The Effects of Energy Transition Policy on Manufacturing Sectors in Korea

The Moon Jae-in administration announced on December 2017 the 8th Basic Plan for Longterm Electricity Supply and Demand (8th BPLE), which emphasizes environmental and safety factors while reflecting the need for a stable power supply and economic efficiency. The 8th BPLE is called an “energy transition policy” in that it shifts away from nuclear power toward renewables, unlike the existing BPLE. Further, the policy prioritizes strengthening demand management and focuses on steadily increasing the use of distributed energy resources. The energy transition policy takes into consideration the safety of national infrastructure and environmental security and protection from natural disasters such as Japan’s Fukushima nuclear accident in March 2011, the Gyeongju earthquake in September 2016 and the Pohang earthquake in November 2017 in Korea. While a policy moving from nuclear and coal power to renewables and natural gas is widely supported in terms of eco-friendliness and safety there are also obstacles to realizing that policy goal. In particular, the stability of demand and supply of energy is the most important factor to consider in Korea, which has an energy-imports for most of its energy. This study focuses on the changes in electricity prices among the various changes that may arise from the implementation of an energy transition policy and analyzes the impacts of those changes on manufacturing.