South Korea’s impending coal tax

South Korea will tax coal imports for power generation from July, the government has announced. The country will also cut duty on some alternative fuels.

The tax was first announced in November and is expected to push up electricity costs, prompting consumers to curb power use as Asia's fourth-largest Economy battles to avoid blackouts during peak demand in winter and summer.

The country's five utilities, fully owned by state-run Korea Electric Power Corp (KEPCO), import around 21-22 million t of coal each quarter, according to industry data.

The finance ministry said in a statement that a rate of 19 Korean won (US$ 0.02) would be imposed per kilogram (kg) of coal with a minimum 5000 kcal of net calorific value (NCV). For coal below 5000 kcal/kg NCV, the rate will be 17 won per kg.

To boost demand for alternative fuels for electricity-generation, the government will lower taxes from July on liquefied natural gas (LNG) to 42 won per kg from 60 won, propane to 14 won per kg from 20 won and kerosene to 72 won per litre from 104 won.

The moves fall in line with expectations.

The country last week announced plans to impose tough caps on CO2 emissions from utilities and industry as part of a carbon trading scheme that will be the world's second biggest when it opens at the start of next year. 

Edited from various sources by Sam Dodson

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