Next year's wholesale price of coal briquettes will rise 15% for the first time in seven years. As a result, the consumer price, which averages 900 won each, is also expected to go up. This is because the Ministry of Trade and Industry (MOTI) reduced the production subsidies it had been paying to coal briquette plants that use coal as a raw material, in line with the Lee Jae-myung administration's coal phaseout stance. Even that will be completely eliminated in 2028. This could hit about 60,000 households nationwide that use coal briquettes directly.
On the 30th, MOTI said in the "Notice on maximum sales prices for coal and coal processed products" that it will raise next year's wholesale price for coal briquette plants from 639 won to 739 won. It is the first wholesale price increase since 2018. Accordingly, the consumer price—which adds distribution costs, labor costs, and transportation costs to the wholesale price—is expected to be higher.
The wholesale price hike is because the government decided to reduce the production subsidies it has paid to coal briquette plants since 1989 from 19 billion won this year to 9.5 billion won each for next year and the year after. In 2028, it will be fully abolished. The government has set the briquette wholesale price below production cost and made up the difference to the plants. It has effectively controlled prices so that coal briquette producers would not raise prices and burden vulnerable groups.
However, after the Lee Jae-myung administration began pushing a "coal phaseout policy," the tone at MOTI changed. In Aug., President Lee Jae-myung said at a "national fiscal savings meeting," "The coal industry is dangerous and uncompetitive, and subsidies are a waste of the budget." After that, MOTI issued a press release saying, "We will abolish coal briquette production subsidies early within two years, and we will also discuss with fiscal authorities plans to abolish coal production subsidies."
As a result, 59,695 households nationwide that use coal briquettes are unlikely to avoid higher heating costs. According to the 2022 "coal briquette consumption survey," the average annual consumption of households using coal briquettes is 1,162 pieces. The government plans to raise the support amount for "coal briquette coupons," which can be used like cash when vulnerable groups purchase briquettes, from 472,000 won to 551,000 won. Applying the average consumer price, that is enough money to buy around 600 pieces per household. The expense to buy the remaining roughly 500 pieces will increase compared to before.
MOTI said, "Making coal briquette prices reflect reality also aims to induce non-vulnerable groups to reduce briquette consumption," adding, "We will protect vulnerable groups by expanding coal briquette coupons and energy vouchers and by supporting heating conversion."
Meanwhile, MOTI issued an explanatory press release on the 1st, saying, "We decided to abolish coal briquette production subsidies to respond to climate change and advance the energy transition," while adding, "Along with the phased abolition of coal briquette production subsidies, we will make every effort to protect vulnerable groups."