1. shades of the energy transition and the end of the 'black jewel'
in the history of South Korea's economic development, briquettes have been more than just a fuel. from the 1960s to the 1980s, it was the main source of energy for ordinary people's winters and the engine of industrialization. But now, in 2025, South Korean society is witnessing the complete demise of the briquette industry amidst the macro trends of rapid energy transition and climate change response. the government's 'Coal Industry Rationalization Policy' and the global carbon neutrality drive are fundamentally dismantling the briquette production and consumption structure, which inevitably threatens the livelihoods of the energy vulnerable.
this report provides an in-depth analysis of the accelerating rise in briquette prices, the collapse of the production base, and the resulting social spillover effects since the winter of 2025. in particular, it examines the impact of the government's subsidy removal policy on market prices, the mechanisms of logistics cost shifting due to supply chain disruption, and how this translates into economic pressure on the energy poor represented by slum dwellers and dal dongne. The report goes beyond a simple description of the current situation to comprehensively diagnose the secondary and tertiary spillover effects of the policy context and global energy market volatility since the 1980s on the domestic briquette market.
2. analyzing Briquette Price Formation Structure and Drivers
the consumer price of briquettes is not simply determined by the cost of production. it is the result of a combination of government-notified prices, production subsidies, and complex logistics costs. the sharp rise in briquette prices as of 2025 suggests that this balance is breaking down.
2.1. Dichotomization of the price structure: factory price vs. consumer price
as of 2025, the maximum selling price of briquettes (factory price), as announced by the government, is frozen at 639 won per piece. this is part of the government's artificial price control policy to stabilize prices for the masses. however, the price consumers actually pay is more than 1,000 won, and can even reach 1,700 won depending on the difficulty of delivery.
the main reason for this price discrepancy is the cost of 'last mile' delivery. the majority of briquette-consuming households are concentrated in high-altitude dal-dong neighborhoods or narrow alleyways where vehicles cannot enter. this leads to an exponential increase in labor and transportation costs in the distribution process from wholesalers to retailers and back to the end consumer. In particular, rising oil prices and rising labor costs drive up delivery fees, resulting in consumer prices that are more than double the factory price.
2.2. Subsidy removal roadmap and price forecast to 2027
the government has finalized a roadmap to phase out briquette production subsidies in the name of climate change mitigation and energy transition. according to the Ministry of Trade, Industry and Energy's plan, the production subsidy will be reduced by 100 won per piece in 2026 and 2027. this will result in an increase in manufacturing costs that will be passed on to consumer prices.
yearpolicy Changeestimated Factory Price Changeestimated Average Consumer Price 2025 price freeze (subsidies remain) 639 KRW 900 ~ 1,000 KRW in 2026 production subsidy cut by 100 won 739 won (+100 won) 1,100 ~ 1,200 won 2027 production subsidy cut by another 100 won 839 won (+200 won) 1,200 KRW to 1,500 KRW
as shown in the table above, the average consumer price of briquettes is expected to exceed KRW 1,200 by 2027. this is a simple average price that does not include delivery fees, and suggests that vulnerable households in rural and mountainous areas may have to pay close to KRW 2,000 per briquette. this is an unaffordable economic shock for people living on around 300,000 won per month.
3. supply chain disruption: the disappearance of production and distribution infrastructure
a more fundamental crisis than rising prices is the physical disappearance of the infrastructure to produce and distribute briquettes. this is creating a supply crisis that goes beyond a "can't afford it" problem to a "can't get it" problem.
3.1. Briquette plant closures and regional supply chain consolidation
the number of briquette factories in the country has plummeted from more than 400 in the 1960s to 26 (registered) by the end of 2024. worse, only 16 are actually operating. regional supply imbalances have been exacerbated by the successive closure of regionally based factories, including Samcheon-ri Briquette Factory in Seoul, the last briquette factory in the country, and Namseon Briquette in Gwangju.
the regional distribution of currently operating plants is as follows
gyeongbuk: 6 (Yeongju, Yecheon, Gimcheon, etc.)
chungbuk: 3 (Jecheon, Chungju, Danyang)
gangwon: 3 (Samcheok, Taebaek, Yeongwol)
others: 1 each in Dongducheon, Daejeon, and Budae, Chungnam, and Jeonju, Jeonbuk
this concentration of factories means an increase in logistics distances. for example, Jeollanam-do, which has lost a factory, must source briquettes from Jeonbuk-do or other regions, which leads to increased transportation costs, which drives up prices for end consumers, creating a vicious cycle. the decrease in factory utilization rate increases the production cost per unit, which in turn leads to the deterioration of the profitability of the factory and the closure of the factory, forming a chain of structural collapse.
3.2. Raw material supply crisis: the end of domestic coal mines
the supply of anthracite coal, the raw material for briquettes, has also reached its limits. in July 2025, the Samcheok Dokgye Mine, the largest state-owned coal mine in Korea, was shut down, effectively destroying the country's anthracite production capacity. currently, only the Samcheok Gyeongdong Sangdeok Mine, a private coal mine, remains in operation, but its output is lower than usual.
the anthracite coal stockpiled by the government and the Korea National Coal Corporation is estimated to be around 2.2 million tons, and given the average annual consumption (around 300,000 tons), there is a buffer period of around seven years. however, this is a time-bound sentence, and the country will have to rely entirely on imports after the stockpile is exhausted. given global coal price volatility and exchange rate risk, briquette prices using imported anthracite are likely to be well above the current forecast range.
