KEEI
Korea Energy Demand Outlook
March 2014
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
March 2013
KEEI
Korea Energy Demand Outlook
·Director of research Lee, Seung-moon(paragon@keei.re.kr)
·Primary energy-Oil Lee, Seung-moon(paragon@keei.re.kr)
·Electricity Kim, Cheol-hyeon(chkim@keei.re.kr)
·Town gas/Thermal energy Park, Myeong-deok(mdpark@keei.re.kr)
·Coal/Conversion Lee, Sang-youl(akan539@keei.re.kr)
·Material/Research support Jo, Eun-jeong(12220@keei.re.kr)
·Material/Research support Jang, Seon-hwa(jsh9459@keei.re.kr)
·Statistical support Lee, Bo-hye(bhlee@keei.re.kr) Phone: +82-31-420-2264, +82-31-420-2234
Fax: +82-31-420-2164
KEEIKorea Energy Demand Outlook
This report quickly identifies recent changes in energy supply and demand and provides energy supply/demand forecast indexes and other information of great interest for formulation of government policy. It is intended to facilitate government efforts to set and adjust overall policy on energy supply and demand.
This report was written and edited by the Energy Demand and Supply Forecast Team under the Center for Energy Information and Statistics of KEEI.
Summary ……… 4
1. Energy Consumption ……… 7
2. Energy Outlook ……… 12
3. Major characteristics……… 20
4. Policy implications……… 24
<Table 1> Rate of increase of each major energy source……… 6
<Table 2> Primary energy consumption and outlook ……… 18
<Table 3> Final energy consumption and outlook ……… 19
[Figure 1] Economic growth and primary energy consumption ……… 7
[Figure 2] Change in primary energy consumption……… 9
[Figure 3] Change in final energy consumption by sector ……… 10
[Figure 4] Economic growth rate and primary energy increase ……… 13
[Figure 5] Outlook for energy intensity and per-capita consumption ……… 13
[Figure 6] Percentage shares of energy sources ……… 15
[Figure 7] Percentage share of final energy demand of each sector ……… 17
[Figure 8] Oil dependence and forecasts ……… 23
Subject Contents
Table of Contents for Titles
Table of Contents for Tables
Table of Contents for Figures
Summary
▶
(Primary energy)Primary energy demand for 2014 is forecast to rise 2.6% from the previous year to 287.6 million toe.
As was the case in 2013, the rate of increase in primary energy demand will likely be lower than the economic growth rate (3.7%).
* The rate of increase in energy consumption exceeded the economic growth rate from 2009 through 2012.
A rise in electricity demand (2.7%), triggered by an increase in electricity demand for industrial use (4.8%) as an outcome of economic recovery, is forecast to lead primary energy demand.
(Key energy indicators) Energy efficiency will likely improve and per-capita energy consumption is expected to rise.
Energy intensity (toe/million won), which is an index that indicates national energy efficiency, is expected to improve somewhat to 0.244 in 2014.
Per-capita energy consumption for 2014 is forecast at 5.70 toe.
-It is forecast to remain at a higher level than in major OECD countries.
* Per-capita energy consumption (toe): (’11) 5.56 →(’12) 5.57 →(’13) 5.58 →(’14) 5.70
* Comparison among major countries in per-capita consumption (2011): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
(By energy source)Electricity (2.7%) and LNG (2.0%) are expected to lead the rise in demand.
Oil (0.6% increase): It is expected to rise 0.6% year-on-year, attributable to increased demand in the transport sector and industrial sector.
* Rate of increase in naphtha demand (%): (’12) 8.3 →(’13) 0.5 →(’14) 2.4
Coal (1.0% increase): There will likely be a rise of 1.0% as a result of an increase in coal demand for industrial use that will more than offset a reduction in coal demand for power generation following the resumption of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1.
LNG (2.0% increase): Natural gas demand is forecast to rise much more slowly because the town gas penetration rate is reaching a state of saturation.
* Rate of increase in natural gas consumption (%): (’12) 8.1 →(’13) 4.7 →(’14) 2.0 Nuclear power (14.2% increase): Operation of some nuclear power plants was stopped last year due to cable issues. Nuclear power generation is forecast to rise substantially with the resumption of operation of these nuclear power plants.
