1 Overview of/Update on the Energy Sector and LEAP Modeling Effort in the Republic of Korea Dr....

1

Overview of/Update on Overview of/Update on the Energy Sector and the Energy Sector and

LEAP Modeling Effort in LEAP Modeling Effort in the Republic of Koreathe Republic of Korea

Dr. David F. Von HippelDr. David F. Von HippelNautilus Institute Senior AssociateNautilus Institute Senior Associate

[Presented for the ROK Team, and based on [Presented for the ROK Team, and based on AES2006 Presentations by Dr. Chung Woo-jin AES2006 Presentations by Dr. Chung Woo-jin

and Dr. Jungmin Kang]and Dr. Jungmin Kang]Asian Energy Security Project MeetingAsian Energy Security Project Meeting

Tsinghua University, Beijing, PRC, November 1, 2007Tsinghua University, Beijing, PRC, November 1, 2007

AES 2007AES 2007 2Von Hippel/ROK Group 11/2007

OUTLINE OF PRESENTATION: The ROK Economy and Energy Sector—Brief

Update Overall Trends and KEEI Forecasts Structure of Energy Supply and Demand Key Policy Processes/Changes

The ROK LEAP Model—Current Status and Ongoing Work Model Structure Existing Paths Work ongoing and to be done Coordination/Integration with DPRK Model


ROK ECONOMY, ENERGY SECTOR

Rapid and Continuing Economic Growth Industry key sector, but Commercial,

Transport has been growing fast Population growth slowing

Structure of Energy Sector Vast majority of energy imported

(petroleum, LNG, Coal) Electricity generation nuclear, imported

coal, natural gas, small amount of hydro, declining amount of oil


ROK ECONOMY, ENERGY SECTOR

Indicator 1981 1990 1995 2003 2006

Avg. Annual Growth Rate (%)

‘81-‘90

‘90-‘06 ‘03-‘06

Primary Energy Consumption(million toe)

45.7 93.2 150.4 215.1 233.4 8.2 5.9 2.8

Per Capita Energy Consumption (toe)

1.18 2.17 3.34 4.50 4.83 7.0 5.1 2.4

Energy/GDP (toe/million won)

0.31 0.29 0.32 0.32 0.31 -0.7 0.42 -1.1

CO2 Emissions

(million t-CO2)135.9 239.0 366.9 474.4 ~495 6.5 4.7 1.4

CO2 Emissions

Per Capita (t-CO2)3.51 5.57 8.14 9.90 10.2 5.3 3.9 1.0

GDP (trillion won) 147.5 320.7 467.1 662.7 759.2 9.0 5.5 4.6

Population (million) 38.7 42.9 45.1 47.8 48.3 1.2 0.74 0.35


ROK Economic Growth/Energy Consumption

For 1987 - 1997• AAGR of Energy Consumption & GDP : 10.3% & 7.7%, respectively• Energy Elasticity of Energy Consumption to GDP : 1.34

For 1998 – 2005• AAGR of Energy Consumption & GDP : 4.7% & 5.6%, respectively• Energy Elasticity of Energy Consumption to GDP : 0.84• In 2006, GDP grew 5.2%, but Energy Consumption only 2.1%

For 1987 - 1997• AAGR of Energy Consumption & GDP : 10.3% & 7.7%, respectively• Energy Elasticity of Energy Consumption to GDP : 1.34

For 1998 – 2005• AAGR of Energy Consumption & GDP : 4.7% & 5.6%, respectively• Energy Elasticity of Energy Consumption to GDP : 0.84• In 2006, GDP grew 5.2%, but Energy Consumption only 2.1%

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

81 83 85 87 89 91 93 95 97 99 2001 2005

(%)

GDP

Primary Energy Consumption


ROK Primary Energy Consumption by Source

Trend in Consumption Shares (198119902006, %)

