South Korean president unveils energy plan focused on cutting fossil fuel reliance

South Korea's newly-elected president Yoon Suk-yeol unveiled his new energy plan July 5 focused on reducing the country's reliance on fossil fuels and increasing oil and LNG stockpiles with a view to enhance the national energy security.

Under the Energy Policy Direction of the New Government, the country would lower the country's dependence on fossil fuel imports to under 70% by 2030, compared with 81.1% in 2021.

In order to help reduce fossil fuel consumption, the country will boost the share of nuclear in the country's power mix to 30% by 2030, from 27.1% in 2021, reversing the nuclear phase-out policy of President Yoon's predecessor Moon Jae-in who had pushed to cut nuclear portion to 10.1% by 2034.

"This energy policy direction officially substitutes the previous government's energy policies," the Ministry of Trade, Industry and Energy said in a statement.

President Yoon, former prosecution chief, took office in May this year with a pledge to overhaul his predecessor Moon's energy policy to support the country's energy-intensive manufacturers.

President Yoon's Energy Policy Direction also said the country will expand its strategic oil reserves to over 100 million barrels in 2025 from 96.5 million barrels currently, as part of efforts to ensure stable supply for South Korea, the world's fourth-biggest crude importer.

The government will continue to grant freight incentives to local oil refiners purchasing crude oil from regions other than the Middle East to reduce the heavy reliance on Persian Gulf crude, it said.

South Korea imported 272.72 million barrels of crude from the Middle East for the first five months this year, or 63.8% of its total imports of 427.46 million barrels, up from 60% last year, which marked the lowest on record, according to S&P Global Commodity Insights calculation based on data from Korea National Oil Corp.

South Korea also will increase its LNG storage capacity to 18.4 million kiloliters by 2034 from 13.69 million kiloliters currently. For this, the government will allow private LNG importers and power utilities to use storage facilities run by state-run Korea Gas Corp.

South Korea will push to increase LNG import volumes from the US, Australia and other non-Middle East countries so as to diversify LNG supply sources beyond the Middle East and Southeast Asia.

In addition, the government will push to set up a "special law on energy security" to help secure energy sources such as oil, gas, hydrogen and uranium.

Under the Energy Policy Direction, the country will "cautiously" seek to reduce coal-fired power plants "in a rational manner to consider power supply conditions," a departure from former President Moon's push for a drastic reduction of coal used for electricity generation blamed for air pollution.

Aging coal-fired power plants will be replaced by LNG-based generators, it said. "Details such as shares of LNG, coal and nuclear in the power mix will be disclosed in the country's basic plan on the electricity supply in the fourth quarter this year," a MOTIE official said.