Electricity (2.7% increase): Demand for industrial use is forecast to go up 4.8% owing to a rise in industrial production. It is forecast to lead an increase in overall electricity demand.
(By consumption sector)Final energy demand is expected to rise 2.4% to 215.6 million toe as a result of the economic recovery.
Industry (3.5% increase): Town gas (6.0%), electricity (4.8%), naphtha (2.4%), etc. will likely lead an increase in energy demand in the industrial sector.
Transport (1.6% increase): This increase is due to economic recovery, an increase in demand for domestic and overseas traveling, and a rise in the number of registered vehicles, even in the face of the persistently high oil prices.
Residential/commercial/public (0.4% increase): Demand will likely go down due to the warm weather in the first half of the year. Demand for oil will continually be replaced by demand for other energy sources.
(year-on-year, %)
Category 2011 2012 2013p 2014e
Primary energy 4.5 0.7 (2.1) 0.6 2.5
Oil 0.9 3.2 -0.1 0.6
Coal 8.1 -2.1 1.1 1.0
Natural gas 7.6 8.1 4.7 2.0
Electricity 4.8 2.5 1.8 2.7
Nuclear energy 1.1 -2.8 -7.7 14.2
<Table 1> Rate of increase of each major energy source
Notes: p refers to provisional values; e refers to forecasts
Primary energy consumption for 2013 is tentatively tallied at 280.4 million toe, a year-on- year rise of 0.6%.
The rate of increase in energy consumption went down owing to the continued slowdown in global and domestic economic growth as well as the persistently high international oil prices.
* Global economic growth rate (%): (’11) 3.9% →(’12) 3.2% →(’13) 3.0%1)
* Domestic economic growth rate (%): (’11) 3.7% →(’12) 2.0% →(’13) 2.8%
* Primary energy increase rate (%): (’11) 4.5% →(’12) 0.72)→(’13) 0.6%
Excluding energy for raw material use (non-energy oil, coking coal), primary energy consumption rose 0.3% year-on-year.
- Energy for raw material use accounted for 26.7% of primary energy consumption, indicating year-on-year growth of 0.2%p.
1) IMF (2014), World Economic Outlook
2) Primary energy increased 2.1% when the same energy conversion factor as that used in 2011 is applied.
Electric furnace steel plant of Dongbu Steel (annual production capacity of 3 million tons, July
Energy Consumption
1
[Figure 1] Economic growth and primary energy consumption
Energy consumption by source in 2013
Oil consumption went down 0.1% year-on-year, attributable to a much more modest increase (0.5%) in naphtha consumption, which had previously risen sharply, and a considerable decrease (-29.9%) in heavy oil consumption for industrial and transport use.
- Naphtha consumption rose a mere 0.5% owing to a slowdown in demand for exports to China and the need to conduct maintenance work on petrochemical facilities.
- Naphtha accounted for 46.8% of total oil consumption, indicating an increase of 0.3%p year-on-year.
- There was a rise in demand for LPG to replace naphtha, a raw material used in the petrochemical industry. In contrast, consumption of LPG for town gas calorific value adjustment went down.
- Oil consumption fell 5.4% in the residential/commercial/public sector owing to the substitution of oil by other energy sources such as town gas. This was a result of the high oil price.
- Oil consumption in the industrial sector rose 1.5% because of steady economic recovery in the second half of the year. Excluding consumption for raw material use, it actually rose 2.6%.
- In the transport sector, consumption dropped 0.2% owing to a sharp decrease in heavy oil consumption by domestic shipping companies, an outcome of financial difficulties in the shipping industry. This occurred despite a rise in gasoline and diesel consumption, triggered by an increase in the number of registered vehicles.
Consumption of coal rose 1.1% year-on-year, attributable to a rise in coal demand for industrial use. Consumption for power generation remained unchanged from the previous year.
- Bituminous coal consumption for steel making rose as a result of rationalization and expansion of steel facilities in the second half of the year. There was also a rise in bituminous coal consumption in the cement industry, an outcome of increased SOC spending and higher exports. Overall, bituminous coal consumption went up 1.0%
year-on-year.
