Power sector carbon reduction review for South Korea in 2030

Abstract

This study investigates the cost-effectiveness and decarbonization of four essential carbon reduction strategies to achieve Korea’s recent 2030 NDC (Nationally Determined Contribution) goal in the power sector. Examining overseas experiences and identifying potentials and challenges in implementing these strategies in Korea, this study explores the performance of future Korean power systems under fifty-four configurations combining these strategies. The evaluation results indicate that: 1) Thirty-one of the fifty-four tested configurations can achieve the emission target (149.9 MtCO2e) with carbon abatement costs (COA) ranging from -$89 to $105/tCO2e. The optimal configuration with the lowest COA is a combination of nuclear restoration and renewable expansion strategies. 2) Renewable expansion significantly reduces the COA and levelized cost of electricity (LCOE). A pure renewable expansion strategy with photovoltaics of 68 GW and wind turbines of 35 GW attains the emission goal at a COA of -$54/tCO2e, in which the generation share of renewables reaches 42%. 3) A carbon tax of $104/tCO2e achieves the target if complemented by nuclear restoration. Otherwise, $120/tCO2e is needed. The COA and LCOE are increases by switching from cheap coal to expensive natural gas in both cases. 4) Twenty percent coal–ammonia co-firing combined with a carbon tax of $32/tCO2e and nuclear restoration can achieve the goal with relatively high costs compared with the optimal strategies. However, a co-firing strategy is limited because the generation shrinks at a minimum level when 40%∼ mixing ratios are applied, or when the fuel price gap between ammonia and natural gas becomes large.