July 30, 2018 / 5:02 AM / a year ago

S.Korea to raise coal tax; lower LNG tax for power generation

SEOUL, July 30 (Reuters) - South Korea plans to increase its tax on thermal coal, while lowering the tax on liquefied natural gas (LNG) to support the use of cleaner fuels for power generation, the finance ministry said on Monday.

The ministry said in a statement that it will increase the tax on thermal coal by 10 won to 46 won ($0.0412) per kilogram reflecting environmental costs of using the fossil fuel.

Meanwhile, the government plans to lower the tax on LNG to 23 won per kg from 91.4 won per kg.

Asia’s fourth-largest economy, which imports almost all of its energy needs, has favoured coal and nuclear power to generate cheaper electricity and to ensure stable power supply.

South Korea now generates more than 70 percent of its power from coal and nuclear, while renewables account for 6 percent, but the country aims to gradually phase out coal and nuclear power.

Under the country’s power supply plan, coal’s share of power generation will fall to 36.1 percent in 2030 and nuclear to 23.9 percent, but those sectors will still make up more than half of the country’s total power generation SOUTHKOREA-POWER/TAX

The revised tax is expected to go into effect from April 1, 2019, should the government plan be approved by parliament. ($1 = 1,115.9000 won) (Reporting By Jane Chung Editing by Eric Meijer)

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