Professor Hong Jong-ho "KEPCO Monopoly Market Structure Must Be Reformed... Carbon Neutrality Difficult at Present"

May 5th Korean Economic Association & Korean International Economic Association General Meeting
'Is Carbon Neutrality by 2050 Possible?' Keynote Presentation

A Market Must Be Created Where Consumers Can Directly Supply and Sell Renewable Energy Power
Renewable Energy Industry Lacks Self-Sustainability Under Government-Controlled Power Supply System

Professor Hong Jong-ho, Graduate School of Environmental Studies, Seoul National University Photo by Yonhap News

[Asia Economy Reporter Eunbyeol Kim] It has been pointed out that 'power market reform' is essential to achieve carbon neutrality. This means that unless the current system, where Korea Electric Power Corporation (KEPCO) monopolizes electricity supply and rigidly determines electricity rates and sales, is restructured, achieving carbon neutrality under the current circumstances will be difficult. It was also pointed out that public acceptance of wind and solar power generation needs to increase.

Professor Hong Jong-ho, an economist and environmental expert at Seoul National University’s Graduate School of Environmental Studies, made this statement on the 5th during the joint meeting of the Korean Economic Association and the Korean International Economic Association, presenting on the topic "Is 2050 Carbon Neutrality Really Possible?"

Professor Hong said, "In Korea, 65% of electricity is still generated by coal and nuclear power, and renewable energy accounted for only 5.1% as of 2019," adding, "The global average has already reached about 30%, and even Japan, which has a similar geography to Korea, has increased to 20%." Globally, to achieve 'carbon neutrality by 2050,' the share of renewable energy must reach 60%, but Korea’s situation falls far short of this level.

In particular, he pointed out that achieving carbon neutrality under Korea’s current conditions is difficult. He cited low public acceptance of carbon neutrality, a rigid power market, and complex interests surrounding nuclear power as problems. Professor Hong said, "In reality, to develop wind and solar power, project developers have to meet local residents one by one and even pay bribes."

Source: Professor Hong Jong-ho, Seoul National University, 'Carbon Neutrality by 2050, Is It Really Possible?'

According to Professor Hong’s scenario analysis, to achieve national-level RE100 (replacing 100% of production power with renewable energy) by 2050, final energy consumption must be reduced by 24% compared to 2014, and 81% of the required 850 TWh of power in 2050 must be supplied by solar and wind combined. He said, "At this point, CO2 emissions can be reduced by 90.9% compared to 2014, but current carbon emissions already exceeded the target by 12.3%, reaching 60.8 million tons as of 2018."

Although the reality is challenging, he also said that the carbon neutrality goal cannot be abandoned. Professor Hong said, "Globally, leading companies have joined RE100, with 284 companies enrolled by the end of last year, and advanced countries will pressure for renewable energy adoption, but in Korea, only eight SK affiliates have joined," adding, "Climate change is an issue, but our companies are facing economic damage because they cannot meet global environmental standards," emphasizing that it is time to pursue structural changes for carbon neutrality.

He stressed that changing the monopoly market structure of Korea Electric Power Corporation (KEPCO) is necessary as a solution. Professor Hong said, "While KEPCO’s electricity supply system may have been necessary during periods requiring intensive development, now consumers can also sell electricity, and power producers can directly purchase renewable energy in a direct trading market. We need to create a diversified and smarter power supply system environment."

For example, in Germany, households generate solar power and either use the electricity directly or sell the surplus, forming a 'prosumer' model. Professor Hong explained that a 'revolutionary change' where individual operators in each region can produce, use, purchase, and sell renewable energy must occur to significantly increase renewable energy adoption. He said, "In this process, electricity can be supplied by using it when prices are lowest and selling it when prices are high, integrating IT technology to monitor prices," adding, "The government’s 40-year control over power supply and price freezes have prevented the renewable energy industry from becoming self-sustaining."

He also hinted that public acceptance is needed for some increase in electricity rates that may occur during this process. Professor Hong said, "Household electricity prices in Germany are 2.5 to 3 times higher than in Korea, but interestingly, Europeans say that citizens can endure electricity bills and that taxes should be collected to invest more in renewable energy," adding, "Currently, Korea’s electricity rates are the lowest among OECD countries, but since failure to achieve carbon neutrality could harm companies, changes in government and politics are necessary."

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