- Anthracite consumption went up 2.3%, attributable to a rise of 4.7% in consumption for residential/commercial use, which mainly consists of briquette consumption for heating as a result of increased installation of briquette boilers for improvement of welfare of the low-income class. This rise more than offset a sharp drop (-45.3%) in anthracite consumption for power generation.
Consumption of natural gas (LNG) went up 4.7% year-on-year, a result of a sharp rise in consumption for power generation owing to a decrease in the operation rate of nuclear power generation. Natural gas consumption for gas production remained steady.
- Consumption for power generation increased 10.0%, attributable to stoppage of operation of some nuclear power plants and the resulting demand for a substitute.
- Consumption of town gas went up 3.0% because the petrochemical industry led consumption for industrial use. Town gas consumption for heating remained steady, rising only 0.3%, as a result of temperatures changing little from last year's levels.
Consumption of nuclear energy plummeted by 7.7% year-on-year, owing to the stoppage of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1 due to cable issues.
[Figure 2] Change in primary energy consumption
[Figure 3] Change in final energy consumption by sector
* Nuclear power plant operation rate (%): (’12) 87.0% →(’13) 76.5%
Electricity consumption rose 1.8% year-on-year, attributable to a slower increase in consumption, an outcome of the slowdown in industrial production and imposition of electricity demand management policies.
- Electricity demand in the residential/commercial sector declined as a result of the imposition of rigorous electricity demand management regulation in the summer and reduced heating load from the unseasonably warm weather this winter.
- Electricity consumption for industrial use rose 3.1%, attributable to increased electricity consumption in the petrochemical (3.1%) and fabricated metal (4.2%) industries.
The percentage of primary energy consumption by source was the highest for oil at 37.8%, followed by coal at 29.2%, LNG at 18.4%, and nuclear power at 10.6%.
Energy consumption by sector in 2013
Final energy consumption rose 1.2% year-on-year to reach 210.6 million toe.
- There was a rise of a mere 2.0% in the industrial sector owing to the economic
slowdown and the resulting slowdown in industrial activity. Energy consumption dropped 0.4% in the residential/commercial/public sector due to unseasonably warm weather. In the transport sector, energy consumption remained unchanged. There was a rise in the road sector, which was offset by a considerable drop in heavy oil consumption.
Energy consumption in the industrial sector was low in the first half and high in the second half of the year (first half of the year: 1.6%; second half of the year: 2.5%), an outcome of gradual economic recovery in the second half of the year.
- Town gas and electricity led the rise in energy consumption.
- Energy consumption for fuel in the industrial sector rose 2.7%.
- The rates of change by source were 3.1% for electricity, 6.9% for town gas, 2.2% for coal, and 1.5% for oil.
Energy consumption in the transport sector remained steady from the previous year, attributable to a sharp drop in fuel consumption for marine transportation despite a rise in consumption for road transportation.
- Consumption of gasoline and diesel rose 2.2% and 4.1%, respectively, an outcome of an increase in the number of registered vehicles. In contrast, heavy oil consumption decreased 28.9% as a result of reduced marine transport by national flag carriers, attributable to business difficulties in the domestic shipping industry.
Consumption in the residential/commercial/public sector went down 0.4% year-on-year owing to unseasonably warm weather in the winter.
- There was a continued decrease in consumption, attributable to a reduction in town gas consumption for heating (-0.3%) and the replacement of oil (-5.4%) by other energy sources, despite a rise in anthracite consumption (4.7%) owing to increased installation of briquette boilers for improvement of welfare.
3) Electric furnace steel plant of Dongbu Steel (annual production capacity of 3 million tons, July 2009), Blast Furnace No. 1 and No. 2 of Hyundai Steel (annual production capacity of 8 million tons, January and November 2010), Thick plate plant of Dongkuk Steel (annual production capacity of 1.5 million tons, May 2010), Yeosu NCC plant of Lotte Chemical (1.86 million tons⇒2.11 million tons, March 2012), etc.
Primary energy demand is forecast to rise 2.6% year-on-year in 2014 to 287.6 million toe.
Primary energy demand is forecast to rise at a lower rate than the economic growth rate, as in 2013.
* Domestic economic growth rate (%): (’12) 2.0% →(’13) 2.8% →(’14) 3.7%
The rise in primary energy demand will be led by an increase in electricity demand, among other factors.
