Renewable energy and carbon capture in South Korea

Renewable energy and carbon capture

Give details of the production and consumption of renewable energy in your country. What is the policy on renewable energy? Describe any obligations on the state and private parties for renewable energy production or use. Describe the main provisions of any scheme for registration of renewable energy production and use and for trade of related accounting units or credits.

Since 2012, the Korean government has implemented the Renewable Portfolio Standard (RPS) scheme pursuant to the Renewable Energy Act, converting from the previous feed-in-tariffs (FIT) regime. Additionally, the government required companies with generation capability of 500MW or more to generate a certain minimum percentage of gross power from renewable energy sources. Currently, 21 large power companies in Korea are subject to this obligation. The current renewable generation quota obligations are set out as follows. However, the Moon Jae-in administration is in the process of revising the ratio and it is expected that the ratios will be adjusted to a higher level.

Failure to meet the obligatory generation quota may result in administrative fines of an amount equivalent to 1.5 times the average trading price of renewable energy certificates (RECs).

Under the Renewable Energy Act, a REC is defined as a ‘certificate authenticating the fact of supply by using new or renewable energy facilities’. A REC is based on each megawatt hour (MWh) of electricity generated from a renewable energy resource. RECs are issued by the New and Renewable Energy Centre and are tradable in Korea. RECs are typically sold to one of 21 large power generation companies that are obligated to generate a certain percentage of their generation output from a renewable energy source.

Renewable energy is monitored by the Korea Electric Power Corporation (KEPCO), which verifies the amount of renewable energy generated. If a company produces renewable energy, in addition to RECs, the company can also get a certified emission reduction (CER) credit for greenhouse gas emissions by registering with the United Nations as a clean development mechanism (CDM) project. The renewable energy is integrated into KEPCO’s electricity grid network because the electricity generated from the renewable source can be sold only through Korea Power Exchange (KPX). In this regard, the Korean renewable energy producers earn revenue by selling electricity to KEPCO through KPX plus additional income by trading RECs with the 21 large power generation companies.

As of August 2019, renewable energy companies typically generated revenue of approximately 85,000 Korean won per MWh, and 58,000 Korean won per 1 unit of REC. Subject to the fulfilment of certain requirements, such entities may also obtain GHG emission permits by generating renewable energy.

Describe, in general terms, any regulation of wind energy.

To engage in the renewable energy business in Korea, the developer must secure ownership or lease rights of the land on which the power plant will be located, and obtain necessary licences from the local government where the land is located. For large-scale power generation projects (over 100,000kW), an environmental impact assessment must be carried out and approved by the MOE.

The time frame for obtaining approval for the development of a utility-scale renewable energy project often depends on the type of renewable source. For example, for onshore wind, the approval process normally takes about four years from filing the application with the government, whereas for solar power the approval may be granted within a year. In the case of a large-scale project, it may take longer than usual to obtain the approval, since it requires an environmental impact assessment.

In Korea, there are special protocols for intermittent energy sources such as wind and solar. When an energy storage system (ESS) is linked to supplement the intermittent energy, additional REC weighting is given in the range of 4.0-5.0 units depending on the type of renewable energy source. The highest weighting (5.0 units) is given to solar farms linked with an ESS.

The current REC weighting was decided by the MOTIE in 2018, taking into consideration the impacts on the environment; technology development and industrial revitalisation; power generation cost; resource potential; effects on reduction of greenhouse gas emission; effects on power supply stability; and level of acceptance of local residents (article 18-9 of the Enforcement Decree of the Renewable Energy Act).

According to the adjustments made in 2018, the Korean government maintained the REC weighting of 1.0 for onshore wind power, but the REC weightings for offshore wind power were increased depending on its distance from the shore to attract more investment. For offshore wind power within 5km from the shore, the REC weighting was increased from 1.5 to 2.0; for 5 to 10km from 2.0 to 2.5; for 10 to 15km from 2.0 to 3.0; and for 15km or further from 2.0 to 3.5.

The Korean government also seeks to secure the commercialisation of ESSs and source technologies to reduce ESS prices by 50 per cent of the current price by 2020.

Describe, in general terms, any regulation of solar energy.

As of 2014, the REC weighting given to solar energy ranges from 0.7 to 1.5. For other general regulations, see question 20. However, in 2018, the REC weighting for solar power plants installed in forests was lowered from 0.7~1.2 to 0.7 for all cases, resulting in poor profitability of solar power and inviting opposition from solar power generators.

Describe, in general terms, any regulation of hydropower, geothermal, wave or tidal energy.

As of 2018, the REC weighting given to hydropower is 1.0; for geothermal, wave and tidal it is between 1.0 and 2.5. For other general regulations, see question 20.

Describe, in general terms, any regulation of production of energy based on waste.

As of 2018, the REC weighting given to waste-to-energy has been lowered to 0.25, considering its effects on environmental pollution and residential acceptability. For other general regulations, see question 20.

Describe, in general terms, any regulation of biofuel for transport uses and any regulation of biomass for generation of heat and power.

Under the Renewable Energy Act, Korea has implemented the Renewable Fuel Standard (RFS), which is a government policy to blend new and renewable energy fuels into transport fuels (article 23-2). Persons subject to the RFS are petroleum refinery businesses and petroleum export-import businesses. In the case of transport fuels, biodiesel (BD) is mixed into diesel oil for automobiles. The mandatory blending ratios for each implementation year are as follows:

RECs are issued for power generated using biodiesel or biomass. In 2018, because of environmental concerns, the Korean government decided to discontinue giving REC weighting to woodchip biomass that is blended into coal power generation, and lowered the REC weightings for other usages of biofuels and biomass from 0.5-1.0 to 0.25-0.5). For other general regulations, see question 20.

Describe, in general terms, any policy on and regulation of carbon capture and storage.

In August 2016, the Korean government announced carbon resources technology including carbon capture and storage (CCS) as one of Korea’s nine National Strategic Projects. Until 2020, the Korean government has decided to invest 47.5 billion won in total to support technological developments that are expected to contribute to reductions of GHG. Currently, CCS technology is not commercially available in Korea. If CCS technology is commercialised, the project may be approved as a CDM project for its GHG reductions subjecting such a project to the issuance of CER credits or it can be used to capture and store GHG from the atmosphere by the companies themselves for the reduction of GHG emissions.