1. An Introdution of Energy Situation and Policy of ROK September 2010 Park, Jimin

2. Contents Energy Situation Energy Issues and Challenges Energy Policy and Target toward 2030

3. I. Energy Situation

4. 1. Economic Growth and Energy Consumption ROK has shown a rapid growth in economy and energy consumption during past 40 years - Average annual growth rate (1970 ∼ 2009): GDP 7.3%, Energy consumption 6.6% 4 Major Economic & Energy Indicator [1970=100] Energy Consumption GDP 100 400 700 1,600 1,900 1,000 1,300 ’70’74’78’82’86’90’94’98’02’09 GDP & Energy Consumption 19.7 MTOE 240.5 MTOE 70.2 Trillion won 948.9 Trillion won GDP (Trillion won) 197019982009 (70-98) Energy Con. (Mtoe) (98-09) Per Capita Energy (toe) Energy/GDP (toe/million won) AAGR Energy consumption per capita continues to grow, but at a decreasing rate Population (million capita) Energy intensity has decreased to 0.25 toe/mln won as improving energy efficiency 577 46 166 49 242 (70-09) 3.614.94 980 0.290.25 32 20 0.61 0.32 62 8.3% 4.9% 7.3% 1.3% 0.6% 1.1% 7.9% 3.5% 6.6% 2.9% 5.5% -0.4% -1.3% -0.6%

5. 5 Energy sources have been diversified, but oil share has been still high - LNG and nuclear power use has been highly increased - But oil growth rate has been sharply decreasing 2. Energy Demand by Source & Sector Primary Energy Demand by SourceFinal Energy Demand by Sector ’75’90’09 RE&Others Oil Coal LNG Nuclear 27.6 MTOE 56.8 13.9 29.3 53.8 26.2 14.2 2.6 3.2 93.2 MTOE 43.4 25.3 14.9 2.5 13.8 240.5 MTOE ’75’90’09 23.4 MTOE 75.1 MTOE 182.7 MTOE Industrial Transportation Resi./Comm. Public/Others Final energy consumption continues to grow, but at a decreasing rate - Industrial energy use has been more than half of total energy use, but growth has slowed in recent years - Energy use in transport sector, which has been about 20 percent, has also slowed due to high oil price - Residential and commercial share has been falling somewhat as households have reached saturation for many energy end uses and electric devices have substituted for devices using other fuels

6. 6 3. Projection of Energy Demand Primary Energy Demand by Source (BaU) RE&Others Oil Coal LNG Nuclear 233.4 MTOE 342.8 MTOE 334.3 311.6 258.7 286.6 34.2% 24.7% 19.5% 5.9% 15.8% 38.3% 25.8% 17.7% 3.8% 14.4% 43.6% 24.3% 15.9% 2.5% 13.7% Energy demand will continue to grow, though at a decreasing rate - Average annual growth rate : (2006-10) 2.6% → (2010-20) 1.9% → (2020-30) 0.6% Share of LNG, nuclear power, and renewable energy will be steadily increased But oil share will be decreased from 43.6% in 2006 to 34.2% in 2030, due to the high oil price, fuel substitution, and industrial structure change 41.2% 26.6% 14.3% 3.8% 14.8% 36.9% 25.5% 18.4% 4.3% 14.8% 35.8% 25.1% 18.7% 5.0% 15.4% source : KEEI, Long-term Energy Outlook, 2008

7. II. Energy Issues and Challenges

8. 8 Due to the lack of indigenous natural resources, overseas energy dependency has increased to 96.2% - In 2009 energy import was decreased with the falling oil price, though the volume was almost unchanged 1. Energy Dependency on Overseas Imports of Mineral Resource 10.8 2 4 6 8 10 12 14 Non-Metallic Metallic Total [billion USD] 5.1 4.6 4.5 6.1 7.94 6.93 10.5 12.3 ’07’06’05’04’03’02’08’09’00’01 14.5 Overseas energy dependency : Overseas metallic minerals dependency : Overseas Energy Dependency amount (billion USD) Import (MTOE) 33.7 32.3 38.3 49.6 66.7 85.6 95.0 141.5 215.4214.8214.9 226.6 228.3 238.7 246.8 255.5 257.1 91.2 ’01’02’03’04’0506’07’08’09 Also, overseas dependency of metallic minerals has reached to 98.8%

9. 9 2. Energy Efficiency Energy efficiency of ROK is one of the lowest in OECD countries(24th) The higher share of manufacturing industry in GDP - Share of service industry : ROK 57.2%, Japan 68.2%, USA 76.5% The higher share of heavy energy consuming industries in manufacturing - Cement, Steel, Petrochemical : ROK 38%, OECD 22% source : IEA, Energy Balances of OECD Countries, 2008 Edition 0.20 0.30 0.40 0.10 0.00 0.32 ROK 0.21 USA 0.19 OECD 0.19 France 0.17 Germany 0.14 England 0.10 Japan Energy intensity by OECD countries (toe/US$ 1,000)

