South Korea’s climate roadmap fails to impress businesses, environmentalists
South Korea raised its emissions reduction target for 2030 and laid out a decarbonization roadmap for the next 30 years, but the initiatives are failing to satisfy either businesses or environmentalists.
In a committee meeting on carbon neutrality 18 October, President Moon Jae-in confirmed that Asia's fourth-largest economy will aim to cut its GHG emissions by 40% compared with 2018 levels by 2030.
The revised Nationally Determined Contribution (NDC) will be formally submitted to the UN during the COP26 climate summit in Glasgow next month. In December 2020, South Korea committed to a 26.3% emissions cut.
"This is the most ambitious reduction goal possible, given our situation … Our goal is very fast paced and challenging," Moon admitted. "Industry and labor may have major concerns about whether they will ever be able to cope."
Government officials said the target was first proposed by the Ministry of Trade, Industry and Energy (MOTIE) 8 October and came after a public consultation.
In early September, South Korea's National Assembly passed the Carbon Neutrality and Green Growth Act, which requires the country to cut emissions by at least 35% by 2030 and reach carbon neutrality by 2050.
The parliament is controlled by Moon's Democratic Party.
"The government will render all possible policy and financial support so the burdens are not shifted onto businesses alone," said Moon, adding that the central government will commit KRW 12 trillion ($10.2 billion) to creating the path to carbon neutrality in 2021.
South Korea will increase investments in technological development and "do all it can to create new jobs and secure new future growth engines to spearhead the carbon-neutral era," he added.
To achieve the new emissions reduction goal, MOTIE said South Korea is aiming to increase the proportion of renewables in its electricity generation mix from 6.2% in 2018 to 30.2% in 2030. Seoul had previously targeted a 20% share by 2030 in its Renewable Energy 3020 plan, which was announced in 2017.
Also, South Korea wants to cut coal's share of its power stack from 41.9% in 2018 to 21.8% in 2030, and LNG's from 26.8% to 19.5%. Ammonia will account for 3.6%, compared with zero in 2018.
"With the new NDC target, the government is prioritizing a switch from coal and gas to renewables," said Vince Heo, associate director for gas and power at IHS Markit. "The most notable update in this new NDC release is the [increased] target share of renewables in the electricity supply in 2030."
While Moon has committed to phasing out nuclear power in South Korea eventually, MOTIE said the energy source will account for a 23.9% share in 2030, compared with 23.4% in 2018, in the roadmap.
"Nuclear's role will be limited as the government aims to phase out nuclear in the power market," Heo told Net-Zero Business Daily.
"However, its share in the electricity supply mix will remain [at] the current level through 2030 as there are four new nuclear reactors under construction."
In the 9th Basic Plan for Electricity Demand and Supply, released in December 2020, Seoul proposed a 40.3% share of capacity for renewables in 2034 versus 15.8% in 2020. Coal's slice of the generation pie is set to nearly halve to 15% from 28.1%, while gas-fired plants' share will fall to 30.6% from 32.3%.
The plan will be reviewed in 2022, when South Korea's next presidential election is due. Moon, who committed his country to carbon neutrality by 2050, is not eligible to run for a second term under the South Korean constitution.
Regardless of who will be the next president, Heo said South Korea's climate goal is not expected to be affected. But the roadmap could be revised.
"The NDC target is unlikely to change as there's mounting pressure from the US and other partnering countries on keeping emissions on a path to net-zero," he said. "The potential changes in energy policy are likely be in nuclear energy, as the opposition party is pushing hard to revive the industry."
Separately, the government narrowed down the number of its pathways to reaching carbon neutrality by 2050 from three to two following Moon's announcement.
Seoul scrapped a scenario where coal would still account for 19.1% of power mix, which was unveiled 5 August.
The first of South Korea's two potential routes to net zero would see coal and LNG power phased out by 2050, renewables account for 70.8% and hydrogen-based, zero-carbon gas turbines on tap for 21.5%. Nuclear will make up 6.1%.
In the second, coal will also be out, but LNG will retain a 5% share. Renewables will account for 60.9%, fuel cells 10.1%, and gas turbines 13.8%. Nuclear will have a 7.2% share.
Meanwhile, the government said it will make large investments in carbon capture, utilization, and storage projects and develop domestic and overseas carbon capture hubs.
