...........................................................................................93
Institutions .................................................................................................................................93
Policies and measures ................................................................................................................94
Electricity from new and renewable sources .............................................................................96
Critique .......................................................................................................................................97
Recommendations .....................................................................................................................98
10. NUCLEAR ENERGY ................................................................................................................................99
Overview ....................................................................................................................................99
Nuclear power plants ...............................................................................................................100
Education and training .............................................................................................................104
The nuclear fuel cycle ..............................................................................................................105
Research and development (spent fuel management) ...........................................................106
International export activities ..................................................................................................108
Critique .....................................................................................................................................109
Recommendations ...................................................................................................................110
PART III ENERGY TECHNOLOGY ......................................................................................... 111
11. ENERGY TECHNOLOGY RESEARCH, DEVELOPMENT AND DEPLOYMENT ..........................................113
Overview ..................................................................................................................................113
Institutional framework ...........................................................................................................113
Policies and programmes .........................................................................................................114
Funding and evaluation............................................................................................................115
International collaboration ......................................................................................................117
Public-private participation .....................................................................................................118
Critique .....................................................................................................................................118
Recommendations ...................................................................................................................119
PART IV ANNEXES ............................................................................................................. 121
ANNEX A: Organisation of the review .....................................................................................................123
ANNEX B: Energy balances and key statistical data ................................................................................125
ANNEX C: International Energy Agency Shared Goals .............................................................................131
ANNEX D: Glossary, List of abbreviations and Currency conversion .......................................................133

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Table of contents
List of figures, tables and boxes
FIGURES
1. Map of Korea .......................................................................................................................16
2. Total primary energy supply, 1973-2010 .............................................................................19
3. Total final consumption by sector, 1973-2010 ....................................................................19
4. Energy-related CO emissions per GDP in Korea and in other selected
2
IEA member countries, 1973-2010 ......................................................................................30
5. CO emissions by fuel, 1973-2010 ........................................................................................31
2
6. CO emissions by sector, 1973-2010....................................................................................31
2
7. Total final consumption by sector, 1973-2010 ....................................................................40
8. Total final consumption by source, 1973-2010 ...................................................................40
9. Total final consumption by sector and by source, 1973-2010.............................................43
10. Natural gas supply by sector, 1986-2010 .............................................................................52
11. Natural gas infrastructure ....................................................................................................56
12. Oil supply by sector, 1973-2010 ...........................................................................................64
13. IEA fuel prices and taxes, second quarter 2012 ...................................................................67
14. Coal demand by sector, 1973-2010 .....................................................................................74
15. Electricity generation by source, 1973-2010 .......................................................................78
16. Electricity generation by source in IEA member countries, 2010 ........................................79
17. Electricity consumption by sector, 1973-2010 ....................................................................79
18. Map of electricity infrastructure ..........................................................................................83
19. Settled volumes on the Korea Power Exchange between 2003 and 2011 ..........................85
20. Electricity prices in Korea and in other selected IEA member countries, 1980-2011 .........88
21. Electricity prices in IEA member countries, 2011 ................................................................89
22. Renewable energy as a percentage of total primary energy supply, 1995-2010 ................94
23. Renewable energy as a percentage of total primary energy supply
in IEA member countries, 2010 ...........................................................................................95
24. Electricity generation from renewable sources as a percentage of all generation
in IEA member countries, 2010 ...........................................................................................96
25. Evolution of Korean nuclear power plant technology .......................................................100
26. Location of nuclear power plants in Korea ........................................................................101
27. Long-term development plan for pyro-processing and SFR ..............................................108
28. Government energy-related RD&D budgets in IEA member countries, 2010 ...................114
TABLES
1. Korean energy security measures ........................................................................................24
2. Natural gas production in Korea and forecast production, 2005-15 ...................................53
3. Existing LNG terminals in Korea ...........................................................................................57
4. KOGAS warning process .......................................................................................................58
5. Restriction of gas supply, by priority ...................................................................................59
6. Anthracite coal reserves in Korea (thousand tonnes) .........................................................74
7. Coal production and briquette price subsidy, 1988 to 2009 ...............................................75
8. The KEPCO transmission network at year end 2011 ...........................................................82
9. Recovery rate of electricity price by sector in 2010 ............................................................87

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Table of contents
10. Nuclear reactors in Korea ..................................................................................................102
11. Status of RD&D budgets in Korea ......................................................................................116
BOXES
1. The National Strategy for Green Growth .............................................................................. 33
2. IEA 25 energy efficiency recommendations ......................................................................... 47
3. Load-shedding events in September 2011............................................................................ 86

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