South Korea’s new president might expedite energy transition, but uncertainties remain

South Korea's newly elected President Lee Jae-myung has committed to expediting the country's adoption of renewable energy, but political, financial and technical challenges may hinder Lee's administration from meeting all the committed targets, according to analysts.

Lee, who won the presidential election on June 3 following the ouster of impeached President Yoon Suk-Yeol, called for prioritizing renewables in the power mix and reviewing his predecessor's nuclear-first policy, Platts reported earlier.

"Lee proposes an accelerated rollout of renewable energy, underpinned by massive investments in offshore wind and solar photovoltaics, while his party aims to achieve 40% of renewable energy in the (power generation) mix by 2035," according to S&P Global Energy report titled South Korea 2025 Presidential Election: Choice between Renewable Acceleration or Step-By-Step Decarbonization, published in late May, right before the election concluded.

As of 2024, nuclear accounted for 32% of South Korea's power generation mix, followed by 29% from LNG, 28% from coal, and 8% from renewables, Energy data showed. According to the 11th Basic Plan for Electricity Supply and Demand (BPE) released by the previous administration, renewable energy is expected to account for only 33% of South Korea's power generation mix till 2038.

Hence, the target set by Lee meant a significant acceleration of the country's pace of energy transition.

Detailed plans

The Energy report showed that Lee has set detailed plans to nurture a more comprehensive ecosystem for renewable energy.

The report highlighted that Lee has planned to construct the "West Coast Energy Highway" to transmit renewable electricity through high-voltage, direct-current gridlines. Lee has also planned for creating RE100 industrial zones, namely, developing industrial clusters fully powered by renewable energy, the report showed, adding that Lee has also shown support towards local solar and wind cooperatives, as well as offshore installation ships and port infrastructure.

To create demand for renewable energy, Lee has emphasized the development of green hydrogen, namely hydrogen produced from water electrolysis using renewable electricity.

The report showed that Lee has planned to leverage hydrogen to support the decarbonization of heavy industries, transportation and power sectors. Lee's strategy included supporting domestic hydrogen production and expanding the use of hydrogen fuel cells and infrastructure, the Energy analysts pointed out.

Besides green hydrogen, the report added that Lee's administration would also explore opportunities for deploying pink hydrogen, namely hydrogen produced through electrolysis with nuclear power.

Challenges and uncertainties

The ruling party, the Democratic Party of Korea (DPK), currently occupies the majority of the National Assembly. However, the Energy report pointed out that Lee's proposal to accelerate renewable deployment could still face bottlenecks due to legislative resistance. The report highlighted that such resistance could hinder major initiatives such as the publication of the next BPE, which is supposed to offer more ambitious climate targets and unlock green infrastructure investments.

The Energy analysts pointed out that energy-intensive manufacturers may also resist the implementation of these agendas, given that renewable investments could lead to higher industrial electricity tariffs.

Meanwhile, from a geopolitical perspective, a rapid increase in renewable electricity supply could increase the country's import dependency on clean-tech products such as solar modules and wind turbines, the report showed. Currently, Chinese manufacturers dominate the global markets for solar, wind and battery products.

Furthermore, as LNG plays an essential role to stabilize the power system and cope with renewable energy's intermittency, increasing renewable electricity supply also means increasing the import of LNG, which could further intensify South Korea's geopolitical vulnerability, according to the report. In 2024, South Korea imported 46.5 million mt of LNG, among which 24% were from Australia, 19% from Qatar, 14% from Malaysia, and 13% from the US Gulf Coast.

"Public opposition to specific renewable projects or the nuclear phaseout may emerge, complicating implementation," the report added.

Besides political challenges, financial and technical challenges are also significant, Energy analysts said in the report.

"Financially, his ambitious agenda requires substantial investment, and Korea Electric Power Corporation's large deficit poses a constraint. Technically, the rapid scale-up of renewables and grid upgrades could encounter logistical and supply chain challenges."

A Singapore-based policy analyst told Platts that Lee's energy transition plan might be "a rosy picture" with significant underlying difficulties when it comes to implementation. "In South Korea, there is still a collective mindset owned by some regulators and many industry stakeholders that a rapid energy transition could compromise the country's economic stability and energy security."

A Seoul-based environmental market analyst told Platts that the specific impacts on South Korea's Emission Trading System (ETS) remained uncertain.

"We hope to see the new administration come up with more ambitious emission reduction targets along with its renewable energy targets, in the country's 2035 NDCs (Nationally Determined Contributions) to be submitted to the UN, which could signal the extent to which ETS allowance supplies would be tightened in the long run."

Platts assessed the Korean Allowance Unit at Won 8,675/mtCO2e ($6.38/mtCO2e) June 5.