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Missing details from South Korea green deal raises doubts over government intentions

A decade of rapid growth has positioned South Korea to take full advantage of the clean transition under President Moon Jae-in’s Green New Deal. But a hangover from previous administrations and an elusive emissions reduction target put its efficacy in doubt

South Korea has joined Europe and the US in presenting a clean energy plan, but its lack of a detailed emissions reduction target leave critics questioning the government’s real intentions

POLITICAL APPETITE
South Korea’s rapid turnaround since the 2008 financial crisis has had elements of green growth but it has not been to the detriment of conventional generation

PUBLIC DOUBT
Support in South Korea for the shift to a low-carbon economy is likely to hinge on the government’s ability to push the pace of change in a country used to high-speed economic growth

KEY QUOTE
The government knows how much each policy will deliver in terms of emissions reductions and how much they will cost, but they have not released those details In the run-up to South Korea’s spring 2020 elections, the ruling Democratic party pledged to pass a Green New Deal to drive the country’s transition to a low-carbon economy.

The party’s election manifesto included promises to set a target to achieve net-zero emissions by 2050, phase out finance for coal projects, significantly invest in renewable energy, and create a centre to help transition workers to green jobs. The party’s landslide election victory was seen as an endorsement of the proposal and the granting of political support for President Moon Jae-in to proceed with the plan. Fast forward to mid-summer and announcement of the eagerly-awaited Green New Deal. Despite international acclaim for the policy, missing from it is any long-term emissions reduction trajectory commitment. Instead, the KRW 73.4 trillion ($62 billion) package sets out the administration’s investment plans for the next five years, with a heavy emphasis on job creation. Areas set for a boost include renewable energy, electric vehicles, hydrogen-powered vehicles, and carbon capture and storage, among others (box). The green plan forms part of a broader Korean New Deal, designed to help the country recover from the economic shock of the global covid-19 pandemic. The government says the missing trajectory for emissions reduction will be published in the second half of 2020, but its absence is causing unease. “The governing party before the elections made a political commitment to achieve net-zero emissions by 2050 and end our financing of coal,” says Kim Joojin, of non-profit Solutions for Our Climate (SFOC) in Seoul. “But what actually went into the Green New Deal is not what was in the political manifesto.” He adds that the lack of an explicit emissions reduction target in the Green New Deal makes it look “awkward”. “The government knows how much each policy will deliver in terms of emissions reductions and how much they will cost, but they have not released it,” Kim says. “Once you have got the target, it is much easier to put in the policy signals.”

BETTER THAN NOTHING
Others are more positive about the plan, with Kim Sungwoo, at operations and management platform YIDO, saying it is, “The beginning of the green agenda in Korea.” He agrees it would be better if the Green New Deal included a long-term net-zero target and set out the transition away from coal. “I am happy to see that [the] green [concept] still has momentum and is alive, despite the covid-19-induced economic crisis,” he says. Korea University professor Chung Suh-Yong says the plan is similar to that for Europe. “I think the European agreement is great and I am not against working with the European model,” he says. Both the European and South Korean plans are broken into key policy areas, with stated goals included, but with the detailed implementation guides to follow. The EU plan also includes policies such as creating a circular economy and ensuring a just transition that are absent from the Korean version. “We have to develop policies using good models that are out there, but then the implementation details need to be localised,” Chung says. The Green New Deal is not South Korea’s first attempt at a transformative policy on climate change. Under former President Lee Myung-bak, between 2008 and 2013, the country developed a low-carbon green growth strategy, drawing from international policies. The strategy led to selection of South Korea as the host country for the UN’s Green Climate Fund as well as the Global Green Growth Institute. During Lee’s tenure, South Korea also legislated for Asia’s first emission trading system (ETS), which began in 2015.

