Renewable Energy Projects Turned into 'Blind Money'... Concerns Over Hasty Green New Deal Implementation

Despite Detection of Government Subsidy Fraud
Project Budget Increased by 17.8 Billion Won Compared to Last Year
Unclear Green Job Creation Effects
Experts: "Corporate Cost Burden Will Increase"
"Contradicts Claims of Reducing Environmental Regulations"

solar collector panel

[Asia Economy Reporters Kim Bo-kyung, Moon Chae-seok] As numerous illegal activities were uncovered in the Korea Energy Agency audit, evaluations have emerged that the true nature of the renewable energy supply project has been fully exposed. In the process of the government pushing its nuclear phase-out policy, companies flooded in indiscriminately as the share of renewable energy was forcibly increased, leading to frequent cases of subsidies being fraudulently obtained. (Related article [Exclusive] Is the renewable energy supply project a 'lawless zone'? Numerous violations uncovered in audit https://www.asiae.co.kr/article/2020051811103749174)

Nevertheless, the Ministry of Trade, Industry and Energy increased this year's budget for the project by 17.8 billion KRW compared to last year and raised the subsidy level for solar power generation facilities, which have the highest demand, from 30% to 50%. This is said to be a measure to prepare for a possible decrease in demand due to the novel coronavirus disease (COVID-19). Instead of preparing measures to prevent misconduct discovered during the project, the ministry is only focused on expanding the project scale.

◆Side effects of reckless renewable energy expansion= Experts pointed out that as the government aggressively expanded renewable energy projects, a large number of small-scale, undercapitalized operators flooded in, raising concerns about rushed and sloppy construction. Professor Jeong Dong-wook of the Department of Energy Systems Engineering at Chung-Ang University said, "The reckless expansion of renewable energy has created factors leading to poor-quality construction," adding, "There is no sharp solution other than strengthening government supervision during the project approval and management stages."

Professor Lee Deok-hwan, Emeritus Professor of Chemical Science Communication at Sogang University, criticized, "Most construction companies lack capital and technical skills and are politically biased," and said, "Forcibly spreading unfinished technology has caused institutional management to become inadequate." He emphasized, "The government should nurture construction companies with reliable capital and technical capabilities."

◆Government again pushing 'Green New Deal'= Amid this, the government is preparing to promote the 'Green New Deal,' which involves massive investment in eco-friendly industries with the aim of simultaneously revitalizing the environment and the economy. The goal is to overcome the national crisis caused by COVID-19 and respond to climate change by boosting both the economy and the environment. However, there are concerns that hastily pushing the Green New Deal could turn investment budgets into 'blind money' again and increase corporate burdens by tightening environmental regulations. Given ongoing controversies surrounding the government's rapid energy transition policies such as nuclear phase-out, driving the Green New Deal could exacerbate social conflicts.

According to multiple government officials on the 18th, the Blue House recently received written reports on the Green New Deal project from four ministries: the Ministry of Environment, Ministry of Land, Infrastructure and Transport, Ministry of Trade, Industry and Energy, and Ministry of SMEs and Startups. This was less than a week after President Moon Jae-in ordered a report on the Green New Deal project on the 12th. Following the president's directive, each ministry hurriedly convened meetings to brainstorm ideas. An official from the Ministry of Trade, Industry and Energy said, "Usually, when we talk about 'New Deal,' the effects need to appear quickly," adding, "It should help respond to climate change while creating jobs." The Green New Deal project is expected to include expanding renewable energy, revitalizing green industries such as eco-friendly products, creating green jobs, and green remodeling to improve building energy efficiency.

◆Increased environmental regulations and concerns over management burdens= Experts said that the reality of green jobs is unclear, and that rushing the energy transition policies like nuclear phase-out could worsen economic and social confusion. Professor Kim Tae-gi of Dankook University pointed out, "The core of the Green New Deal is nuclear phase-out and renewable energy, but if that increased jobs, there should have been many jobs created in the solar power business, yet visible effects are not seen." In fact, the Ministry of Environment initially reported creating 24,000 green jobs early last year but reduced the target to 19,000 this year.

There are also concerns that the Green New Deal could increase corporate burdens as companies facing liquidity crises due to COVID-19 are demanding relaxation of environmental regulations. Professor Kim criticized, "When 'green' is included in government policies, environmental cost burdens increase and regulations inevitably rise," adding, "This contradicts the statement about reducing environmental regulations considering the industry's situation due to COVID-19." This means that rather than immediately serving as a stepping stone to overcome the economic crisis caused by COVID-19, the Green New Deal could impose management burdens on the private sector due to environmental regulations, in addition to the government's initial investment costs.

In December last year, European Union (EU) member states agreed on the 'Green Deal,' which aims to achieve net-zero greenhouse gas emissions by 2050. The issue here is cost. To support Green Deal projects across energy, industry, construction, and transportation sectors, the EU must raise at least 1 trillion euros (approximately 1,330 trillion KRW) over the next decade. Given the severe impact of COVID-19 on the European economy, it is uncertain whether the costly Green Deal projects can be implemented as planned.

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