South Korea electricity plan can’t break away from LNG
LNG imports have become a political issue in South Korea, pitting an entrenched fossil fuels sector against a growingly concerned populace.
Under increasing international scrutiny over its emissions reductions targets and policies, South Korea is trying to reconfigure its power sector, which still relies heavily on LNG imports.
Against this backdrop, the country’s Ministry of Trade, Industry and Energy recently finalized its 11th Basic Plan for Long-Term Electricity Supply and Demand (BPLE).
The BPLE is a long-term power supply blueprint that calls for expanding carbon-free electricity, including nuclear power, solar and wind power, and hydrogen.
A Yonhap news report said that the plan projected a faster increase in electricity demand than in the past since South Korea is developing a robust semi-conductor industry, seeing a boom in AI data construction and an electrification transition, which also includes EV distribution expansion.
The plan forecasts that the country’s electricity demand will increase, compared to current levels, by some 30 percent by 2038.
Missed UN renewables targets
However, the BPLE has largely been criticised by South Korean and international journalists and analysts. A recent Institute for Energy Economics and Financial Analysis (IEEFA) report said that the plan misses the mark. Though the BPLE aims to achieve the country’s decarbonisation goals by tripling renewable energy capacity to 121.9 gigawatts (GW) by 2038, compared to only 30 GW in 2023, it nonetheless fails to triple capacity by 2030 as pledged at the 2023 UN Climate Change Conference.
Janghyeok Lim, Policy Analyst at Seoul-based Solutions for Our Climate (SFOC), told Gas Outlook that the 2030 renewables target under the plan is not ambitious enough. “In order to quickly develop renewable energy, solar power expansion has to be prioritised,” he said.
“However, solar power development is being limited by distancing regulation that mandates solar panels be installed away from roads and buildings,” he added.
“Currently, the distancing regulation is pervasive across Korea, which means there’s not enough space to install new solar PV. But on the wind energy front, Korea recently had a breakthrough in passing the offshore wind promotion act. We hope that this will expedite the wind power development moving forward.”
The BPLE also prioritises greenhouse gas (GHG) emitting LNG-fired power production along with still-expensive Small Modular Reactors (SMRs) to meet additional power demand from the country’s growing AI and semi-conductor sector, the IEEFA report added. SMRs are advanced nuclear reactors that have a power capacity of up to 300 MW per unit, which is about one-third of the generating capacity of traditional nuclear reactors.
The growth of AI data centres in the Asia-Pacific region is either good news or cause for alarm, depending on an individual’s perspective. In 2023, the region’s rapid growth in cloud computing, digitalisation and 5G usage helped total operational data capacity reach some 10.6 GW, a Wood Mackenzie report found. This development will help provide jobs and upward mobility for many in the region.
South Korea, for its part, is building one of the world’s largest AI data centres. The centre, to be built in Jeollanam-do Province, has a planned capacity of 3 GW with an estimated cost of US$35 billion and a 2028 completion date. Amin Badr-El-Din, one of the project developers, said that it’s “more than just a technological milestone; it’s a strategic leap forward for Korea’s global technological leadership.”
However, most of the increased electricity demand for this new power-intensive data centre will come from gas-to power projects, including the CO2 and methane emissions that can be found across the entire gas value chain.
Gas, when used for the power sector, emits at least half of the emissions as does coal, the world’s dirtiest burning fossil fuel. Methane leakage is even worse. Methane is around 90 times more potent at trapping heat in the atmosphere over a 20-year period than CO2, according to the US Environmental Protection Agency.
Legacy of LNG over-reliance
South Korea’s continued reliance on LNG shouldn’t come as a surprise. The sector still wields considerable economic and political power in the country. Despite a population of only 52 million people, South Korea remains the world’s third largest LNG importer, after China and Japan, respectively, taking in 47.2 million metric tons of the super-chilled fuel in 2024.
“LNG infrastructure is highly capital-intensive and politically entrenched,” Lim said. “State-owned and private utilities, pipeline operators, and gas trading companies have strong political will to protect sunk costs and ensure high utilisation of LNG terminals and gas-fired plants.”
He added that many of these actors are either government-affiliates or enjoy close relationships with policymakers, giving them disproportionate influence over national energy strategy.
Even if South Korea tries to pull back more on LNG usage, geopolitical developments could soon get in the way. President Donald Trump is pushing U.S. trading partners to offset trade imbalances by procuring more U.S. LNG. South Korea, a top U.S. ally and trading partner, has already indicated that it will buy more U.S. energy imports and likely cut long-term off-take deals with the yet-to be built Alaska LNG project, a Trump favourite.
In a speech to the U.S. Congress on March 4th, Trump said that his administration is working on “a gigantic natural gas pipeline in Alaska, among the largest in the world, where Japan, South Korea and other nations want to be our partners with investments of trillions of dollars each.”