They Called It Eco-Friendly Coal Power, But It's "Out"... Energy Policy Drifting with Each Administration

IGCC, a National Project... Useless After 5 Years Due to Moon's Coal Phase-Out Policy

[Sejong=Asia Economy Reporter Kwon Haeyoung] #Korea Western Power was praised as a ‘low-pollution power generation technology’ after commercializing for the first time in 2016 a technology that extracts gas from coal and utilizes it for electricity production as a national project. It was recognized as an eco-friendly power generation method because it emits less greenhouse gas than conventional coal power generation. Because of this, it even received tax benefits such as exemption from individual consumption tax on bituminous coal. However, the ruling party, the Democratic Party of Korea, effectively introduced a bill to phase it out for the reason of ‘coal phase-out,’ putting it in crisis just five years after commercialization. In particular, the government, which led the national project, expressed support for this. There is an evaluation that energy policies change with each administration, causing repeated troubles for power companies rather than establishing a long-term plan.

According to related industries and the National Assembly on the 22nd, the government recently conveyed to the National Assembly its agreement with the ruling party’s amendment to the ‘Act on the Development, Use, and Spread of New and Renewable Energy,’ which excludes Integrated Gasification Combined Cycle (IGCC) from new energy. Earlier, Democratic Party lawmakers Lee Soyoung and Kim Seonghwan stated through the amendment that IGCC should be excluded from new energy. However, the government added the opinion that tax benefits should be maintained due to trust issues.

An official from the Ministry of Trade, Industry and Energy explained, "As a result of operating IGCC power plants, it was found that costs are higher and efficiency is lower than initially expected," and added, "We conveyed to the National Assembly the opinion that trust protection for existing operators is necessary, so existing benefits such as exemption from individual consumption tax on the raw material bituminous coal should be maintained."

IGCC is a method that converts coal into gas and then produces electricity. Overseas countries such as the United States and Japan have actively operated it, and Korea Western Power also started the Taean IGCC project in 2006 as a national research and development project. However, after the current government took office, the trend shifted to coal phase-out, turning IGCC into a target for elimination. In practice, it was found that the initial investment cost is high and greenhouse gas emissions are twice as much as natural gas combined cycle power generation.

Power companies are struggling. In the energy transition process toward carbon neutrality by 2050, the ‘right then, wrong now’ style of rushed legislation could not only impose performance burdens but also eliminate incentives for developing eco-friendly technologies. Korea Western Power, which led technology development, is unlikely to properly recover the investment cost of 1.7 trillion won. Korea Western Power has been struggling in the red for three years due to the coal phase-out policy.

The IGCC power plant project that Korea East-West Power planned to build in Namhae, Gyeongnam, in partnership with POSCO Construction and Doosan Heavy Industries is also facing the risk of collapse.

An energy industry official said, "If IGCC is phased out from eco-friendly energy, not only will the performance of power companies deteriorate, but the necessity for developing eco-friendly technologies will also disappear," adding, "While energy transition for decarbonization is important, if technologies developed as national projects are suddenly phased out, the credibility of national energy policy will also decline."

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