The average temperature of the earth has risen by 1℃ compared to before industrialization. The temperature rise curve in the last 10 years has been steeper. Even if the earth’s temperature rises 0.5℃ higher than now, it will face an irreversible catastrophe. The glaciers melt and disappear, and methane gas, which causes a greenhouse effect more than 20 times that of carbon dioxide, is generated from the frozen soil, accelerating global warming.
“We will keep the global average temperature rise below 2℃ than before industrialization. Furthermore, we try our best to limit it to 1.5℃.”
The resolution of the United Nations Convention on Climate Change (Paris Agreement) signed in 2015 can be summarized as follows. Incomparable to Corona 19, the desperate human survival is contained in the number ‘2’.
There is no time. It is a common perception among over 70 countries that we must join in to slow it down as soon as possible. Last year, many countries, including the European Union, joined the declaration of carbon neutrality, and the biggest puzzle was actually solved when the US returned to the Paris Agreement with President Biden’s election. Excluding about China, which has set goals for 2060, the US, EU, Japan, and Korea have declared that they will achieve carbon neutrality by 2050.
RE100 campaign, ESG management is on the rise
Korea has nothing to say even if it is accused of being a’climate villain’. According to data from the Ministry of Environment’s Greenhouse Gas Information Center, Korea emitted 72.8 million tons of carbon in 2019 alone. Although it was the first to decrease 24.8 million tons (3.4%) compared to the 727.6 million tons of emissions in 2018, it is still the highest number in the world, ranking 9th in the world (China is ranked first and the United States is second).
The data of the ‘2050 Carbon Neutral Promotion Strategy’ announced by the government last year also support this. As of 2019, Korea’s manufacturing share was 28.4%, much higher than that of the EU (16.4%) or the United States (11%). Major industries such as steel and petrochemical, which have led the country’s economic growth, are among the industries that emit carbon, and the share of coal power generation accounts for 40.4% in the composition of energy sources. Compared to the US (24%), Japan (32%), and Germany (30%), the figure is much higher.
Due to the nature of the industrial structure of Korea, an export-led economy, a lukewarm response to carbon neutrality could lead to a major crisis in the future. Apple alone in the United States announced in July last year that “by 2030, we will achieve 100% carbon neutrality in all business activities across the manufacturing supply chain and product lifecycle.” This means that all Apple devices will produce zero carbon emissions. Suppliers such as Samsung Electronics and LG Display must come up with a solution within 10 years.
Apple is not the only company that has said it will respond to climate change. Global companies such as Microsoft, Google, Amazon, IKEA, and Starbucks have also announced RE100 membership. RE100 stands for’Renewable Energy 100%’ and is a voluntary campaign to cover 100% of the electricity used by companies with renewable energy. It is known that Apple has encouraged partners such as Samsung to join RE100. Already, 8 Korean companies from SK Group and Hanwha Q CELLS have joined RE100.
POSCO’s step as a company that emits the most greenhouse gases in Korea is also accelerating. In the’Climate Action Report’ published in December of last year, POSCO proposed a goal of reducing carbon emissions by 20% compared to 2019 and by 50% in 2040.
The first step is to improve energy efficiency and replace it with low-carbon raw materials with high economic efficiency, and in the second step, advancement using scrap (scrap metal) and the application of carbon capture, utilization and storage (CCUS) technology, and in the third step, ultimately The key is to open the era of decarbonization by utilizing green hydrogen produced from renewable energy through hydrogen reduction steelmaking technology in the steelmaking process.
Concrete implementation plans are also coming out one after another. The POSCO Group recently joined hands with Hyundai Motor Group to introduce 1,500 hydrogen electric vehicles in stages, and in the process of steel making, by-product hydrogen was purified and used for hydrogen trucks. In addition, it will participate with Hyundai Motors in overseas green hydrogen production projects such as Australia, and plans to import green hydrogen in the form of ammonia and use it domestically.
Now, companies need to run companies with’ESG’ in mind. ESG, which stands for Environment, Social, and Governance, refers to the principle of corporate management that’we must fulfill our social responsibilities while being eco-friendly and maintain a transparent governance structure’. The’Sustainability Report’ published by companies and the aforementioned RE100 campaign are also deeply related to this.
The atmosphere of evaluating climate change as a core competency of a company from a mid- to long-term perspective is being detected everywhere. An increasing number of global asset managers are actively using ESG indicators for investment, and the EU mandates ESG disclosures for all financial companies from March this year. Japan is also encouraging companies to participate by giving incentives to ESG bonds, and China plans to take measures such as raising taxes by lowering the credit rating of companies that violate the carbon emission reduction target. In addition, Joe Biden of the United States has pledged to introduce a carbon tax bill by 2025.
Carbon neutral policies in the US, Europe and China
When Joe Biden officially took office as President of the United States on January 20, the carbon neutral, or energy paradigm shift, once again received attention. The United States has returned to the Paris Agreement. Accordingly, the parties to the agreement must raise their voluntarily determined greenhouse gas reduction targets every five years, and from 2023, they are supposed to check the implementation status every five years. It is worth noting that the carbon tax in the United States or the carbon border tax, which will be introduced by the EU in 2023, is linked to the protection of domestic industries.
