{"id":2205439,"date":"2024-06-12T17:37:44","date_gmt":"2024-06-12T08:37:44","guid":{"rendered":"https:\/\/koreapro.org\/?p=2205439"},"modified":"2024-06-13T16:32:54","modified_gmt":"2024-06-13T07:32:54","slug":"south-koreas-sluggish-renewable-energy-transition-puts-economy-at-risk","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/06\/south-koreas-sluggish-renewable-energy-transition-puts-economy-at-risk\/","title":{"rendered":"South Korea\u2019s sluggish renewable energy transition puts economy at risk"},"content":{"rendered":"

South Korea\u2019s Ministry of Trade, Industry and Energy released the <\/span>11th Basic Plan for Electricity Supply and Demand<\/span><\/a> last month, setting a target for renewable energy sources to provide 21.6% of the country\u2019s power generation by 2030.<\/span><\/p>\n

But despite the country\u2019s desire to raise the proportion of renewables in its energy mix, a closer look shows that Seoul\u2019s ambitions have barely changed even as the threat of global warming has grown, rising just .1% from a target of 21.5% in the <\/span>10th Basic Plan<\/span><\/a> released in 2022.<\/span><\/p>\n

This lack of progress raises questions about the country\u2019s commitment to accelerating its renewable energy transition and its ability to compete with other nations that are setting more aggressive targets, putting South Korea at risk of failing to meet its climate change commitments and damaging its international reputation.<\/span><\/p>\n

INTERNATIONAL STANDING AT RISK<\/b><\/p>\n

South Korea\u2019s slow adoption of renewable energy compared to other Organization for Economic Co-operation and Development (OECD) countries poses risks to its international reputation and competitiveness.<\/span><\/p>\n

The country\u2019s renewable energy target falls short of that of <\/span>the U.K.<\/span><\/a>, which aims to achieve 85% renewable energy by 2030. <\/span>Germany<\/span><\/a> targets 75%, <\/span>the U.S.<\/span><\/a> 59% and <\/span>Japan<\/span><\/a> 38%. While it remains to be seen if these countries can meet their renewable energy goals, the substantial gap highlights South Korea\u2019s sluggish progress in transitioning to clean energy sources.<\/span><\/p>\n

As developed nations increasingly prioritize sustainability and climate action, South Korea risks being perceived as a laggard in the renewable energy race. This perception will likely damage the country\u2019s reputation as a technologically advanced and forward-thinking nation, potentially affecting its ability to attract foreign investment.<\/span><\/p>\n

Moreover, failing to keep pace with the global shift toward renewable energy will hinder South Korea\u2019s competitiveness in international markets.<\/span><\/p>\n

For instance, the French government\u2019s decision last year to <\/span>amend its electric vehicle subsidy policy<\/span><\/a> excluded South Korean car manufacturers from receiving tax credits as the policy granted subsidies based on the vehicle\u2019s price, fuel efficiency and carbon emissions throughout the supply chain.<\/span><\/p>\n

As global demand for clean energy technologies and products grows, South Korean businesses may struggle to capture market share if they are seen as relying on outdated, carbon-intensive energy sources.<\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol and French President Emmanuel Macron announce the result of their bilateral summit in Paris, June 20, 2023 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

MOUNTING BUSINESS RISKS<\/b><\/p>\n

The growing demand for clean energy solutions across various industries puts pressure on companies to adopt sustainable practices and reduce their carbon footprint. Noncompliant businesses risk losing revenue and market share to competitors that are better aligned with the global shift toward sustainability.<\/span><\/p>\n

One major risk for South Korean businesses is the potential for exclusion from international supply chains and partnerships. Multinational corporations are increasingly setting environmental standards for their suppliers and partners, requiring them to meet specific renewable energy usage targets.<\/span><\/p>\n

The European Union\u2019s (EU) <\/span>Carbon Border Adjustment Mechanism<\/span><\/a> (CBAM) poses another challenge for South Korean exporters. Implemented in Oct. 2023, CBAM requires companies importing goods into the EU to pay a carbon levy on products sourced from countries with less stringent emissions regulations.<\/span><\/p>\n

This already puts South Korean exporters at a competitive disadvantage, as they face higher costs compared to suppliers from countries with more ambitious renewable energy targets.<\/span><\/p>\n