Forecasts for key energy indicators
Energy intensity is expected to slightly improve from 0.252 toe/million won in 2012 to 0.247 toe/million won in 2013 and to 0.244 toe/million won in 2014.
- Between 2009 and 2012, consumption of electricity, bituminous coal for raw material use, and naphtha rose considerably, attributable to expansion of facilities3)in energy- intensive industries and active production.
- Energy intensity began to fall last year as a result of the extinction of facility expansion effects and a slowdown in growth of production activities in energy-intensive industries.
Per-capita energy consumption is expected to have risen from 5.57 toe in 2012 to 5.58 toe in 2013 and is forecast to rise to 5.70 toe in 2014.
- It is expected to remain at a high level compared to major OECD countries.
- There was a rise in energy demand to power electrical equipment, electronic equipment, air conditioning, heating systems, automobiles, and the like as a result of higher income levels.
- There was also an increase in energy input in industrial production, which caused a
Energy Outlook
2
steady rise in per-capita energy consumption.
* Comparison among major countries in per-capita energy consumption (’11): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
[Figure 4] Economic growth rate and primary energy increase
[Figure 5] Outlook for energy intensity and per-capita consumption
Forecasts for energy demand by source in 2014
Coal demand is forecast to rise 1.0% year-on-year as a result of increased demand for industrial use that will more than offset a drop in demand for power generation due to the resumption of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1.
- Coal demand for industrial use is forecast to rise 3.5%, attributable to a rise in demand for steel making as a result of the full launch of operations of Blast Furnace No. 3 of Hyundai Steel as well as increased activity in the cement industry and the resulting rise in bituminous coal demand.
- Bituminous coal demand is forecast to rise 0.5% as a result of increased demand for industrial use, an outcome of the economic recovery.
- Anthracite demand is expected to grow 7.2% as a result of increased consumption by industry despite a further drop in consumption for residential/commercial use.
Oil demand is forecast to increase 0.6% year-on-year owing to a rise in demand in the transport sector and industrial sector, despite continued replacement by other energy sources in the residential/commercial/public sector.
- Oil demand for transport is forecast to increase 1.2% owing to lower international oil prices, an increase in cargo volume due to the economic recovery, and a rise in the number of registered vehicles.
- Naphtha demand will go up 2.4% owing to a rise in the rate of increase in production in the petrochemical industry. As a result, oil demand in the industrial sector is forecast to rise 1.7%.
- Oil demand in the residential/commercial/public sector is forecast to fall 5.6% year-on- year, attributable to the continued substitution of fuel by town gas in response to the persistently high oil prices.
Demand for natural gas is expected to rise much more slowly because the town gas penetration rate is reaching a state of saturation. It is forecast to go up only 2.0% year-on- year.
- In 2013, natural gas demand for power generation soared owing to reduced nuclear power generation stemming from cable issues. In 2014, demand will remain nearly
[Figure 6] Percentage shares of energy sources unchanged.
- Town gas demand is expected to rise 2.5% as a result of a further increase in demand for industrial use.
Electricity demand is forecast to rise 2.7% year-on-year as a result of an increase in demand for industrial use, an outcome of the economic recovery.
- Electricity demand for industrial use is expected to go up 4.8% year-on-year owing to a rise in industrial production. It will likely lead the overall rise in electricity demand.
- The rate of increase in electricity demand will likely be lower than the economic growth rate in 2014, which was also the case in 2013. GDP elasticity of electricity consumption is forecast to rise slightly from 0.64 in 2013 to 0.73 in 2014.
Nuclear power generation is expected to rise considerably (14.2%) with the resumption of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1, whose operation was stopped in 2013.
The share of energy consumption accounted for by oil and coal is expected to decline;
the share taken up by natural gas and nuclear power should rise.
- Oil's share of energy consumption dropped to below 50% in 2002 and has continued to go down. It dropped to 38.1% in 2012 and is estimated at 37.8% for 2013 and forecast at 37.0% for 2014.
- The share taken up by coal consumption increased from 23.0% in 2001 to 30.2% in 2011 as a result of a steady rise in coking coal consumption for industrial use and coal consumption for power generation. The share accounted for by coal in 2013 is estimated at 29.2% and is forecast to fall to 28.8% in 2014 since there was no expansion of coal-fired power generation facilities and demand for industrial use likely increased more slowly in 2013, just as in 2012.