• Oil : 58.1 53.8 43.6• Coal : 33.3 26.2 24.3

• LNG : 0 3.2 13.7 • Nuclear : 1.6 14.2 15.9


• Oil : 58.1 53.8 43.6• Coal : 33.3 26.2 24.3

• LNG : 0 3.2 13.7 • Nuclear : 1.6 14.2 15.9

2006233.4 mil. toe

LNG13.7% Nuclear

15.9%

Hydro0.6%

Coal24.3%

Oil43.6%

Renewables& Others

1.9%

0

40

80

120

160

200

240

70 73 76 79 82 85 88 91 94 97 2000 2005

(mil. toe)

Coal Oil LNG Hydro Nuclear Firewood & Others


ROK Energy Consumption by Sector


• Industrial : 44.948.156.0 • Rsd. & Cmrcl : 40.729.320.7

• Transport : 9.618.921.0 • Public & Other : 4.83.72.2


• Industrial : 44.948.156.0 • Rsd. & Cmrcl : 40.729.320.7

• Transport : 9.618.921.0 • Public & Other : 4.83.72.2

-

20

40

60

80

100

120

140

160

180

75 78 81 84 87 90 93 96 99 2005

(mil. toe)

Industrial Residentail & Commercial Transport Public & Others

2005170.9 mil. toe

Residential/Commercial

20.7%

Industrial

56.0%

Public &Others2.2%

Transport21.0%


213.8 215.4 214.8 214.9 226.6 227.9

37.833.8 32.2

38.0

49.6

66.7

0

100

200

300

400

500

600

700

800

00 01 02 03 04 05

0

10

20

30

40

50

60

70

80

Import(mtoe) Import expenditure(b il.US$)

ROK Energy Imports Dependencemtoe

Energy Import (2005/2006)

• Import Dependency: 96.7% • ME Dependency of Crude Oil: 81.8%

• Energy Imports: $ 66.7 billion • Energy Import/Total Import: 25.5%

Energy Import (2005/2006)

• Import Dependency: 96.7% • ME Dependency of Crude Oil: 81.8%

• Energy Imports: $ 66.7 billion • Energy Import/Total Import: 25.5%

Billion US$


ROK Electricity Sector

Recent Trends (2005-2007)

• Total Capacity as of 7/07: 66.7 GW • Load Factor 76-88%

• Reserve margin ~10 - 25% • Growth in GWh 2005-2006: 4.6%

Recent Trends (2005-2007)

• Total Capacity as of 7/07: 66.7 GW • Load Factor 76-88%

• Reserve margin ~10 - 25% • Growth in GWh 2005-2006: 4.6%

0

10000

20000

30000

40000

50000

60000

70000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Cap

acit

y (M

W)

Hydro NuclearCoal Mix Oil ThermalLNG Combined CycleInternal Combustion


　 05 10 15 20 30AAGR(%)

05-10

10-20

20-30

GDP ( trillion won)

640 806 981 1,194 1,684 4.7 4.0 3.5

Population (million)

48.3 49.2 49.8 50.0 49.3 0.4 0.1 -0.1

Economy and Population

• Annual average growth rate (AAGR) of economy from 2005 to 2030 : 3.9 %

• Population will decrease after 2020

Economy and Population

• Annual average growth rate (AAGR) of economy from 2005 to 2030 : 3.9 %

• Population will decrease after 2020

Source : Korea Development Institute

GDP and Population

ROK FORECASTS/PROJECTIONS


　 2005 2010 2015 2020 2025 2030Agriculture&

Fishery 3.9 3.1 2.6 2.2 2.0 1.8

Industry 32.2 32.9 33.1 33.1 32.7 31.8

SOC 11.0 10.7 10.4 10.2 9.8 9.5

Service 52.9 53.2 53.9 54.6 55.6 56.9

GDP in industry

100.0 100.0 100.0 100.0 100.0 100.0

Industry Structure

• The AAGR of value added from ’05 to ‘30 in industry: 3.9 %

• The ratio of service industry will be higher : AAGR 4.2%(’05-’30)

