SEOUL – A burgeoning conflict initiated by the United States and Israel against Iran has plunged the global economy into a severe crisis, echoing and surpassing the oil shocks of the 1970s. The ensuing disruption to vital shipping lanes and energy infrastructure has sent shockwaves through South Korea, exposing the profound vulnerabilities of its continued reliance on fossil fuels. In response, Greenpeace East Asia’s Seoul office has issued an urgent plea to the South Korean government, calling for an immediate abandonment of fossil fuel dependency and a decisive acceleration towards a self-sufficient, renewable energy system.

The gravity of the situation was underscored by Fatih Birol, Executive Director of the International Energy Agency (IEA), who warned that the current crisis surpasses the combined impact of the two oil shocks experienced in the 1970s. Naval blockades along critical maritime routes, particularly the Strait of Hormuz, have severely hampered the import of essential goods, including food, to the Gulf region. Simultaneously, targeted strikes on energy infrastructure are not only threatening fuel supplies but also jeopardizing access to fresh water. The attacks on nuclear facilities and refineries have raised grave concerns about long-term environmental damage, leaving a toxic legacy on land and in the oceans.

South Korea, a nation heavily reliant on imported energy, has been particularly hard hit. On March 24th, the government officially raised the energy security alert to "Caution." In a move that has drawn criticism from environmental advocates, the administration responded by easing restrictions on coal power generation and delaying the decommissioning of aging coal-fired power plants. This decision highlights the immediate pressure to secure energy supplies, even at the cost of environmental commitments.

Compounding the crisis, QatarEnergy, a major supplier of Liquefied Natural Gas (LNG) to South Korea, officially declared Force Majeure on its long-term LNG contracts with South Korea and other global partners on the same day. Force Majeure is a contractual clause that allows parties to suspend or terminate their obligations when faced with extraordinary events beyond their control. The declaration signifies a significant disruption in supply, with repairs to damaged or affected facilities anticipated to take an estimated three to five years. This prolonged disruption clearly demonstrates that contractual agreements alone cannot guarantee physical energy supply in times of geopolitical instability.

The economic repercussions are extending far beyond the energy sector. In the Yeosu National Industrial Complex, a pivotal hub for South Korea’s petrochemical industry, the blockade of the Strait of Hormuz has severed critical naphtha supplies. Naphtha is a key feedstock for the production of plastics and other petrochemicals. This supply disruption has forced major petrochemical companies to significantly curtail their operations. Plant utilization rates, which typically hover around 90%, have plummeted to the 60% range, signaling a substantial economic downturn for the sector.

The South Korean government’s proposed solution to replace the disrupted Qatari LNG, which accounts for approximately 14% of the nation’s total LNG imports, has been to seek alternative sources from countries like the United States or Australia. However, Greenpeace argues that this approach fundamentally ignores the core issue: the global nature of LNG pricing. Even if physical supply can be secured from these alternative origins, the inherent volatility of the global market means that price shocks will inevitably be passed on to consumers. This ongoing dependency on fossil fuels, Greenpeace asserts, leaves South Korea perpetually vulnerable to geopolitical risks, a lesson, they contend, that was not adequately learned from the 2022 Russia-Ukraine war.

The economic fallout from the 2022 conflict serves as a stark reminder of this vulnerability. Soaring LNG prices and subsequent increases in System Marginal Prices (SMP) – the price of electricity in the wholesale market – compelled the South Korean government to suppress utility hikes in an effort to curb inflation. While consumers may have experienced temporary relief through capped rates, the underlying costs did not disappear. Korea Electric Power Corporation (KEPCO) recorded a staggering operating loss of 33 trillion Korean Won (KRW) in 2022, with its total debt escalating to 206 trillion KRW. Similarly, Korea Gas Corporation (KOGAS) faces 14 trillion KRW in outstanding receivables. This massive accumulation of public corporate debt, Greenpeace warns, will ultimately be borne by taxpayers in the form of future tax increases or further rate hikes.

The current surge in oil prices has also exposed deep-seated structural weaknesses within South Korea’s transportation sector. On March 13th, the government implemented caps on refinery prices, utilizing tax revenue to compensate for the financial losses incurred by oil companies. Furthermore, the "temporary" fuel tax cut, initially introduced in 2021, has been extended a remarkable 20 times. The government has now announced yet another extension, coupled with a significant increase in the rate of reduction.

