Climate Change and Energy Security in South Korea’s Indo-Pacific Strategy

South Korea’s Indo-Pacific strategy identifies nine areas in which Seoul plans to increase its engagement in the Indo-Pacific. Among those nine areas, the section on climate change and energy security stands out as it calls for a specific response to one of the implications of Russia’s invasion of Ukraine. 

For much of the world, Russia’s invasion of Ukraine has resulted in higher energy prices. Shortly after the start of the war Brent crude briefly jumped to over $130 per barrel in March. Prior to the invasion it had been trading at $92.77 per barrel. While prices have declined in recent months, Brent crude averaged over $106 per barrel until early August, and the nature of war means there are no certainties that price surges will not return. 

South Korea is dependent on imports of fossil fuels to drive its energy intensive economy and was not immune the energy price shocks produced by the war. While imports of fossil fuels were only up 3 percent by volume in 2022, they increased 58.9 percent by value. These price increases filtered into the domestic economy. Kepco, South Korea’s state-owned electricity monopoly, has implemented four electricity price increases since the war began, including a record 9.5 percent increase at the beginning of this year. 

Surging energy prices, along with Russia’s weaponization of energy supplies against European states, have influenced South Korean thinking on energy security. Seoul’s Indo-Pacific strategy notes that: 

The instability in the global energy market caused by the war in Ukraine highlights the need for closer international cooperation to achieve both energy transition and energy security in parallel. Amidst the trend towards strategic weaponization of traditional energy sources such as fossil fuels, stabilizing energy supply through clean energy transition is an urgent task. 

To address these challenges, South Korea’s strategy lays out a series of objectives. For climate change, the strategy focuses on the development of a regional cooperation system to reduce greenhouse gas emission, advance cooperation on green technology, and help countries adapt to climate change. It also envisions the development of regional carbon markets and the deployment of new technologies ranging from hydrogen and electric vehicles to green shipping. 

Seoul’s approach to energy security, however, is narrower than its designs for addressing climate change. The energy security strategy approach focuses on the development of a hydrogen economy and expanding the capacity for the use of nuclear power in the region, especially in the form of small modular reactors. 

While the approaches to climate change and energy security differ, they can work together and complement each other. The key for South Korean policymakers will be developing an implementation plan that helps to spur an energy transition that works hand-in-hand to address climate change and create greater economic security in the region.

Pulling the two elements together requires a focus on sequencing if Seoul is to provide near-term energy security and move more quickly to address climate change. Nuclear power and hydrogen technologies, two technologies South Korea’s Indo-Pacific strategy promotes, are medium-to-long term options. 

Nuclear power has traditionally been difficult to deploy. While South Korea is among the most efficient in building nuclear power plants, average construction time is still over four years domestically. The nuclear power plant South Korea constructed in the United Arab Emirates, however, took more than a decade to come online. In the case of new technologies such as small modular reactors, the deployment could also take years despite hopes to streamline construction. One study suggests that a series of small modular reactors being built in the United Kingdom may not come online until 2030. These timeframes won’t help the near-term energy crisis and risk delaying greenhouse gas reduction during a critical period for preventing the worst outcomes of climate change.

Hydrogen energy faces similar challenges. Most of the world’s hydrogen is currently produced using fossil fuels, lessening its appeal as a clean fuel. Producing clean hydrogen will require further deployment of solar, wind, nuclear, and other clean sources of power to produce the hydrogen needed to power vehicles, planes, and other energy intensive needs.  

From this perspective, it is strange that South Korea’s Indo-Pacific strategy is silent on solar power. According to the International Energy Agency, new solar deployments need to see an average annual growth of 25 percent through 2030 if the world is to meet its 2050 net zero emissions objectives. Deploying utility scale solar can take from three to five years, but it is cheaper to run and build than nuclear power plants and more proven then hydrogen technologies. Nuclear power, and eventually hydrogen, will be needed to provide base load power for when solar and wind are not available, but leading with solar could help countries in the region address climate change and energy security more quickly.

For South Korea, it would also have two potential advantages. While China dominates the production of solar panels, South Korea’s Hanhwa Q Cells is one of the two non-Chinese firms that are among the world’s 10 largest producers. Integrating the deployment of solar power into South Korea’s strategy would support domestic industry, which has faced uncertainty due to the Yoon administration’s decision to reduce South Korea’s own renewable power goals. The deployment of solar power could also support the uptake of electric vehicles and hydrogen in the Indo-Pacific, two technologies where South Korea also has potential advantages.

One advantage of South Korea’s Indo-Pacific strategy is that it defines the region more broadly than others, pulling in even Latin America. This flexible approach to what the “Indo-Pacific” is could prove useful when thinking about developing a hydrogen economy. Transitioning to hydrogen only makes sense if there are excess reserves of clean energy to produce hydrogen – something South Korea lacks domestically. However, Australia and Chile have the potential to be important partners during the initial stages of any hydrogen transition as sources of green hydrogen due to their solar power potential. 

Much of the support for these projects in the Indo-Pacific will need to come through increased funding for the Korea International Cooperation Agency (KOICA), South Korea’s international development agency. In 2021, KOICA implemented a plan for mid-term climate change response that includes the deployment of renewable energy among its objectives. KOICA could play an important role in the development of new solar projects, along with the deployment of electric vehicle charging stations that will support the adoption of electric vehicles in the region. More capital intensive projects, such as new nuclear power plants, will likely require the support of state banks. That was the case with the UAE nuclear power plant, which received some funding from the Export-Import Bank of Korea. 

Some of this work will also need to be coordinated with the international development agencies of other countries, such as the United States. KOICA already cooperates closely with USAID on climate change, but cooperation will need to deepen and broaden on this issue. An additional path for cooperation is the Just Energy Transition Partnership. These partnerships are designed to bring multiple donors together to help countries transition from coal power. While South Korea is not part of the Just Energy Transition Partnership taking place in Indonesia, joining this or future projects in the region is another way South Korea can contribute to bolstering energy security and addressing climate change in the Indo-Pacific.

To implement its strategy, South Korea will need to integrate climate change and energy security into its governmental policy. At the moment, there is no control tower within the presidential office to coordinate policy on these issues. Practically, that makes it more difficult for South Korea to coordinate its efforts across ministries, but also signals that climate change and energy security are lower priorities for the administration. 

For over 150 years, the world has primarily been powered by fossil fuels, but the energy transition taking place will instead be based in the development and manufacturing of new technologies. South Korea’s manufacturing prowess gives it potential advantages in this transition in areas such as electric vehicles and batteries, energy storage, solar, and nuclear power, as well as significant potential in newer technologies related to hydrogen and green shipping.  As the Indo-Pacific transitions to clean energy, South Korea has the potential to play an important role. Fulfilling that role, however, will require a significant commitment realizing the aspirations related to climate change and energy security in its Indo-Pacific strategy.