Industry Structure

• The AAGR of value added from ’05 to ‘30 in industry: 3.9 %

• The ratio of service industry will be higher : AAGR 4.2%(’05-’30)

Fractions of value added by economic activity (%)

Source : Korea Institute for Industrial economics and trade



2005 2010 2015 2020 2025 2030

Food & Beverage 5.1 4.1 3.4 3.0 2.6 2.4

Textile product 3.8 2.6 1.9 1.6 1.3 1.2

Wood & Pulp, Paper 3.2 2.6 2.1 1.9 1.7 1.5

Petrochemical 16.9 15.1 13.7 13.0 12.4 12.0

Nonmetallic mineral 3.0 2.5 2.1 1.8 1.6 1.4

Basic metal product 6.7 5.8 5.2 4.7 4.3 3.9

Fabricated Metal 60.1 66.4 71.0 73.5 75.6 77.3

Others 1.2 0.8 0.6 0.5 0.4 0.4

Total 100.0 100.0 100.0 100.0 100.0 100.0

Fraction of value added by industrial sector (%)

Structural Changes in Industry (Manufacturing)

• AAGR of fabrication industries from ’05 to ‘30 : 5.0 % * Fabrication Industries: Information & communication, car-making, shipbuilding

• Shares of output by other sectors will fall as a result

Structural Changes in Industry (Manufacturing)

• AAGR of fabrication industries from ’05 to ‘30 : 5.0 % * Fabrication Industries: Information & communication, car-making, shipbuilding

• Shares of output by other sectors will fall as a result

Source : Korea Institute for Industrial economics and trade



(Unit: %) 228.6 MTOE

2010 2020 2030

Oil

Coal

LNG

Nuclear

RE & Others

44.4

24.0

13.3

16.1

2005

2.3

40.9

25.5

15.9

14.1

3.6

260.1 MTOE

36.1

25.3

15.5

17.9

5.1

330.7 MTOE

34.3

23.1

18.0

18.4

6.1

400.2 MTOE

Shares of primary energy use by Type (20052030, %)

• Oil : 44.4 34.3 • Coal : 24.0 23.1 • Natural gas : 13.3 18.0 • Nuclear : 16.1 18.4

Shares of primary energy use by Type (20052030, %)

• Oil : 44.4 34.3 • Coal : 24.0 23.1 • Natural gas : 13.3 18.0 • Nuclear : 16.1 18.4


AAGR 2.5% 2.4% 1.9%

2.2%(’05-’30)


4.5

5.5

6.5

7.5

8.5

05 10 15 20 25 30

year

per

capita

0.2

0.25

0.3

0.35

ener

gy/G

DP

per capita energy/GDP

Per capita energy & energy/GDP • Energy Consumption per capita will steadily increase while energy efficiency of the economy improves

Per capita energy & energy/GDP • Energy Consumption per capita will steadily increase while energy efficiency of the economy improves



(Unit: %)

2010 2020 2030

Industry

Transport

Residential

Commercial& Public

2005

287.2 MTOE

55.2

20.6

14.2

10.0

172.1 MTOE

54.6

20.8

13.6

10.9

192.9 MTOE

54.7

20.8

12.6

12.0

238.9 MTOE

55.1

19.9

12.0

13.0

Shares of Final Demand by Demand sectors (20052030, %)

• Industry : 55.2 55.1 • Transport : 20.6 19.9

• Resident : 14.2 12.0 • Commercial& Public : 10.0 13.0

Shares of Final Demand by Demand sectors (20052030, %)

• Industry : 55.2 55.1 • Transport : 20.6 19.9

• Resident : 14.2 12.0 • Commercial& Public : 10.0 13.0


AAGR 2.3% 2.2% 1.9%

2.1%(’05-’30)


Shares of consumption by final energy

• The shares of coal and petroleum will fall while those of other energy forms (electricity, city gas, heat, renewables) will be higher

