Profit and Power: Opportunities in the US-South Korea Energy Sector

Expanding US-South Korea Energy Collaboration

South Korea is one of the United States’ most industrially-capable international partners, but due to its lack of energy resources, it relies on U.S. liquefied natural gas (LNG), among other sources, to fuel its industrial output. Increased U.S.-South Korea energy cooperation would strengthen an already robust treaty alliance and economic partnership. Over the last five years, South Korea has expanded its trade and investment relationship with the U.S., becoming its largest foreign investor, while the U.S. has overtaken China as South Korea’s top export market. In 2024, South Korea was the largest importer of U.S. LNG, receiving 5.7 million metric tons.

South Korea’s already strong participation in the U.S. energy sector was supercharged by the Inflation Reduction Act of 2022 (IRA). Its incentives significantly boosted South Korea’s investment and engagement in the green economy, accelerating growth in electric vehicles (EVs), charging stations, small modular reactors (SMRs), wind turbines, solar panels, and more. In the coming years, given the potential for profit, energy sector cooperation is likely to continue to increase.

Fueling the Energy Transition

The IRA and CHIPs and Science acts have attracted billions of South Korean energy-related investment, funding projects and plants in Texas, Georgia, Alabama, Ohio, Indiana, Tennessee and Michigan to produce EV batteries, solar panels, wind turbines and related supply chain components that support the U.S. and global effort to catalyze the energy transition. South Korean investment has added manufacturing capacity throughout the supply chain for EVs and EV batteries and supported expansion of related infrastructure.

In addition to this existing cooperation in the EV space, South Korea and the U.S. are starting to expand their cooperation in clean hydrogen and ammonia. For example, U.S. company AirProducts invested $500 million to establish a clean hydrogen production facility in Gyeonggi Province that could be used to import U.S. production as well as the associated “crackers” that are used to break down heavier fuels. Cracking is an energy intensive process and development of an efficient and affordable hydrogen-driven cracking process would result in a significant reduction of greenhouse gases. Syzygy Plasmonics, a startup based on Rice University-developed technology, set up a test ammonia cracker in Ulsan, South Korea in November 2024 and is working with South Korean companies to expand cooperation in the hydrogen sector.

Key to US-South Korea Energy Ties

The most significant U.S.-South Korea energy partnership remains in LNG, with the U.S. as South Korea’s top supplier. LNG makes up 26.8% of South Korea’s energy mix and Korea is the third largest LNG importer globally after China and Japan. Less well known is Chevron’s decades-old joint venture with South Korean conglomerate GS (known as GS Caltex) that operates the fourth largest refinery in the world in Yeosu, South Korea.

As South Korea works to hit its net zero commitments and transition away from coal, U.S.-South Korea LNG trade should continue to increase. With the second Trump administration’s expected focus on reducing the trade deficit (over $50 billion in 2024), the pressure to further increase LNG, and perhaps crude oil, imports from the U.S. is likely to rise.

Renewed Focus on Nuclear Power and Exports

While fossil fuels will continue to power much of South Korea in the near term, the future is bright for nuclear power, both domestically and as a source for overseas manufacturing and operating. After former President Moon Jae-in (2017–22) pledged to abandon nuclear power for environmental reasons in the wake of the 2011 Fukushima disaster, President Yoon Seok-yeol (2022–TBD) renewed South Korea’s commitment to nuclear power as a domestic energy source and a source for jobs and overseas sales.

Ahead of likely spring presidential elections in South Korea, all major candidates support increased focus on nuclear power, both domestically and as an export opportunity. Following the signing of a civil nuclear memorandum of understanding (MOU) between the U.S. and South Korea on Jan. 9, 2025, civil nuclear cooperation is expected to accelerate, with the U.S. likely supporting the previously-disputed deal for Korea Hydro and Nuclear Power (KHNP) to build nuclear reactors in Czechia.

South Korean companies are investing in U.S. companies like NuScale and TerraPower, while also developing their own reactor models and continuing to export traditional South Korean reactors. The new MOU unlocks great potential for U.S.-South Korea civil nuclear cooperation. Leveraging U.S. research expertise alongside South Korea’s construction capacity and experience, the coming decades could position this sector at the core of a shared energy future and broader economic cooperation.

