1. Global Energy Problems and Counter Policies and Measures of Korea
MOON, Young Seok, Ph. D.
Korea Energy Economics Institute 1

2. 01 02 03 Two Challenges: Low Oil Price and GHG Emission Reductions
Contents 01
Two Challenges: Low Oil Price and GHG Emission Reductions
Five Counter Policies and Measures of Korea
Concluding Remarks 02 03

3. 01
Two Challenges: Low Oil Price and GHG Emission Reductions

4. Impact of Low Oil Price on Korean Economy
For a 10% drop in oil price by supply side causes alone, economic impact on GDP growth rate and income would be 0.2%P and 0.3%P, respectively, for the past 14 years since 2001.
- Less impact of oil price change than previous 14-year period
< Impact of a 10% Drop of Oil Price on Korea Economy >
(%P)
Period
GDP
Cons.
Invest
CPI
Current A/C
(bill. $)
GNI
2001.1/4~2014.2/4
0.16
0.06
0.10
-0.14
5.2
0.33
1988.1/4~2002.4/4
0.31
0.58
0.13
0.03
2.3
0.80

5. Impact of Low Oil Price on Korean Economy
A 10% drop in oil price lowers production costs of industry as a whole by 0.67% (Japan 0.34%, China 0.36%)
<Estimated Cost-Down Effects in Korean Industries of a 10% oil price drop >
Manufacturing: Average: 1.04%, (Oil products: 7.92%, Petrochemical : 2.02%)
-> Export of Manufacturing increases by 0.55%
Service: 0.28%
Need to business re-alignment and structural reform to cope with challenges against industrial competitiveness

6. KOREA’s Emissions Issues
Rapid increase in GHG Emissions: 3.9% annually
Increasing emission share of power generation due to high demand partly caused by low electricity price and coal-fired plants
Significant reduction required to hit the emissions target
■ GHG Emissions Trend
■ Trend vs. Target
■ Share of Power Gen
(unit: mil. tCO2eq)

7. Challenges and Opportunities
Korea’s major industries facing low growth
Need for
developing new growth engine
Production cost reduction due to low oil prices
Achieving GHG
reduction
goal
Transform to a
low-carbon
high-efficiency
energy system
More investment capability
Take the current changing environment, e.g., low oil price, stricter response to climate change, as an opportunity to become an energy powerhouse

8. Five Counter Policies and Measures of Korea02 8

9. Counter Policies and Measures of Korea
Nurture Energy-Related New Industry
Act on the 7th Basic Plan for Power Supply and Demand
Induce More Investment in New/Renewable Energy
Take Low Oil Price as Opportunity for Enhancing Energy Security
Enact Trustworthy Safety-First Nuclear Policy

10. Energy-Related New Industry
Basic Concept
An industry that create new markets for energy efficiency improvements and reduce GHG emissions, creating a new growth engine
By innovating the way energy is produced and consumed and by introducing new business models
Through convergence between existing energy industries and ICT, manufacturing and financial sectors

11. Energy-Related New Industry
Future Plans ■
To increase investment by initiating financial support to promote private sector investment, developing ‘locally’ customized energy-related business models
To export energy-related new business models by utilizing Green Climate Fund
To enact a special law on Energy-Related New Industry to lay an institutional foundation to nurture the Industry ■ ■ 11

12. 7th Basic Plan for Power Supply /Demand
Low carbon Gen Mix for Post 2020
Decreasing Share of coal-fired power
Replacing aged plants by requiring environmental performance
increase share of nuclear plants (23.4% by 2029) and RE (20.1% by 2029)
Reserve margin:
22%↑
Peak demand
12%↓
Power Consumption
14.3%↓
Enhancing Distributed Gen.
Minimizing new transmission lines and large-scale power plants
Market incentives for distributed generation
Expansion of self-generation facilities for metropolitan areas
< Generation Mix Forecast by Capacity Share (%) >
2013
(actual outcome)
2029
Distributed
Power
Generation
(GWh)
Renew.
4,428
39,748
(5.3%)
DHCS
16,871
29,426
(4.0%)
Non-Utility
20,021
23,941
(3.2%)
Total
41,320
93,115
Share of Distributed Gen.
7.6%
12.5%
Nuclear
Coal
LNG RE
DHCS
Oil & Pump
2014
22.2
28.2
28.7
6.7 5
9.1
7th Plan (‘29)
23.4
26.8
20.6
20.1
5.5
3.6 12

13. Enhancing Renewables Investment
Continue RE
investment
(780 Billion won
by 2015)
7 on-shore wind
power projects
(208MW)
Enforcement of
RFS system
in June, 2015
Expand
solar PV licensee
or small
sized firms
financial
support for
SMEs
More gov
RE+ESS 13

14. Opportunity for Enhancing Energy Security
Continue overseas resource development investment
Expansion of gov’t oil stockpile
■ Energy Imports (2013)
■ Oil Stock Status (By Apr, 2014)
(Unit : MMb)
Category
Capacity
Oil reserves
Duration
Days
(IEA standard)
(consump)
Crude
Product
Total
Gov
146.0 78 13 91
124 36
Priv
145.4 48 58
106
130 42
291.4
126 71
197
254
* Excluding International Joint Stockpile : 38MMb 14

15. Safety- First Nuclear Power
Increasing investment to improve existing nuclear facilities (‘12-’17, 1.1 trill. won)
Expanding low-and-intermediate-level radioactive waste disposal facilities (#1 in operation since Aug. 2015, #2 will be built by 2019)
Enacting “Basic Plan for Spent Fuel Management”
■ Unplanned Outrage Rate ( Average)
■ NPP Operational Safety Performance Indicators
(‘15. 1Q) 15

16. Concluding Remarks 03 16

17. Concluding Remarks
Policy environment and policy measures may not be much different between countries in the face of the same global constraints.
Korea’s policy measures are customized practical ones
Safety-based nuclear power expansion, New industry and renewable energy investment, Energy security enhancement, etc.
Opportunities for mutual benefit between Czech Republic and Korea and others from cooperation for developing policy and technology (esp. nuclear sector), sharing experiences and information, and promoting business in energy area. 17