South Korea's energy transition is taking its toll on Australia
Decarbonization puts €3.9 billion of Australian exports at risk
SydneyIn the midst of the COP30 sessions, South Korea announced that it aims to shut down the country's 61 thermal power plants, responsible for 33% of energy production, within 15 years. The world's fourth-largest coal importer, accounting for 8% of total exports, has set closure dates for 40 power plants, with the remaining 21 slated for closure by early 2026. Kim Sung-hwan, South Korea's Minister of Climate, Energy, and Environment, stated from Brazil that the closures are not only for climate reasons but also to increase competitiveness and create thousands of jobs. South Korea is the second Asian country, after Singapore, to join the Powering Past Coal Alliance, an initiative that brings together some sixty countries, mostly developed nations. An hour after the announcement, the minister participated in an event in Belém with his Australian counterpart, Chris Bowen. Australia has seen its presence in the South Korean market reduced by competitors such as Russia and Indonesia, but it still exports almost 10% of its coal to the Asian country, with a value of around AU$2.3 billion (approximately €1.3 billion) in 2025, according to the auditor.
However, this type of mining is at risk of not being profitable. According to an analysis by the US-based non-profit organization IEEFA, there are no emerging markets for Australian coal (which is of higher quality), nor sufficient evidence that, in the event of a potential increase in demand, it would not be met by cheaper coal. For Rod Campbell, research director at the Australia Institute, an economic and public policy think tank, Seoul's decision is a "message to end coal in Asia," framed within the competition they maintain with countries like Japan, Taiwan, and China, which together account for 56% of exports.
The industry association, the Minerals Council of Australia, admits no concern. In an emailed statement attributed to its CEO, Tania Constable, they emphasize that South Korea "continues to fund underground carbon capture technologies to reduce its emissions, while using coal." —although these technologies have not proven their effectiveness—, and estimate exports for that year at between €3.9 billion and €6.9 billion, representing 9.6% of the total.
The Australian Treasury, however, in a September report, predicts that the value of coal exports, but also gas exports, will plummet by 50% in the next 5 years. "For a long time, these decarbonization trends weren't really believed," says Jorrit Gosens, PhD in environmental economics and management and professor at the Australian National University. "I think it's time for both state and federal governments to start accepting that this is not a sector with a future," he notes.
"The (right-wing) Coalition and the Labor government see the issue of coal and fossil fuel exports as too big a battle," points out Peter Christoff, professor of climate change and policy at the University of Melbourne, who in 2012 published an article in which he called for an end to it. "Governments in Australia are very happy to avoid the political headache and let the markets do their job," and that "is a bad idea," he concludes.
South Korean Parliament tightens the schedule
In the past week, a proposed law in Seoul's parliament has indicated that the transition could be more ambitious, with coal-fired power plants set to close by 2035, five years ahead of the ambitions of the new president, Lee Jae-myung. This marks a political shift for a country traditionally reluctant to invest in renewable energy.
Over the past decade, South Korean companies such as steelmaker POSCO, with its subsidiary Hume Coal, and KEPCO (whose main shareholder is the state), have unsuccessfully attempted to open mines in Australia. Courts and governments have halted the projects, which faced opposition from local residents and ranchers. "If things had been different in the last 10 or 15 years and those large mines, funded by South Korean money, had been operating [...], I think it would have been much more complicated," Campbell notes.
But the money seems to be going elsewhere, and the coal sector is losing ground in Seoul. According to a recent survey of 105 senior executives, 99% agree that the government should undertake the energy transition over the next decade, and half of these indicate that they are open to abandoning fossil fuels before 2030.