If environmental regulations are strengthened to practice carbon neutrality, companies in the US or Europe will move their production facilities to countries with less carbon regulations to avoid an increase in production costs, and the carbon tax plays a role in blocking such movements in advance. This could be a tool for trade pressure on emerging countries such as China and India.
Now it’s time to look at the movements of each country on a carbon neutral basis.
First, the EU is raising its 2030 reduction target to achieve a net zero carbon emission in 2050. To raise the target from 40% to 55% or more compared to 1990, it is necessary to expand the green industry as much. What Europe is paying attention to is offshore wind power. NortH2, Europe’s largest green hydrogen production project being promoted in the North Sea, and the artificial energy island construction plan being promoted by Denmark with about 38 trillion won are all based on offshore wind power.
Currently, the EU’s offshore wind power installation is only 12GW. The UK also recently raised its offshore wind power target from 30GW to 40GW by 2030. In 2030, we can expect to secure 100GW of offshore wind power in Europe. Water electrolysis technology is also attracting great attention as a plan to produce hydrogen from the electricity and supply it to neighboring countries is being promoted.
Europe has focused more on infrastructure sectors such as production, storage and transportation than on the use of hydrogen. Rather than gray hydrogen, which has a lot of carbon emissions such as natural gas reforming, it has been striving to produce green hydrogen and water electrolysis technology in connection with renewable energy. The growing interest in green hydrogen was largely influenced by the’European hydrogen strategy’ announced in July last year. Europe plans to set the production cost of green hydrogen to the same level as gray hydrogen by 2025.
The interest in renewable energy is also hot in the United States. Biden has made a pledge to achieve carbon neutrality in the electricity sector by 2035 by investing $2 trillion over four years. The capacity of power generation facilities in the United States is about 1,100GW, of which coal and natural gas power generation is expected to be replaced by renewable energy as soon as its life expires (nuclear power plants with high power generation costs tend to close due to aging). This means that fossil fuel-based energy sources ranging from 700 to 800 GW are highly likely to be converted to renewable energy such as wind power and solar power in the future.
Renewable energy is highly intermittent, so it is necessary to secure renewable energy facilities in excess of 1,400 to 1,600 GW in order to produce the same electric power as before, so only in the United States, the demand for renewable energy at an annual average of about 100 GW for the next 15 years can be expected.
Next is the rapid growth of the electric and hydrogen vehicle markets. Biden’s transportation policy is to introduce California-style fuel economy regulations and replace 500,000 school buses and 3 million federal vehicles with eco-friendly vehicles such as electric and hydrogen vehicles. Strong fuel economy regulations and mandatory sales of eco-friendly vehicles lead to decarbonization of the transportation sector, which is similar to EU policy.
The U.S. is expected to induce the construction of new factories such as electric vehicles, hydrogen vehicles, batteries, and fuel cells through the government-guaranteed borrowing system and investment tax deduction, and increase the federal government subsidy limit, which is limited to 200,000 units per year, to more than 600,000 units. . In addition, it is highly likely to revitalize the electric vehicle market by introducing the federal government’s mandatory clean car system. The policy to expand subsidies will have a big impact on the sales of electric car models from Tesla, GM, and Ford.
The hydrogen car market should pay attention to China. China has already made successful cases of electric vehicle companies BYD, NIO, Li Auto, and Xpeng in addition to battery maker CATL through support for electric vehicle development. The hydrogen car industry has inherited this and is enjoying the most subsidies. In particular, this year, we are cultivating the hydrogen car industry more systematically by subdividing requirements to secure a value chain for the entire industry rather than paying subsidy per unit as last year, and revealing a list of key parts.
2050 ‘3+1’ strategy for carbon neutrality
This time, it is the movement of the Korean government. President Moon Jae-in declared 2050 carbon neutrality in a speech at the National Assembly on October 28 last year. And on December 7th, government ministries gathered and announced the ‘2050 Carbon Neutral Promotion Strategy’. The government proposed a ‘3+1’ action strategy to create a low-carbon industrial ecosystem and accelerate energy conversion. These included three policy directions of △low carbonization of the economic structure △creation of a new promising low-carbon industry ecosystem, △fair transition to a carbon-neutral society, and △reinforcement of the foundation for a carbon-neutral system, including improvement of the fiscal system.
First is the low carbonization of the economic structure. Innovate SMEs through’Manufacturing Renaissance 2.0′, which guides high-carbon industrial structures such as steel, petrochemical, oil, cement, etc. through smart factories and smart green industrial complexes, and converts the entire value chain to a low-carbon structure. Support. In addition, in order to accelerate the conversion of internal combustion locomotives into eco-friendly vehicles, infrastructure such as electric vehicle chargers and hydrogen charging stations will be expanded, and innovation in overall mobility such as public transportation, railroads, and ships will be promoted.
