Current and future plans for coal use in Korea

Energy Vol. 11, No. 11/12, pp. 109-1095, Printed in Great Britain

CURRENT

1986

036&5442/86 $3.00 +O.OO Pergamon Journals Ltd

AND FUTURE PLANS FOR COAL USE IN KOREA CHEE KE SEEK

Mines Registration Office,Republic of Korea, Ministry of Energy and Resources,Seoul 110,Korea Abstract-Korea’s

remarkable economic achievement in the recent past paralleled an equivalent increase in energy consumption. Korea’s poor endowment of energy recources is often mentioned as one of the major obstacles to its sustained economic development. During the two world energy crises, the Korean government began to restructure its energy policy to emphasize both demandside management and security of supply. When the government’s program for diversification of energy resources is attained, coal and nuclear energy will become Korea’s principle alternative energy sources with a significant decrease in the role of oil.

INTRODUCTION For more than two decades, the Korean economy has grown steadily at an average annual rate of 8%, and has evolved from a primarily rural economy to an advanced developing one during the world-wide energy crises of the 1970s. Nevertheless, a result of the lessons learned during this period and of a national will for development, the country’s economy recorded a remarkable growth rate of 7.5%-reaching a per capita income of US$2000in 1984.’ Korea is expected to sustain a steady economic growth rate of 7% per annum and to achieve a per capita income of more than US$5000 by ~OOOA.D. To attain this target the government considers its major goals to be stabilizing the energy supply, stabilizing prices, ensuring adequate employment, increasing domestic savings, and improving the balance of payments.

ENERGY

POLICY

AND

STRATEGIES

Until the first oil shock, Korea’s energy policy was characterized by supply-side management, due mainly to a lack of indigenous energy resources. However, the serious aftermath of the two oil crises forced the Korean government to restructure its energy policy. Accordingly, the government has established a long-range energy policy with the objectives of conserving energy, developing and utilizing alternative energy resources, diversifying energy resources, and ensuring an adequate energy supply in the most economically advantageous way.

COAL

POLICY

AND

STRATEGIES

To successfully diversify Korea’s energy resources, the government is encouraging the maximum use of bituminous coal. Efforts to expand bituminous coal use in industry include providing financial support and tax incentives to potential users for installation of coal facilities, constructing a distribution network for small-quantity consumers, establishing common facilities in the industrial complexes for efficient supply, and developing utilization technology. For anthracite, which is mainly used by the residential and commercial sectors, emphasis will be given to improving utilization methods.

ENERGY

DEMAND

AND

SUPPLY

Korea’s energy consumption pattern has undergone three main stages. Through the 1950s and until 1964, traditional fuels such as wood and agricultural wastes were the country’s main energy resources, accounting for 45% of total energy consumption. Then, EGY 11:11,12-E

1091

1092

CHEE KE SEEK

as a result of the economic reconstruction programs after the Korean War and particularly ambitious industrial development programs initiated by the Korean government in the early sixties, Korea experienced significant changes in energy volume and in the structure of demand and supply. For a short time, from 1965 to 1967, domestic anthracite coal emerged as a principal energy source, accounting for 43.0-39.7% of total energy consumption.’ Industrial development programs then opened up a new era from 1968 on with the rapid emergence of oil as the key energy source-accounting for 34.9% of the total consumption of 15.8 million tons of oil equivalent for the year. From 1965 to 1983, total energy consumption increased at a rate of 8.3% per annum, from 12 to 49.7 million tons of oil equivalent. In other words, total energy consumption increased by a factor of four between 1965 and 1983, despite the two world oil crises during which the growth in annual energy consumption was moderated drastically to less than 2% per annum. During the same period, however, the share of imported energy sources in total energy consumption grew rapidly, jeopardizing Korea’s independence and aggravating the country’s balance of payment. Between 1965 and 1983 energy imports increased from 12.7 to 74.8% of total energy consumption;3 oil imports increased from 12.1 to 56.2%. Nearly half of the total energy consumption of 41 million tons of oil equivalent was used for the industrial sector. The residential sector accounted for 35.9%, while the transportation sector accounted for a relatively small part of the total energy consumption considering the rising transportation demands characteristic of many advanced developing countries. PROSPECTS

