Gov’t continues to whittle subsidy for coal and briquettes

The government is raising coal and briquette prices again to lessen Korea’s dependency on traditional energy and promote renewable energy.

This is the third year in a row the prices have been raised.

The Ministry of Trade, Industry and Energy said the retail price of coal will be raised a maximum of 8 percent while briquettes, a common heating source for lower-income families, will be hiked as much as 19.6 percent.

The increases will depend on the quality of the coal and briquettes.

The current price for level four coal, which is the best, is 172,660 won ($152.40) per ton. It will be raised to 186,540 won. The maximum briquette factory price will be raised from 534.25 won to 639 won.

At the G-20 summit in Seoul in 2010, the government promised to end its fossil fuel subsidies by 2020.

The ministry said, by 2020, the prices of coal and briquettes will at least match the production price.

The government has been keeping coal and briquette retail prices below the production cost since 1989 by subsidizing manufacturers to keep heating prices low for poorer families.

Despite the hikes, the coal retail price will still be only 75 percent of the production cost. Briquette retail prices will be 76 percent.

Consumption of coal and briquettes has been falling as the prices rose over the last three years. It has fallen from 1.47 million tons in 2015 to 1.09 million tons last year.

The government subsidizes poorer families that use coal or briquettes for heating by giving them a yearly subsidy voucher. Last year’s 313,000 won voucher has been raised to 406,000 won this year, a near 30 percent increase.

Last year, the government spent roughly 22 billion won for vouchers for 70,000 lower-income households. Of the total, 38 percent lived on government subsidies. Such families includes single-parent homes, families with disabilities and seniors living alone.

This year, 640,00 have applied for the vouchers. The vouchers are good through the end of April.

Additionally, the government is offering to pay for any lower-income households to install a boiler heating system. It will pay a maximum of 3 million won subsidy for gas-fueled boiler heating system as well as insulated window frames.

The government has set aside a budget of 1.65 billion won and estimates 5.5 million households will apply for subsidized boiler heating systems.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]