South Korea’s energy policies at risk from Yoon’s martial law gambit

• President Yoon Suk Yeol faces backlash over martial law
• Yoon a strong advocate for nuclear power at home, abroad
• Legislators are calling for resignation, impeachment

SINGAPORE (ICIS)– South Korea President Yoon Suk Yeol’s short-lived martial law declaration on the midnight of 4 December shocked the country, raising concerns on whether he can finish the term set to end in 2027 without being impeached, and putting uncertainty on Korea’s energy policies, should the office change hands, including strong support for LNG as a transition fuel and phasing out coal.

The opposition Korea Democratic Party already filed motions to impeach Yoon on the afternoon of 4 December. If the impeachment passes via the National Assembly, it would need to go through a judicial review and then a new election would be called in 60 days if upheld.

Yoon and his People Power Party are a minority in the legislature and have faced opposition roadblocks to ambitious energy policies that were a sharp change from predecessor Moon Jae In.

NUCLEAR

Yoon, who was elected in 2022, is a supporter of a growing nuclear power footprint at home and exports of nuclear plants, including recent efforts with the Czech republic, and vowed to increase the share of nuclear in the energy mix to above 30% by 2030.

Moon had declared that nuclear would be completely phased out since his term in 2017.

On 12 September 2024, Korea’s Nuclear Safety and Security Commission (NSSC) granted the construction permit for Shin-Hanul 3 and 4 reactors. This means four nuclear plants are underway by 2038.

Korea would further export 10 nuclear plants by 2030 under his envision, to potential buyers all over the world.

“The Democratic Party is not pro-nuclear, if they are elected after Yoon’s impeachment they might not start new projects but also not likely to kill the ongoing projects and export efforts due to NDC (National Determined Contribution) concerns”, a Korean academic familiar with the matter told ICIS.

“Nuclear is quite essential to achieve Korea’s carbon neutral goals”, he added. The country has a 2050 net-zero carbon target.

LNG DEMAND

South Korea relies heavily on fossil fuels for power generation. Imported LNG powers over a quarter of the Korean economy.

This number is projected to decrease due to rising share of nuclear and renewables.

South Korea’s Ministry of Trade, Industry and Energy MOTIE on 19 November said it has formed a “Coal-Fired Power Generation Transition Council” among five companies for an updated roadmap on phasing out coal plants due by the first quarter of 2025.

But the country’s LNG import grew by 7.5% from 39.34mtpa in 2023 (January-November), to 42.31mtpa in the same period of 2024, ICIS data shows.

“Short-term LNG demand will indeed be lower because of new coal power plants and renewables, but LNG need won’t be diminishing in the next ten years, because electricity consumption will grow due to data centers, semi-conductor industry and more abnormal temperatures,” the Korean scholar said.

South Korea is the world’s third largest LNG importer and has extensive power infrastructure to feed high-end manufacturing. As well, South Korean shipyards have completed 500 LNG tankers for export since 1994, according to the Ministry of Trade, Industry, and Energy (MOTIE) in April 2024.

Also in November, MOTIE announced pilot bidding for an LNG capacity market.

The newly introduced liquefied natural gas (LNG) capacity market is a competitive bidding process for new and new collective energy sources using LNG as the main fuel.

The country has also worked closely with Qatar on LNG supply agreements and on shipping – as well as on US projects via private companies.

EAST SEA DRILLING

In June, the president announced exploratory drilling for fossil fuels off its eastern shore, which could supply the country with oil and gas from four to 29 years, according to estimates.

The first drilling will begin in the later half of this month, and the initial results will be released in H1 2025, according to Korean media.

It remains unclear what results the exploitation will deliver by then, and whether a change of power will put an end to the project.

At the same time, Yoon’s latest poll rating slid to 25%, Korean media reported.

The Korean won weakened to just above 1,400 to the US dollar on 4 December from levels just above 1,300 won at the end of October, making imports more expensive at least in the short term, as the country’s main labor union called for a general strike and Yoon’s resignation.

The Bank of Korea and South Korea’s Finance Ministry pledged steps for stability, including 10 trillion won ($7.07 billion) in stock market stabilisation funds if needed via the financial regulator. (Roman Kazmin contributed to this article)