4. policy context: The dilemma of coal industry rationalization and carbon neutrality
the current briquette crisis is the result of long-term government policy intervention rather than natural market forces. starting in the late 1980s, the "coal industry rationalization policy" has led to coal production cuts for both economic and environmental reasons.
4.1. First Rationalization Policy (1988-): economic growth and fuel switching
the initial rationalization policy, which was implemented around the 1988 Seoul Olympics, was aimed at increasing national income and improving the environment. the government launched a massive program to switch household fuels from briquettes to oil boilers and city gas, which led to a sharp decline in the proportion of households using briquettes, which stood at 77.8% in 1988. while the policy had positive effects in terms of reducing air pollution and improving living conditions, it had the side effect of leaving out low-income households who could not afford the cost of energy conversion.
4.2. The second round of rationalization (2020s-): climate crisis and coal phase-out
in the 2020s, the policy intensified, with "carbon neutrality" as the core value. in order to meet global standards, the government has put in place a strong drive to curtail coal power generation and curb domestic briquette consumption. international pressures, including discussions of a carbon tax and the EU's Carbon Border Adjustment Mechanism (CBAM), are accelerating the exit of the domestic coal industry.
the government is removing production subsidies and pushing for price realization to induce a reduction in briquette consumption. the Ministry of Industry explains that this is "aimed at encouraging non-vulnerable households to reduce briquette consumption," but this policy logic has been criticized as disconnected from reality, as the overwhelming majority of households using briquettes are vulnerable.
5. the reality of the energy poor and the social costs
the direct victims of briquette supply chain disruptions and rising prices are the most vulnerable in our society. for them, briquettes are not a fuel of choice, but the only means of survival.
5.1. Demographics and housing limitations
in 2025, it is estimated that there will be less than 60,000 households using briquettes. the average age of these households is in the 80s, and they are dominated by the elderly and the extremely poor, with an average monthly income of only 300,000 won.
the cost of briquettes is not the only reason why they are unable to give up briquettes. old houses, such as shanty towns and unauthorized shanty towns, are extremely poorly insulated and draughty. oil or gas boilers are not only expensive to maintain, but often impossible to install due to the structure of the building. the briquette stove's ability to heat the floor directly and retain heat for a long period of time is essential in these living conditions. this is why government programs to support boiler replacement are not effective.
5.2. Welfare blind spots and increased heating costs
the government announced that it will increase the unit price of briquette coupons from 472,000 won in 2025 to 551,000 won in 2026 to protect the vulnerable. however, there are many voices in the field that this is not enough to cover the increase in the price of briquettes and the heating needs during the cold season.
a household needs about 1,000 briquettes to get through the winter. even at 1,000 won per piece, it costs 1 million won, and the remaining 450,000 won, excluding the 550,000 won subsidy, is unaffordable for an elderly household with a monthly income of 300,000 won. as a result, they are forced to reduce heating hours or rely on electric heaters, which leads to health problems such as hypothermia and increased social costs.
6. a shrinking culture of giving and the limits of private support
private sector donations, which used to fill the gap in government support, are also shrinking. the economic downturn and rising prices have chilled the giving spirit of individuals and corporations.
6.1. The 'donation cliff' phenomenon has intensified
according to relief organizations such as the Briquette Bank, the amount of briquette donations in 2025 plummeted by 30-40% year-on-year. in addition to the economic recession that followed COVID-19, the rising price of briquettes has led to a "double whammy," meaning that the same amount of donations can support fewer briquettes.
6.2. Fewer volunteers and delivery challenges
briquette delivery is highly dependent on human labor due to the difficulty of accessing areas with vehicles. however, as the number of volunteers has decreased, the organization has been unable to find enough delivery personnel to deliver briquettes even when they are stacked in warehouses. declining donations and fewer volunteers are major factors contributing to the isolation of the energy poor.
7. conclusions and policy recommendations
the briquette crisis in South Korea in 2025 is not just about fuel, but about social inequality in the energy transition. while the transition away from coal to combat the climate crisis is irresistible, there is a lack of attention to the 'just transition' that occurs in the process.
while briquette price hikes and plant closures are proceeding according to economic logic, the damage is concentrated in welfare areas that cannot be addressed by economic logic. therefore, a multifaceted policy approach is needed, including the following
realize in-kindsupport: briquette coupon amounts should be realized to reflect actual heating needs (based on 1,000 briquettes per household) and delivery surcharges, not just inflation.
introduce a public logistics system: A public delivery system at the local government level or a policy of subsidizing transportation costs should be established to deliver to rural areas that have been abandoned by private delivery companies.
improve residential environments in parallel: Rather than forcing fuel switching, fundamental measures should be taken to improve energy efficiency by supporting green remodeling, such as insulation, first.
stockpiling as a social safety net: In the face of a collapsed domestic production base, governments should establish reliable stockpiles and supply plans for essential needs to avoid supply crises.
briquettes will soon become a museum artifact. but until that moment when the last household needs a briquette, the state has a responsibility to keep them warm. just as important as the speed of the energy transition is the constant reflection on whether it is oriented towards people.