South Korean Coal Demand Surges Amid LNG Disruption and Nuclear Plant Maintenance

The South Korean government's goal to exit coal power generation by 2040 is facing an unexpected challenge. Despite efforts to reduce reliance on coal, the country's power market has become more dependent on it this year due to a combination of factors.

According to the Korea Electric Power Corporation, total power generation from March to July decreased by 0.3% year-on-year, while coal power generation increased by 14.9%, reaching 71,532 gigawatt hours (GWh). Coal's share of total power generation rose 3.9 percentage points to 29.5%. Nuclear power generation, on the other hand, decreased by 11.4% and its share fell 3.7 percentage points.

The increase in coal demand is attributed to the disruption of liquefied natural gas (LNG) supply due to the Middle East war, which caused Asian natural gas prices to jump. The International Energy Agency (IEA) predicted that Korea's coal demand will reach 119 million tons this year, up 6% from the previous year.

The IEA also pointed out that low availability of nuclear power plants coincided with the increase in coal generation. Analysts say this situation shows that it is difficult to achieve decarbonization only with the schedule for the closure of coal power plants.