Chaos at the Gates: The impacts of the COVID-19 pandemic and energy price shocks on South Korea’s gas industry amid energy transition

Abstract

South Korea was one of the first countries to be hit by the coronavirus infections. Having rapidly contained the health emergency in the immediate period, Seoul arguably mitigated the economic fallouts more successfully than the majority of advanced economies but could not avoid substantial losses. The far-reaching fallout of COVID-19 has been testing the country’s energy transition pathway, as actors involved are facing difficult decisions amid more stringent financial constraints to deliver their ambitious targets, including achieving carbon neutrality by 2050. Amid the combined effects of the pandemic and the global energy prices shocks, addressing the nexus between energy security on the supply side, affordability, and the safety of people’s lives and property, has become even more pressing. Against this backdrop, natural gas has tailored a special role to bridge the low carbon re-alignment of the entire Korean energy system, also in the face of the current and future challenges to Korea’s energy security. But long-drawn hurdles stemming from rather unsuccessful efforts to reform the gas system risk weakening its ability to cope with present uncertainties and heightened volatilities.