Democratic Party Promotes Direct Renewable Energy Contracts with Large Corporations as Part of 'Green New Deal'

Kim Tae-nyeon, floor leader of the Democratic Party of Korea, is attending the party strategy meeting held at the National Assembly on the 12th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporters Park Cheol-eung, Won Dara, Lee Chang-hwan, Moon Chae-seok] The Democratic Party of Korea is promoting a plan to respond to the climate crisis through direct contract supply between large corporations and renewable energy electricity producers. This is being reviewed as part of the 'Green New Deal' prepared by the government and ruling party, aiming to respond to the global trend of environmental demands.

Kim Seong-hwan, head of the Korean New Deal Task Force of the Democratic Party's COVID-19 National Crisis Overcoming Committee, said in a phone interview with Asia Economy on the 12th, "We intend to reflect as much as possible in the detailed implementation plan of the Korean New Deal (scheduled to be announced early next month) the provision that allows companies to use renewable energy electricity through autonomous Power Purchase Agreements (PPA) with renewable energy electricity suppliers."

Kim proposed an amendment to the Electricity Business Act with this content in July last year, but it was not properly discussed in the 20th National Assembly. This time, as the ruling party and government promote the 'Green New Deal' through consultations, they intend to include it as a key item. Along with institutional reform, a budget for expanding renewable energy infrastructure may also be reflected in the third supplementary budget.

Currently, renewable energy power producers must trade in the electricity market or sign contracts with Korea Electric Power Corporation (KEPCO) to sell electricity. If the law is amended, they will be able to trade directly with large power-consuming companies such as Hyundai Steel and Samsung Electronics. This is an issue strongly demanded by environmental organizations including Greenpeace for the revolutionary expansion of renewable energy.

Explaining the background of the proposal, Kim said, "More than 180 major global companies have joined the RE100 campaign, which pledges to supply 100% of the electricity needed for corporate activities from renewable energy," adding, "These companies also require their partners to use renewable energy, which has begun to directly affect the export competitiveness of our companies." It is known that Apple is discussing ways to expand clean energy programs with its Korean partners.

However, this recognizes an exception to the electricity industry structure that prohibits simultaneous production and sales of electricity, which could cause controversy. There are concerns that it could lead to electricity price increases. The National Assembly's expert committee stated in a review report last year, "Opposing opinions on the amendment argue that it could be a factor in raising electricity prices," and "Electricity users might enter into long-term renewable energy contracts during high-rate periods and receive lower-cost electricity from KEPCO during other times, causing a cherry picking phenomenon."

The Ministry of Trade, Industry and Energy has expressed the position that consensus within the National Assembly on the dual operation of power generation and sales is necessary first. However, it is understood that there is some difference in stance between the departments responsible for the electricity industry and renewable energy within the ministry. Kim said, "After recently meeting with a senior official from the Ministry of Trade, Industry and Energy, I understood that awareness of expanding renewable energy has become more proactive amid the COVID-19 crisis."

From the companies' perspective, while they agree with the global trend of expanding renewable energy, they consider it premature in terms of practicality. A Samsung Electronics official said, "We agree with the overall direction and purpose such as greenhouse gas reduction and renewable energy expansion and will actively participate. However, it is difficult to evaluate at this stage as the policy has not yet been concretized and detailed matters have not been released."

Another business official said, "Since the generation cost of renewable energy is relatively high, there is a cost burden, and there are practical difficulties regarding whether stable power supply will be possible."

This content was produced with the assistance of AI translation services.