[Exclusive] Transition Committee Considers Designating Changwon, the 'Nuclear Power Mecca,' as an Industrial Crisis Area

Review of Designating Changwon and Others as Special Industrial Crisis Response Areas
Urgent Need to Restore Ecosystem to Fulfill Yoon's Pledge
Government to Provide Financial and Employment Support Benefits to Special Areas
Ministry of Industry: 33.8% Nuclear Power Share Possible by 2030 with Continued Operation

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Jun-hyung] The Presidential Transition Committee is considering designating Changwon in Gyeongnam, the domestic mecca of the nuclear power industry, as a special industrial crisis response area. This is based on the judgment that extraordinary measures are necessary to restore the nuclear power ecosystem, which has been directly hit by the nuclear phase-out policy, in a short period of time. The Ministry of Trade, Industry and Energy, the competent authority, estimated that if 10 aged nuclear reactors continue to operate without supply chain disruptions, the share of nuclear power generation could be raised to 33.8% by 2030.

According to related ministries on the 4th, the Ministry of Trade, Industry and Energy recently proposed the designation of special industrial crisis response areas as a measure to revitalize the nuclear power ecosystem during a briefing to the Transition Committee. The plan is to designate nuclear power company-dense areas such as Changwon and Sasang-gu in Busan as special industrial crisis response areas to provide financial support, tax benefits, and other incentives. The Ministry also announced plans to commission a research project by the end of this year to analyze supply chains by sector, including main nuclear power equipment and auxiliary equipment. This is to thoroughly understand the current status of the nuclear power ecosystem, which has collapsed over the past five years, and to specify support measures.

Special industrial crisis response areas are regions highly dependent on a specific industry and can suffer significant damage if that industry faces a crisis. They were introduced through the 2017 amendment of the 'National Balanced Development Special Act.' The Minister of Trade, Industry and Energy can designate these areas after review by the Industrial Crisis Response Deliberation Committee, and once approved as special areas, they can receive broad benefits such as financial and employment support. The maximum legal designation period is five years. Six regions, including Gunsan in Jeonbuk, Dong-gu in Ulsan, and Geoje in Gyeongnam, have been designated as special industrial crisis response areas and are receiving government support.

The Ministry of Trade, Industry and Energy views government support for nuclear power company-dense areas as inevitable to realize the next administration's nuclear power policy. Even if the government takes the lead in revitalizing nuclear power, the related ecosystem that supports the policy has been fundamentally damaged over the past five years. Doosan Heavy Industries & Construction, a leading domestic nuclear power company, received emergency funds worth about 1 trillion won from the government in 2020 due to the impact of the nuclear phase-out policy. Experts diagnose that even if the operating period of Kori Unit 2, whose design life expires next year, is extended, supply chain disruptions are inevitable during equipment improvements such as parts replacement.

Additionally, the Ministry reported to the Transition Committee that the share of nuclear power generation could be increased to 33.8% by 2030. The share of nuclear power generation has been maintained between 23% and 29% over the past five years. The target set by President-elect Yoon Seok-yeol is between 30% and 35%.

However, this is conditional on the 'continued operation of nuclear reactors.' It is a goal achievable only if 10 active nuclear reactors, including Kori Unit 2, whose design life expires by 2030, continue to operate without supply chain disruptions. This once again emphasizes the necessity of restoring the nuclear power ecosystem. The Ministry stated in the briefing to the Transition Committee, "The operating license for Kori Unit 2 expires in April next year," and added, "The decision on whether to continue operation is urgent."