Transcript Two Challenges: Low Oil Price and GHG Emission Reductions 01

Global Energy Problems and
Counter Policies and Measures
of Korea
MOON, Young Seok, Ph. D.
Korea Energy Economics Institute
Contents
01
Two Challenges: Low Oil Price and GHG Emission
Reductions
02
Five Counter Policies and Measures of Korea
03
Concluding Remarks
2
01
Two Challenges: Low Oil Price and GHG Emission
Reductions
3
Impact of Low Oil Price on Korean Economy
 For a 10% drop in oil price by supply side causes alone, economic
impact on GDP growth rate and income would be 0.2%P and
0.3%P, respectively, for the past 14 years since 2001.
- Less impact of oil price change than previous 14-year period
< Impact of a 10% Drop of Oil Price on Korea Economy >
(%P)
Period
GDP
Cons.
Invest
CPI
Current
A/C
(bill. $)
2001.1/4~2014.2/4
0.16
0.06
0.10
-0.14
5.2
0.33
1988.1/4~2002.4/4
0.31
0.58
0.13
0.03
2.3
0.80
GNI
4
Impact of Low Oil Price on Korean Economy
 A 10% drop in oil price lowers production costs of industry as a
whole by 0.67% (Japan 0.34%, China 0.36%)
<Estimated Cost-Down Effects in Korean Industries of a 10% oil price drop >
• Manufacturing: Average: 1.04%, (Oil products: 7.92%, Petrochemical : 2.02%)
-> Export of Manufacturing increases by 0.55%
• Service: 0.28%
Need to business re-alignment and
structural reform to cope with
challenges against industrial
competitiveness
5
KOREA’s Emissions Issues
• Rapid increase in GHG Emissions: 3.9% annually
• Increasing emission share of power generation due to high demand partly
caused by low electricity price and coal-fired plants
• Significant reduction required to hit the emissions target
■
GHG Emissions Trend
■
Trend vs. Target
■
Share of Power Gen
(unit: mil. tCO2eq)
6
Challenges and Opportunities
Korea’s major
industries facing
low growth
Need for
developing new
growth engine
More investment
capability
Transform to a
low-carbon
high-efficiency
energy system
Take the current changing environment, e.g., low oil
price, stricter response to climate change, as an
opportunity to become an energy powerhouse
7
02
Five Counter Policies and Measures of Korea
8
Counter Policies and Measures of Korea
Nurture Energy-Related New Industry
Act on the 7th Basic Plan for Power Supply and Demand
Induce More Investment in New/Renewable Energy
Take Low Oil Price as Opportunity for Enhancing Energy Security
Enact Trustworthy Safety-First Nuclear Policy
9
Energy-Related New Industry
Basic Concept
 An industry that create new markets for energy efficiency
improvements and reduce GHG emissions, creating a new
growth engine
 By innovating the way energy is produced and consumed and
by introducing new business models
 Through convergence between existing energy industries and
ICT, manufacturing and financial sectors
10
Energy-Related New Industry
Future Plans
■
To increase investment by initiating financial support to
promote private sector investment, developing ‘locally’
customized energy-related business models
■
To export energy-related new business models by utilizing
Green Climate Fund
■
To enact a special law on Energy-Related New Industry to
lay an institutional foundation to nurture the Industry
11
11
7th Basic Plan for Power Supply /Demand
Low carbon Gen Mix for Post 2020
• Decreasing Share of coal-fired power
• Replacing aged plants by requiring environmental performance
• increase share of nuclear plants (23.4% by 2029) and RE (20.1% by
2029)
Reserve margin:
22%↑
Peak demand
12%↓
Power Consumption
14.3%↓
Enhancing Distributed Gen.
• Minimizing new transmission lines and large-scale power plants
• Market incentives for distributed generation
• Expansion of self-generation facilities for metropolitan areas
< Generation Mix Forecast by Capacity Share (%) >
Nuclear
2014
7th
Plan
(‘29)
22.2
23.4
Coal
28.2
26.8
LNG
28.7
20.6
RE
6.7
20.1
DHCS
5
5.5
Oil &
Pump
9.1
3.6
2013
2029
Renew.
4,428
39,748
(5.3%)
DHCS
16,871
29,426
(4.0%)
Non-Utility
20,021
23,941
(3.2%)
Total
41,320
93,115
7.6%
12.5%
(actual outcome)
Distributed
Power
Generation
(GWh)
Share of Distributed Gen.
12
12
Enhancing Renewables Investment
More gov
support for
RE+ESS
Expand
solar PV licensee
or small
sized firms
Expand
financial
support for
SMEs
Enforcement of
RFS system
in June, 2015
Continue RE
investment
(780 Billion won
by 2015)
7 on-shore wind
power projects
(208MW)
13
13
Opportunity for Enhancing Energy Security
 Continue overseas resource development investment
 Expansion of gov’t oil stockpile
■ Energy Imports (2013)
■ Oil Stock Status (By Apr, 2014)
(Unit : MMb)
Duration
Days
Oil reserves
Category
Capacity
Gov
Duration
Days
Crude
Product
Total
(IEA
standard)
(consump)
146.0
78
13
91
124
36
Priv
145.4
48
58
106
130
42
Total
291.4
126
71
197
254
78
* Excluding International Joint Stockpile : 38MMb
14
14
Safety- First Nuclear Power
 Increasing investment to improve existing nuclear facilities (‘12-’17,
1.1 trill. won)
 Expanding low-and-intermediate-level radioactive waste disposal facilities (#1
in operation since Aug. 2015, #2 will be built by 2019)
 Enacting “Basic Plan for Spent Fuel Management”
■ Unplanned Outrage Rate (2012-14 Average)
■ NPP Operational Safety Performance Indicators
(‘15. 1Q)
15
15
03
Concluding Remarks
16
Concluding Remarks
 Policy environment and policy measures may not be much
different between countries in the face of the same global
constraints.
 Korea’s policy measures are customized practical ones
 Safety-based nuclear power expansion, New industry and renewable
energy investment, Energy security enhancement, etc.
 Opportunities for mutual benefit between Czech Republic and
Korea and others from cooperation for developing policy and
technology (esp. nuclear sector), sharing experiences and
information, and promoting business in energy area.
17