An Introdution of Energy Situation and Policy of ROK

An Introdution of Energy Situation and Policy of ROK

September 2010

Park, Jimin

Contents

Energy Situation

Energy Issues and Challenges

Energy Policy and Target toward 2030

I. Energy Situation

1. Economic Growth and Energy Consumption

ROK has shown a rapid growth in economy and energy consumptionduring 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

100100

400400

700700

1,6001,600

1,9001,900

1,0001,000

1,3001,300

’70’70 ’74’74 ’78’78 ’82’82 ’86’86 ’90’90 ’94’94 ’98’98 ’02’02 ’09’09

GDP & Energy Consumption

19.7MTOE

240.5MTOE

70.2Trillion won

948.9Trillion won

GDP(Trillion won)

19701970 19981998 20092009 (70-98)(70-98)

Energy Con.(Mtoe)

(98-09)(98-09)

Per Capita Energy

(toe)

Energy/GDP(toe/million won)

AAGRAAGR

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)(70-09)

3.61 4.94

980

0.29 0.25

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%

6.6% 2.9% 5.5%

-0.4% -1.3% -0.6%

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 Source Final Energy Demand by Sector

’75’75 ’90’90 ’09’09

RE&Others

Oil

Coal

LNG

Nuclear

27.6MTOE

56.8

13.929.3

53.8

26.2

14.22.6

3.2

93.2MTOE

43.4

25.3

14.9

2.5

13.8

240.5MTOE

’75’75 ’90’90 ’09’09

23.4MTOE

75.1MTOE

182.7MTOE

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

3. Projection of Energy Demand

Primary Energy Demand by Source (BaU)

RE&Others

Oil

Coal

LNG

Nuclear

233.4MTOE

342.8MTOE334.3

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 thehigh 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

II. Energy Issues and Challenges

8

Due to the lack of indigenous natural resources, overseas energy dependencyhas 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

10.810.8

22

44

66

88

1010

1212

1414Non-MetallicNon-Metallic

MetallicMetallicTotalTotal

[billion USD]

5.15.1 4.64.6 4.54.5

6.16.1

7.947.946.936.93

10.510.5

12.312.3

’07’07’06’06’05’05’04’04’03’03’02’02 ’08’08 ’09’09’00’00 ’01’01

14.514.5

Overseas energy dependency : Overseas metallic minerals dependency :

Overseas Energy Dependency

amount (billion USD)amount (billion USD)Import (MTOE)Import (MTOE)

33.733.7 32.332.3 38.338.349.649.6

66.766.7

85.685.6

95.095.0

141.5141.5

215.4215.4 214.8214.8 214.9214.9 226.6226.6 228.3228.3 238.7238.7 246.8246.8 255.5255.5 257.1257.1

91.291.2

’01’01 ’02’02 ’03’03 ’04’04 ’05’05 0606 ’07’07 ’08’08 ’09’09

Also, overseas dependency of metallic minerals has reached to 98.8%

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

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

CO2 Emission by Countries(2006)

Greenhouse Gas Emission

Energy

Industry Process

Agri. / Waste

USA China Russia India

4489th

Japan

5,6971st

5,6072nd

1,2504th

1,2135th

’90’90 ’00’00 ’05’05

297.5297.5

528.6528.6591.1591.1

83.3%83.3%

6.7%6.7%10.0%10.0%

84.3%84.3%

11.0%11.0%4.7%4.7%

Transport19.7%

Industry31.5%

Generation34.3%

12.4%

Others2.1%Household

& Commercial(unit: MTCO2)

(unit: MTCO2)

Korea

1,5873rd

III. Energy Policy and Target toward 2030

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 1Strategy 1 Strategy 2Strategy 2 Strategy 3Strategy 3 Strategy 4Strategy 4

1. National Energy Policy for Future Development

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- Key sources for renewable energy : bio-fuel, wind power, solar energyTarget for renewables share in energy mix : 11% (2030)Target for renewables share in energy mix : 11% (2030)

[1,000 TOE]

Supply Trend of Renewable Energy Target for Renewables (2030)

1,0001,000

’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’08

2,0002,000

3,0003,000

4,0004,000

5,0005,000

6,0006,000

0.36%

1.40%

2.06%

2.43%ShareShareSupplySupply

’08 ’30

GeothermalTide, Wave, OceanSolar photovoltaicHydroSolar thermalWindBiomassWaste material

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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 )

4,2724,272

3,1523,152

2007

26.0(35.5 )

1,7721,772

2010

1,8721,872

1987 1990 2000 2003 2007

762762

1,3721,3721,5721,572

1,7721,772

595966

3636 2828 28282626

3636404041414949

99

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 TransportHousehold

& Commercial

Others

300.4(Target)

240.5

342.8(improving

2.1% pa)

[MTOE]

Improving2.6 % pa

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 energyimporting 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

Japan China Italy Spain France

9%(’09)

22%27%(’08)

48%62%

97%RussiaRussia

Central Asia Central Asia

Middle East Middle East

AfricaAfricaSoutheast AsiaSoutheast Asia

AustraliaAustralia

South America South America

North AmericaNorth America

Korea

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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 reduction Carbon Absorption by forests

(unit: MTCO2)

2012 20202009

1,452

1,613

1,854

20202005

594

741

570

Reducing

30%

BAU

Target

(unit: MTCO2)

Thank you for your attention!!