Shares of consumption by final energy

• The shares of coal and petroleum will fall while those of other energy forms (electricity, city gas, heat, renewables) will be higher

0%

20%

40%

60%

80%

100%

05 10 15 20 25 30

year

consu

mpti

on renewables

heat energyelectricitycity gaspetroleumcoal



Supply-oriented energy policy • Energy policy was mainly aimed at supplying energy in a stable

manner and at low prices to enhance industrial competitiveness and contain inflation

Intervention of the government • Depended on central planning rather than on markets functioning

Supply-oriented energy policy • Energy policy was mainly aimed at supplying energy in a stable

manner and at low prices to enhance industrial competitiveness and contain inflation

Intervention of the government • Depended on central planning rather than on markets functioning

Positive Achievement • Well-established Domestic Supply Network for Oil, Gas, Electricity,

and District Heating Several negative results • Energy-Intensive Economic Structure • Environmental Problem

Positive Achievement • Well-established Domestic Supply Network for Oil, Gas, Electricity,

and District Heating Several negative results • Energy-Intensive Economic Structure • Environmental Problem

ROK Energy Policy Directions


ROK Energy Policy Directions Market Development and Privatization

Break up of KEPCo into generation, transmission, distribution components

Development of Korea Power Exchange Break up of KEPCo generation into nuclear, non-nuclear

components, with sale and private operation of some (non-nuclear) assets

Partial sale to private sector of part of stock of Korean National Oil Company

Revise tax structures for some fuels (including biofuels) Energy Cooperation

Oil and gas resources development (foreign and domestic) Participating in NEA energy cooperation research


ROK Energy Policy Directions

Energy-EfficientSociety

High Oil Price

SustainableEnergy System

EnvironmentalRegulation

Oil MarketInstability

UNFCCC

Challenges Policy DirectionsChanging Conditions

Overseas EnergyDevelopment

Energy SecurityThreats

ResourceCompetition

Open PolicyFramework

Conflicts betweenStakeholders

Policy DecisionProcess

InternationalOil Market

EnvironmentalConcerns

Energy Supply

Security

Non-GovernmentalOrganizations


Overseas DevelopmentRenewables

Energy Intensity(%) Share(%) Rate(%)

Efficiency

0.32

0.25

0.20

0.30

0.40

2005 2011

2.3

5.0

0.0

2.0

4.0

6.0

2005 2011

Oil Gas

3.7

15.0

4.7

30.0

0.0

10.0

20.0

30.0

2005 2013 2005 2013

ROK Energy Policy Directions From 2nd Energy Plan—3rd Plan upcoming 2007


THE ROK LEAP MODELDEMAND STRUCTURE Residential—Driven by number of households

Cooking, Space Heating, Lighting, Appliances (electric)

Industrial—Driven by industrial GDP, share Mining, Agriculture/Fisheries, Manufacturing,

Construction (Manufacturing dominant) Commercial/public—Driven by building area Transport—Driven by number of vehicles

Private vehicles — 4 types Mass transit and freight vehicles — 8 types


THE ROK LEAP MODELTRANSFORMATION STRUCTURE Electricity T&D Electricity Generation — 11 Types of power plants Industrial Combined Heat and Power (CHP) District Heating Town Gas production LNG Gasification Oil Refining Pipeline Gas Imports from RFE (for Regional Path) LNG Imports from DPRK (for Regional Path) Electricity Imports from RFE (for Regional Path)


THE ROK LEAP MODELReference or BAU Path

Extrapolation of currently evolving economy/energy sector trends (Need to update to latest projections)

Item 2001 2010 2020 2030 Annual Increase (%)

’01-’10

’10-’20 ’20-’30

GDP (1995 T KRW) 493.4 768.4 1,165 1,629 5.0 4.3 3.4

Population(Million)

47.3 49.6 50.7 50.3 0.5 0.2 -0.1

Households(Million)

