Korea revises down emission reduction target for businesses

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The South Korean government has decided to revise down its 2030 greenhouse gas reduction target for the industrial sector to 11.4 percent from 14.5 percent set by the former administration, a move that will load off some regulatory burden on businesses.

The 2050 Presidential Commission on Carbon Neutrality and Green Growth on Tuesday unveiled its first basic plan between 2023 and 2042 to achieve carbon neutrality and green growth. The plan is expected to serve as a basis for the future initiatives led by the Yoon Suk Yeol government.

Under the plan, the commission maintained the overall national emission goal of reducing carbon emissions to 436.6 million tons by 2030, down 40 percent from the 2018 levels, as set in 2021. It, however, eased the 2030 reduction target for corporate polluters to 11.4 percent, or 230.7 million tons, from 14.5 percent set in 2021. The adjustment will allow the Korean industrial sector to generate 8.1 million tons more of emissions.

The adjustment comes as there have been concerns that the reduction target was too high for industries, especially manufacturers of chips, petrochemicals, and steel.

The commission said that the gap caused by the eased target for industries will be filled with the use of nuclear power and renewable energy sources such as solar and hydrogen. It also plans to reduce 11.2 million tons of carbon dioxide through carbon capture storage technology.

Businesses have been arguing that the country’s nationally determined contribution (NDC) target is too high and that it does not reflect Korea’s high dependence on manufacturing, one of heavy carbon polluting industries, which encompasses steel and petrochemicals.

The Ministry of Trade, Industry, and Energy asked the Korea Energy Economics Institute and The Korea Institute for Industrial Economics and Trade for research on the feasibility of the NDC goals in September 2022.

[Image source: Gettyimagesbank]

The research showed that an estimate of greenhouse gas reduction to be achieved by 2030 amounted to only 13 million tons, or 5 percent of the country‘s emissions levels in 2018. The ministry delivered the results to the commission and the Ministry of Environment and kicked off discussions for a revised greenhouse reduction target.

The adjusted target of 11.4 percent is a compromise between the previous target and a suggestion of less than 5 percent from the industrial sector.

The proposal from the presidential commission is aimed at speeding up the shift towards renewable energy to meet the reduction target. The government increased the 2030 curb goal in the energy transition by 1.5 percent. It plans to have reactors to account for 32.4 percent of total power generation by 2030, up from 27.4 percent in 2021. Renewable energy sources are expected to make up for 21.6 percent, up from 7.5 percent in 2021, according to the proposal.

The business circle welcomed the adjustment but called for incentives and tax breaks, saying that the rate is still too high.

“The previous target of 14.5 percent was not feasible without considering multiple factors, such as uncertainty of technology advancement and fuel supply, as well as lack of cost-effective reduction methods,” said an unnamed official from the Korea Enterprises Federation. “However, the revised goal remains still challenging to be achieved, given the country’s carbon-neutral technology and commercialization levels.”

The Federation of Korean Industries called on the government for tax breaks to encourage local companies to push for the development and commercialization of carbon reduction technology, which involves high cost and risk.