- The share accounted for by natural gas was 18.0% in 2012, attributable to a sharp rise in natural gas demand for power generation and town gas production. The share is estimated at 18.4% for 2013, when demand for power generation sharply rose, and is forecast to change little in 2014.
- The share accounted for by nuclear power reached 16.1% in 2005 and then declined as no facilities were expanded. It likely dropped to 10.6% in 2013 as a result of a decrease in the usage rate despite a rise in facility capacity. It should rebound slightly to 11.6%
in 2014.
Outlook for energy demand by sector in 2014
Final energy demand is forecast to rise 2.4% as a result of the economic recovery.
In the industrial sector, energy demand will likely rise 3.5% this year as a result of increased industrial activity. Electricity and town gas are expected to lead the overall rise in demand.
* Forecast for electricity demand (%): (’12) 2.9 →(’13) 3.1 →(’13) 4.8
* Forecast for town gas demand (%): (’12) 15.0 →(’13) 6.9 →(’13) 6.0
- Naphtha demand is expected to go up as a result of increased PX production for export to China.
* Forecast for naphtha demand (%): (’12) 8.3 →(’13) 0.5 →(’14) 2.4
Energy demand in the transport sector is forecast to increase 1.6% this year, an outcome of the economic recovery, a rise in domestic demand for travel in Korea and abroad, and an increase in the number of registered vehicles.
- Demand for gasoline and diesel is forecast to increase steadily. In contrast, demand for LPG will likely continue to decline as a result of a drop in the number of LPG vehicles.
Energy demand in the residential/commercial/public sector is expected to drop 0.4%, attributable to rapid replacement of oil demand by other energy sources as well a reduction in anthracite demand
Final energy consumption by sector
- The share of energy consumption accounted for by the industrial sector remained between 55% and 56% until 2005, when it began to rise. It is continuing to rise: it reached an estimated 62.2% in 2013 and is forecast to reach 62.9% in 2014. The increase in the share accounted for by the industrial sector is a result of steady growth of energy-intensive industries including the steel and petrochemical industries and very strong growth of the fabricated metal industry, which consumes a great deal of electricity.
- The transport sector accounted for 21.0% of consumption in 2006, but its share steadily declined afterwards. It fell to 17.9% in 2011 and is expected to drop to 17.5% in 2014.
The drop in the share of consumption of the transport sector is a result of a substantial drop in the rate of increase in petroleum product consumption for transport that compares to the higher rate of increase in energy consumption in other sectors. This was a result of the international oil prices remaining stubbornly high since 2003.
[Figure 7] Percentage share of final energy demand of each sector
Category
2012 2013p 2014e
Annual 1/4 2/4 3/4 4/4 Annual First half
Second
half Annual
128.1 32.9 31.1 33.2 32.4 129.6 64.1 66.8 130.9
(-2.1) (0.7) (6.2) (0.9) (-2.8) (1.1) (0.1) (1.9) (1.0)
96.7 25.0 23.3 25.0 24.3 97.5 47.6 50.3 97.9
(-2.5) (0.7) (8.0) (0.0) (-4.2) (0.9) (-1.3) (2.1) (0.4)
827.7 205.3 201.2 205.1 215.3 826.8 405.8 426.3 832.0
(3.2) (-1.9) (0.0) (0.4) (1.1) (-0.1) (-0.2) (1.4) (0.6)
412.2 100.9 99.8 98.3 106.7 405.8 194.1 206.0 400.1
(-0.3) (-7.1) (1.4) (-1.4) (1.2) (-1.6) (-3.3) (0.5) (-1.4)
38.5 12.7 8.7 7.6 11.3 40.3 22.1 19.0 41.1
(8.1) (-0.4) (10.1) (12.5) (1.9) (4.7) (3.1) (0.8) (2.0)
7.7 1.7 2.0 2.7 1.8 8.3 3.6 4.6 8.2
(-2.3) (39.8) (6.1) (6.9) (-7.9) (8.2) (-2.9) (0.5) (-1.1)
