OECD "South Korea Ranks Last Among 36 Countries in Renewable Energy Share"... Recommends Electricity Price Increase

"Minimal Achievements in the Environmental Sector" in 'Korea Economic Report 2020'

[Asia Economy Reporter Moon Chaeseok] The Organisation for Economic Co-operation and Development (OECD) has recommended improvements, stating that South Korea's renewable energy policies remain insufficient in addressing global climate change and that electricity prices are excessively low.

In the '2020 OECD Economic Survey of Korea' released last August, the OECD evaluated South Korea's policy performance across various sectors including economic growth, labor market, and environment, making these remarks.

The OECD report assessed that South Korea has a "low level of environmental quality by OECD standards" and that "environmental performance remains minimal."

It particularly pointed out that the share of renewable energy in primary energy supply, including oil, natural gas, and coal, is relatively low. This share was only 2%, ranking last among the 36 countries surveyed.

Conversely, the proportion of fossil fuels in primary energy supply was 80%, with coal accounting for 31% of that. This figure is higher than most other OECD countries, according to the analysis.

Among the 36 surveyed countries, only Estonia (71%), Poland (48%), Czech Republic (35%), and Australia (35%) have a higher coal share than South Korea.

The OECD also issued a warning regarding fine dust (particulate matter).

Although air quality temporarily improved in the first half of this year due to seasonal fine dust management, favorable weather conditions, and reduced activity amid the COVID-19 pandemic, the majority of the population remains exposed to fine dust concentrations far exceeding the World Health Organization (WHO) threshold.

In particular, Seoul's fine dust concentration, approximately twice the WHO standard, significantly increases premature mortality rates and adversely affects children's health, the report analyzed.

The OECD emphasized, "The South Korean government is implementing additional measures, including the closure of coal-fired power plants, aiming to reduce domestically generated fine dust by 35% by 2024 compared to 2016 levels. However, continuous efforts are necessary to lower concentrations below WHO standards."

Alongside this, the OECD stated that achieving the government's announced goal of reducing greenhouse gas emissions to 536 million tons by 2030 (a 24.4% reduction from 709.1 million tons in 2017) requires "comprehensive measures."

Previously, in July 2018, the government committed to reducing greenhouse gas emissions by 24.4% from 2017 levels through the '2030 National Greenhouse Gas Reduction Basic Implementation Plan.'

On the 4th, the Ministry of Environment submitted the 'Key Contents of the National Greenhouse Gas Reduction Plan (NDC) Renewal' to the office of Assemblyman Yang Yi-won of the Democratic Party, maintaining the same target.

Meanwhile, the OECD suggested reconsidering the current energy policies, which include excessive capacity payments (CP) and carbon emission cost compensations for coal-fired power plants.

The OECD also criticized South Korea's low electricity prices.

"The policy of cheap electricity prices hinders not only the market entry of renewable energy but also future investments in electricity demand management," it evaluated.

It emphasized that as the economy recovers, electricity prices should be gradually increased considering costs, and subsidies should be provided regardless of energy use to protect vulnerable groups.

South Korea is among the countries with the lowest electricity prices worldwide.

According to the '2018 Household Electricity Prices' report released by the International Energy Agency (IEA) in the first half of this year, South Korea's household electricity price was $110.5/MWh, ranking third cheapest among 33 surveyed countries after Mexico ($62.9/MWh) and Turkey ($103.9/MWh).

This price is less than one-third of the most expensive Denmark ($358.0 USD/MWh) and about half that of Japan ($239.0 USD/MWh).

Korea Electric Power Corporation (KEPCO) has repeatedly stated that it is considering introducing a fuel cost linkage system in the year-end electricity rate reform plan.

This content was produced with the assistance of AI translation services.