South Korea’s trade ministry has announced a plan to phase out over 75% of the country’s coal-fired power plants by 2039, an ambitious effort to align the country with global decarbonization trends and reduce greenhouse gas emissions.

Introduced last week alongside the establishment of a “Coal Power Transition Taskforce,” the initiative reflects the ROK’s recognition of the need to transition from coal, which it currently relies on for roughly a third of its energy needs.

But the road map faces significant headwinds, and its success will hinge on whether the country can overcome energy security risks, economic disruptions from the transition and inertia in its adoption of renewable energy.

Without decisive action to address these issues, the coal phase-out risks becoming an aspirational goal that further exposes South Korea’s energy vulnerabilities.

ENERGY SECURITY RISKS

South Korea’s reliance on imported energy is already a critical vulnerability for the country, and the coal phase-out threatens to exacerbate this. By replacing coal with liquefied natural gas (LNG) and nascent technologies such as green hydrogen and ammonia, the country risks deepening its dependence on geopolitically sensitive imports.

The volatility of LNG markets, influenced by tensions in the Middle East and trade disputes involving the U.S. and China, could leave South Korea vulnerable to supply disruptions and price spikes.

Hydrogen and ammonia, touted as the cornerstones of South Korea’s zero-carbon strategy, are still far from becoming viable alternatives to coal. Their infrastructure is underdeveloped, and scaling them to meet energy demand will require substantial investment and time.

These delays could create critical gaps in energy supply as coal plants are decommissioned, raising the possibility of power shortages or increased energy costs.

The road map’s reliance on these technologies without addressing the immediate risks tied to LNG exposes a strategic blind spot. 

A liquefied natural gas carrier | Image: Canva

REGIONAL ECONOMIC STRAINS

South Korean regions dependent on the coal industry, such as Chungcheong and Gangwon provinces, face significant risks of job losses if coal-fired plants are phased out. These areas host some of the country’s largest coal plants, including the Taean and Samcheok facilities, which also sustain local economies through secondary industries such as logistics and maintenance services.

Past attempts to address regional economic inequalities from industrial transitions have experienced mixed success. For instance, the closure of mining operations in Gangwon Province during the 1980s led to long-term unemployment and population decline, leaving many towns economically stagnant for decades.

A similar fate could await coal-reliant communities unless proactive measures are implemented.

The road map provides limited detail on how the Ministry of Trade, Industry and Energy (MOTIE) plans to transition these areas to new industries or retrain displaced workers. While the ministry has suggested repurposing coal plant infrastructure to renewable energy hubs or hydrogen production, such projects require significant investment and face long lead times.

Without immediate job creation programs or financial support for affected communities, these regions could experience prolonged economic decline.

Labor unrest is another likely challenge. South Korea’s unions have a history of resisting abrupt policy changes. Local governments, wary of losing their tax base, may also resist closures unless offered substantial compensation or economic development packages.

Failure to address these disparities will not only undermine public support for the transition but also widen socioeconomic gaps across the country.

Industrial machinery working with coal | Image: Pexels

IMPLEMENTATION CHALLENGES

The coal phase-out’s timeline introduces significant execution risks. Successful implementation will require coordinated efforts across multiple government ministries, local governments and private-sector stakeholders.

However, South Korea’s energy policies have often been mired in inefficiency. One major challenge lies in defining clear roles and responsibilities across the relevant ministries.

For instance, MOTIE would oversee the energy transition, but it must coordinate with the environment ministry, which manages emissions regulations, and the labor ministry, which addresses workforce impacts.

Numerous government initiatives have often suffered from competing priorities between various ministries and agencies, resulting in fragmented policy execution.

Political will, or the lack thereof, also looms large. Despite aiming to reduce reliance on LNG, South Korea’s 11th Basic Plan for Long-Term Electricity Supply and Demand still prioritizes fossil fuels and small modular reactors to meet the growing power demand from semiconductor clusters and artificial intelligence data centers.

Another critical bottleneck is South Korea’s aging electricity grid, which was designed primarily for centralized, fossil fuel-based power generation. This grid is ill-suited to accommodate the variable nature of renewable energy sources like solar and wind or emerging technologies such as hydrogen.

Finally, political continuity is far from guaranteed. The road map spans multiple election cycles, and a change in administration could deprioritize or even derail the plan.

President Yoon Suk-yeol’s approval rate has been perennially low, and while the main opposition Democratic Party has supported renewable energy, disagreements over nuclear energy likely mean that the road map’s longevity remains uncertain.

South Korean President Yoon Suk-yeol during a groundbreaking ceremony for Shin Hanul Nuclear Power Plant units on Oct. 30, 2024 | Image: ROK Presidential Office

A LONG ROAD TO LEADERSHIP

Despite its challenges, the coal phase-out road map presents South Korea with a rare opportunity to redefine its energy strategy and assert global leadership in the clean energy transition.

A well-executed coal phase-out would significantly enhance South Korea’s credibility at international forums like the G20 and COP summits. Historically, South Korea has faced criticism for lagging behind its OECD peers in climate action, but aligning its domestic energy policies with ambitious decarbonization goals would strengthen its negotiating position.

Moreover, successfully transitioning away from coal could bolster South Korea’s trade relationships, particularly with Europe. The EU’s Carbon Border Adjustment Mechanism, which levies fees on carbon-intensive imports, already puts South Korean exporters at a disadvantage compared to suppliers from countries with cleaner energy grids.

By reducing its reliance on coal and increasing the share of renewables in its energy mix, South Korea could lower the carbon footprint of its exports, making its products more competitive in the European market. This shift would help safeguard existing trade and unlock new opportunities in green technology exports to countries prioritizing sustainable supply chains.

UNCERTAIN FUTURE

South Korea’s coal phase-out faces significant obstacles. Energy security vulnerabilities, economic disruptions in coal-dependent regions and systemic inefficiencies in policy implementation all threaten to undermine the initiative.

Moreover, South Korea’s track record of incremental progress in renewable energy raises doubts about its ability to achieve the road map’s goals within the proposed timeline.

While the road map has the potential to position the ROK as a global leader in the energy transition, its success will require unprecedented levels of coordination, investment and political will. 

Without these, the plan risks becoming another missed opportunity, leaving South Korea struggling to compete in an increasingly sustainability-focused world.

Edited by Alannah Hill