"To Address Energy Gaps in Carbon Neutral Process, Nuclear Power Utilization Is Necessary"

[Asia Economy Reporter Jeong Hyunjin] In preparation for unexpected energy crises during the carbon neutrality process, there is a claim that nuclear power should be utilized as base-load energy and coal power generation should be gradually reduced.

On the 4th, the Federation of Korean Industries (FKI) analyzed the current situations of China, the European Union (EU), and others experiencing energy crises due to recent energy supply-demand imbalances and presented this opinion. Since last September, China has been suffering from a severe power shortage, causing factory shutdowns and other incidents. In Europe, power shortages have intensified mainly in Spain and Germany, where electricity generation heavily depends on natural gas.

The FKI analyzed that in China, the power shortage occurred because electricity supply, mainly from coal power generation, could not keep up with the power demand following economic recovery. From January to August this year, China's electricity consumption increased by 13% compared to the same period last year, whereas coal production, which accounts for more than 60% of power generation, increased by only 5.5% during the same period. As a result, coal prices rose by 49.8% compared to the beginning of the year.

Additionally, the FKI pointed out that floods in Shanxi Province, a major coal mining area in China, disrupted coal production, further worsening the power shortage. It was also understood that the Chinese government's carbon neutrality policy indirectly affected the stagnation of coal production. Due to power shortages, electricity supply was cut off in industrial regions centered on manufacturing such as Jiangsu Province and Guangdong Province, causing shutdowns of factories in energy-intensive industries like steel. As factory shutdowns occurred due to the power shortage, China's industrial production has continued to decline.

In the EU, recent abnormal weather weakened wind speeds, reducing wind power generation, which led to a rise in the price of natural gas, an alternative fuel. As of last September, the share of wind power generation in Europe was 9.3%, down 2.3 percentage points from 11.6% in September of the previous year. Natural gas prices increased more than 3.6 times compared to the beginning of the year (based on the Netherlands TTF-European natural gas benchmark), and electricity prices increased by 2.4 times in Germany, 2.8 times in the UK, 3.1 times in France, and 3.4 times in Spain compared to the beginning of the year.

The FKI stated, "As electricity prices rose, some energy-intensive industries such as steel and fertilizer stopped factory operations, causing damage to the industrial sector," and added, "The geopolitical issue of the EU importing more than 35% of its natural gas from Russia is also judged to have indirectly influenced the EU energy crisis."

The FKI explained that China and EU countries are planning to continue promoting coal and nuclear power generation to overcome this energy crisis. The Chinese government announced plans last month to build coal-fired power plants and develop new mines. Earlier in April, it also announced plans to build 20 new reactors by 2025. The UK decided last month to provide budgets for large-scale nuclear power projects such as Small Modular Reactors (SMRs), and France also announced plans to invest 1 billion euros (approximately 1.4 trillion KRW) in SMRs and others in the same month.

The United States is also considering energy supply measures for this winter as gasoline and coal prices have risen nearly 40% compared to the beginning of the year. The U.S. Office of the Director of National Intelligence released an analysis report last month identifying SMRs as a key future energy technology, and the Illinois state legislature passed a bill a month ago to extend the lifespan of a nuclear power plant scheduled to close.

Yoo Hwan-ik, Director of Corporate Policy at the FKI, stated, "Major countries such as China and the UK, facing energy crises, are announcing energy policies to continue promoting nuclear and coal power generation along with renewable energy development," and argued, "South Korea also needs to utilize nuclear power as base-load energy and gradually reduce coal power generation rather than rapidly cutting it to prevent energy gaps that may occur during the carbon neutrality process."

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