South Korea's announcement to phase out coal-fired power plants by 2040 signals a major shift in its energy strategy and is expected to impact the global coal trade, particularly for Australia, one of the largest exporters of coal to Korea.

As one of the biggest coal importers in the world, South Korea has been a key partner in Australia's coal trade. However, with South Korea now planning to reduce its reliance on coal, the country's coal imports are expected to decline, leading to a potential fall in Australian coal exports.

In 2025, Australia is projected to export around $1.5 billion worth of thermal coal to South Korea, according to analytics firm Kpler. South Korea currently accounts for about 8% of global coal trade, and coal contributes around 30% of its electricity generation.

Kim Sung-hwan, South Korea's climate, energy, and environment minister, emphasized that this move is part of the country's broader efforts to enhance energy security, boost business competitiveness, and create thousands of jobs. In response to these changes, experts predict Australian coal exports to South Korea could fall by 50% within the next five years.

Australia's coal industry, which long depended on export revenues, now faced increased uncertainty. The Australian government also accelerated domestic green energy plans, aiming to increase renewable energy from 42% to 82% of the country's total electricity by the end of the decade. This shift includes plans to close 62 coal-fired power plants, with 40 already scheduled for retirement.

The announcement by South Korea could also encourage other Asian countries, such as Indonesia and the Philippines, to expedite their own transitions away from coal. While South Korea has faced criticism in the past for not moving faster toward green energy, its renewable energy capacity has grown substantially, increasing sixfold between 2013 and 2023.

Despite this progress, South Korea still faced challenges in achieving its climate goals. In 2024, fossil fuels accounted for 60% of the country's electricity generation, and while coal generation dropped to 18.5% in April 2025, emissions from the power sector remain high.

Nuclear energy currently provided the largest share of South Korea's clean electricity, followed by wind and solar. The country's solar capacity has surged, with a 61% increase in installations in the first five months of 2025 compared to the same period in 2024.

However, experts like Nicolas Fulghum of Ember caution that South Korea must accelerate the deployment of wind, solar, and battery storage technologies to stay competitive in the global energy transition.

South Korea's coal phaseout marks a key development in the global energy landscape, with potential far-reaching implications for both energy markets and international coal trade. For Australia, this signals a shift in its coal export outlook, while for South Korea, it represents a critical step toward achieving its climate targets and reducing dependence on fossil fuels.