NGO calls for South Korea to discontinue LNG bunkering rebate policy by 2030
- Published
by Admin
Korean non-government organisation Solutions for Our Climate (SFOC) on Tuesday (4 June) published a report to shed light on the challenges facing the LNG bunkering rebate policy and to reassess the justification for its continuation.
SFOC said the rebate system for LNG bunkering may impose a greater financial burden on the South Korean government and potentially impede its commitment to achieving net-zero emissions in international shipping by 2050.
According to the report titled Reconsidering Korea’s LNG Bunkering 100% Rebate Policy, LNG bunkering rebates are financed through the Special Energy Account, which has incurred a deficit of roughly KRW 3 trillion in 2023.
If the current rebate system remains unchanged, the rebates are projected to increase from KRW 1.4 million in 2024 to KRW 16.9 billion in 2025 and to KRW 33.9 billion in 2030 (USD 140,000, USD 16.9 million, and USD 33 million, respectively (USD 1 : KRW 1,000).
“In light of both the deficit-ridden Special Energy Account and South Korea’s lack of competitiveness in the global LNG bunkering market projected, the rationale for continuously providing rebates on increasing amounts of LNG levies diminishes,” the report said.
“Therefore, the viability of this rebate system beyond 2030 must be reassessed.”
To boost its LNG bunkering industry, the South Korean government has been reimbursing all import levies imposed on LNG fueling by LNG-powered vessels since 2021 if the bunkering occurs within its territorial waters.
The report said South Korea’s small market share in LNG bunkering, compared to major global ports in other countries, underscores the realistic limitations on the country’s aspirations to lead the international LNG bunkering industry.
“The divergence between South Korea’s LNG bunkering rebate policy and the international community’s stance on LNG, as well as the Korean Green Taxonomy (K-Taxonomy) — a green economic activity classification system endorsed by the country’s Ministry of Environment — is a significant issue that requires attention,” it said.
“Lastly, the rebate system for LNG bunkering may impose a greater financial burden on the South Korean government and potentially impede its commitment to achieving net-zero emissions in international shipping by 2050.
Note: The full report titled ‘Reconsidering Korea’s LNG Bunkering 100% Rebate Policy’ can be viewed here.
Photo credit: Lauren Seo on Unsplash
Published: 6 June 2024
