How The Energy System Is Structured
South Korea’s electricity sector is not fully privatized as is the case in many other countries. The Korea Electric Power Corporation (KEPCO) is the monopoly that controls electricity retail sales, transmission, and distribution. Its shareholder composition is as follows: Korea Finance Corporation holds 32.90%, the Korean government 18.20%, foreigners 31.32%, the National Pension Service 7.07%, and others 10.51%. This means that KEPCO is de facto state-owned.
The power generation industry in Korea is liberalized. In order to increase electricity production through renewable energy, the Korean government encourages private investment and seeks to make the investment environment more market-friendly. However, as long as the electricity market is monopolized, the entrance of new renewable energy producers will be limited.
Minister Yoo Il-ho, Deputy Prime Minister for Economic Affairs and Finance, reported a governmental plan for the reform of major public institutions related to energy and the environment at the 2016 workshop for the heads of state-run enterprises on June 14, 2016. According to his briefing, the electricity sales market and the gas import and sales market, which have been monopolized by state-run companies, i.e. KEPCO and KOGAS, will be gradually privatized.
Sources of Energy
In terms of energy consumption, Korea spent $214.9 million total in 2014; 48.2% of the total energy consumption was from oil, 19.2% from electricity, 17.1% from coal, 10.8% from city gas, and 4.6% from miscellaneous sources including renewable energy.
Due to heavy dependence on hydrocarbon energy sources, Korea marked itself as the thirteenth largest GHG emitter in the world; Korea’s overall GHG emissions (excluding Land Use, Land-Use Change, and Forestry, or LULUCF) were 688.4 MtCO2e in 2012, representing a 1.4% share in global GHG emissions. According to the Intended Nationally Determined Contribution (INDC) submitted by Korea to the United Nations Framework Convention on Climate Change (UNFCCC),  Korea aims to reduce its GHG emissions by 37% from the business-as-usual (BAU, 850.6 MtCO2e) levels by 2030 in all economic sectors, which is equivalent to a 22% reduction from its emissions level in 2012.
This objective poses significant challenges, mainly due to the following reasons as indicated by the Korean governments in its INDC submission. First, Korea’s economy is heavily dependent on manufacturing that requires oil or coal as input materials. Energy consumption by the industrial sector occupies approximately 64% of the country’s total energy consumption, which results in significant GHG emissions. Second, the level of energy efficiency in major industries is already very high in Korea, limiting the country’s potential to further mitigate its GHG emissions. The Korean government assigned less than 12% of GHG reduction from the current BAU level to the industrial sector, which implies that the reduction burden on the electricity sector will be greater. In order to meet the goal, the reductions should be made mainly in the electricity sector, which is the leading energy producer in Korea.
Total energy production in Korea was 4.5 million tons in 2014. 72.6% of the total energy production was from nuclear energy whereas 21.3% was from renewable energy, 3.6% from hydropower, 1.7% from coal, and 0.7% from LNG in the same year.
Nuclear energy represents a major part of energy produced in Korea and is regarded as the most reliable alternative energy to better deal with Korea’s pledge at the Paris Agreement.
Profiles of Leading Energy Companies
KEPCO split its generation business into six separate subsidiary power generation companies in 2001, including Korea Hydro & Nuclear Power (KHNP), Korea South-East Power, Korea Midland Power, Korea Southern Power, Korea Western Power, and Korea East-West Power, while maintaining a monopoly in electricity retail sales, transmission, and distribution.
KHNP is the nuclear operator in Korea, fielding 24 nuclear reactors in the country (the total installed capacity equals 21,716 MW), while the other five power utilities are in charge of operating coal-burning and gas-burning thermal power plants. Therefore, KHNP, together with the Korean government, intends to increase nuclear power capacity even further; currently six more reactors are under construction and four more reactors are under preparation. However, as the level of public acceptance significantly decreases, especially after the Fukushima nuclear accidents, some efforts to site new nuclear power plants encountered strong local resistance and ended in failure. Interestingly, KHNP is the largest renewable energy producer as well. It runs 35 hydro power units (the total installed capacity equals 606.7 MW), 16 pumped-storage power units (4,700 MW), five solar power plants (56.25 MW), one fuel cell plant (58.8 MW), and one wind power plant (0.75 MW).
 KEPCO homepage
 Korea Energy Management Corporation (KEMC), “2015 Korea Energy Handbook”
 International Carbon Action Partnership ETS Detailed Information, “Korea Emissions Trading Scheme” (Last Update: 12 August 2016)
 Intended Nationally Determined Contribution (INDC) Submission by the Republic of Korea (Submitted on June 30, 2015)
 Won, Dong-kyu, “Special Report – Paris Agreement and Major Issues for Electricity Sector,” KEMRI Electricity Economy Review
 KEMC, “2015 Korea Energy Handbook”
 KHNP homepage
Submitted by Climate Scorecard Country Manager Eunjung Lim