Encroachment of Foreign Capital on Territorial Waters and Unregulated Development... Can the Special Act on Offshore Wind Power Stop It? [Why&Next]

Surge of 8 Bills in the 22nd National Assembly
Speeding Up with Control Tower and Public-Private Council Formation
Includes Bid Preferences and Preliminary Zone Inclusion for Existing Wind Measurement and Power Generation Permit Holders
"Must Be Supplemented to Strengthen Public Interest"

Interest is growing in whether the Offshore Wind Power Special Act, which shifts the development of offshore wind power from individual operators to a government-led planned site approach, will be enacted. If passed, this law is expected to alleviate the burdens and uncertainties faced by operators in site discovery and securing local acceptance, thereby contributing to the revitalization of the domestic offshore wind power industry. However, it seems difficult to completely dispel recent concerns about foreign capital encroaching on domestic territorial waters and reckless marine development. Accordingly, there are calls to include provisions that strengthen public interest in the currently proposed bills.

According to the National Assembly Legislative Information System on the 8th, following the representative proposal of the Offshore Wind Power Planned Site and Industry Promotion Special Act by Assemblywoman Kim So-hee in June last year, seven other lawmakers including Heo Jong-sik, Kim Won-i, Seo Wang-jin, Kang Seung-gyu, Cho Kyung-tae, Kim Jeong-ho, and Jeong Jin-wook have additionally proposed similar bills.

At the end of November last year, the National Assembly held a review of the Offshore Wind Power Special Act at the Industrial, Trade, Energy, Small and Medium Business Committee’s Industrial, Trade, Energy, and Patent Subcommittee, which is the relevant standing committee. Another subcommittee meeting was held on December 26, but the agenda was not properly discussed before the session was adjourned. A committee official stated, "It is currently unknown when the subcommittee will be convened again."

"Establish a control tower under the Prime Minister’s Office for one-stop processing"

Offshore wind power is regarded as the optimal alternative to expand renewable energy in South Korea’s geographical environment, where onshore solar and wind power expansion is limited. However, securing local acceptance is difficult, and the long time required for permits and approvals has resulted in slower deployment than expected. As of June 2024, the total capacity of operating offshore wind power facilities in South Korea, including demonstration projects, is only 0.16 gigawatts (GW).

Therefore, the Offshore Wind Power Special Act, which aims to shift offshore wind power development from individual operators to a government-led planned site development method, has been promoted. In the 21st National Assembly, lawmakers Kim Won-i, Han Mu-kyung, and Kim Han-jung proposed related bills and reached considerable consensus on key issues, but the bills were not passed within the session and were automatically discarded. The bills reintroduced in the 22nd National Assembly are based on the discussions from the 21st Assembly.

The eight bills currently proposed commonly include provisions for the government to form a control tower to discover offshore wind power complexes and secure local acceptance through public-private councils involving local governments and fishermen. They also stipulate that the government should handle various consultations and permits in a one-stop process to shorten the required time.

First, all bills commonly include the establishment of an Offshore Wind Power Development Committee as a control tower under the Prime Minister’s Office. The committee is composed of heads of relevant ministries. Separately, an Offshore Wind Power Promotion Team will be placed under the committee or the Ministry of Trade, Industry and Energy to handle practical affairs. The bill proposed by Assemblyman Kang Seung-gyu also includes provisions to designate a dedicated agency.

The planned site designation process for wind power development follows the steps of establishing an offshore wind power site information network → designating a preliminary district → designating a development district → selecting operators → approving implementation plans.

The most contentious part is the designation of preliminary districts. There are differences among the bills regarding how to handle operators who have already installed wind measurement devices or received development permits. Stakeholders have sharply conflicting interests.

Treatment of existing operators is expected to remain a contentious issue during the legislative process, especially amid concerns about foreign capital encroachment and reckless marine development. According to the Ministry of Trade, Industry and Energy, as of August last year, 48 out of 88 offshore wind power projects with development permits (55%) were foreign companies. Additionally, the number of wind measurement devices installed in territorial waters has reached 74. This increase is due to attempts to secure marine areas by installing wind measurement devices amid expectations of market expansion.

"Wind measurement devices to be purchased by agreement... Development permit holders designated as preliminary districts"

Despite these concerns, most of the currently proposed bills recognize the vested rights of existing operators. This is a result of anticipating opposition and legal disputes from existing operators.

The bills proposed by Assemblywomen Kim So-hee, Heo Jong-sik, Seo Wang-jin, Cho Kyung-tae, and Kim Jeong-ho allow operators who have already received development permits to apply for their permitted areas to be designated as preliminary districts. They also allow the government to purchase wind measurement devices by agreement if necessary. Furthermore, operators with preliminary district designation or wind measurement devices are given preferential treatment during operator selection bidding.

Assemblyman Kim Won-i’s bill takes a different stance by immediately incorporating existing development permit holders as offshore wind power developers, while Assemblyman Kang Seung-gyu’s bill stipulates selection as offshore wind power developers only if certain conditions are met.

Ultimately, although there are differences in degree, all bills are expected to recognize existing rights for those who have installed wind measurement devices or received development permits after the Offshore Wind Power Special Act is enforced. This means that even if the act passes the National Assembly, it will be difficult to fundamentally resolve issues of foreign capital encroachment or reckless development raised by some.

"Offshore wind power development requires foreign capital attraction... Public interest must be strengthened"

Recently, the government has been coordinating with the National Assembly to include provisions that strengthen public interest while preserving the positive effects of foreign capital participation in offshore wind power. The wind power industry also acknowledges that participation by overseas developers with extensive offshore wind development experience can help advance the domestic offshore wind ecosystem. It is considered practically difficult to develop the domestic offshore wind industry without foreign capital participation.

An official from the Ministry of Trade, Industry and Energy said, "Offshore wind power development projects require investments worth trillions of won per gigawatt (GW), so attracting foreign capital is necessary," but added, "We hope the bill will be prepared to strengthen public interest to protect domestic industries while ensuring orderly offshore wind development."

There are also calls to include provisions that encourage and support participation by domestic power companies to strengthen the public interest of offshore wind power. For example, the bill introduced by Assemblyman Jeong Jin-wook in December last year includes provisions to establish and implement policies necessary for converting coal-fired power plants to offshore wind power. The rationale is that since coal-fired power plants emit large amounts of carbon, support measures are needed to replace them with eco-friendly offshore wind power.