Period Industries Bearing 400 Trillion Won Cost for Transition to Low-Carbon Society

Industrial Research Institute: Steel, Petrochemical, and Cement Sectors... Manufacturing Industry May Collapse Due to Cost Burden

2050 Long-term Low Carbon Development Strategy (LEDDS) 2nd Industry Sector Discussion Forum.
[Photo by Korea Cement Association]

[Asia Economy Reporter Kim Jong-hwa] Considering the worst-case scenario where the entire domestic manufacturing industry collapses due to the steel, petrochemical, and cement sectors bearing at least a 400 trillion won cost burden when implementing the '2050 Low Carbon Development Strategy (LEDS)' linked to the 2030 greenhouse gas reduction targets, urgent measures are needed.

On the 26th, five major key industry associations including steel, petrochemical, cement, semiconductor, and display held the '2nd Industry Discussion on the 2050 Long-term Low Carbon Development Strategy (LEDS)' at the Korea Chamber of Commerce and Industry's assembly room. They expressed concerns that if the sectoral visions and tasks of the '2050 Long-term Low Carbon Development Strategy (LEDS)' revealed at the public forum on the 17th are implemented as is, domestic key industries will lose international competitiveness and collapse.

Experts gathered at the discussion unanimously stated, "With current measures, the survival of domestic manufacturing is at risk," and emphasized, "It is necessary to accurately estimate the costs required for the transition to a low-carbon society and begin discussions on securing funding and other countermeasures."

Jeong Eun-mi, head of the Korea Institute for Industrial Economics and Trade, who presented at the event, explained, "At least 400 trillion won in transition costs will be needed for just the three sectors of steel, petrochemical, and cement," adding, "If the sunk costs of existing facilities with remaining lifespans are also considered, the costs will increase significantly."

The government proposed hydrogen reduction steelmaking and CCUS (carbon capture, utilization, and storage) as transition methods for the industrial sector at the public forum on the 17th.

Professor Min Dong-jun of Yonsei University, who participated as a discussant, stressed, "Domestic companies can import energy and resources from overseas to manufacture products and export them again because they have maximized production efficiency to secure cost competitiveness," adding, "Excessive cost burdens during the transition to a low-carbon society will ultimately undermine the cost competitiveness achieved by domestic companies, leading to employment reductions and the collapse of the entire manufacturing industry."

Senior Research Fellow Lim Jae-gyu of the Korea Energy Economics Institute also stated, "Industries such as steel, petrochemical, and cement supply intermediate goods to sectors like automotive, IT, and construction, so a decline in their competitiveness inevitably affects the entire domestic manufacturing industry," and argued, "South Korea has the second-highest manufacturing share in the world, so it must prepare a more meticulous strategy than other countries."

He further noted, "The European Union (EU), except for Germany, has a weak manufacturing base and cannot serve as a model for us," and said, "We should refer to the strategies of countries fiercely competing with us in manufacturing, such as the United States, China, and Japan."

All representatives from the major industry associations agreed on the necessity of greenhouse gas reduction in the five key sectors but emphasized that LEDS must include a comprehensive roadmap for the development and application of greenhouse gas reduction and absorption technologies to expect successful implementation of greenhouse gas reduction. They added, "Even the EU, which has a weak manufacturing base, plans to raise up to 1,300 trillion won in funding over the next decade for the transition to a low-carbon society, so we hope communication and cooperation between the government and industry will expand to prepare countermeasures."

The government plans to prepare a LEDS government draft reflecting stakeholders' opinions, hold a public hearing next month, and submit it to the UN by December.

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