FOR

FUTURE

ENERGY

DEMAND

AND

SUPPLY

According to recent long-range projections prepared by the government,4 total energy demand is expected to increase at a rate of 5.6% per annum by the end of the 1980s and then slow down to a rate of 4.6% during the 199Os, to arrive at a level of 124.2 million tons of oil equivalent by 2001 (Table 1). This means an increase of 2.6 times from the current consumption of 49.9 million tons of oil equivalent in 1983. Table 1. Demand projection by energy source and transition of aggregate 6nal energy demand: Korea, 1983-2001 Demand Projection 1986 1991 1996

2001

Average Annual Growth Rate 1970s 1980s 1990s

Type of energy resource

1983

Petroleum (10’ Bbl) Anthracite (10’ ton) Bituminous (10s ton) LNG (10s ton) Hydra-power (GWh) Nuclear power (GWh) Renewable & others (1O”TOE) Total Primary Energy (10’TOE) Fuel for Generation (10’TOE) Total Final Energy (10’ TOE)

191,294 21,670 9633 2723 8965 2378

223,430 23.279 14,462 403 3001 21,698 2171

227,117 21,324 20,885 2M)o 4060 47.33s 2201

305,342 19,832 34,935 5000 4236 58,701 2803

359,599 18,667 51,075 5000 82,559 3934

9.9 6.3 63.0

3.9 -0.0 10.9

7.5 4.9

4.1 32.2 -1.2

3.0 -1.3 9.4 9.6 2.3 5.7 6.0

49,700

59,654

79,099

99.889

124,155

8.2

5.6

4.6

11,736

16,144

23,877

33,512

45,706

13.9

9.3

6.7

41,629

48,414

62,546

76,826

92,874

7.6

4.8

4.0

Even though the government has vigorously pursued energy independence, the prospect is not bright, considering the limits of the domestic energy supply and the time needed to benefit from the ongoing energy diversification programs. Energy imports are therefore expected to increase to almost 90% of total energy consumption by 2001, from the current 75%. However, the principal role played by oil is expected to decrease from 56.2% in 1983 to 39.7% by 2001, thanks to vigorous programs to diversify to alternative energy sources such as bituminous coal and nuclear energy (Fig. 1). In particular, bituminous coal will emerge as one of the principal energy sources, increasing from 12.8% of total energy

Current and future plans for coal use in Korea

1093

demand in 1983 to a projected 27.2% by 2001. Nuclear energy is also expected to increasefrom 4.5% to 16.6% during the same period. 4.8

28

4,5 Cl.4

Renewable (others) c 1.3

L Hydropower

r) 1.0)

3.2

.

Nuclear power 16.6

12.8

2721

56.2 Petroleum

474

39.7

J 283

1986

1991

1996

2001

Fig. 1. Forecast of percentage share in total energy demand, by source: Korea, 1983-2001.

In the mean time, the energy demand structure will show a tangible change, approaching the energy consumption pattern of developed countries. That is, the transportation and industrial sectors will show significant increases, while the residential and commercial sectors will show a diminishing share (Fig. 2). 6.7

Pubk

(others)

5.5

,w 4.4J

Residential 8 commercial 35 9

28 2

31 9 19.9

,5,5

Transportation

4, g

Industry

983

1986

21.8

45.6

42.7

1991

1996

2001

Fig. 2. Forecast of percentage share in total energy demand, by sector: Korea, 1983-2001.

CURRENT

SITUATION

FOR COAL

DEMAND

AND SUPPLY

Korea’s energy resources are scarce. Anthracite coal is the only indigenous fossil fuel, and its reserves are severely limited. The total resources of anthracite coal are around 1.5 billion tons,’ of which only about 640 million tons are economically recoverable; these will last only about 30 yr at current production levels. Even though domestic coal production has increased significantly (from 7.4 to 21 million tons between 1962 and 1984),

