Energy security, IRA and carbon neutrality top priorities

By Lee Kyung-min

The government will facilitate the exports of Korea-developed APR1400 nuclear reactors to Poland and the Czech Republic, as part of a broader policy drive to advance and normalize the often-demonized source of energy, the energy ministry said Tuesday.

Korea will maintain close high-level intergovernmental communication channels with the Philippines, the U.K. and Turkey as well as other countries in Africa, Asia and Europe, with tailored strategies for meeting their energy demands, as outlined by the nuclear export initiative under President Yoon Suk-yeol.

The politically stalled construction of nuclear reactors will resume promptly, fueling much-needed growth for the industry set to be revitalized by up to 3.5 trillion won ($2.7 billion) in business deals next year, up 1.1 trillion won from this year. Starting next year until 2025, one reactor will be built each year.

The reserves for natural gas and crude oil will be increased, in a preemptive measure to better prepare for the energy crunch brought on and amplified by Russia’s invasion of Ukraine. Behind the efforts to fortify energy self-sufficiency lies elevated key global commodity prices, certain to weigh heavily on local power demand which is on a sharp rise due to extreme weather conditions all year round. Wind energy investment will be increased to seek balanced sustainable growth of renewables to meet the global trend of carbon neutrality.

These are part of the policy drives of the Ministry of Trade, Industry and Energy for 2023 reported to Yoon.

“Export of Korea’s nuclear power systems, shipbuilding and plant businesses will fortify the country’s competitiveness next year,” the ministry said.

The emphasis on exports is extremely critical for next year, primarily because Korea’s exports are expected to register a 4.5 percent contraction. The prospect is a bleak turn from this year’s record-high exports of $680 billion and $29.5 billion in foreign direct investment. Among the slew of factors are expected unit price decreases in semiconductors, the ministry said. Chip exports account for about a fifth of the country’s export total.

Further fanning concerns of a slump in exports and investments is weaker-than-feared growth of Korea’s key trade partners, compounded further by the depreciating Korea currency against the U.S. dollar and tightening consumer sentiment.

The spread of protectionism is another key negative development for export-reliant Korea, as best illustrated by the U.S. Inflation Reduction Act (IRA) tanking the growth of Korea’s car manufacturers.

The negative global trade outlook is not in any way mitigated by the Carbon Border Adjustment Mechanism (CBAM), a major hurdle for local manufacturers, especially in the steel industry.

Other than the nuclear power industry, the government will foster defense and energy exports.

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