S. Korea plans energy U-turn away from coal, nuclear

The plan by the new administration of President Moon Jae-in, which took power in early May would move a notable laggard in renewables toward green energy, responding to public concerns over air pollution and nuclear safety. (Reuters)
Updated 04 June 2017
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S. Korea plans energy U-turn away from coal, nuclear

SEOUL: A proposed energy U-turn by South Korea’s new government would put the environment at the center of energy policy, shifting one of the world’s staunchest supporters of coal and nuclear power toward natural gas and renewables.
If implemented, the ambitious plans by the world’s fourth-biggest coal importer and No.2 liquefied natural gas (LNG) buyer will have a big impact on producers. South Korea’s LNG imports could jump by more than 50 percent by 2030, while coal shipments could peak as early as next year.
But experts warn that any move to halt construction of a raft of new coal and nuclear plants, many of which are already being built, could threaten energy security.
The plan by the new administration of President Moon Jae-in, which took power in early May would move a notable laggard in renewables toward green energy, responding to public concerns over air pollution and nuclear safety.
“The government cannot neglect people’s demands and in the long term, it is right to pursue clean and safe energy. But there will be many challenges,” said Sonn Yang-Hoon, Economics Professor at Incheon National University.
South Korea, Asia’s fourth-largest economy, gets 70 percent of its electricity from thermal coal and nuclear reactors and offers tax benefits to both sectors to ensure abundant electricity at affordable prices.
While Moon’s energy road map is still being hashed out, his staff say that care for the environment will play a central role in forming policy.
“Currently taxes are imposed on gas for power generation and we plan to correct the skewed tax system by seeking to levy environmental taxes on coal and nuclear,” said Paik Ungyu, an energy engineering professor at Hanyang University who advises Moon on energy policy.
The government hopes to boost gas-fired generation from about 18 percent now to 27 percent by 2030 and boost the use of renewables, now mainly hydro, from roughly 5 percent to 20 percent, said Paik.
At the same time, coal’s contribution would fall from about 40 percent to 21.8 percent and nuclear from 30 percent to 21.6 percent, based on power demand growth of 2.2 percent.
A key short-term option is to boost the operating rates of gas-fired power stations from 40 percent to 60 percent through the reduction or removal of tariffs on gas imports. Coal and nuclear power are exempt from import tariffs.
The price of gas-fired electricity in March was 129.51 won ($0.1160) per kilowatt-hour (kWh), 40 percent more than coal and nearly double the cost of nuclear power, according to data from Korea Electric Power Corp. (KEPCO).
Long-term energy economics favor policy change, with renewable costs falling sharply due to improved technology and LNG prices sliding over 70 percent from their 2014 peak on a huge supply increase, especially from Australia and the US.
“If there are no new nuclear and coal plants, the potential LNG imports could be 46-49 million tons per annum depending on the success of the renewable targets,” said Chong Zhi Xin, principal Asia LNG analyst at energy consultancy Wood Mackenzie.
Moon this month ordered a temporary halt on 10 old coal-fired power plants and outlined plans to bring forward their permanent closure.
More controversially, he pledged during his campaign to review existing plans to build nine coal power plants and eight nuclear reactors, including the part-completed Shin Kori No.5 and No.6, citing safety concerns.
Experts estimate up to $2.7 billion has already been committed on Shin Kori No.5 and No.6 by state-run Korea Hydro & Nuclear Power Corp. Work has also started on the coal plant projects, although all are less than 10 percent complete.
If forecasts suggest that not building the new plants means South Korea will be unable to meet projected electricity demand, then the government’s pledges will not be feasible, said Kim Nam-il, a senior research fellow at the Korea Energy Economic Institute
The Independent Power Producer Association (IPPA), which represents the coal and gas industries, estimates that nearly $2 billion has also been spent on the nine coal-fired plants under threat, raising the issue of compensation.
“The government cannot unilaterally push cancelations as private companies have already invested in the projects. If the government scraps a plan, it would have to compensate properly,” said Yoo Seung-Hoon, an energy policy professor at Seoul National University of Science & Technology.


Tunisia to almost double gas production this year

Updated 58 min 21 sec ago
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Tunisia to almost double gas production this year

  • The project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP
  • It will include investments of about $700 million

TUNIS: Tunisia will almost double production of natural gas to about 65,000 barrels of oil equivalent per day this year, the industry and energy minister, Slim Feriani, told Reuters on Friday.
The country’s gas output will jump from 35,000 barrels of oil equivalent per day (boed) when the southern Nawara gas field comes onstream in June, Feriani said.
“We will raise our production by about 30,000 barrels of oil equivalent when the Nawara project in the south will start,” Feriani told Reuters in interview.
This project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP with investments of about $700 million.
Feriani also said Tunisia was seeking to attract about $2 billion in foreign investment to produce 1,900 megawatts (MW) of renewable energy in three years. “We will start launching international bids for the production of renewable wind and sun energy. We aim to produce 1,900 MW by investment of up to $2 billion until 2022,” he said.
This would represent about 22 percent of the country’s electricity production.
PHOSPHATE
Tunisia also plans to raise production of phosphate from 3 million tons to 5 million in 2019, he said.
Raising the output will boost economic growth and provide revenue to revive its faltering economy, the minister said.
Phosphate exports are a key source of foreign currency reserves, which have dropped to levels worth just 82 days of imports, according to Tunisia’s central bank.
Tunisia produced about 8.2 million tons of phosphate in 2010 but output dropped after its 2011 revolution. Annual output has not exceeded 4.5 million tons since 2011.
Feriani said lower production has caused Tunisia to lose markets and about $1 billion each year.
Phosphate exports were hit by repeated protests in the main producing region of Gafsa, where unemployed youth demanding jobs blockaded rail transport.