Value context and insight. lkm@koreatimes.co.kr
Korean businesses lukewarm about gov't carbon-free drive
Deputy Prime Minister and Finance Minister Hong Nam-ki speaks during a ministerial-level meeting at the Seoul Government Complex in Gwanghwamun, Monday. / Yonhap
By Lee Kyung-min
By Lee Kyung-min
Industry insiders have expressed the hope that the government will take a cautious approach and reassess its ambitious “carbon-free” policy initiatives because Korea's economic growth still depends heavily on carbon-based energy sources.
“A huge amount of energy is required to build and operate memory chip lines,” an official from the local semiconductor sector said Monday. “From that standpoint, it's very challenging for us to use renewable energy. For us, the possible magnitude of the carbon reduction would be quite dramatic because carbon is still the largest source of energy.”
The reaction came immediately after the government unveiled its vision to achieve carbon neutrality by 2050. This would call for the country to kick its obsession with fossil fuels and accelerate investments into clean energy at a pace few dared believe possible.
“If carbon neutrality is inevitable, the focus should be about how to take the initiative and become proactive about it, not how to find ways to adjust afterwards,” Deputy Prime Minister and Finance Minister Hong Nam-ki said during a ministerial-level meeting at the Seoul Government Complex in Gwanghwamun.
To back up the move, the government said it would offer larger subsidies to firms that increase spending on research and development (R&D) into energy generation, and construction and transport needed to adopt low-carbon business models promptly.
An unspecified amount of government funds will be created to tackle climate change, while financing for businesses with green growth models will double to 13 percent of the national budget from 6.5 percent now.
Tax policies will be revised following a comprehensive study that will assess the feasibility of imposing a tax on carbon-related goods and activities, as well as the benefits of carbon emissions trading.
Workers in old industries will be retrained and businesses will be given opportunities to move to new business models, a measure to limit job losses and the sudden shutdown of firms that would hurt the real economy following rapid green-oriented corporate restructuring, the government said.
The ministries of finance, industries and science outlined the policy roadmap, under which a shift will be made in how the economy functions, a new business ecosystem takes shape and fair competition strengthens in the process.
“I would say yes, Korea will need to rethink its reliance on oil and I have to agree that carbon-free is the path the country should pursue, eventually,” another industry official said.
“However, the reality is Korea's core industries are heavily reliant on coal. More back-up measures and detailed policies are needed.”
Coal accounted for 40.4 percent of the country's energy sources as of 2019, followed by nuclear power (25.9 percent) and liquefied natural gas (25.6 percent).
The official said the government's announcement would require “massive, detailed and continued” policy support to bring forward clean energy investment and would need further clarity on the country's plans for possibly developing carbon-capture technology and carbon-offset credits.
South Korea needs to submit national strategies to the UN by the end of this year, as part of the Low-Emissions Development Strategy (LEDS), a term that emerged under the U.N. Framework Convention on Climate Change in 2008.
LEDS seeks to serve multiple purposes, but is primarily intended to help advance national climate change and development policy in a more coordinated, coherent and strategic manner.