Korea

In acknowledgement of the multi-agency nature of the energy programme and the cross-cutting nature of policies, the IEA recommends that the government enhance the role of the Presidential Commission on Carbon Neutrality and Green Growth in partnership with the Ministry of Climate, Energy and Environment (MCEE) and entrust it with a guiding role in strengthening the National Framework Plan for Carbon Neutrality and Green Growth. In particular, the Commission’s primary function would be to encourage gradual progress and provide strategic recommendations for policy delivery. Its role as a collaborative forum to align and establish guidelines across levels of government in pursuit of the targets outlined in the National Strategy and Framework Plan for Carbon Neutrality and Green Growth should be further strengthened. It could help MCEE ensure that the market frameworks are in place to deliver the optimal technology mix and the associated investments, taking a system-wide perspective that accounts for increased variable generation and other clean energy technologies such as nuclear power and pumped storage. The government may like to explore the experiences and lessons from other IEA countries such as Ireland, Switzerland and the United Kingdom when developing legislation on climate action and sectoral climate plans and how advisory councils support and advise their governments.

Korea’s plans to expand its nuclear capacity should be coupled with an ambitious renewables programme. Realisation of the renewables programme involves significant expansion of installed capacity from 2022 to 2030 to reach Korea’s longer-term goals. Looking beyond plans for solar PV and offshore and onshore wind, there should be careful consideration of the potential of renewable energy sources and technologies such as hydrogen, large-scale battery ESS, and electric and fuel cell vehicles to progress to a low-carbon economy. Korea faces distinct challenges in its efforts to expand new and renewable energy sources. The limited amount of available land, the large share of forested land and the high population density impose stress on planning for renewables. Deployment and integration of renewable electricity is further complicated by the lack of interconnections with neighbouring countries. Many other IEA countries have greatly expanded their renewable energy capacity in recent years and have published roadmaps for further expansion.

Public opposition to energy infrastructure can lead to delays, increased costs and have a negative material impact on the location of energy power projects. To make engagement meaningful and embed it into all policy areas, Korea should develop and adopt a national strategy for public engagement that establishes standards of communication with local communities. Communication should begin at the earliest possible opportunity, for example when plans are first being developed, and maintained on a continuous basis, including the permitting and construction phases. These standards will create understanding at the local level as to how they will be consulted with and at which stage of plan and project development.

Furthermore, the messaging around these infrastructure projects should be simplified and linked to broader goals of climate change and economic opportunity. As much as possible, communications and engagement should be led at the local level by public administrators and local politicians. At the national level, messaging across government should be coherent and simple as to the purpose of these plans and projects. The Strategy should include commitments to review community benefits, including compensation, proximity pricing, employment opportunities and local service obligations. The Strategy will also seek to instil a sense of national pride, helping to ensure the project’s success and long-term sustainability.

The core function of spatial planning is to better balance social, economic and physical development. In Korea it could be used to identify optimal locations for new energy infrastructure and different categories of land and sea use. Mapping energy demand will allow better forecasting the location and spatial demands of future energy requirements. Korea should seek to embed spatial planning into the energy planning process, which will enable it to align the needs of electricity demand, generation and transmission infrastructure. Plans for new hydrogen and LNG infrastructure should also be taken into account when developing an integrated approach to new infrastructure. A national spatial plan would serve as a catalyst for a national conversation about the optimal location of energy demand from new industries and necessary infrastructure.

The K-ETS covers about three-quarters of GHG emissions and is the main tool to achieve Korea’s climate pledges. The K-ETS experiences low liquidity, prices are low and have decreased in recent years. The fourth phase of the K-ETS will run from 2026 to 2030 and the cap for this period will be determined soon. Liquidity and price discovery could grow by increasing the share of allowances allocated by regular auctions and fully opening these auctions to all market participants, banks, brokerages and other intermediaries. Introducing a market stability mechanism with a mandate to auction additional allowances held in reserve (within the overall cap) in periods of low liquidity, as is the case for other market stability mechanisms, would further boost liquidity when necessary. The market design should ensure the carbon price feeds through to the electricity price and acts as an incentive to invest in zero and low-emissions technologies. The allocation of allowances should also be linked directly to Korea’s 2030 climate targets.

The present regulatory model for Korea placed KOREC in the structure of the newly-established Ministry of Climate, Energy and Environment in October 2025, a major shareholder of KEPCO. Consumers and the energy sector will be better served by adopting a new regulatory model. Among other tasks, the independent regulator should be responsible for redressing imbalances in the electricity retail market and ensuring the transition from the existing tariff retail regime to a transparent and market-based one. The regulator should also ensure that low-income households and vulnerable consumers are protected from exposure to energy poverty. The regulator should focus on developing measures to effectively unbundle KEPCO’s different functions while ensuring the long-term financial sustainability of its retail electricity business.

