Overambitious Carbon Neutrality Plan Should Be Reconsidered

On October 18, the 2050 Carbon Neutrality Commission announced its “proposal to raise the 2030 greenhouse gas reduction target (NDC)” and its “final 2050 carbon neutrality scenario.”

The proposed NDC revision raises the target to cutting greenhouse gas emissions by 40% from 2018 levels by 2030.

The carbon neutrality scenario consists of two options: a full carbon neutrality plan (Option A), which would completely ban coal and LNG power generation by 2050 and increase the share of renewable energy to 70.8%; and a compromise plan (Option B), which would allow LNG power generation at 5% and increase renewable energy to 60.9%.

These announcements have drawn continuous criticism from the scientific community, industry, and political circles. Experts have three main concerns. First, our relevant science and technology are still insufficient. New technologies presented by the government as key means of achieving carbon neutrality—such as CCUS (carbon capture, utilization, and storage), carbon-free gas turbines, and hydrogen reduction steelmaking—remain at the experimental stage.

In other words, it is still unclear whether they have secured the safety and economic viability needed for commercialization. The government even unilaterally ordered a “78% reduction in usage” of hydrogen fluoride, a core material in semiconductor manufacturing for which there is no substitute.

In effect, the government has declared, “We can make carbon emissions zero. If that proves impossible, then we should make it possible even if it means shutting down production processes,” even though no suitable technology capable of dramatically reducing carbon has yet been invented.

Second, it creates confusion for businesses. Under the existing Framework Act on Carbon Neutrality, the 2030 NDC target was 35%, but this decision suddenly raised it to 40%. Moreover, instead of settling on a single carbon neutrality scenario, the government vaguely assumed two possible situations.

Under government policies that change so abruptly, businesses are forced to bear enormous regulatory risk in the course of formulating strategy.

As a result, businesses are bound to suffer major damage. And that damage will ultimately fall squarely on workers and consumers.

Third, there is no consideration of cost. The government has prepared no measures whatsoever regarding the costs businesses must bear to achieve carbon neutrality. Even POSCO, widely regarded as a leader in hydrogen reduction steelmaking technology, estimates that replacing all of its existing blast furnaces would cost 40 trillion won.

This is a cost arising purely from regulation. When businesses are placed in a situation where they must shoulder the entire burden of these costs, it is only natural for the government to provide support where it can, and where it cannot, to lift the regulations.

Environmental issues are extremely important. But to solve them, we must consider methods that fit reality. Benefits and costs must always be considered together. It is problematic to push ahead with regulations on the basis of lofty justifications while ignoring the actual conditions faced by industry. The resulting harm will simply be passed on in full to businesses and the public.

The carbon neutrality plan being pursued by the current government is an excessive policy that could deal a blow to the business community. It should not set reduction targets in advance and then try to force compliance at all costs. The government should put forward a new, rational policy after comprehensively considering the state of related technological development, the costs required to achieve the targets, and the risks that may be imposed on businesses.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

---

Original title: 무리한 탄소중립 계획 재검토해야

Author: Sung-no Choi

Date: 2021-10-25

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24309