South Korea’s Green New Deal: The Dirty Reality
WHAT’S HAPPENING?
As one of the world’s largest CO2 emitters, South Korea has pledged to go carbon neutral. However, decarbonization will be an uphill battle that will require more than what the government has planned.
KEY INSIGHTS
– South Korea is one of the carbon-heaviest nations on earth and requires fundamental changes to its economy to rid itself of its fossil fuel addiction.
– The country’s outgoing president, Moon Jae-in, has introduced South Korea’s Green New Deal to kickstart the green energy transition.
– While South Korea has launched some exciting projects that may transform its economy, much more will be required than what has been committed thus far.
MOON JAE-IN’S LEGACY
South Korean President Moon Jae-in is nearing the end of his term in office. He will likely be the most popular outgoing president in the country’s history, despite leaving with unfulfilled election pledges. Ending the Korean War, stamping out corruption, making housing more affordable, closing the gender pay disparity and reining in the country’s powerful conglomerates—the chaebols—were all lofty promises, none of which were achieved.
There is one policy that was introduced during Moon’s term, however, that may end up as one of the greatest legacies of any South Korean president: South Korea’s Green New Deal.
In mid-2020, President Moon announced that his country would cease to be a net CO2-emitter by 2050. The supermajority his party achieved that year in the National Assembly elections gave Moon the power to introduce the “Green New Deal.” An initial $10 billion of investment and the prospect of over one hundred thousand jobs created in the coming years were to be the first steps toward a greener future.
This was followed by more pledges, additional funding and legislation that formalized South Korea’s path to carbon neutrality. Then, during the 2021 UN Climate Change Conference (COP26) in Scotland, President Moon revealed his country’s most ambitious goals yet: reducing the economy’s reliance on coal and becoming a global leader in renewable energy production.
South Korea’s announcements received much applause but also raised many eyebrows. The world’s tenth-largest economy is also the seventh-largest emitter of CO2. A large adjustment to the domestic economy would be required to kick its habit of fossil fuel usage.
SOUTH KOREA’S FOSSIL FUEL ADDICTION
According to an independent scientific analysis of countries’ goals and policies against the agreed limits of the Paris Agreement, South Korea’s current targets are classified as “insufficient.” Similarly, the government’s actual economic and environmental policies aimed at achieving carbon neutrality are “highly insufficient.” Taken together, South Korea’s actions are lacking if the country seeks to limit its carbon footprint.
South Korea is one of the carbon-heaviest economies on earth, both per capita and in absolute terms. This will come as no surprise to its inhabitants, as poor air quality is a major issue. The State of Global Air 2019 report estimated that air pollution is the cause of at least 20,000 deaths annually.
Urban South Koreans are used to having air quality displayed in real-time on their smartphones, which emit a shrill warning sound whenever the day’s pollution levels are expected to exceed levels acceptable for human health. Depending on the time of the year, this alert can sound on more days than not.
A major reason for South Korea’s heavily-polluted air is the country’s energy mix. The International Energy Agency (IEA) has noted that South Korea has the lowest share of renewable energy in its energy production mix of any IEA member.
It also has the highest share of industrial energy consumption, as the chaebols rely on cheap energy for the production of semiconductors and automotive vehicles, shipbuilding and to power other heavy industries.
Additionally, above 40% of South Korea’s energy is sourced from coal; only 6% comes from renewables. The government has pledged to move away from coal, but in turn, will increase the share of liquefied natural gas (LNG). Because it releases less CO2, LNG is preferable to coal. However, a drawback to LNG is that it produces methane as a byproduct. Methane has a global warming potential of around 28 times that of CO2. While many other developed nations have promised to phase out coal entirely by 2030, the Moon administration planned to merely cut the share of coal-produced energy down to 21% by 2030, rather than eliminating it altogether.
Apart from shifting to less carbon-heavy fossil fuels, the Green New Deal also entails groundbreaking projects aimed at introducing green energy into the country’s energy mix. One such recently-unveiled project involves building the world’s largest offshore wind farm. To be completed by 2030, it would provide South Korea with energy equivalent to six nuclear power plants. But it will take many more such projects if the country’s COP26 goal of 30% renewables is to be achieved by 2030.