Korea is an assertive and successful nuclear energy producer which is rightly a source of national pride and international envy. The country has strong ambitions to establish itself as a leader in the development and construction of small modular reactors. One means to support this goal would be to leverage existing knowledge, technical expertise and manufacturing capacity to create a national industrial complex for the construction and demonstration of SMRs. This industrial complex should focus on demonstrating both SMR manufacturing and efficient SMR operation for an end‑use industrial case application. By leveraging its industrial capabilities, Korea can focus on showcasing efficient SMR manufacturing while pioneering the world’s first integrated industrial case of, for example, nuclear hydrogen production and use. This would position Korea at the forefront of an emerging industrial sector and consolidate its own emerging hydrogen economy, driving significant economic growth.

Korea is working to deliver its Basic Plan for Hydrogen Economy Implantation and subsequent policy directions from the Hydrogen Economy Committee, which determines a pathway for developing its hydrogen ecosystem. The government implemented a certification system to ensure that incentivised hydrogen is clean. Korea focuses on demand-side policies to kick off the market for clean hydrogen, specifically by incentivising the use of hydrogen in electricity generation and mobility. Although this may be a good strategy to attract the first import volumes of clean hydrogen, Korea may have to identify other decarbonisation options for its hydrogen economy, with an emphasis on cost-effectiveness.

Korea should clarify the policy instruments needed to increase the use of hydrogen in hard-to-abate sectors such as industry and heavy-duty transport, which were envisioned in the Basic Plan for Hydrogen Economy Implementation and subsequent policies. Furthermore, it should aim to reduce the number of conversion steps when importing hydrogen from abroad, for example by using the hydrogen (carrier) in the form it arrives in Korea. To achieve this, policy instruments based on the entire “well‑to-wheel” value chain should be strengthened.

Korea should create clear and transparent rules on building, owning and operating hydrogen pipelines and import terminals. Investors and project developers need clear and stable regulatory frameworks to back their investments. Without timely buildout of infrastructure, the link between hydrogen supply and demand is broken, leading to uncertainty and stunted market growth. Regulatory measures that focus on planning, repurposing existing natural gas pipelines and storage facilities to lower costs, streamlining permitting frameworks, and building cross-border co-operation on hydrogen networks can facilitate robust market development.

As part of these broader efforts, Korea introduced a legislative proposal in January 2025: the Hydrogen Business Bill. It aims to establish a sound regulatory foundation for the hydrogen industry by setting rules for permitting, supply-demand management, obligations of market participants and user protection. It is expected to lay a firm legal ground for shaping a well-functioning hydrogen market and supporting the development of a robust industrial ecosystem, which would reinforce investor confidence in Korea’s emerging hydrogen economy.

Korea developed a certification scheme with emission categories for hydrogen for use in its Clean Hydrogen Power Bidding Market. As a major future importer of clean hydrogen and its derivatives, Korea is active in international fora (e.g. the International Partnership for Hydrogen and Fuel Cells in the Economy) discussing clean hydrogen certification schemes and their mutual recognition. Korea’s clean hydrogen certification scheme is based on various international standards, including ISO/TS 19870, while taking its national circumstances into consideration. As demonstrated in the first year of the electricity bidding market of the Clean Hydrogen Portfolio Standard, suppliers that are interested in the Korean market are willing to align their production processes to the Korean scheme. These suppliers that need to consider the certification rules of their buyers may prefer that domestic market certification schemes do not conflict with those of their buyers. Accordingly, it is important to advance discussions on harmonising clean hydrogen certification standards internationally, while taking into account each country’s specific national and market circumstances to ensure credibility and interoperability across markets.

Korea is a successful manufacturer of battery storage technology. Electricity storage can provide a range of services to the power system, including maximising the use of variable renewables, helping to manage congestion on the network, and providing a range of network services, such as frequency response and reactive power. To incentivise investment and deployment of electricity storage, revenues renumerating the technology for the benefits it brings to the system are required. These revenues are not currently visible to investors or open to market competition. In July 2025, Korea expanded the Centralised Contract Market for ESS established on Jeju Island to the mainland. This mechanism is a market-based competition mechanism which provides developers to predictable revenue stream over the life of the project. Future iterations of this market should be open and accessible to a range of technologies.