14.9 16.9 18.2 19.1 1.5 1.0 0.5

Person per Household

3.2 2.9 2.8 2.6 -1.0 -0.5 -0.5


THE ROK LEAP MODEL

National Alternative Path—Current Structure Assumptions currently similar to BAU Path,

except electricity generation projections. Emphasizing renewable energy: Share of electricity

generation by renewables 7.0% of total electricity generation in 2011, comparing with 2.6% in BAU

No new deployment of nuclear power plants after 2017

Demand side planned, but not yet developed


THE ROK LEAP MODELRegional Alternative Path ROK participates in many of the regional

infrastructure and other cooperative activities proposed for the Regional Alternative path

Natural gas pipeline: recipient of gas from pipeline bringing gas from North Sakhalin in the RFE to the ROK, with some gas used in the DPRK, and beginning operations in 2016

LNG Terminal: ROK/DPRK collaboration on a new LNG terminal, in the southern DPRK

Electricity Import: Transmission interconnection between RFE and ROK, passing through DPRK; 3 GWe in both directions


ROK LEAP MODEL: Initial ResultsResidentialIndustrialCommercial PublicTransportation

Demand Results: Energy demand final unitsScenario: BAU, Fuel: All Fuels

20012004 2008 2012 2016 2020 2024 2028

Millio

n To

nne

of O

il Eq

uiva

lent

s

340

320

300

280

260

240

220

200

180

160

140

120

100

80

60

40

20


ROK LEAP MODEL: Initial ResultsTown GasNatural GasNaphthaLPGKeroseneJet KeroseneIndustrial HeatHeatGasolineFuel OilElectricityDieselCoal {bituminous}Coal {anthracite}

Demand Results: Energy demand final unitsScenario: BAU

2001 2004 2007 2010 2013 2016 2019 2022 2025 2028

Millio

n To

nne

of O

il Eq

uiva

lent

s

340320300280260240220200180160140120100806040200


ROK LEAP MODEL: Initial ResultsSolid FuelsRenewablesNuclearNatural GasHydropowerCrude Oil

Resource Results: Primary requirementsScenario: BAU

2001 2004 2007 2010 2013 2016 2019 2022 2025 2028

Millio

n To

nne

of O

il Eq

uiva

lent

s

400

350

300

250

200

150

100

50

0


ROK LEAP MODEL: Initial ResultsOil ProductsNatural GasHeatElectricity

Resource Results: Primary requirementsScenario: BAU

2001 2004 2007 2010 2013 2016 2019 2022 2025 2028

Thou

sand

Ton

ne o

f O

il Eq

uiva

lent

s30,00028,00026,00024,00022,00020,00018,00016,00014,00012,00010,0008,0006,0004,0002,000

0-2,000-4,000


ROK LEAP MODEL: Initial ResultsAnt. CoalBit CoalOil SteamLNG SteamCombined CycleInternal CombustionNuclearHydroWind PowerSolar PVTidal Power

Transformation Results: CapacityScenario: BAU, Capacity: All Capacities

2001 2005 2009 2013 2017 2021 2025 2029

Thou

sand

Meg

awat

ts

110

100

90

80

70

60

50

40

30

20

10

0


THE ROK LEAP MODELNEXT KEY STEPS BY ROK TEAM Team leader, Prof. Shin Eui-soon of Yonsei Univ., Dr.

Chung Woo-jin of KEEI advising Update to 2006 Base Year, add latest projections Add detail as available/needed (Manufacturing

subsectors?), review assumptions Add/revise Demand-side measures for National

Alternative Plan; add demand-side costs Add supply-side costs for a number of modules Add resource costs Develop, evaluate Nuclear “Max” and “Min” Paths Link with updated DPRK paths (LNG, imports from

RFE) Develop alternative nuclear fuel cycle paths


THANK YOU!THANK YOU!

1 Overview of/Update on the Energy Sector and LEAP Modeling Effort in the Republic of Korea Dr....

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