Fostering new promising industries is related to the competitiveness of companies. Fostering low-carbon industries such as secondary batteries, low-power semiconductors, bio, and green hydrogen is the key. In particular, it will seek to innovate and commercialize green hydrogen technology, which is a core fuel of a carbon-neutral society, develop liquefied hydrogen and hydrogen turbines, and establish a hydrogen distribution base. The plan is to increase the proportion of fuel to 80% by combining the introduction of green hydrogen, which is currently at the level of small-scale demonstration, from overseas in 2050.
It also proposes relief measures for industries, regions, and workers who may suffer damage in the process of implementing carbon neutrality. The Ministry of Industry predicts that 2,800 internal combustion locomotive parts makers and 250,000 workers will be damaged if energy conversion is promoted. This is about 31% of the total auto parts industry. The government’s policy is to minimize damage through business reorganization and re-employment support.
The fiscal system is also modified to strengthen the system base for carbon neutrality. The’Climate Response Fund’ will be newly established, and the pricing system will be reconstructed by comprehensively reviewing the means of charging carbon prices such as taxation, levy, and emission trading system. In addition, the’carbon recognition budget system’ is also introduced, which evaluates the effect of various project budgets on carbon reduction and reflects the results in budget planning and execution.
The government decided to set up the’Public-Private Joint 2050 Carbon Neutrality Committee (tentative name)’ under the direct control of the President to gain momentum for this strategy. The committee will review the carbon-neutral national strategy, major policies, plan deliberation and resolution, and implementation status.
The government finalized the’Long-Term Low Carbon Development Strategy (LEDS)’, a strategic report for realizing carbon neutrality in 2050 at the end of last year and submitted it to the UN. In addition, it proposed the’National Greenhouse Gas Reduction Target (NDC)’ to reduce 24.4% of carbon emissions in 2017 by 2030. Now that you have set your goals, there is more work left to go right there.
Focus on carbon dioxide capture and utilization technology
In order to realize carbon neutrality, in addition to new renewable energy and green hydrogen production technologies,’carbon dioxide capture and utilization (CCU) technology’ is essential. CCU is a technology that captures CO2 generated from greenhouse gas emission sources such as industrial facilities and power plants and turns them into resources or converts them into useful substances. In November of last year, the government has already started establishing a’CCU technology roadmap’ for the demonstration and commercialization of carbon dioxide capture and utilization technologies centered on the Ministry of Science and Technology, the Ministry of Industry and the Ministry of Environment.
The CCU roadmap is largely divided into four areas: △ carbon dioxide capture, △ carbon dioxide utilization, △ CCU industrial strategy, and △ CCU policy and system. More than 50 industry-academia-research experts are planning to announce a roadmap in the first half of this year, divided into’short-term commercialization technology group’ that can be commercialized within 2030 after reviewing technology development, and’mid- to long-term strategic technology group’ that takes a long time to develop technology.
Also, on February 22, the’Carbon Neutral Standardization Strategies Council’, a public-private consultation supervised by the National Institute of Technology and Standards, held its first meeting. The council will establish four subcommittees, including energy conversion, new promising low-carbon industry, low-carbon conversion core industry, and reinforcement of standardization base, to discover standardization tasks for carbon neutrality. By the end of this year, the ‘2050 carbon-neutral standardization strategy’ will be established, which will serve as a guideline for the development of carbon-neutral technologies, leading to the presentation of implementation methods and test evaluation standards for each industry in the future.
In addition, activities are underway to enact the’Carbon Dioxide Capture and Utilization Promotion Act (provisional plan)’ centered on the Green Technology Center. Although CCU technology is an important technology that has a great effect on reducing greenhouse gases, commercialization of the technology has been slow because it has not received attention. Globally, the demand is increasing significantly, and as it is a business that has a clear justification, there is a strong voice that policy support should be continued to gain a competitive advantage through legal support.
The’CCU Promotion Act’ aims to support the development and commercialization of related technologies, foster specialized companies and experts, and establish a business foundation. Like the Hydrogen Economic Committee stipulated in the Hydrogen Act, the purpose is to establish a’CO2 Capture and Utilization Committee’ and to establish a dedicated agency to provide systematic support.
There has been an interest and effort in reducing greenhouse gas emissions and carbon neutrality. Jeju Special Self-Governing Province, which aims to become a’Carbon Free Island’ and has endeavored to supply wind power and electric vehicles, is representative. The local government’s interest is also hotter than ever. Gangwon-do declared ‘2040 carbon-neutral’ 10 years earlier than the government, and Gwangju City formed a carbon-neutral city promotion team to reduce greenhouse gases. Wanju-gun, Jeollabuk-do, has prepared a strategy for’realization of the 2050 carbon-neutral leading city, and is moving quickly.
It is true that words and actions have been contradicted by the carbon neutral policy. The carbon neutral’declaration’ is a’promise’ based on practice. Many countries and companies that lead the world economy are taking action. This means that changes in the Earth’s climate environment are indeed at great risk. The Corona 19 pandemic also contributed to this shift in perception.
“You say you love your children the most, but you are stealing their future by not actively coping with climate change.” Even if we don’t recall the words of teenage environmentalist Greta Thunberg, we are already going through that change in our daily lives. Texas is not alone in the record cold hitting Texas.