[2020 National Audit] Ministry of Industry: "2021 Global 'New Climate Regime' Launch... Introduction of Coal Cap System"

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy answering questions from the National Assembly on July 23. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] The Ministry of Trade, Industry and Energy announced that it will introduce a coal total volume system that limits the increase in coal power generation as an additional measure to reduce greenhouse gases. It emphasized that as countries are expected to expand their energy transition efforts by announcing greenhouse gas reduction measures under the Paris Agreement starting next year, South Korea must also strengthen its carbon reduction policies.

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy reported this status during the National Assembly’s Industry, Trade, Energy, Small and Medium Enterprises Committee (Sanjoongwi) inspection on the 7th.

Minister Sung said, "We will strengthen energy innovation for a low-carbon society," adding, "Through the Green New Deal, we will implement large-scale investments and bold institutional reforms, focusing on creating new businesses and jobs."

Promotion of Greenhouse Gas Reduction Along with Increased Solar and Wind Power Deployment

In the status report, the Ministry cited examples such as Germany’s enactment of the Decarbonization Act (last July) and the UK’s legislation for carbon neutrality by 2050 (June last year), stating the need to strengthen energy transition efforts. It emphasized that global companies like British Petroleum (BP) and Google are increasing investments in low-carbon sectors, and that low-carbon investments now lead to competitiveness for both countries and companies.

Accordingly, when promoting the Green New Deal in the future, the ministry plans not only to expand the deployment of new and renewable energy but also to foster new services, new industries, and job creation linked with the Digital New Deal, including artificial intelligence (AI) and big data.

The 9th Basic Plan for Electricity Supply and Demand (9th Electricity Plan) announced plans to retire 30 of the current 60 coal power plants by 2034, replace 24 units (12.7GW) with liquefied natural gas (LNG), and pursue 5.1GW of new LNG installations. This is similar to the 'draft' announced by the general subcommittee of the 9th Electricity Plan advisory body on May 8. It was indicated that the final version of the 9th Electricity Plan to be announced within this year will maintain the same policy as the draft.

Introduction of Coal Total Volume System... Limiting Power Generation Caps

A notable point is the announcement to introduce the coal total volume system. As an additional measure to reduce greenhouse gases, it limits the upper limit of coal power generation by power producers. Although plans to reduce coal power plants were previously announced through the 9th Electricity Plan, this is the first time a system to regulate coal power generation volumes by power companies has been introduced.

Earlier, on the 29th of last month, the Ministry of Environment announced the '3rd National Greenhouse Gas Emission Allowance Allocation Plan (3rd Plan Period),' stating that if the Ministry of Trade, Industry and Energy introduces the coal total volume system and price bidding system by the first half of 2023, it will not introduce the integrated emission efficiency standard allocation method (BM) coefficient for the power sector. BM refers to a method of calculating emission allowance allocations based on a company’s greenhouse gas emission efficiency. The higher the BM coefficient, the more free emission allowances are allocated.

The ministry also revealed a core Green New Deal policy to increase solar and wind power capacity to 42.7GW by 2025 (15.8GW provisional figure last year). For solar power, it plans to invest 330 billion KRW by 2024 in three major areas: high efficiency, new markets, and low cost. For wind power, it hinted at developing 8MW power turbines. Additionally, it announced a total investment of 132.5 billion KRW in ultra-large turbines, floating systems, Nusel localization testbeds, and large turbine demonstration complexes.

The plan is to raise the technological level of power generation facilities in line with large projects such as the Southwest Jeonbuk region (2.4GW), Sinan (8.2GW), and Ulsan and Southeast floating systems (6.0GW). For example, the Southwest Sea offshore wind demonstration complex in Gochang-gun, Jeollabuk-do currently has 20 turbines of 3MW installed. Since 8MW turbines are already commercialized in advanced countries like Europe and 12MW technology development has begun, it is necessary to rapidly enhance Doosan Heavy Industries & Construction’s technological level.

Activation of Industrial Ecosystem Solidarity and Cooperation... Strengthening Supply Chains

The Ministry of Trade, Industry and Energy reported to the National Assembly that it plans to strengthen supply chains through the activation of solidarity and cooperation within the industrial ecosystem. It pledged active support to commercialize research and development (R&D) outcomes. The strategy involves matching companies within the same industry as well as those from different sectors, along with public and private institutions, to attract investments.

It plans to discover representative success cases centered on high value-added industries such as bio, semiconductors, batteries, and gas turbines. In this regard, the ministry approved the business restructuring of 15 companies including Samsung Display on the 23rd of last month, supporting Samsung’s transition to quantum dot (QD) display panel business.

As future major policy plans, the ministry presented ▲ realization of an industrial powerhouse ▲ leap to a trade and commerce powerhouse. To accelerate the 'Manufacturing Renaissance,' it will establish a core base for next-generation memory in the semiconductor cluster in Yongin. Demand companies are expected to invest 120 trillion KRW, create 17,000 new jobs, and generate 200 trillion KRW in added value.

Fostering High Value-Added Industries such as AI Semiconductors and Future Cars

The ministry will invest 1 trillion KRW over 10 years in intelligent artificial intelligence (AI) semiconductors and 1.5 trillion KRW in future car technology development. By 2025, it plans to build 45,000 electric vehicle chargers and 450 hydrogen chargers. It will also increase the number of smart green industrial complexes from the current 7 to 15 by 2025.

Following the ministry’s inspection on this day, a comprehensive inspection will be held once more on the 22nd. For affiliated institutions, inspections will be held on the 13th for 8 institutions including the Korea Institute of Energy Technology Evaluation and Planning, on the 15th for 13 institutions including Korea Electric Power Corporation, and on the 20th for 11 institutions including Korea Gas Corporation.

The Sanjoongwi summoned Park Ji-won, chairman of Doosan Heavy Industries & Construction, as a witness for the inspection. Questions related to the Green New Deal project will be asked. Additionally, Kim Dong-wook, executive director of Hyundai Motor Company, and Lee Gam-gyu, vice president of LG Electronics, will also appear at the inspection.

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