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CHEE KE SEEK

its share in Korea’s total energy consumption has decreased from 35.7 to 20.9%. About 87.5% of the supply of anthracite coal is used for the residential and commercial sectors; only 9.6% and 2.4% were used for power generation and industrial purposes, respectively, in 1983. One-hundred per cent of the bituminous coal used in Korea is imported. The markets for bituminous coal expanded following the first world oil crisis into the power generation and cement industries. Thus, demand for bituminous coal increased 14.8 times during the period 1973 to 1983, from 0.6 to 9.6 million tons. Table 2. Supply and demand plan for anthracite coal (Unit: IO3Ton) 1983 1983

1986

1986 Gr0Wth Rate

Division

Growth Rate (%) 1991

1996

2001 19871991

SUPPlY Stocks Production Import

30.377 9363 19,861 813

29,OQO 6307 20,700 2000

Demand Residential/ Commercial Electric Power Others

21,670

Stocks

19921996

19972001

- 1.2 - 14.1 1.4 35.0

26.760 5466 20,300 1000

24,991 5191 19,Oco 800

23,323 4623 18,ooo 700

-1.6 -0.9 -0.4 -4.6

- 1.4 - 1.0 -1.3 -4.4

-1.4 - 2.3 -1.1 -2.6

23,279

2.4

21,324

19,832

18,667

-1.7

-1.4

-1.2

19,860

20,254

0.7

18,780

17,591

16,729

- 1.5

- 1.3

-1.0

2074 636

2525 so0

6.8 -8.4

2044 SO0

1741 500

1438 500

-4.1

-3.2

- 3.8

8367

5728

5442

5159

4656

-1.0

-1.1

- 2.0

-13.5

Table 3. Projection of bituminous coal consumption by use (Unit: lo3 Ton) Year

Division Metallurgical coal Steaming Coal Power Generation Cement Industry Other Industries Total

Average Annual Growth Rate (%) 19821987199219971986 1991 1996 2001

1983

1986

1991

1996

2001

6199

6200

8867

11,316

13,119

0.6

1.4

5.0

3.0

3434

8262

12,018

23,619

37,956

46.1

7.8

14.5

10.0

546

4912

6040

14,615

25,817

4.2

19.3

12.1

2883

3120

4374

5265

5600

7.0

3.0

1.2

S

230

1604

3739

6539

47.5

18.4

11.8

20,885 (17.4)

34,935 (23.1)

51,075 (27.2)

7.6

10.8

7.9

9633 (12.8)t

14,462 (16.0)

20.3 14.5

tFigure in parenthesis is ratio to total primary energy

PROSPECTS

FOR

FUTURE

COAL

DEMAND

AND

SUPPLY

Because of limited reserves and increasing production constraints, use of domestic anthracite is expected to gradually decrease. Annual coal production is expected to decrease by 2001 from the current 20 million tons to 18 million tons. Its share of the total primary energy requirements will decrease from 20 to 7% between 1983 and 2001. Bituminous coal, on the other hand, is expected to play an important role in the national energy balance due to vigorous energy diversification programs and limited contributions from solar energy and biomass. With increasing demand in the power generation and industrial sectors, use of bituminous coal is expected to increase at a rate of 9.4% in the

Current

and future plans for coal use in Korea

1095

199Os, from 9.6 million tons in 1983 to 51 million tons by 2001. Its share of the total primary energy requirements will increase to 27% by 2001, from only 13% in 1983. A large part of the demand for bituminous coal-25% of the total by 2001-is expected to come from the steel industry where bituminous coal is used as coking coal. The demand for bituminous coal for coal-fired power plants will increase drastically from 0.5 million tons (81%) in 1983 to 25.8 million tons (36.2%) by 2001.

REFERENCES 1. Bank of Korea, “Preliminary Estimate of Gross National Product for 1984”, Monthly Bulletin No. 39, Seoul (1985). 2. Korea Institute of Energy and Resources, “A study of the Comprehensive Analysis of the Energy Consumption Structure”, Report No. KI-84P-5, Seoul (1984). 3. Republic of Korea Ministry of Energy and Resources/Korea Institute of Energy and Resources, Yearbook of Energy Statistics. Seoul (1984). 4. Republic of Korea Ministry of Energy and Resources, Long-term Energy Projections and Strategies toward the Year 2@00”, Seoul (1985). 5. Korea Institute of Energy and Resources, “A Study of Modernization and the Establishment of a Standard Model in Coal Mines”, Report No. KE-84P-12, Seoul (1984).