South Korea Shifts to Address Climate Change

At the April Leaders Summit on Climate, hosted by U.S. President Joe Biden, South Korea pledged to increase its current medium-term commitment to cut greenhouse gas emissions and to end state-backed financing for overseas coal plants. The climate summit pledge was followed by President Moon Jae-in’s commitment at the recent South Korea-U.S. summit to cooperate more deeply with the United States on climate change. These are just the latest in a series of steps by the Moon administration to tackle climate change, greenhouse gas emissions, and related issues. However, more ambition is needed if South Korea is to make its contribution to the world’s efforts to keep global temperature increases to 1.5 degrees Celsius above pre-industrial level.

South Korea has begun pursing more robust climate change policies for both domestic and international reasons. Lacking domestic energy resources, South Korea is dependent on imports of coal, petroleum, and LNG to power much of its economy. Meanwhile, fine dust particles from China and increasing emissions from fossil fuels have worsened air quality in recent years. A shift to cleaner energy would help in combating air pollution while also addressing the domestic need for energy security and tapping into new growth industries to create jobs.

A shift in U.S. policy is also playing a role. After four years of Trump administration policies that loosened regulations on air pollution and largely pushed climate change off the radar, the Biden administration has made it a cornerstone of its agenda. The Biden administration’s focus on climate change is pushing South Korea to be more ambitious in its own goals.

Beginning to Address the Challenge of Climate Change

As one of the world’s leading industrial nations, South Korea’s export-driven economy relies on energy intensive products such as semiconductors, steel, automobiles, and petrochemicals. These power-guzzling industrial sectors in concert with an electricity sector that produces 43.1 percent of its power from coal have combined to make South Korea one of the world’s largest emitters of greenhouse gases.

According to the International Energy Administration, South Korea is the world’s eighth largest source of carbon dioxide emissions. Its emissions are twice as intense per unit of GDP as the OECD average and only peaked in 2018.

To address this challenge, Moon pledged in October 2020 that South Korea would become carbon neutral by 2050. This step followed the introduction of the Green New Deal earlier in 2020 to support the post-pandemic economy, as well as prior investments in the development of hydrogen as a new fuel source, and a commitment to increase the percentage of renewables in South Korea’s overall energy mix to 30-35 percent in the Third Energy Master Plan.

According to South Korea’s 2050 Carbon Neutral Strategy, however, from 2000 to 2017 final energy consumption in the economy as a whole increased by 53 percent, while consumption by the industrial sector alone increased by 68 percent. While greenhouse gas emissions grew at a slightly slower pace of 40.1 percent over the same period, South Korea’s current emission reductions target is relatively unambitious, with a commitment to reduce emissions by 24.4 percent from 2017 levels in 2030. Climate Action Tracker has rated this as highly insufficient; it would leave South Korea emitting over 536 metric tons (Mt) of carbon dioxide in 2030, or a little less than the 561.8 Mt of carbon dioxide it emitted in 2005.

South Korea has also taken steps to reduce greenhouse gas emissions overseas. Until recently South Korea was one of the few countries, along with China and Japan, that continued to finance the development of coal power plants abroad. Moon pledged to end this practice at the climate summit hosted by Biden in April, while the United States and South Korea agreed to cooperate at the OECD and other international fora to end all forms of public financing for overseas coal power plants at the May 21 South Korea-U.S. summit. Private banks in South Korea also previously committed to end financing of new overseas coal power plants.

In addition, South Korea recently announced that it will triple its funding of green energy projects in emerging economies to $600 million per year by 2025 as part of its Economic Development Cooperation Fund (EDCF). The same commitment aims to increase gree- related loans through the EDCF from their current 22 percent of funding to 40 percent. The United States and South Korea have also agreed to align their international financing with the objective of achieving significant greenhouse gas emissions reductions this decade and global net-zero emissions by 2050.

The Role of the Private Sector

While the South Korean government is placing a more significant focus on climate change, reducing emissions also requires cooperation from the corporate sector. Eighty percent of the world’s corporate greenhouse emissions are produced by only 167 companies, including three South Korean firms, according to Climate Action 100+. While Climate Action 100+ evaluates steel-making giant POSCO’s plans to reduce greenhouse gas emissions as sufficient, Korea Electric Power Corp (KEPCO) and SK Innovation do not have plans in place to reduce their emissions to meet South Korea’s nationally defined contribution to climate change.

KEPCO’s lack of a sufficient plan to reduce its emissions could be especially problematic for South Korea as it seeks to achieve its emissions reduction targets. The energy sector accounts for 36 percent of South Korea’s emissions and the state-run utility produces the vast majority of electricity sold in South Korea. The IEA’s Net Zero report estimates that global electricity will need to be carbon free by 2040. South Korea’s current strategy would allow for the continued construction of seven new coal power plants and phase out 30 aging coal power plants by 2034. As a result, the power generated from coal in South Korea would only drop from 35.8 GW to 29 GW in 2034, leaving nearly all the reductions needed to meet a net-zero target to be crammed into a six-year period.

The IEA also estimates that electric vehicles will need to account for 60 percent of vehicle sales by 2030. Overall, the transportation sector accounts for 14 percent of South Korea’s emissions, but its current targets only call for sales of hydrogen and electric vehicles to account for a third of all vehicles sold in 2030. While ambitious compared to current levels, these figures are well below what IEA estimates will be needed to address emissions by 2030. Meeting IEA targets would require a more rapid shift to producing electric or hydrogen vehicles at Hyundai and Kia.

Of course, if those electric vehicles are drawing power off existing coal plants they would potentially add to South Korea’s emissions. These two policies need to move together to be effective.

Meeting the Challenge

The Moon administration understands the need to put forward a more aggressive plan to deal with climate change. At the Biden-Moon summit, South Korea recommitted to outlining deeper commitments in advance of the November U.N. Climate Change Conference (COP26) in Glasgow, Scotland. South Korea’s Ambassador for Climate Change Yoo Yeon-chul has even suggested that these plans will be “bold.”

To achieve a bold plan South Korea should look to couple its new pledge to reduce emissions with financing to help industries transition, increased funds for R&D into new technologies to address climate change, a commitment to phase out coal power more rapidly, and a deadline to end the sale of vehicles with combustion engines. It should also begin discussions with North Korea to ensure that any breakthrough on the nuclear issue is coupled with a strategy that provides the North’s economy with a green future as well.

The real challenge, however, for South Korea, as with other democracies, is that progress on long-term issues such as climate change is dependent upon the next administration. Moon can set South Korea on a course to reduce its emissions, but in the long run real progress will depend on whoever is sworn in as the next president in May of 2022.