150.3 37.0 31.1 35.2 35.4 138.8 77.8 80.7 158.4
(-2.8) (-1.7) (-14.5) (-12.6) (-1.5) (-7.7) (14.0) (14.3) (14.2)
8.0 2.2 2.2 2.2 2.3 8.9 4.7 4.8 9.6
(21.4) (10.4) (11.6) (10.1) (10.5) (10.6) (8.3) (6.9) (7.6)
278.7 74.0 66.1 67.2 73.0 280.4 143.2 144.4 287.6
(0.7) (-0.3) (2.0) (0.9) (0.1) (0.6) (2.2) (3.0) (2.6)
204.9 55.5 48.0 48.2 53.8 205.5 105.3 105.3 210.7
(0.4) (-1.3) (3.0) (0.2) (-0.4) (0.3) (1.8) (3.3) (2.5)
Coal (Million ton) -Excluding coking coal
OIl (Million bbl) -Excluding non-energy
LNG (Million ton)
Hydro (TWh) Nuclear power
(TWh) Other (Million TOE) Primary energy
(Million TOE) Total energy -Excluding for raw materials
<Table 2> Primary energy consumption and outlook
Notes: 1) The figures for 2012 were calculated using the new energy conversion factor (introduced on December 30, 2011). When the previous energy conversion factor is applied, the rate of increase in primary energy demand is 2.1% (1.2% not including raw material use).
2) The figures in parentheses are year-on-year percentage changes (%); p indicates that the figures are tentative;
and e indicates that the figures are forecasts.
- The percentage of consumption accounted for by the residential/commercial/public sector moved steadily downward. It dropped to 20.5% in 2012, and it is expected to have declined to 20.2% in 2013 and is forecast at 19.6% for 2014. The share of consumption accounted for by the residential/commercial/public sector, where most energy is consumed for heating and air conditioning, tends to vary with temperature changes in the summer and winter.
Category
2012 2013p 2014e
Annual 1/4 2/4 3/4 4/4 Annual First half
Second
half Annual
128.3 32.5 31.8 32.6 34.0 130.9 66.8 68.7 135.5
(1.1) (2.1) (1.0) (2.4) (2.6) (2.0) (3.8) (3.2) (3.5)
54.6 14.0 13.7 13.6 14.7 56.0 28.9 29.6 58.6
(0.4) (1.4) (3.0) (2.0) (4.2) (2.7) (4.4) (4.6) (4.5)
37.1 8.8 9.3 9.5 9.5 37.1 18.3 19.5 37.7
(0.7) (-1.1) (1.0) (-0.5) (0.7) (0.0) (0.6) (2.4) (1.6)
42.7 14.9 8.8 7.4 11.4 42.5 23.3 19.1 42.3
(1.3) (-1.4) (6.3) (0.7) (-4.4) (-0.4) (-1.5) (1.1) (-0.4)
208.1 56.2 49.9 49.6 54.9 210.6 108.3 107.3 215.6
(1.1) (0.7) (1.9) (1.5) (0.7) (1.2) (2.1) (2.7) (2.4)
134.4 37.7 31.7 30.6 35.6 135.7 70.5 68.2 138.6
(0.8) (-0.3) (3.3) (0.9) (0.4) (1.0) (1.4) (3.0) (2.2)
23.8 9.1 5.0 3.8 6.6 24.5 14.3 10.8 25.1
(9.7) (5.0) (11.6) (4.0) (-5.5) (3.0) (1.4) (4.0) (2.5)
796.5 198.4 194.7 198.4 208.9 800.4 394.8 414.3 809.1
(2.3) (-0.4) (1.0) (0.2) (1.2) (0.5) (0.4) (1.7) (1.1)
381.0 94.0 93.4 91.7 100.3 379.3 183.2 194.0 377.2
(-2.5) (-4.6) (3.6) (-2.0) (1.4) (-0.4) (-2.3) (1.1) (-0.6)
466.6 125.0 113.8 118.6 117.4 474.8 243.3 244.4 487.7
(2.5) (0.2) (2.1) (2.3) (2.6) (1.8) (1.9) (3.6) (2.7)
48.4 12.1 11.9 12.4 13.2 49.5 25.2 26.0 51.3
(-3.0) (0.8) (1.4) (4.2) (2.8) (2.3) (5.3) (1.8) (3.5)
16.9 4.2 4.0 4.2 5.1 17.5 8.8 9.5 18.3
(-6.8) (1.4) (1.4) (5.3) (4.8) (3.3) (6.9) (2.1) (4.4)
8,874.8 2,746.5 2,168.5 2,009.8 2,607.6 9,532.4 5,296.4 5,001.9 10,298.3
(17.8) (6.8) (11.0) (8.3) (4.5) (7.4) (7.8) (8.3) (8.0)
Industry (Million TOE) -Excluding for raw materials
Transport (Million TOE) Residential/Comme
rcial/Public (Million TOE)
Total (Million TOE)
Total -Excluding for raw materials
Town gas (Billion ㎥)
Electricity (TWh)
Oil (Million bbl) -Non-energy
oil excluded
Coal (Million ton) -Excluding coking coal Thermal and other
(Thousand TOE)
<Table 3> Final energy consumption and outlook
Notes: 1) The figures for 2012 were calculated using the new energy conversion factor (introduced on December 30, 2011). When the previous energy conversion factor is applied, the rate of increase in final energy demand is 2.1%. (1.2% not including raw material use.)