THE NUCLEAR QUESTION
Lee’s strategy, however, was criticised for being inaccurate in its definition of “green”. Its use of the term to mean anything that reduced emissions meant that nuclear power was deemed a green energy source, despite contrary evidence that it was not green presented by many environmental groups over the years. Furthermore, during Lee’s tenure, the share of primary energy from coal and natural gas rose (chart), while nuclear power stagnated. Renewables increased their share, from 1.6% of primary energy in 2010 to 2.5% by 2015, according to data from the International Energy Agency. Under Lee’s successor, climate change fell down the list of priorities. President Park Geun-hye instead focused on what she billed the “creative” economy, with an emphasis on science and technology. Following the election of President Moon after Park’s impeachment in May 2017, climate change and the environment rose to prominence again. In June 2017, Moon announced his energy transition policy shift from nuclear to renewables. At the time, nuclear power supplied around 26% of the country’s electricity, according to the World Nuclear Association. Under Moon’s proposal, the country will phase out nuclear power over 45 years, with a goal for renewables to supply 40% of South Korea’s power and nuclear just 10% by 2034. Chiefly, notes Korea university’s Chung, Moon’s plan was not developed within an emissions reduction context, hence the focus on closing nuclear power plants but not coal. It is on this transition policy that the Green New Deal is predicated. MIXED SIGNALS The mixed signals from President Lee’s term persist today, says Kim at SFOC. “Underneath this Green New Deal excitement was a bailout of a fossil fuel industry,” he says, citing a $3 billion rescue package for Doosan Heavy Industries & Construction, a builder of coal and gas power turbines and plants. The conglomerate has a nascent wind power business, which may have been part of the government’s decision to throw the firm a lifeline. “Having a Korea-based manufacturer is important,” Kim says, much in the same way that many governments want a national industrial leader. “There are aspirations to be green, but the political reality is [they] need Doosan,” says Kim. “There is vast potential for the transition in our energy sector,” he continues. Part of the reason for the Green New Deal’s shortcomings is that there remain a number of reforms that the government needs to make to enable the plan. More ambition and specificity will follow, Kim predicts. The expected reforms include changes to the power market structure to enable renewable energy producers to sell to buyers beyond just KEPCO, the national electricity utility, and changes to the power supply system to make it more flexible. A subsidy strategy for renewable energy needs to become more transparent as well, he adds.
SOUTH KOREA GREEN NEW DEAL AT A GLANCE

The $62 billion plan for 2020-2025 includes:

  • Remodelling and retrofitting public buildings, including housing and schools
  • Restoration of green areas, such as parks
  • Establishment of smart cities
  • An increase in solar and wind power capacity to 42.7 GW by 2025
  • Green mobility initiatives, including more charging stations for electric and hydrogen cars
  • Green loans amounting to $1.6 billion for industrial innovation, with a focus on clean air, biological materials, hydrothermal energy and EV waste battery handling
  • Development of carbon capture, utilisation and storage technology
  • Creation of a safe water management system

In total, the plan is expected to create 659,000 jobs over the five years.

INDUSTRIAL TALENT
Domestically, a lot of untapped talent could also play a part in delivering the changes sought, Kim says. “We do have excellent battery companies, but they mainly rely on exports,” he says. “We have good module [manufacturing] companies too, but we are under-utilising that.” Digitalisation and information technology are already key pillars of the South Korean economy, says Kim Sungwoo from YIDO, and will play an important role in delivering on the Green New Deal. He argues for using digital technology to monitor and improve energy performance of buildings, factories and homes to help reduce usage. Other things to watch, he says, are the forthcoming ETS allocation plan for 2021-25 and an electricity supply and demand plan from the energy ministry in September. The electricity plan will set out the power mix and investment needed for the next 15 years, including the renewable energy capacity scale-up, reduction of coal burning and a gas-fired capacity forecast. “This will be closely linked to greenhouse gas (GHG) emissions reductions, as 40% of emissions come from the power sector,” says Kim.

PUBLIC EXPECTATIONS
The biggest challenge is the risk of stagnation within the transition, YIDO’s Kim warns. South Korea has transformed itself from a recipient of overseas aid to a donor nation in one generation, but the shift to a low-carbon economy will take longer. The momentum of public support and investor appetite may wane if progress slows too much. “We all know that is the direction, but we are so used to efficiency and moving fast, we need time to adjust ourselves,” he adds. “Our top priority has been production and selling the product to meet target revenue,” he continues. The focus on revenue is how South Korea achieved its “mission impossible” to transition from an official development assistance recipient to donor so quickly, Kim explains. To achieve a similarly speedy low-carbon transition, the country has to accept the importance of preserving the environment and to think much more about it. He adds: “South Korea has grown, fuelled by fossil fuels and energy-intensive industry. It takes a little bit of time to convert into a low-carbon society — and it is not just us, it is a global trend,” says Kim.

OVERSEAS OFFSETS
Indeed, Chung says one shortfall of the plan is that it fails to look at what actions can be achieved towards the climate goals outside of South Korea. Relative to many other countries, South Korea is not well endowed with clean energy resources like solar. As a result, it will have difficulty reaching the required levels of decarbonisation by 2050 based on its domestic resource, Chung says. The government should look for ways for South Korean businesses to engage other nations, such as developing renewable energy projects in African countries, he says. Under the Paris Agreement, specifically Article 6.2 which establishes a mechanism for bilateral cooperation, South Korea could fund new renewable energy projects in other countries with better resources and include the carbon reductions in its own carbon budget. “If the policy is not developed to include an international aspect, I am afraid it will not have a significant impact,” Chung says.

TEXT Katie Kouchakji