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The Peninsula

Seoul’s Dependence on Coal Imports

Published January 17, 2022
Author: Korea View

What Happened:

  • In January 2022, Indonesia announced a ban on coal exports. Indonesian coal accounts for 20% of Seoul’s total coal imports.
  • In response, the South Korean government urged the Indonesian government to remove the ban on coal exports.
  • Despite these actions, the South Korean government officially stated that Indonesia’s ban on coal exports would have minimal damage to the Korean economy.

Implications: South Korea’s economy appears unprepared for sudden changes in the global supply chain. Seoul’s call for the Indonesian government to lift its recent ban on coal exports suggests that this development carries significant anticipated costs to the economy. Another recent example showcasing this vulnerability is China’s decision to reduce the export of key inputs for diesel fuel. As a consequence, Korean businesses have struggled to project a budget for 2022 as transportations costs rise in response to the fuel shortage. As a country heavily invested in manufacturing and the digital economy, there are fears that continued threats to the energy supply might disrupt the country’s growth prospects.

Context: Korea’s call for Indonesia to lift its export ban also clashes with its commitment to help reduce global carbon emissions. President Moon Jae-in’s “Green New Deal” commits the country to generating more green energy. But its response to Indonesia’s coal export ban revealed that South Korea still remains heavily dependent on coal. Currently, 30% of the country’s electricity generation is dependent on coal.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of  Kayla Harris, Yubin Huh, David Lee, Sarah Marshall, and Mai Anna Pressley. Picture from Flickr account of Must Kemal

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