2) The figures in parentheses are year-on-year percentage changes (%); p indicates that the figures are tentative;
and e indicates that the figures are forecasts.
Major Characteristics
3
Nuclear power generation is expected to rise substantially in 2014.
Nuclear power generation fell considerably in 2013 owing to the stoppage of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 2 due to cable issues. Nuclear power generation is forecast to rise substantially when operation of these nuclear power plants resumes this year.
- Electricity supply/demand conditions are expected to somewhat improve with the rise in nuclear power generation.
- The percentage of primary energy that is accounted for by nuclear power is expected to somewhat increase in 2014.
* The percentage of primary energy that is accounted for by nuclear energy: (’12) 11.4% →(’13) 10.6% →(’14) 11.6%
Energy intensity (toe/million won), which is an index that indicates national energy efficiency, is expected to somewhat improve to 0.244 in 2014. Per-capita energy consumption will likely rise throughout 2014 and reach 5.73 toe for the entire year.
Energy intensity will go down since there will no longer be any of the effects from facility expansion in energy-intensity industries that were generated from 2009 through 2012.
Per-capita energy consumption is high compared to major OECD countries.
* Comparison among major countries in per-capita consumption (’11): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
In addition to a rise in energy demand by final consumers to power electrical equipment, electronic equipment, air conditioning, heating systems, automobiles, and the like as a result of higher income levels, there was also an increase in energy input in industrial production. This caused a steady rise in per-capita energy consumption.
An increase in energy demand in the industrial sector is expected to lead an overall rise in
final energy demand.
The rate of increase in energy demand in the industrial sector is forecast to rise as an outcome of the economic recovery.
* Rate of increase in demand in the industrial sector (%): (’12) 1.1 →(’13) 2.0 →(’14) 3.5
The industrial sector is forecast to account for 91.5% of the rise in final energy demand.
Energy sources that are expected to lead energy demand in the industrial sector are town gas and electricity.
- It is assumed that fuel, including oil, is still being steadily replaced by town gas in response to the high oil prices and rising preference for clean fuel by industry.
* Rate of increase in town gas consumption for industrial use (%): (’12) 15.0 →(’13) 6.9 →(’14) 6.0
- Electricity demand for industrial use is forecast to rise as an outcome of the economic recovery despite a rise in electric power charges.
* Rate of increase in electricity consumption for industrial use (%): (’12) 2.9 →(’13) 3.1 →(’14) 4.8
The rate of increase in demand in the transport sector is expected to rise owing to stabilization of oil prices, an increase in the number of registered vehicles, and economic recovery.
There will be a rise in consumption of gasoline and diesel, attributable to an increase in the average size of vehicles and a rise in demand for travel, an outcome of the substitute holiday system.
Heavy oil consumption dropped sharply in 2013 as a result of a decline in shipping by national flag carriers, attributable to business difficulties in the domestic shipping industry. Consumption of heavy oil is expected to drop again in 2014, but to a lesser degree.
