Gov’t’s mandatory emission cut plan by 2030 faces backlash
By Baek Byung-yeul
Korean companies are crying foul over the government’s drastic moves to cut carbon emissions, claiming that these will end up hurting the competitiveness of the country’s key manufacturing industries.
Protest has been growing since Aug. 31 when Korea became the world’s 14th nation to legislate a Carbon Neutrality Act after the National Assembly passed a bill mandating over a 35 percent cut in greenhouse gas emissions by 2030 to consequently achieve net zero emissions by 2050.
Industry experts and representatives are criticizing the government’s move toward carbon neutrality, saying the mandatory 35 percent cut in emissions is too drastic and there has been no consideration on a practical action plan, and this could hurt the national economy that is centered on manufacturing.
They say companies, especially in the energy, steel and transportation sectors, are not fully prepared to adjust to the strengthened environmental regulations.
An official in the steel industry said the government pushed the bill too quickly without enough discussion with various groups from industries, academia and other fields.
“To meet the 35 percent goal, companies are required to increase their use of renewable energy, but this costs a lot. Even if we switch to using solar energy, we need a huge amount of land, and also wind pylons,” the official said. “It should have been done through discussions with various groups.”
Korea’s carbon emissions peaked at 72.8 million tons in 2018 and have been on the decline since then. If the reduction target is set at 35 percent, carbon emissions should be reduced by 240.21 million tons by 2030.
The expert added that the bill could have even the worst consequence of pushing companies to move their domestic production facilities abroad. Meanwhile, the bigger question is whether small- and medium-sized businesses that lack the manpower, funding and technology compared to larger companies will be able to achieve this goal.
“The carbon-intensive industry sectors such as steel-manufacturing, oil refining and petrochemicals are key industries as they are exporting enormous amount of products to countries around the world,” said Yoo Seung-hoon, an energy policy professor at Seoul National University of Science and Technology.
“If the 35 percent cut is enforced, they have to choose whether to close their operations here or move to overseas off-shoring. Either way, this would decrease GDP and reduce the number of jobs. Do you think the people will endure these changes without any protest?” Yoo asked.
He also said that in order to achieve the 2030 goal, there would have to be changes in energy consumption and business operations, both of which seem difficult to achieve.
“In terms of changes in energy use, the country needs to see an extreme increase in the use of solar energy. Currently, Korea’s solar energy capacity is less than 20 gigawatt-hours, but this has to be increased to 125 gigawatts-hours, nearly seven-fold.
“It will be physically possible if we replace farmland with solar power plants and reclaim land from the sea to build more solar power plants. But it will cost an exceptionally large amount, and the government has not yet built a national consensus about such changes,” he added.
Yoo Hwan-ik, chief economist at the Federation of Korean Industries (FKI), also expressed concerns that the bill could hinder the country’s economic development.
“The act stipulates that greenhouse gas emissions should be reduced by more than 35 percent compared to 2018, but this could place too much of a burden on the national economy,” Yoo said, adding there should be a careful review of the act so that the reduction goal can be established reasonably according to the country’s economic condition.
There also has been criticism that government support measures for achieving carbon neutrality are insufficient, again placing more of a burden on private companies.
In response, the Ministry of Trade, Industry and Energy said it will expand investment in research and development to help reduce the private sector’s burden in achieving carbon neutrality.
“The ministry expanded the government’s 2022 R&D budget from 1.26 trillion won this year to 1.55 trillion won to study switching to a low-carbon industrial structure. Specifically in the energy sector, the ministry allocated 956.1 billion won for 2022, up from 753.5 billion won in 2021,” it said.
The ministry further stated that it will provide funding of 6.7 trillion won to 13 carbon-intensive industry sectors such as steel, petrochemical and cement production between 2023 and 2030, to enable them to develop technologies that reduce carbon emissions.
“The ministry has formed a council for cooperation between the public and private sectors to actively reflect the latter’s demands, and plans to minimize the burden on industries by expanding support for technological development to realize carbon neutrality in the future,” the ministry added.
‘Korea should not be compared to Europe, US’
Experts have pointed out that Korea should not be compared to Europe and the United States, which have been preparing for carbon neutrality since the 1990s. Starting with the Kyoto Protocol in 1997, they have been aiming for a net zero goal, 13 years before Korea enacted the Framework Act on Low Carbon and Green Growth in 2010.
In 2019, the European Union laid out its Green Deal investment plan, which will see an investment of at least 1 trillion euro. The EU also promised up to a 470 billion euro investment in a hydrogen expansion strategy last year with the aim of boosting its hydrogen economy from 2 billion euro now to 140 billion euro by 2030.
The U.S. is forecast to invest over $2 trillion in its net zero plan. The strategy is to secure 700,000 jobs by raising the size of its hydrogen economy to $140 billion by 2030. In addition to traditional renewable energy such as solar, wind and hydrogen power, new renewable energy production technologies using corn and animal fat are also being developed.
To keep pace with advanced regions, major conglomerates in Korea recently agreed to cooperate in developing a nationwide hydrogen ecosystem, announcing they will invest a combined 43.4 trillion won ($37 billion) by 2030 to establish facilities for hydrogen production, distribution, storage and utilization.
However, the Korea Chamber of Commerce and Industry rates Korea’s carbon neutrality-related technology as only at about 80 percent of that of the EU and the U.S., and there is a significant gap in key technologies such as hydrogen fuel cells, and carbon capture, utilization and storage (CCUS).
“We should take a different approach from Europe. We are lagging behind Europe in technologies, so we need to warm up slowly by 2030 and then speed up,” Prof. Yoo said. “If we run fast without warming up, we will collapse. Carbon-intensive sectors such as steel and petrochemical manufacturing and oil refining are fiercely competing with China, but China aims to achieve its net zero goal by 2060, 10 years later than Korea. Ten years is enough time for our industry’s competitiveness to lag behind that of China.”