Climate minister stresses need to lower industrial electricity rates to boost Korea's competitiveness

Climate Minister Kim Sung-whan speaks during a press conference held at the Government Complex Seoul, Thursday. Yonhap

Climate Minister Kim Sung-whan on Thursday called for efforts to lower industrial electricity rates in a bid to help Korean companies boost their global competitiveness, while reaffirming the country's push to expand clean energy amid climate change and the growth of advanced industries.

Kim made the call in a press conference marking the one-year anniversary of the Lee Jae Myung administration, which transferred the role of devising energy policies to the Ministry of Climate, Energy and Environment, formerly the environment ministry, from the industry ministry in a bid to strengthen Korea's response to climate change and foster the country's transition to renewable energy.

"One point I personally regret is that electricity rates were raised toward the end of the former Yoon Suk Yeol administration, and rates for industrial use, in particular, were substantially increased," Kim told reporters, explaining that other countries have more expensive electricity rates for domestic use and cheaper rates for industrial use to control costs.

Korea raised the electricity rate for industrial use by 9.7 percent in October 2024 amid the Korea Electric Power Corp.'s (KEPCO) financial troubles stemming from a global energy price surge during the Russia-Ukraine war.

Currently, Korea's electricity rate for industrial use stands at 181 won ($0.12) per kilowatt-hour (kWh), much higher than the 120 won per kWh level in China and the United States, Kim said.

Rates in Europe and Japan are a little bit higher than Korea's, but prices here should be lowered as Korean companies are mainly competing with Chinese firms, he explained, noting that the government is mulling introducing a differentiated electricity pricing scheme by region.

The regional electricity rate system is expected to help industries based in regions outside of the greater Seoul area and with heavy power consumption, such as petrochemical and steel, enjoy cheaper electricity prices.

The climate minister also reaffirmed the government's push for transition into clean energy, mainly renewable energy sources and nuclear power, from coal power, and transform the country into an "electro-state."

Last year, the Seoul government set a goal to reduce the country's greenhouse gas emissions by 53-61 percent from 2018 levels by 2035.

Under the nationally determined contribution (NDC) target for 2035, Korea aims to generate 30 percent of power through renewable energy by 2035 and expand the installed capacity of renewable energy facilities to 100 gigawatts by 2030, while phasing out of coal-fired power generation by 2040.

Renewable energy accounted for 11.4 percent of the country's total energy generation in 2025, while coal power took up around 30 percent.

Kim said the government will consider the push for clean energy and increasing demand for electricity with the growth of artificial intelligence (AI) and other advanced industries when devising the 12th basic plan for electricity supply and demand for the 2026-40 period.

Kim did not rule out the possibility of additional construction of nuclear power plants, vowing to make a "practical" decision.

Regarding speculations that the government is considering putting a price cap on gas prices, a core component of domestic electricity rates, the minister said the country is not facing imminent upward pressure on electricity rates at the moment, but vowed an active response in case continued energy price volatility put pressure on KEPCO.

KEPCO could face an operating loss when the average system marginal price (SMP), or the wholesale electricity price, reaches the 146 won per kWh level, but the SMP stood at around 126 won as of Tuesday, he explained.

During the Russia-Ukraine war, the SMP surpassed the 190 won level, even touching 200 won at one point, driving the country's electricity provider into hundreds of trillions of won in debt.