Korea is the latest nation to move toward the cessation of its nuclear energy programme. Earlier in the month, NFA questioned the political motivations to this move, in this second part to the feature, we consider the German experience and some possible economic consequences for energy hungry Korea...
Lessons from the German experience
The German experience in heading down the abandonment road should imbue the Koreans with a strong sense of foreboding. The two countries are extremely different in terms of their nuclear reliance, accessibility to cross-border nuclear energy purchase and technological advancement with respect to renewables. Yet, German has suffered somewhat under the Merkel Administration’s decision to clear NPPs from German territory.
Within weeks of the Fukushima incident, Chancellor Merkel, who governs by weak coalition, was faced with a blitzkrieg of public protests forcing her to reconsider the German energy mix. Almost 50% of aging German reactors were closed within a relatively short period following Fukushima, followed by the promise to phase out nuclear by 2022. But, and it’s a very important ‘but’, Germany has the option to purchase electricity from its nuclear behemoth next-door neighbour, France; and Germany is far further down the technological road in terms of renewables than Korea, which is surprisingly not particularly a leader in this area (although that is going to have to change, if President Moon proved determined to cancel nuclear and coal).
Germany is not without significant energy-related problems, despite its massive industrialised economy, huge consumer-based, and its advanced R&D in and use of renewables. The nuclear rich French, despite a smaller GDP than their eastern neighbour, pay half as much for electricity as do Germans, with one Economist commentator famously saying that Germany has made some unusually big mistakes in realigning its national energy policy, in particular, “abolishing nuclear power so quickly is crazy. But Germany’s biggest error is one commonly committed by countries that are trying to move away from fossil fuels [and nuclear] and towards renewables. It is to ignore the fact that wind and solar power impose costs on the entire energy system, which go up more than proportionately as they add more."
Such analysis of the German energy condition provides a serious cautionary tale for Korea. If the central European giant still remains troubled by its abandonment decision, then surely a similar but compounded, fate awaits its East Asian nuclear colleague.
Competing nuclear technology vendors may have cause celebrate
Some nuclear industry stakeholders are bound to rejoice at President Moon’s decision. South Korea is an advanced and established nuclear nation, a first generation nuclear player. The nation is major exporter of technology, partnering with a far-reaching group of emerging nuclear nations including India, Indonesia, Malaysia, Jordan and the UAE, and supplies nuclear tech and engineering to fellow established nation, China. Potentially diminishing its role on the global nuclear vendor’s stage will excite competitors.
While the Korean Atomic Energy Research Institute and the Korean Power Energy Company will continue to export its technology and infrastructure development capabilities around the world – one current major project includes large scale facilities (four units) in Barakah, Abu Dhabi, UAE – funding is surely to be reduced or activities scaled-down, and to some extent the apron strings will be cut. This will leave space in the market for French, Japanese and Russian vendors to step-up, an effect amplified by the recent financial failure of US-Japanese giant Westinghouse.
South Korea, China and Japan have all robust experiences in using nuclear technology, especially the power applications. In our opinion, regardless of their individual energy policies, they should strengthen their cooperation as neighbours on nuclear safety, security and emergency preparedness and response, and continue to share their nuclear safety expertise with potential newcomers in Asia, particularly in ASEAN, through nuclear cooperation networks in the region. Public awareness and education should be consistently promoted and widely pursued. “China and Russia are both marketing their nuclear technology actively all over Asia, including ASEAN. They would be glad if there were fewer competitors. But it is unlikely that South Korean nuclear vendors will suddenly retreat from its overseas business deals.”
Ambassador Ong Keng Yong, Executive Deputy Chairman, S. Rajaratnam School of International Studies and former ASEAN Secretary-General, states that is uncertain how any change of Korean government policy on nuclear power will affect the image of South Korean nuclear vendors and their capacity to take more construction deals.” However, there will have to be real and measurable effect given that funding is likely to be withdrawn and stakeholder involvement will inevitably decrease.
One simple question that truly needs to be confronted by the President Moon Bureaucracy is: does Korea have sufficient alternative energy sources to replace nuclear power? Another hard to ask question is: Will this policy reversal result in Korean using more "dirty" energy sources in its future energy mix? Whether or not President Moon Jae-in actually scraps construction on coal and nuclear plants will depend on the capacity of South Korea to meet its energy needs without them. The road ahead for the industrialised energy dependent nation of Korean is uncertain and perhaps, in light of the German Dilemma, far-reaching and potentially catastrophic policy decisions, however well-intentioned and populist and politically helpful they may be, must be placed on the table with greater caution and a detailed cost-benefit analysis. It is unlikely given the timeframe involved that anything approaching detailed analysis could have truly been conducted. Will the lights go out in Korea? No. But when energy costs soar, President Moon may be ruing past populist decisions.