Energy Cooperation Spans Conglomerates, Tech, and Startups

South Korea is at the cutting edge of technological development in the energy sector. The following examples highlight this progress:

• Korea Zinc, a 50-year old leader in recycling and smelting, operates extensively in the U.S., Australia, and elsewhere.
• Major South Korean conglomerates like Samsung, SK, Lotte, LG, and Hanwha are investing heavily in U.S. companies across the supply chain. South Korea’s second-largest conglomerate, SK, plans to invest over $50 billion in batteries, chips, and energy-related factories over the next 10 years.
• South Korean startups like Gaoncell are forging partnerships in the U.S., Poland, and Saudi Arabia to expand energy cooperation. Gaoncell is developing cutting-edge hydrogen fuel cell technology to create portable energy solutions for a variety of uses ranging from defense to data centers and drones.
• South Korean company CS Wind owns and operates the largest wind turbine manufacturing facility in the world in Pueblo, Colorado.

Fueling US Energy Innovation

Gaoncell exemplifies the type of cooperation expected going forward — research and production capabilities developed in South Korea, combined with global capital, sales and production. Similarly, the CS Wind investment and partnership illustrates how South Korean companies bring three key benefits to the U.S.:

1. Investing in the U.S. and creating jobs.
2. Leading research and development to create advanced technologies for the energy sector.
3. Providing manufacturing capacity and ability to meet deadlines and cost targets.

Although political challenges remain in aligning the bilateral relationship — and with Japan in trilateral arrangements — energy sector partnerships are expected to grow. Looking forward, established South Korean companies and conglomerates will likely continue to find investment and cooperation opportunities in the U.S. To strengthen this cooperation, research institutions and governments should expedite existing initiatives that support smaller companies and startups, driving further profitability in the U.S.-South Korea energy partnership.

South Korea’s Role in Shaping the Future of Minerals

South Korea also plays a leading role in the mineral sector, which is expected to grow in importance as the global energy economy shifts away from fossil fuels. As the current chair of the Minerals Security Partnership (MSP), a U.S.-led collaboration of 14 countries and the EU, South Korea is spearheading efforts to secure a steady supply of critical minerals. With major conglomerates like POSCO at the forefront, South Korea is a key player in the global effort to diversify mineral sources, even as China maintains a dominant position in mineral production and processing. While a true mineral decoupling from China is unlikely to occur in the next decade, South Korean investments are contributing to a more balanced and resilient global supply chain.

Key Dialogues and Future Opportunities

When representatives of the U.S. and South Korea met at Rice University’s Baker Institute for Public Policy in Houston on April 29–30, 2024, for their tenth annual energy security dialogue, it marked a significant shift. For the first time, business and academic experts joined what had previously been a government-to-government policy dialogue. Building on the success of that event, the Baker Institute sponsored a follow-up U.S.-Korea Business Energy Dialogue on Nov. 21, 2024, which served as a half year check-in on this critical bilateral energy relationship.

Guided by a government-drafted agenda and led by energy experts from academia and business, participants discussed not only continued cooperation in traditional sectors like LNG, but also ways to accelerate industrial collaboration in support of the energy transition. In both dialogues, experts and officials discussed coordinating policies to enhance collaboration and identified areas for growth, shared research, and cross-investment in sectors such as carbon capture, wind and solar power, geothermal, and hydrogen. During the November session, participants agreed that, as the second Trump administration begins, all should seek to frame cooperation as an opportunity to support U.S. efforts to compete with and counter China.

South Korea and the U.S. already cooperate extensively across government and private sectors, and this collaboration is expected to intensify as both nations seek to compete with and offer an alternative to China’s influence. The 2024 discussions at the Baker Institute underscored that the most promising areas for U.S.-South Korea cooperation lie in carbon capture, utilization and storage, nuclear energy, minerals supply chain coordination, and LNG exports — sectors that hold the potential to shape a more secure and sustainable global energy future.

This publication was produced on behalf of Rice University’s Baker Institute for Public Policy. Wherever feasible, the material was reviewed by external experts prior to its release. Any errors are the responsibility of the author(s) alone. 

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