10. 10 3. GHG Emission and UNFCCC ROK is the 9th largest country in emission of greenhouse gas ROK is being pressured to become a member of Annex 1 in post-Kyoto protocol (after 2012) source : IEA, Key World Energy Statistics, 2008 CO 2 Emission by Countries (2006) Greenhouse Gas Emission Energy Industry Process Agri. / Waste USAChinaRussiaIndia 448 9th Japan 5,697 1st 5,607 2nd 1,250 4th 1,213 5th ’90’00’05 297.5 528.6 591.1 83.3% 6.7% 10.0% 84.3% 11.0% 4.7% Transport 19.7% Industry 31.5% Generation 34.3% 12.4% Others 2.1% Household & Commercial (unit: MTCO 2 ) Korea 1,587 3rd

11. III. Energy Policy and Target toward 2030

12. 12  Expansion in supply of renewable energy  Increase in capacity of nuclear power  Green technology development both in domestic and towards global markets  Strengthening overseas resources development  Stable energy supply  Energy efficiency improvement  Market-based price system Low Carbon & Low Energy Consumption Low Fossil Fuel Development of Green Energy Industry Promotion of Energy Security  Active involvement in global initiatives for climate change Strategy 1 Strategy 2 Strategy 3 Strategy 4 1. National Energy Policy for Future Development

13. 13 2. Policy and Target for Renewable Energy Renewable energy supply has increased at an annual rate of 17.2% during 1990~2008 (2.4% share in total energy consumption in 2008) - Key sources for renewable energy : bio-fuel, wind power, solar energy Target for renewables share in energy mix : 11% (2030) [1,000 TOE] Supply Trend of Renewable Energy Target for Renewables (2030) 1,000 ’90’92’94’96’98’00’02’04 ’08 2,000 3,000 4,000 5,000 6,000 0.36 % 1.40 % 2.06 % 2.43 % Share Supply ’08’30 Geothermal Tide, Wave, Ocean Solar photovoltaic Hydro Solar thermal Wind Biomass Waste material

14. 14 3. Policy and Target for Nuclear Power Nuclear power has contributed to the stable energy supply in Korea - The share of nuclear power in power generation : 36% Nuclear power will continuously play a significant role in reducing energy imports and GHG emission - More advanced technology development required for safety improvement - Need to secure the sites of nuclear power plants and radio-active waste Nuclear Power Target for Nuclear Power Capacity (10MW) Capacity Ratio(%) Generation Ratio(%) Capacity (10MW) Capacity Ratio(%) Generation Ratio(%) ( ) 2020 2030 25.0 (34.2 ) 33.5 (48.9 ) 40.6 (59.0 ) 4,272 3,152 2007 26.0 (35.5 ) 1,772 2010 1,872 1987 1990 2000 20032007 762 1,372 1,572 1,772 59 6 36 28 26 36 40 41 49 9

15. 15 4. Policy and Target for Energy Efficiency Improvement Energy efficiency has improved 1.3% per year from 1998 to 2007 The stronger measures will be employed (improving 2.6% per year to 2030) - Promoting knowledge-based service industries (S/W, engineering, design, etc) - Developing high technologies in energy efficiency (GT, BT) - Fostering ESCO companies and introducing various systems for energy conservation Targets by Sectors ’07’20’30 Target for Energy Efficiency 17 (44%) 7 (19%) 12 (32%) 2 (5%) [MTOE] Industry Transport Household & Commercial Others 300.4 (Target) 240.5 342.8 (improving 2.1% pa) [MTOE] Improving 2.6 % pa

16. 16 5. Policy and Target for Overseas Energy Development Ratio of oil overseas production to oil import(`07) ROK is the lowest in overseas energy activities among the major energy importing countries ROK pursues more active overseas resource developments - Target ratio of overseas oil production to national oil import : 40% (2030) Strengthening of energy and economic cooperation with energy rich countries Promotion of overseas exploration and production businesses to the companies Strong government supports for fostering technologies and human resources over energy development JapanChina Italy Spain France 9 % (’09) 22% 27% (’08) 48% 62% 97% Russia Central Asia Middle East Africa Southeast Asia Australia South America North America Korea

17. 17 6. Policy and Target for of GHG Emissions Mitigation Target for GHG emissions reduction : 30% reduction from BAU (2020) Laying the groundwork for effective and sustained reduction of the emissions - Establishment of a legal and regulatory framework, carbon trading, a national GHG inventory report system - Managing forestation to pursuing to increase carbon absorption Target for GHG emissions reductionCarbon Absorption by forests (unit: MTCO 2 ) 201220202009 1,452 1,613 1,854 20202005 594 741 570 Reducing 30% BAU Target (unit: MTCO 2 )

18. Thank you for your attention!!