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Historical Overview of the Korean Energy Policy

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Historical Overview of the Korean Energy Policy06



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Title Historical Overview of the Korean Energy Policy
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Material Type Report
Date 2015
Language Korean
File Type Theme
Subject Industry and Technology < Energy
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Abstract

Sub-Theme 2 |  Historical Overview of the Korean Energy Policy





In the Korean energy context, energy problems have been endogenously and exogenously emerging in a successive manner. Accordingly, energy policy regimes have changed in the course of time. In the 1960s, sufficient and cheaper supply of energy required for the successful take-off of nation's economy was the key condition. During the oil shock in 1970s and 1980s, the vulnerability of nation's energy system to external shocks was the major issue. Thereafter, the degrading environment due to the increasing use of fossil fuels ensued as another issue of a top priority to be addressed. There also emerged the problem of obsolescent governance structure on industry management, owing to the increasing scale and complexity of energy industries. In recent years, as a result of higher oil price trend and the escalating global climate change issue, the sustainability of Korea's energy system has become a national agenda of a top priority.




[Overview of the Korean Energy Policy]

 









































Period Problem Policy Regime
1940s~1950s Energy Poverty Development of domestic coal
1960s Limited energy supply for economic take-off Oilization
1970s~1980s Vulnerable energy security Energy security
1980s~1990s Degradation of environmental quality Energy-environment policy
1990s~2000s Obsolete governance of energy industry managem’t Market mechanism
2000s~present Unsustainability Energy technology

 policy





1. Domestic Coal Development to overcome Energy Poverty (1950s)



In the 1940s and 1950s, energy poverty was an issue of a top-priority, calling for a concerted national response. Entering the 1950s, policies aiming at the development of domestic coal, mostly anthracite, were implemented. Many railways were constructed to connect coal mines and consumers along with construction of coal-fired power plants. As a result, the share of coal in the primary energy supply had fast increased from 19.2% in 1955 up to 43.6% in 1965, which planted seed for modern industrialization.





2. Oilization Policy Regime (1960s~1970s)



The first 5-year economic development plan (1962~1966) began in 1962. In order to achieve a rapid economic growth, the Korean government shifted its strategy to oilization policy away from coal-based strategy, realizing the limit of domestic coal production not enough to fuel the massive economic take-off. The oil-based development regime triggered the construction rush of oil refineries, which results in oil consumption galloped at an annual growth rate of over 30% from the past annual 2%. The oilization of energy system had improved the overall fuel efficiency which again devoted to the successful take-off of the Korean economy.





3. Energy Security Policy Regime (late 1970s~1980s)



In response to the two oil shock in the 1970s, the Korean government adopted energy security enhancement policies. Energy security measures such as diversification of energy sources and suppliers, conservation and oil stockpiling, the construction of nuclear and bituminous coal-fired power plants along with the establishment of an institute specialized in energy conservation (currently KEA) and a little later an independent energy ministry (Ministry of Energy & Resources: MOER) in1978. Overall, the economic hardship during the 2nd oil shock era and the stringent policy responses thereof brought forth a significant structural change in Korea's energy system.





4. Environmental Protection Policy Regime (1980s~1990s)



Air-pollution level had increased significantly in urban areas, and became a source of great concern in the 1970s and1980s. This degradation of air quality was due to two causes: the ever-increasing use of fossil fuels and the lack of well-organized environmental policy. The environmental policy became one of the top priority national agenda, starting with the enactment of the Environmental Conservation Law in 1977, followed by the establishment of the Agency of Environment in 1980 (currently, the Ministry of Environment). Indebted to the shift in energy mix and the stringent emission control, the once-deteriorating environmental quality improved slowly to reach the standards recommended by international health institutes





5. Market-Oriented Policy Regime (1990s~2000s)



Korea's energy market was dominated by the government through stringent regulation, intervention, subsidization and the operation of government-running monopolies. However, the Korean government had introduced more market mechanism into the nation's macro-economic management, allowing more autonomy to the private actors and, thereby, enhancing innovations required for further economic growth. The reform policy consisted of three strategies: to provide more autonomy in management decisions, to make the relevant industry competitive by way of de-monopolization, and finally to privatize public enterprises. The Public Enterprise Management law was enacted to facilitate the process, which was culminated in a massive restructuring scheme on public energy monopolies (KEPCO, KOGAS), which remains only as a half success.





6. Energy Technology Policy Regime (2000s~)



The first agenda of Korea's energy technology policy is to develop technological competitiveness of Korea's energy-related industries up to the level of advanced nations. The rapid evolution of technology policy started with the 1st National Energy Technology Development Plan (2006~2015). Thereafter, a series of plans for energy technology development have been introduced by then newly established the Korea Institute of Energy Technology Evaluation and Planning (KETEP). Hundreds of R&DD projects are organized and promoted under the long-term technology development roadmap. The projects are categorized into four major fields: energy efficiency, new and renewable energy sources, clean fossil fuel, and power generation and nuclear energy.