Biden win to weigh on Korea's carbon-intensive industries

Democratic U.S. presidential candidate Joe Biden departs after making a statement on the 2020 U.S. presidential election results during a brief appearance before reporters in Wilmington, Delaware, U.S., Nov. 5. Reuters-Yonhap

By Nam Hyun-woo

As Joe Biden nears the U.S. presidency, Korea's carbon-intensive industries are under dire pressure to become more eco-friendly, as the Democrat is expected to introduce a slew of strong environmental policies highlighted by carbon adjustment fees.

The steel and petrochemical industries here are already facing demands to cut their emissions, after the Moon Jae-in administration announced that Korea will pursue net-zero emissions by 2050. Biden's presidency would run the clock faster for those industries as their trade with the U.S. will be under immediate impact, industry officials and analysts said, Friday.

In his election promises, Biden pledged to tackle a series of environmental issues, and drawing the most attention in the plans are carbon adjustment fees or quotas.

On its website, the Biden camp wrote that “the Biden Administration will impose carbon adjustment fees or quotas on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations,” to ensure that “American workers and their employers are not at a competitive disadvantage and simultaneously encourage other nations to raise their climate ambitions.”

Though the camp did not specify the range of industries and duties, analysts say the demand to cut emissions will become stronger, requiring the domestic steelmaking, petrochemical and cement industries to either bear the costs or come up with new technologies to cut emissions.

“Biden's presidency will make the clock run faster for domestic industries in meeting global demands to cut emissions,” said Jung Eun-mi, a senior research fellow at Korea Institute for Industrial Economics & Trade. “This results in the greater necessity for the domestic manufacturing industries to enhance their efforts for emission-reducing technologies and state support to help that.”

According to Jung, the three industries assume that their accumulated costs to meet the country's goal to reach net-zero emission by 2050 will climb up to 400 trillion won ($355.2 billion), if individual companies have to fully change their facilities and manufacturing processes. When the scope is extended to the entire Korean industries, the amount will grow further.

Domestic carbon-intensive industries are striving to meet these demands for carbon reduction, but still are in early stages.

LG Chem announced in July it would pursue the RE100 campaign among all of its plants and business sites, meaning the petrochemical and battery firm will run operations on 100 percent renewable energy, and set the 2050 emission goals at 10 million tons, which was the company's total emissions last year. To achieve this, the company said it will develop eco-friendly and recyclable technologies and products but those plans are still in the early stages.

Earlier this month, SK Group announced eight of its units will join RE100 campaign, and its other fossil-fuel or petrochemical units such as SK E&S, SK Energy and SK Innovation will launch emission cut efforts tantamount to RE100. However, they also did not come up with detailed action plans or intermediate targets.

Steelmaker POSCO is yet to announce its tangible plans on emission cuts. During its conference call for the third quarter, the company said the Korean government's goal should be raised first and it will then come up with long-term plans on carbon neutrality.

Adding pressures to them, the government will likely unveil its Low Emission Development Strategies (LEDS) later this year before submitting them to the United Nations. The LEDS are anticipated to contain the government's May announcement that half of the country's coal-fired power plants will be closed by 2034.