Power
South Korea turns to coal as LNG crisis deepens winter supply risks
Soaring spot liquefied natural gas prices and constrained Middle Eastern supplies have forced South Korea to increase reliance on coal-fired power generation.
Key points
- Spot LNG prices have reached four-year highs following disruptions in Middle Eastern deliveries.
- South Korea plans to temporarily increase coal and nuclear generation to reduce gas demand.
- The government maintains a longer-term plan to invest up to $747 billion in renewables and decarbonisation by 2035.
What happened
South Korea is shifting back to coal-fired power generation for the upcoming winter season as soaring spot liquefied natural gas (LNG) prices make gas-fired plants uneconomical, OilPrice.com reported. According to Climate, Energy and Environment Minister Kim Sungwhan, the country must reduce gas consumption in the short term due to a lack of Middle Eastern deliveries.
As the world's third-largest LNG buyer behind China and Japan, South Korea has been severely impacted by supply constraints. Coal-fired power supply in the country surged by 40 percent in April, marking the largest monthly jump since August 2019, Reuters reported.
Why it matters
The shift highlights how immediate energy security concerns can override long-term decarbonisation goals during global supply crunches. High LNG prices at four-year highs are driving up electricity costs for consumers and industries alike. Research by Ember and Global Energy Monitor previously indicated that South Korea's annual fossil fuel imports could reach $133 billion based on early-June spot prices.
Despite the immediate reliance on fossil fuels, the government unveiled plans to invest up to one quadrillion Korean won, equivalent to $747 billion, in renewable energy, electric vehicle adoption, and industry decarbonisation by 2035.
What comes next
Authorities intend to manage winter energy demand by expanding renewables rapidly while increasing the utilisation of nuclear and coal power. Policymakers and market participants will monitor spot LNG availability closely as global shipping and supply routes face continued pressure.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Grids decide whether generation becomes power that homes and businesses can rely on. Generation mix, transmission and distribution losses, and tariffs together shape reliability and the case for investment.
100.0% of people in South Korea had electricity in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
