Energy and Climate Policy Institute

작성일 : 16-04-05 10:38
Enerzine 43. Energy and Climate Policy Outlook
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Energy and Climate Policy Institute for Just Transition (ECPI) has prospected for seven energy and climate issues. In this newsletter, I selected three issues of them to share with the activists in other countries.


Since the Paris Climate Change Conference, having a low carbon energy system emerged as a global trend. A view that the fossil energy system will rapidly change into a renewable energy system, e.g. solar energy appears from all over the place. On the other hand, the chaos of the energy system excited as low oil prices that has continued is becoming another permanent variable in our society. It is expected that in 2016, as these two agendas are intertwined complexly, a basis for the beginning of a remarkable change in the energy climate system will be prepared.

Influences and views of fluctuation in international oil prices
International oil prices continuously fell from 110 dollars/barrel in the mid-2014, recorded the lowest prices on December 21, 2015, for the first time in 10 years, and barely recovered the price range of 30 dollars in February 2016. However, the possibility of a rebound in a hurry is not great, and it is expected that, for a while, the situation of low oil prices will continue and increase little by little. It is because the situation of low oil prices was caused by the structural variables of demand and supply.

Above all, the increase of the total oil production affected the decline of international oil prices because of the mining of shale oil since the mid-2014 from the side of the supply. OPEC countries like Saudi Arabia refused to reduce the production, opposing the shale boom of the U.S., which sharply increased the count of boreholes, applying the horizontal hydraulic fracturing technology, and this brought about the state of relative over-supply of international oil. Many analysts analyze that this has the nature of a ‘chicken game’ considering the circumstances in which shale oil wells in the U.S. have weak profitability and speculative capital is concentrated; however, since, unlike Venezuela, low oil prices do not strike a decisive blow to the economy of oil-producing Middle Eastern countries like Saudi Arabia, the initiative of the competition lies in the oil-producing Middle Eastern countries. In addition to this, as investors preferred dollars to investment in kind because of a strong dollar with the reduction of interest rates by the U.S., buying crude oil, too, declined, which instigated the lowering of oil prices.
From the supply side, another added variable is the Western countries’ removal of economic sanction on Iran on January 16, 2016. Iran’s crude oil production capacity is fourth largest in the world, and according to the International Energy Agency (IEA), it can increase the volume of export up to 1 million barrels in a short time after the removal of the sanction. Iran exported 2.5 million barrels of crude oil a day before the sanction by the West in 2012. In addition, since Saudi Arabia and Iran are experiencing a political opposition, it is predicted that it will not be easy for the OPEC countries to conclude an agreement of the reduced production. At the end of last year, the IMF predicted that the international oil prices might additionally fall down to 5 - 15 dollars per barrel if Iran’s export of crude oil is resumed in 2016. Therefore, since the fall of oil prices is caused by these structural factors, it seems that flexible quotes like the present will continue, and oil prices in 2016 would recover the level of 55-60 dollars on average through the regulatory agencies in spite of the recent temporary decline. (Royal Embassy of the Kingdom of Saudi Arabia in Korea, 2015)
The problem is the time after that. Although geopolitical variables decreased, there is also a prospect that the shrinkage of investment due to the falling oil prices made insufficient the crude oil inventory and the preparation of available facilities, so at the end of 2016, the international oil prices will rebound. Besides, while a number of investments have already withdrawn from shale oil facilities in the U.S. which were closed due to the deteriorated profitability, it is the key point if the elasticity of the supply of shale oil can be secured even if oil price increases again. It is noted that the international oil prices imply the possibilities of uncertainty and fluctuation from a side different from the past.

30th anniversary of Chernobyl, 5th anniversary of Fukushima, and Action for Phase-out nuclear in South Korea

As Shin-Kori Nuclear Power Plant Unit No. 3 started loading fuel in January 2016, the number of nuclear power plants increased to 25 units, 3 units are under construction, and 8 units are planned for construction. The number, 25 units may mean a turning point from the dependence on nuclear power generation to denuclearization, which approaches heavily. With a riot to asking for withdrawal of the notice of new sites already carried out in Samcheok and Yeongdeok, social organizations’ activities in Busan begin to restrain from the construction of Units 5 and 6 of the Shin-Kori Nuclear Power Plant.