One major gamble in South Korea’s greening pursuit is its focus on hydrogen, both as an energy source and for personal transportation. South Korea seeks to become a global leader in the production of hydrogen fuel cell electric vehicles (FCEV). Hydrogen fuel cells will likely become a major engine for global supply chains, powering ships, trains, and trucks.
In comparison, battery-fueled electric vehicles (EVs) are twice as efficient at energy conversion and tend to have a significantly longer range, causing many to question hydrogen’s relevance for personal automobiles.
Nonetheless, South Korea is well positioned for trying to push FCEVs over EVs, because there are still very few EVs on South Korea’s streets. Due to a lack of public investment over the years, owning an EV in South Korea remains cumbersome and expensive. For most South Koreans, owning an EV is only practical if they also invest in their own charging station.
Additionally, current plans envisage hydrogen as a major energy source. Large hydrogen-production facilities are already under construction and will use LNG to produce the hydrogen, thereby generating “gray hydrogen.” While the South Korean government plans to shift towards green hydrogen utilization, a lack of availability and economic viability prevent this goal from being achieved. As such, South Korea’s green hydrogen goal can only be achieved presently by importing green hydrogen.
South Korea’s optimistic ambitions for carbon neutrality are nothing unusual among developed nations, but it has a steeper path to climb than most of its peers. One major issue with the current Green New Deal can be found in its origin: COVID-19.
In early 2020, the country was reeling from the economic shock caused by the pandemic. The Green New Deal was introduced as part of several government initiatives focused on economic growth. Rather than purely focusing on the long-term issue of the energy transition, the Green New Deal is currently more concerned with maintaining access to cheap energy while creating economic stimulus through large-scale projects.
BUSINESS AS USUAL FOR A GREENER FUTURE
While the Moon administration’s ambitious targets for South Korean carbon neutrality should be taken seriously, current policies are insufficient to get there. As such, the soon-to-be inaugurated Yoon Suk-yeol administration will likely continue to announce additional initiatives.
Apart from the need to clean up the country’s energy mix, pollution and air quality are real issues for the people of South Korea, who will judge future presidents on their progress in improving these metrics. Therefore, more government-led initiatives should be expected in the short-term.
These could benefit companies from around the world that specialize in green energy, given that some of the required know-how and technology will have to be imported. However, South Korea is a very protective market with powerful conglomerates that tend to defend their interests from outside competition, often with the help of lawmakers. It is those conglomerates that appear to be the main beneficiaries of current policies.
South Korea will also be a major testing ground for FCEVs and hydrogen. The country’s bet on hydrogen will likely be either a success story to emulate or a cautionary tale to others. If the gamble pays off, South Korea will be at the forefront of a hydrogen revolution. However, if global demand for FCEVs proves underwhelming, or if green hydrogen remains out of reach, this strategy could backfire. In this case, South Korea’s economy will remain dependent on fossil fuels for even longer, while also having to undergo a costly readjustment away from hydrogen.
While the proportion of energy coming from coal will gradually decline, there is a real danger that other fossil fuels will be used to replace the majority of that share, at least while the focus remains on maintaining a cheap supply of energy for heavy industries.
However, to achieve carbon neutrality, South Korea’s energy-intensive industries would have to completely transform. This would entail a major economic cost, which the South Korean government will likely continue to put off discussing for some time. A green energy transition requires tough choices for which there is still little political will.
In any case, South Korea’s Green New Deal will likely be the basis for strong economic growth, powered by its conglomerates, which will see already record-breaking profits increase further.
Whether this economic activity will actually translate into a significantly lower carbon footprint, let alone carbon neutrality, remains to be seen. South Korea’s Green New Deal could be the start of a greener future for the country, but it is only a start, not an actual roadmap yet. Whether Moon Jae-in will be remembered as the president who started South Korea’s green revolution may depend on his successor’s commitment to decarbonization.
