After decades of reliance on coal, South Korea has announced plans to close all coal-fired power plants by 2040. For Australia, this signals a likely steep decline in its coal exports in the coming decades, as one of its main trade partners reduces its coal use.
The Australian government is now preparing for a fall in its coal exports, as South Korea, the third-biggest importer of Australian coal, plans to shift away from the “dirtiest fossil fuel”. Australia expects to export around $1.5 billion worth of thermal coal to South Korea in 2025, according to the analytics firm Kpler. Korea is home to the world’s seventh-largest coal power fleet and accounts for around 8 percent of global trade. At present, coal contributes roughly 30 percent of the country’s electricity.
South Korea announced at the COP30 climate summit in Brazil this month that it would be joining the Powering Past Coal Alliance, a group of around 60 countries and 120 sub-national governments, businesses, and organisations that are phasing out the use of fossil fuels. Kim Sung-hwan, South Korea’s minister of climate, energy, and environment, said the move reflected Korea’s commitment to “accelerating a just and clean energy transition”.
Kim stated, “The shift from coal to clean power is not only essential for the climate. It will also help both the Republic of Korea and all other countries increase our energy security, boost the competitiveness of our businesses, and create thousands of jobs.”
In response, James Bowen, the director of consultancy ReMap Research, said that Australian coal exports could fall in value by around 50 percent over the next five years. While Australia continues to rely heavily on coal exports for revenue, the government has recently introduced more ambitious domestic green energy plans. The government recently announced the aim to increase the proportion of electricity from renewable energy from about 42 percent over the past year to 82 percent by the end of the decade.
The pledge will mean the closure of 62 coal plants, with 40 having already established retirement dates. The announcement could well put pressure on other Asian countries that are still heavily reliant on coal, such as Indonesia and the Philippines, to consider an accelerated transition away from the fossil fuel.
In the past, South Korea has faced criticism for not working fast enough to transition to green. For example, the government aims for 20 percent renewable electricity by 2030, which is far below the global share of 60 percent renewable electricity outlined in the IEA Net-Zero Emissions scenario.
However, its renewable energy capacity has increased significantly in recent years. Green energy capacity in South Korea increased sixfold between 2013 and 2023, although greater electricity grid expansion and modernisation are needed to support this growth.
In April, for the first time, fossil fuels contributed less than half of South Korea’s total electricity generation, at 49.5 percent, according to the global energy think tank Ember. This is the lowest contribution since the 50.4 percent figure recorded in May 2024. This was driven by a decline in coal generation, which fell to 18.5 percent in April. Meanwhile, fossil fuels contributed 60 percent of electricity generation on average in 2024.
South Korea’s coal output was 36 percent lower in April 2025 compared to April 2021, helping to reduce power sector emissions by an estimated 6.7 million tonnes of carbon dioxide. However, in 2024, the country’s power sector emitted five tonnes of CO2 per capita, which is roughly triple the global average.
Korea has begun to transition away from coal thanks to heavy investments in its clean energy sector. In 2024, South Korea’s largest source of clean electricity was nuclear, at 30 percent, while wind and solar power accounted for around 6 percent. In April this year, solar power contributed a record 9.2 percent share of electricity generation in South Korea, far higher than the previous 8.7 percent record in May 2024. South Korea added 1.56 GW of solar power between January and May 2025, which is 61 percent higher than during the same period of 2024.
Nicolas Fulghum, a senior data analyst at Ember, stated, “Recent months show faster deployment of solar power, but South Korea is still trailing behind other advanced economies that are driving rapid deployment of wind, solar and batteries. Enabling a faster rollout of these key clean energy technologies in the South Korean market represents a major opportunity to strengthen South Korea’s domestic energy supply and reduce dependence on imported gas and coal.”
South Korea’s ambitious goal to reduce its reliance on coal in the coming decades signals a significant shift in the global coal trade. However, while Korea has gradually ramped up its renewable energy capacity in recent years, the government must do more to accelerate the country’s green transition if it hopes to meet its climate targets and reduce dependence on coal in line with its recent pledge.
By Felicity Bradstock for Oilprice.com
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