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Late last year, Korea released its first Indo-Pacific strategy. The initial commentary on the strategy often focused on issues of the great power competition or whether the document had mentioned China enough. While the development of Indo-Pacific strategies by countries in Asia, North America, and Europe is being driven by the emergence of a new great power rivalry, the most interesting part of Korea's strategy may be the section on climate change and energy security and what that means for its emerging clean tech industry.
Russia's invasion of Ukraine has highlighted the importance of energy security. For much of last year, the war fueled price increases, not just in Europe, but in global energy markets. In Korea, the energy disruptions from the war resulted in rising costs for imports of fossil fuels. Despite the overall volume of imports of fossil fuels increasing by only 3 percent, Korea paid nearly 60 percent more for its imports of fossil fuels in 2022. These cost increases have been partially passed on to consumers in Korea through four price increases by KEPCO since the war began.
While the world may still be dependent on fossil fuels, it is also undergoing a transition to clean energy dependent on high-tech manufacturing. This transition creates the potential for Korea to play a significant role in the Indo-Pacific as a more stable provider of energy. According to the International Energy Agency, Korean firms are among the world's leaders in the manufacturing of electric vehicle batteries, as well as key manufacturers of electric vehicle battery parts such as cathodes and anodes. Korea also has the potential to be among the world leaders in hydrogen technology, solar panels and nuclear power.
Korea's Indo-Pacific strategy looks to integrate these technologies into Seoul's regional approach to climate change and energy security but seems to view the two issues as separate rather than part of an integrated whole. The strategy calls for cooperation in the area of emissions reduction through the utilization of zero-emissions vehicles, green shipping, and the development of electric vehicle charging stations. While the shift to electric vehicles and green shipping directly helps to reduce emissions, these are also key components of the larger energy transition. Electric vehicles also boost energy security, for example, by reducing the amount of petroleum countries' need to import and have the potential to serve as localized power sources when not being driven.
The energy security portion of the strategy focuses on the development of a hydrogen economy and nuclear power. Nuclear power will play an important role in the energy transition, especially as a source of base-load power to meet demand when wind and solar power are not available, but the strategy should take a broader approach to clean energy.
Korean manufacturers are among the most efficient at building nuclear power plants, but construction time still averages over four years. Small modular reactors, which are also part of the Indo-Pacific strategy, are a relatively new technology that could speed the process. Only a handful, however, are under construction worldwide and some estimates suggest that a series of small modular reactors being built in the United Kingdom may not come online until 2030.
The challenges with deploying nuclear power mean that any strategy needs to also include technologies that can be deployed more rapidly both to reduce carbon emissions sooner and improve energy security. It is surprising in this sense that solar power is not mentioned in the strategy. Korea is the world's sixth-largest exporter of solar panels. Hanhwa Q Cells is set to make significant investments in the United States in new production thanks to subsidies from the Inflation Reduction Act.
Incentives for solar manufacturing in Korea and the Indo-Pacific would support the development of a key energy industry in Korea while also helping the region to reduce its use of fossil fuels as new nuclear plants are constructed.
A continued focus on climate change and energy security domestically and in Korea's Indo-Pacific strategy could provide three distinct benefits. As a country with few domestic energy sources, transitioning to clean energy could improve domestic energy security and reduce the potential for the weaponization of Korea's energy imports ― something the strategy notes is becoming more common. While some clean energy technologies, such as solar, may not be ideal for deployment in Korea, their continued development could create new export industries and domestic jobs. Lastly, Korea's advantages as a manufacturing powerhouse could create opportunities for it to play a significant role in the region both as a provider of clean energy technology and in the policy-setting agenda.
Even a decade ago it would have seemed unlikely to consider Korea as a potential green energy powerhouse. But as the world transitions from an energy system dependent on drilling and mining for fossil fuels to one based on high-tech manufacturing, Korea finds itself with the potential to become a significant player in future energy markets. However, to reach that potential there will need to be a continued bi-partisan commitment to climate change and energy security.
Troy Stangarone (ts@keia.org) is the senior director of congressional affairs and trade at the Korea Economic Institute.
