hankyoreh

An activist from the Seoul branch of Korean Federation for Environmental Movement wears a gas mask in front of the National Assembly in Seoul calling for the deletion of the clause including clean diesel cars in the Environmentally Friendly Automobile Law

The Hankyoreh confirmed that the new South Korean administration is strongly considering a plan to convert all nine of the coal plants that are currently under construction to environmentally friendly liquefied natural gas (LNG) combined-cycle power plants, regardless of how far along their construction is. This plan, which is part of the government’s efforts to deal with the fine particle dust, is provoking pushback from the private-sector coal power suppliers that have invested hundreds of billions of won into these projects, indicating that there will be conflict over compensation for company losses.

“Apparently [the new administration’s pledges and the governance planning advisory committee] are more focused on a policy shift on the nine plants currently under construction than on the question of whether construction has or has not reached 10%,” said an official from the Ministry of Trade, Industry and Energy (MOTIE) during a telephone call with the Hankyoreh on June 5. This suggests that briefings by the advisory committee and by the Ministry led to the conclusion that all nine of the plants should be handled in the same manner (including the conversion to LNG power) regardless of how much progress has been reached in their construction.

“The question of how to deal with the nine coal plants currently under construction ought to be considered and determined in connection with the eighth basic plan for supplying power, which will be adopted at the end of the year. Rather than categorizing them according to whether their construction has reached 10%, we’re leaning toward further discussion [about whether to convert to LNG combined-cycle power] while looking at the next decade and beyond to ensure that there are no hitches in supplying domestic power,” said another senior official at the Ministry.

During his presidential campaign, President Moon Jae-in promised to review “from scratch” the nine coal plants whose construction is less than 10% complete and to reduce the power generated by coal-fired plants by 30% during his time in office and replace that with LNG. There has been disagreement within the industry as to whether 10% progress should be calculated from the actual beginning of construction or whether this also includes preliminary work prior to construction. “Considering that construction permits have already been granted for all nine of the coal-fired power plants, we’re planning to discuss this in detail with private-sector power suppliers as we draw up a plan to implement the new administration’s campaign pledges. The government will not make any unilateral decisions, and these deliberations will include the potential losses of private-sector power suppliers,” said an official from the Ministry.

In fact, the “10% progress” referred to the progress on construction as of early July 2016, when the government unveiled its plans to deal with fine particle dust. According to the Korea Power Exchange, which has been assessing the progress of construction at the nine new coal-fired plants, construction on all plants is currently (as of June) between 14% and 20%, if the preparatory stage prior to construction is included. (This stage involves receiving the permit, acquiring the land and placing orders for the design of machinery required for generating power, including the turbines, boilers and transformers.) The nine power plants that are under construction are Sinseocheon No. 1 in South Chungcheong Province, Anin Power No. 1 and No. 2 in Gangneung, Gangwon Province, High Power No. 1 and No. 2 in Goseong, Gangwon Province, POS Power No. 1 and No. 2 in Samcheok, Gangwon Province, and Eco Power No. 1 and No. 2 in Dangjin, South Chungcheong Province. These plants cost an average of 1.84 trillion (US$1.65 billion) each, amounting to 16.6 trillion won (US$14.87 billion) altogether.

At the end of last month, the Korea Power Exchange asked the four companies (POS Power, Gangneung Eco Power, Goseong Green Power and Dangjin Eco Power) that are building eight of the coal-fired plants (except for Sihnseocheon No. 1, which is being built by Korea Midland Power) for their opinion of a plan to issue new permits for LNG plants and to adjust construction accordingly. The companies that are participating in the construction of the new coal-fired plants (including SK Gas, POSCO Energy, Doosan Heavy Industries and Construction, Daelim Industrial, Samsung C&T, Hanwha Engineering and Construction, KB Kookmin Bank and the Industrial Bank of Korea) have reportedly already invested a considerable amount of money in acquiring land and placing orders for the necessary machinery.

“Private-sector power suppliers have expressed their disapproval,” the Korea Power Exchange said. “They’ve pointed out that they’ve already invested hundreds of billions of won in coal-fired plants for which permits have been issued, and they won’t accept the conversion to LNG plants if they’re not compensated for the losses they will incur after the projects are suspended on the government’s orders.”

By Cho Kye-wan, staff reporter

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