Seoul wants the technology to help reduce South Korea's emissions by 55.1 million metric tons (mt) of carbon dioxide equivalent (CO2e) in the first pathway, and 84.6 million mt CO2e in the second.
Green and business lobbyists both reacted negatively to the latest climate initiatives.
The Korea Federation for Environmental Movement (KFEM), affiliated to Friends of the Earth, said the government's plans fail to align with the Paris Agreement's ambition of keeping the global temperature rise below 1.5 degrees Celsius.
"Both the NDC and carbon-neutral scenarios consist of insufficient targets and uncertain means to avert the climate crisis," the environmental group said.
South Korea needs to reduce emissions by at least 50% and phase out coal power by 2030 to help avert the climate crisis, according to the KFEM.
With the country's highly competitive battery and vehicle makers, government officials have long argued that South Korea is well positioned to benefit from global decarbonization efforts.
In September, the country exported 34,823 electric vehicles, hybrid electric vehicles, plug-in hybrid electric vehicles, and fuel-cell hybrid vehicles, a monthly record and up 31.3% from a year earlier.
Industry experts believe South Korea could be a major market for offshore wind power after the government announced an 8-GW fixed-bottom project near Sinan, South Jeolla in February
But the country is also home to some major steelmakers, petrochemical producers, and metal smelters that require a lot of electricity. The Federation of Korean Industries (FKI) expressed worries over the climate initiatives' potentially negative impact on the national economy.
"The energy efficiency of our industry is the highest in the world…It is difficult to introduce innovative carbon reduction technology," the business group said.
The FKI wants the government to review the reduction target for 2030 and consider shifting to nuclear energy to lower emissions in the utility sector.
"It is difficult to introduce innovative carbon reduction technologies and new energy like hydrogen and ammonia by 2030," the FKI said on its website.
"The government should quickly come up with realistic alternatives and strengthen support for carbon reduction technology development," it added.
Walk the walk?
While Seoul has hiked its climate targets and announced major headline figures for various initiatives—including the KRW 73.4 trillion Green New Deal—since last year, policy experts said the government did not provide enough concrete measures for reducing emissions.
In the industrial, commercial, and residential sectors, Seo said incumbent policies to date have had little success in incentivizing electrification or allowing infrastructure to adapt to low-carbon fuels.
The government has talked of low-carbon technologies, such as carbon capture, without giving clear guidance on how their deployment will be supported en masse, he said, adding that "further regulatory and fiscal support for technological development and new infrastructure will be needed to achieve the scale of transformation."
According to the G20 climate policy report card published by Ceres, Investor Group on Climate Change, and Asia Investor Group on Climate Change 18 October, South Korea's overall policy suite is in line with 3-4 degrees Celsius of global warming—far above the Paris Agreement's target.
The country is set to emit 649-691 million mt of CO2e in 2030 with its current policies, missing the NDC target of 540 million mt, think-tank NewClimate Institute Policy Analyst Jamie Wong said.
"The government needs to significantly strengthen its climate policies, even more so if the country is to achieve carbon neutrality by 2050," he added.
As for the private sector, only listed companies with total assets of KRW 2 trillion or more have to report environmental data from next year. Firms are recommended but not required to follow the standards set out by the Task Force on Climate-Related Financial Disclosures.
The Science Based Targets initiative, a partnership between the UN Global Compact, the World Resources Institute, the World Wide Fund for Nature, and CDP (the non-profit formerly known as Carbon Disclosure Project), gave South Korean firms a low mark when evaluating how G20 businesses have aligned their climate targets with the Paris Agreement. A total of 106 firms in the country have declared their goals to the CDP, but none of them are aligned.
Yoo-Kyung Park, head of Asia-Pacific responsible investment and governance at APG Asset Management, said the policy signals have not been strong enough to prompt South Korean firms to decarbonize in droves.
"The Korean government needs to act, so the industries can actually prepare," she said.
Park cited the power sector—a major emitter—as an example. While the government introduced an emissions trading system in 2015, coal plants continue to receive large quantities of free allowances. Wholesale electricity prices also have yet to fully reflect emissions costs.
"The incentives for companies to quickly transit their energy use and sources are not strong enough. The policy direction is not strong enough. And the punishment [for big emitters] is not strong enough," Park said.
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