In addition, 2016 is the year of the 5th anniversary of Fukushima nuclear accident and 30th anniversary of the explosion of the Chernobyl Nuclear Power Plant, and in South Korea, an interest in the safety of nuclear power plants will increase, and international related events will be held one after another. However, in contrast to the symbolic meaning of this year, the domestic preparation of the movements for denuclearization is not more active than in an average year. While the national unit motive power for activities is relatively low, it is expected that the areas with concrete issues will lead the motive power of the movements.
The issue of the processing of spent nuclear fuel went through the process of enhancing publicity last year, but while nothing notable has been decided, so that it should be discussed again from the starting point, the saturation of spent nuclear fuel is getting more serious. All of the selection of an intermediate disposal site, the scope of studies of pyro-processing (dry reprocessing) concluded by the Republic of Korea - United State Atomic Energy Agreement and the reconstruction of related governance organizations would become issues again after the general election. Struggles against spent nuclear fuel management are likely to occur with competition for attracting a local cluster, in connection with organizations that study and implement the demolition of nuclear power plants.
The issues of 765kV transmission line, which has remained latent for several years and the conflict around the location of the sites for high voltage substations, too, are dormant in several places in Gyeonggi-do and Gangwon-do. In addition, a class action for damage from the low-level radiation exposure in the region of a nuclear power plant site starting with ‘Gyundo’ suit and the safety of radioactive waste repository facilities in Gyeongju, which begins to operate, too, will continuously emerge as issues.
Since the Paris Climate Change Conference, a drive of nuclear industrial circles and the government support for this may appear, additionally, and the government and the nuclear industrial circles may attempt a nuclear governance centered around themselves that are more active. The task of preparing the 8th Basic Plan of Long-Term Electricity Supply and Demand to include both the purpose of reduction of greenhouse gas and a plan for nuclear related facilities does not yet show any special activity, and while the reservation rate of electric power increased on the background of the increased capacity of coal thermal power and nuclear power plants and warm winter, more issues and controversy are announced.

Activities of energy cooperatives and small private power producers

Currently, most of the energy cooperatives in Korea are those focusing on a solar energy generation project, and 81 cooperatives have been established and registered nationwide as of December 31, 2015. Since the Framework Act on Cooperatives came into effect in Korea in December 2012, 29, 30 and 22 energy cooperatives have been newly constructed respectively in 2013, 2014 and 2015, and the number is steadily increasing. Of the 81 registered energy cooperatives, there are 29 cooperatives established by civil society organizations and citizens related to the environment and energy, which are affiliated with the National Federation of Citizens’ Power Generation Cooperatives (Hereafter, ‘the Federation’) as members or communicate with them as associated members with connections. There are 45 solar power plants in total, constructed by the energy cooperatives in Korea, and the total capacity of their power generation equipment is 2,453.41kW (As of December 31, 2015.). From the result of a survey in January 2015, the number increased by 22, and the total capacity of the power generation equipment increased about two times from 1,350.8kW.
By region, of 16 metropolitan cities, most plants have been established in Seoul (31), followed by Gyeonggi-do province (13) and Jeonbuk province (10). While the energy cooperatives’ construction of solar power plants is stagnant with the deterioration of the solar energy generation market, additional power plants are constructed by the energy cooperatives located in Seoul. It is interpreted that this is because Seoul sets out for policy support through Seoul-type Feed in Tariff (FIT) operation and loan for climate change fund, while it keeps communicating with energy cooperatives.
However, the present situation of energy cooperatives in Korea is gloomy. As mentioned above, the energy cooperatives in Korea are energy cooperatives focused on solar energy generation, as a business model that constructs power plants by gathering investment money from the members and sells the electricity produced in solar power plants. In other words, they do not have a profit structure other than electricity sales. However, the continuous decline of the prices of electric power produced from solar energy (SMP and REC) makes it difficult to manage the energy cooperatives. This is because the government predicts the demands for electric power excessively and builds large-scale coal thermal power/atomic power plants additionally to keep a reserve margin high. Because of the keynote that the supply-oriented policy continues to the present government based on large-scale coal/nuclear power, it is predicted that the price will become lower unless there is a change in the government's policy. In the meantime, REC price, too, sharply fell, according to the Renewable Portfolio Standard (RPS)) (It drastically declined by a whopping 37% when the price in the first half of 2015 was compared to that of the first half of 2014). The energy cooperatives experience financial difficulties as they did not secure stable distributors though they produced electric power from solar energy. It is predicted that the issues such as the maintenance of the low SMP price and unstable REC market will not improve in 2016, either. Accordingly, the construction of additional solar power plants by small power producers, including energy cooperatives will stagnate. Energy cooperatives are forming a response team by the federation and carrying out a movement of petition for legislation urging the system improvement in order to overcome this situation.


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