How to best utilize Basic Plan for Carbon Neutrality and Green Growth

By Kim Sung-woo

Last month, the Presidential Commission on Carbon Neutrality and Green Growth (of which I am member) passed the 1st Basic Plan for Carbon Neutrality and Green Growth (Basic Plan), which was ultimately approved and confirmed at a Cabinet Meeting on April 11. The Basic Plan, designed as a countermeasure to the global climate crisis and government-led support for sustainable growth, is to be established every five years over the next 20 years (from 2023 through 2042).

The Basic Plan serves as a master plan that governs more detailed undertakings for local governments and longer-term strategies for the nation including electricity supply plans, land development plans and resource circulation plans. The Basic Plan comprises three major parts: (a) national strategies and visions for conversion to a net-zero society, (b) reduction targets for carbon emissions and (c) policy tools to establish a robust system for implementing the roadmaps to carbon neutrality.

As for the visions and strategies for transition to a net-zero society, four major strategies have been established for achieving carbon neutrality by 2050 while maintaining sustainable growth of the national economy. The strategies are centered on the idea of reducing greenhouse gas emissions effectively and quantifiably, led by innovation-driven through the private sector. They also aim to garner Korean public support and empathy on the need for a transition to carbon neutrality and also to achieve a position as a leading nation in the world in the race to carbon neutrality.

In terms of reduction targets and policies, while maintaining the 40 percent reduction target of national greenhouse gas by 2030 compared to the 2018 level, the reduction rate in the industrial sector was eased, and the reduction targets in the energy transition and overseas emission reduction sectors were tightened. To achieve the targets, the proportion of nuclear power generation will be expanded to 32.4 percent in 2030 (27.4 percent in 2021) and the proportion of renewable energy generation will be increased to above 21.6 percent (7.5 percent in 2021).

In addition, the emissions trading scheme, which regulates companies' greenhouse gas emissions, will be improved to further incentivize emission reduction and gradually increase the ratio of emission permit auctions. Four point two million electric vehicles and 300,000 hydrogen cars will be supplied by 2030 through purchase subsidies and strengthened emission standards.

The government will push for the reduction of waste and promote resource circulation by establishing higher waste reduction targets (i.e., increase from 56.7 percent to 64 percent for household waste and from 84.4 percent to 92.5 percent for industrial waste) and introducing a resource efficiency rating system for each product. Korea is looking to reduce 37.5 million tons of greenhouse gas emissions overseas by 2030 by preparing specific guidelines related to overseas emission reduction projects and signing agreements with major countries interested in hosting such emission reduction projects.

On the implementation side, the Basic Plan establishes a carbon-neutral technology innovation road-map, selects 100 key Korean-style carbon-neutral technologies and develops a comprehensive strategy to foster public-private partnerships in developing climate technology.

The Basic Plan also covers the promotion of new green industries such as low-carbon materials, next-generation rechargeable batteries, next-generation semiconductors, recycling and climate impact and adaptation services.

For these reasons, the Basic Plan is expected to promote financing support for carbon-neutral and green industries, expand the range of companies required to disclose information on their environmental aspects, apply the green taxonomy system for non-bond financial products, as well as remove regulatory hurdles through regulatory sandboxes, negative regulations, lessened zoning regulations and one-stop licensing services.

Various other policy initiatives are also proposed, such as establishing a support system for companies and workers in industries affected by the transition to carbon neutrality, expanding infrastructure to preemptively respond to abnormal climate changes, establishing a system to implement bottom-up carbon neutrality and green growth led by local government and societies, nurturing young professionals in the area of carbon neutrality and raising public awareness, and strengthening bilateral and multilateral cooperation with other countries.

As one can see, the Basic Plan addresses a wide range of agendas to achieve carbon neutrality while promoting balanced growth of the nation's economy. Regrettably, however, discussions on the Basic Plan have been focused on the reduction targets, losing sight of how to implement these important plans and the sophisticated analysis of their details. Many companies argue that the reduction targets are too stringent for their business environment, while environment activists call for more reductions on the corporate players.

In light of the current level of technology development and cost of the available technologies, public awareness of the urgency in addressing the climate crisis, and how well (or poorly) our society has internalized negative externality problems, I do not believe there is a panacean reduction target that satisfies everyone. Rather than aggravating the ongoing controversy, we should put all our efforts into overachieving the reduction goals through robust analysis of details of the Basic Plan and bridging the gap in different perspectives held by various stakeholders. We need to get the most out of our long-awaited master plan for carbon neutrality. A pearl is worthless as long as it is in its shell.

Kim Sung-woo is head of Environment & Energy Research Institute at Kim & Chang.