Integrated energy poluvy analysis for drvrloping countries : the case of korea

Abstract

This study has presented the results of a long-term analysis of the Korean energy sector utilizing a network-based energy-I/O integrated system, with particular emphasis on Korean government``s oil dependence reduction grogram. This independence program includes an ambitious nuclear and coal power expansion program, long-term LNG-import contract, and a set of subsidies, taxes, and quotas designed to reduce oil consumption in the demand sectors. It was argued that when viewed in an integrated fashion, the current set of government actions that have been undertaken in Korea to reduce oil imports may be more expensive and less effective than previously realized. The reason arises from the interactions of the various actors at different points in the energy system. For example, if current policies are continued, demand for distillate fuels will increase from 30 percent of refinery output to 50 percent while residual demand will decrease from 50 percent to 30 percent by the turn of the century. Unless expensive refinery retrofitting is undertaken, Korea will be in the position of either importing distillate fuel, exporting residual, or both. Either situation would involve added imports of oil, either as distillate or as refinery feedstock. This analysis suggests that a more balanced policy for oil import reductions that takes into account the interactions of various actors might realize equal or greater reductions in oil imports at a lower long-run cost as compared to extending existing policies. Such a policy might forestall some planned expansion in baseload electricity generation capacity addition and concentrate on conserving fuels (mainly distillate) in the transportation sector, for example. Another observation lies in the effects of industrial structure, particularly in manufacturing, upon the nation``s energy use and its mix. As a fast growing economy, Koreas``s future energy supply and demand configuration is much dependent upon her industrial policy. Conve...