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Minister Lee holds 25th Energy Commission meeting 2022-06-24

Trade, Industry and Energy Minister Lee Chang-yang held the 25th Energy Commission meeting at the Plaza Hotel Seoul on June 23, the first of its kind under the new regime.

Launched in 2006, the Energy Commission is headed by the Trade, Industry and Energy Minister and consists of relevant ministries’ officials and civil members. The recent meeting had two agenda items, namely the new regime’s energy policy directions and market-based efficiency enhancement measures.

Noting South Korea’s heavy reliance on energy-intensive sectors and energy imports, Minister Lee Chang-yang stated that Korea is substantially exposed to the volatility of global energy markets, and announced the establishment of Energy Policy Directions jointly developed with relevant ministries.

The first agenda is the new energy policy directions, which can be summed up in three major projects. One, becoming a nuclear energy powerhouse with strong ecosystem; two, establishing energy security by proactive resourcing and diversification of energy sources for creation of new industries and jobs; three, creating an economic ecosystem for carbon neutral, green investment and green consumption.

The above project tasks under the first agenda will be announced in further detail in July after more feedback from industry experts and interested parties.

The second agenda is to shift policy focus so that energy efficiency is at the center. Enhancing energy efficiency can help tackle challenges like high oil prices more effectively, while also reducing social and economic costs. Aware of the pressure that will be felt by energy consumers, the Ministry is striving to minimize burden and solve problems simultaneously.

South Korea is the world’s 10th largest consumer of energy but ranks among lower-efficiency nations, using 1.7 times more energy than OECD average and coming in 33rd put of 36 countries in terms of energy consumption rate. Unlike the decoupling of energy consumption and economic growth shown by countries like Japan and Germany, Korea’s graph indicates rather a coupling of the two.

By category, Korean industries take up 62 percent of the total energy consumption, followed by buildings and transport, and all three are still on the rise. Manufacturing businesses take up 90 percent of industrial energy consumption, 80 percent of which is attributable to steel, minerals and oil refining.

In view of these facts, the Ministry’s vision of Korea rising as a global energy powerhouse entails an innovation across industry, home and transport energy efficiency over the next five years, aiming to cut energy consumption rate by 25 percent.

For Korea’s industry, this requires mandating the recently introduced pilot project Energy Efficiency Resource Standards (EERS), which is also assessed as “effective” and “good policy” in the U.S. states when seeing that EERS-implementing states enjoyed a power reduction rate up to four times higher than that of non-implementing states.

For homes and buildings, the Ministry notes that policy improvements can prod voluntary civil participation. The “Energy Cash Back” pilot program, presently enforced in three districts, is to be expanded to 226 districts nationwide. The Ministry will cooperate with local governments to better manage efficiency targets and boost energy independence. Moreover, since larger and specialty vehicles account for 21 percent of transport energy despite taking up only 3.6 percent of total number of vehicles, mileage restriction is another relevant option.

The aforementioned energy efficiency enhancement measures are to be realized in tandem with digital platforms, introducing a Korean version of U.S.' “Green Button,” which is initially a data integration platform where a supplier’s energy consumption data can be viewed by consumers and 3rd party services provider.

Minister Lee remarked that the new government’s energy policy consists of two pillars: supply wise, there will be policy shifts back toward nuclear energy development, and demand-wise, enhancing energy efficiency is key. On these two pillars stand the new regime’s basic framework for energy policies.