According to a report by the <\/span>Korea International Trade Association<\/span><\/a>, 17% of South Korean manufacturing exporters are already facing client demands to use renewable energy, with 42% of these companies expecting such demands to intensify in the near future.<\/span><\/p>\n

As more countries adopt carbon pricing mechanisms like CBAM, the pressure on South Korean businesses to transition to renewable energy will only continue to grow, potentially leading to significant economic losses if they fail to adapt.<\/span><\/p>\n

FOSSIL FUEL INVESTMENT RISKS<\/b><\/p>\n

South Korean President Yoon Suk-yeol\u2019s <\/span>announcement<\/span><\/a> last week of a potential oil and gas reserve off the country\u2019s east coast, estimated to hold up to 14 billion barrels, introduces new risks and uncertainties for the ROK conventional energy sector.<\/span><\/p>\n

A discovery would lead to substantial investment in fossil fuel infrastructure, but this will likely divert resources away from the transition to cleaner energy sources and undermine South Korea\u2019s commitment to reducing greenhouse gas emissions and achieving net-zero emissions by 2050.<\/span><\/p>\n

Moreover, even if the exploration leads to the discovery of significant oil and gas deposits, the long-term benefits may be limited. As the global shift toward renewable energy accelerates, <\/span>demand for fossil fuels is expected to decline<\/span><\/a>, potentially leaving South Korea with <\/span>stranded assets<\/span><\/a> in the form of underutilized oil and gas infrastructure.<\/span><\/p>\n

Investing in the newly discovered oil and gas reserves also carries significant reputational risks for South Korea. As the international community becomes increasingly focused on sustainability and climate action, countries that continue to invest in fossil fuels may face criticism and pressure from other nations, investors and environmental groups.<\/span><\/p>\n

Further, by locking itself into a carbon-intensive path, South Korea risks falling behind other developed nations in the race to develop clean energy technologies and infrastructure.<\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol holds a briefing about potential oil and gas reserves, June 3, 2024 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

TARGETS AND OBSTACLES<\/b><\/p>\n

Notably, the 11th Basic Plan sets a goal of tripling the country\u2019s solar and wind power capacity from 23 gigawatts in 2022 to 72 gigawatts by 2030. However, the plan\u2019s feasibility remains to be seen.<\/span><\/p>\n

In the political realm, the Yoon administration has focused on <\/span>expanding the country\u2019s nuclear power sector<\/span><\/a> while simultaneously cracking down on <\/span>corruption allegations<\/span><\/a> surrounding the previous Moon Jae-in administration\u2019s promotion of renewable energy sources.<\/span><\/p>\n

Additionally, one of the main obstacles to reaching the 2030 targets is the infrastructure and grid integration challenges associated with a rapid expansion of renewable energy capacity.<\/span><\/p>\n

South Korea\u2019s electricity grid was designed primarily for <\/span>centralized, fossil fuel-based power generation<\/span><\/a>, and adapting it to accommodate a large influx of variable renewable energy sources will require significant investments in grid modernization and energy storage solutions.<\/span><\/p>\n

Financial constraints and investment risks are another major hurdle in achieving the 2030 targets. Whereas renewable energy projects often require substantial upfront capital investments, the relatively low cost of fossil fuels may undermine the economic viability of renewable energy projects.<\/span><\/p>\n

CHALLENGING ROAD AHEAD<\/b><\/p>\n

South Korea\u2019s renewable energy transition is fraught with critical risks that will likely have far-reaching implications for the country\u2019s economy, international standing and environmental sustainability.<\/span><\/p>\n

The growing global demand for renewable energy and the increasing pressure on businesses to adopt sustainable practices could serve as a catalyst for change in South Korea. As more countries implement carbon pricing mechanisms and other policies to promote clean energy, South Korean companies may find it increasingly difficult to compete in global markets without embracing renewable energy.<\/span><\/p>\n

However, based on the government\u2019s sluggish progress in transitioning to clean energy sources, South Korea will likely continue to face significant obstacles in achieving its renewable energy targets and reducing its greenhouse gas emissions.<\/span><\/p>\n

Edited by Alannah Hill<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a>Inter-Korean & Foreign Relations<\/span><\/a>Technology & Cyber<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

South Korea\u2019s Ministry of Trade, Industry and Energy released the 11th Basic Plan for Electricity Supply and Demand last month, setting a target for renewable energy sources to provide 21.6% of the country\u2019s power generation by 2030. 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