South Korea’s energy transition: A shift away from coal, impacting Australia’s exports
South Korea is taking a bold step towards a greener future, announcing its plan to phase out coal by the 2040s. This move, revealed at COP30, is a significant blow to Australian coal exporters, who have relied on the country as a major trading partner. But here’s the catch: South Korea is joining forces with a powerful bloc of 60 nations committed to ending their reliance on coal, a fossil fuel that has long been a cornerstone of global energy production.
The Korean Minister of Climate, Energy, and Environment, Kim Sung-whan, made the official declaration in Belem, committing to decommission 61 coal-fired power plants. 40 of these plants already have set closure dates, while the remaining dates will be decided based on economic and environmental considerations, with a detailed plan expected in 2024. The minister shared a vision for a future energy system where renewable sources take center stage, supported by nuclear power, while coal and gas play diminished roles.
Interestingly, South Korea’s renewable energy sector has been relatively small, but the government aims to change that. They plan to significantly boost wind and solar power, along with related industries such as energy storage and grid technology. This shift comes after South Korea faced criticism for initially pledging to phase out coal by the 2030s but later backtracking, claiming they only agreed to work on a plan to achieve this goal.
Currently, coal accounts for a substantial 22.3% of South Korea’s energy supply, making it the fourth-largest importer in the region. Australia has been a key supplier, providing both thermal coal for power generation and metallurgical coal for industrial processes like steel production. In August alone, Australia shipped 2.7 million tonnes of coal to South Korea, although congestion in Australian ports allowed Russia and Indonesia to temporarily surpass Australia as the top exporters.
While South Korea’s decision is a positive step for the environment, Adam McGibbon, a strategist at Oil Change International, points out a potential issue. He applauds the move but notes that South Korea has yet to take significant action on oil and gas, still investing public funds in new fossil fuel projects. Between 2020 and 2022, the country financed an average of $10 billion per year in overseas fossil projects, compared to only $850 million per year for renewable energy initiatives.
South Korea, along with Japan, has played a significant role in Australia’s gas production boom, providing state-directed investments that have been crucial for project development. From 2008 to 2014, Japan and South Korea contributed over $20.5 billion to key Australian gas projects, with Japan’s export credit agency, JBIC, providing the majority. Japan’s investments tend to focus on primary production, while South Korea’s investments lean more towards transport infrastructure.
And this is the part that might spark debate: As South Korea transitions away from coal, what does this mean for Australia’s coal industry? Will this shift create opportunities for cleaner energy sources, or will it lead to economic challenges for coal-dependent regions? The future of energy is a complex and evolving landscape, and South Korea’s decision adds another layer to this global conversation. Stay tuned as we explore the implications and potential outcomes of this significant energy transition.