Greenpeace argues that this continuous financial support perpetuates and entrenches the nation’s oil-dependent transportation system. By subsidizing internal combustion engine vehicles, the government is inadvertently weakening the incentive for consumers to transition to electric vehicles (EVs). This creates a predictable, vicious cycle: each new energy crisis triggers further tax cuts and subsidies for fossil fuel-based transportation, mirroring the power sector’s retreat to coal due to a delayed renewable energy transition.

The petrochemical crisis, directly linked to the disruption of naphtha supplies, is also fueling inflation across the broader plastics industry. South Korea’s heavy reliance on petroleum-based production means that any instability in the supply chain, from naphtha to ethylene, inevitably results in recurring economic chaos. The current emergency measures being implemented by the government are described by Greenpeace as mere "band-aids" that fail to address the root cause of the problem. They advocate for a comprehensive "Circular Economy" approach that fundamentally breaks the nation’s addiction to oil. However, they note that the government’s "Comprehensive Plastic Reduction Plan" still primarily focuses on waste management rather than prioritizing a reduction in production at the source.

Greenpeace Seoul’s Demands to the South Korean Government:

In light of the escalating crisis and the clear evidence of fossil fuel dependency’s inherent fragility, Greenpeace Seoul has issued a set of demands to the South Korean government, urging a fundamental shift in energy policy:

  • Accelerate the Transition to 100% Renewable Energy: Greenpeace calls for a significantly accelerated timeline for the complete transition to renewable energy sources, aiming for a fully decarbonized energy system as swiftly as possible. This includes phasing out all fossil fuels, including coal, natural gas, and oil, from the energy mix.
  • Strengthen Renewable Energy Infrastructure: The organization urges the government to invest heavily in and rapidly expand domestic renewable energy infrastructure, including solar, wind, and geothermal power. This includes streamlining permitting processes and providing robust financial incentives for renewable energy development and deployment.
  • Support the Electrification of Transportation: Greenpeace advocates for policies that actively promote and incentivize the adoption of electric vehicles (EVs) and other forms of sustainable transportation. This includes expanding charging infrastructure, offering significant purchase subsidies for EVs, and phasing out internal combustion engine vehicle sales.
  • Promote Energy Efficiency and Conservation: The organization stresses the importance of implementing comprehensive energy efficiency programs across all sectors, including industry, buildings, and households. This also involves public awareness campaigns to encourage energy conservation practices.
  • End Fossil Fuel Subsidies: Greenpeace demands an immediate cessation of all direct and indirect subsidies for the fossil fuel industry. These funds, they argue, should be redirected towards investments in renewable energy and sustainable solutions.
  • Foster a Circular Economy: The organization calls for the development and implementation of a true circular economy model that prioritizes resource efficiency, waste reduction at the source, and the reuse and recycling of materials, particularly in the plastics industry.

The undeniable lesson of the current crisis, Greenpeace asserts, is the inherent fragility of a fossil fuel-dependent economy. When a critical strait is blockaded, factories grind to a halt, and the cost of living for ordinary citizens explodes. This stark reality underscores the precariousness of relying on energy sources that are subject to geopolitical machinations and volatile global markets.

In contrast, domestic renewable energy sources are inherently resilient to such disruptions. Wind turbines and solar panels operate irrespective of naval blockades. Electric vehicles and bicycles function without regard to fluctuating international oil prices. The sun and the wind, the very foundations of renewable energy, do not issue Force Majeure declarations.

Greenpeace implores the South Korean government to move beyond the immediate task of managing the current chaos and to proactively embark on the critical mission of building a robust, self-sufficient, and resilient energy system. Such a system, powered by renewable resources, would not only insulate the nation from future geopolitical shocks but also contribute to a cleaner, healthier, and more sustainable future for all. The current crisis presents a critical juncture, an opportunity for South Korea to decisively pivot away from its fossil fuel dependency and embrace the promise of a renewable energy future.

Media Contact:

Yujie Xue, International Communications Officer, Greenpeace East Asia, +852 5127 3416, [email protected]