- Consumption is forecast to drop at a considerably slower rate owing to a rise in traffic, an outcome of the steady recovery of both the global economy and domestic economy.
* Global economic growth rate (%): (’12) 3.2 →(’13) 3.0 →(’14) 3.64)
* Domestic economic growth rate (%): (’12) 2.0 →(’13) 2.8 →(’14) 3.7
* Rate of increase in consumption of heavy oil for transport (%): (’12) -6.9 →(’13) - 28.9 →(’14) -6.6
The share of primary energy accounted for by oil is forecast to steadily decline.
The share accounted for by oil in primary energy fell to less than 40% in 2010 and declined to 38.1% in 2012. It is expected to have fallen to 37.8% in 2013 and is forecast at 37.0% in 2014.
- When excluding non-energy oil for industrial use (naphtha, asphalt, etc.), the share of primary energy accounted for by oil used as an energy source is expected to have fallen from 19.5% in 2012 to 19.1% in 2013 and is forecast at 18.3% in 2014.
- The share accounted for by non-energy oil is forecast to remain at roughly the same level as in 2012.
The Korean economy's declining dependence on oil is a result of the persistently high oil prices and the resulting change in the relative prices of energy sources.
- The rise in oil prices has led to less rapid increases in fuel consumption for transport.
Also, disuse of heavy oil-fired power plants has resulted in the ongoing decline in oil consumption for power generation. Oil is being replaced by other energy sources such as town gas and electricity.
- This fuel replacement is due to the huge increases in prices of oil and the relative stability in real electricity charges.
4) IMF(2014), World Economic Outlook
[Figure 8] Oil dependence and forecasts
Measures need to be taken on an on-going basis to stabilize winter and summer electricity supply and demand.
Electricity demand is forecast to rise 2.7% in 2014, but power generation capacity will be expanded by around 10%. As a result, electricity supply and demand conditions should somewhat improve from 2013.
However, there is a possibility of an emergency situation in electricity supply in the event of a delay in the commencement of operation of new nuclear power plants, the occurrence of unusual weather, or unexpected stoppage of power generation facilities.
- Construction of Sinwolseong Nuclear Power Plant Unit 2 (1 million kW) and Singori Nuclear Power Plant Unit 3 (1.4 million kW) was slated for completion in the second half of 2013, but the commencement of operation now seems uncertain even in 2014.
This points to the need to continuously manage electricity demand for stabilization of electricity supply and demand, including reduction of peak electricity use.
Establish a reasonable energy price system.
Correcting the consumption distortion between electricity and non-electricity requires bringing the electricity charges more in line with market rates and improving the energy tax system.
The artificially low electricity charges are triggering an increase in demand, and this situation needs to be addressed by reflecting the cost principle in the electricity charge system.
The energy tax system should be rationalized to correct the consumption distortion between electricity and non-electricity energy sources.
- With the amendment to the Individual Consumption Tax Act, a tax of KRW 18/kg will be imposed on bituminous coal for power generation starting in July 2014, and there will be a 30% tax cut for kerosene and propane. This is expected to somewhat correct the price distortion.
Policy Implications
4
Implement policies that raise energy efficiency and encourage energy-saving in the industrial sector.
Per-capita energy consumption will rise continually owing to the increase in income levels and the rise in energy consumption for industrial use.
In 2014, the industrial sector will account for approximately 91.5% of the total final energy increase of 5.0 million toe.
- Consumption of electricity for industrial use and naphtha is forecast to rise as the domestic and global economy recovers.
- The industrial sector is the most important agent in reducing energy demand. However, its ability to reduce demand in the short term is very limited because the Korean industry as a whole is energy-intensive.
- There is a need to shift to a low energy-consuming industrial structure in the long term in order to reduce energy consumption, which in the meantime continues to rise.
Simultaneously, policies that encourage energy efficiency and energy saving in the industrial sector should immediately be put in place.
Issued in March 2014
CEO of publisher: Sonn Yang-hoon
Registration: No. 7 on December 7, 1992
Printed by: Bumshinsa (02)503-8737
ⓒKorea Energy Economic Institute 2014 132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114, Fax: (031)422-4958
Publisher: Korea Energy Economics Institute
KEEI
Korea Energy Demand Outlook
March 2014
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
Fax: (031)422-4958
