Companies Say "2050 Carbon Neutrality... A Path to Take but an Immediate Risk Factor"

Survey on 'Domestic Companies' Response to Carbon Neutrality' for Companies Participating in Emissions Trading Scheme by Sangui

[Asia Economy Reporter Yoonju Hwang] Domestic companies view the path to '2050 Carbon Neutrality' as necessary, but currently assess it more as a risk than an opportunity.

According to a survey conducted by the Korea Chamber of Commerce and Industry targeting companies participating in the greenhouse gas emissions trading system (403 responses out of 684 companies), 57.3% of the respondents evaluated 2050 carbon neutrality as a "difficult but necessary path." In contrast, 42.7% of companies said that "carbon neutrality is realistically difficult."

Carbon neutrality (net zero) is the goal of reducing the net greenhouse gas emissions (emissions minus absorption) to zero to overcome the climate change crisis. The EU and Japan have declared achieving carbon neutrality by 2050, China by 2060, and the United States has also pledged carbon neutrality with the Biden administration. Korea declared its 2050 carbon neutrality goal last October.

Although carbon neutrality is an unavoidable path, many companies currently see it more as a risk than an opportunity. Regarding the impact of carbon neutrality on corporate competitiveness, 74.2% of companies responded that it poses a "risk of weakened competitiveness" (59.3%) or a "risk to industry survival" (14.9%). Only 25.8% viewed it as an "opportunity to strengthen competitiveness."

Two-thirds of Respondent Companies Are Responding or Planning to Respond to Carbon Neutrality... One-third Have Yet to Respond

In this survey, 64.8% of respondent companies answered that they are either "responding" (31.0%) or "planning to respond" (33.8%) to carbon neutrality policies. On the other hand, 35.2% said they are "unable to respond."

Companies that have started responding to carbon neutrality mainly cited regulations as the reason, with "current regulations" (39.0%) or "preparing for stricter regulations" (21.7%) accounting for 60.7%. Companies responding for proactive reasons such as "practicing ESG" (16.9%), "strengthening competitiveness" (12.5%), "supply chain demands" (5.2%), and "participation in climate crisis response" (2.9%) were relatively fewer. <"Seeking new business opportunities" 1.8%>

Regarding response measures, "investment in greenhouse gas reduction at business sites" (75.5%) was the majority, followed by "participation in initiatives such as RE100" (9.3%), "promotion of external reduction projects" (7.6%), and "participation in decarbonization technology development" (7.2%). Companies that have yet to respond cited reasons in order of "cost burden" (41.7%), "lack of reduction methods" (31.3%), and "pushed down in priority" (22.2%).

A manufacturing industry official said, "Unlike the power generation and transportation sectors, most industrial sectors have yet to develop decarbonization innovation technologies," adding, "While carbon zero is the ultimate goal, currently we are only responding to gradually strengthening greenhouse gas regulations," expressing difficulties.

Companies Need Various R&D Tasks... Requesting 'Support for Reduction Investment' and 'Development of Innovative Technologies' as Policy Tasks

Companies require various research and development (R&D) tasks to achieve carbon neutrality. The most cited was "production technology using renewable energy" (24.8%), followed by "process gas substitution and reduction technology" (22.5%), "energy efficiency improvement technology" (22.2%), "resource circulation technology" (17.5%), and "carbon capture, utilization, and storage (CCUS) technology" (13.0%).

Accordingly, many companies requested "support for reduction investment" (36.7%) and "development of decarbonization innovative technologies" (31.0%) as urgent policy tasks for carbon neutrality, followed by "establishment of renewable and hydrogen energy supply infrastructure" (15.1%), "rationalization of laws and systems" (11.2%), and "building cooperative networks" (5.0%).

Meanwhile, if the carbon border tax, which is being introduced in the EU and the United States, is implemented, 73.7% of companies predicted it would negatively affect their competitiveness. The carbon border tax is a system that imposes taxes equivalent to carbon costs when goods produced in countries with loose greenhouse gas emission regulations are exported to countries with strict regulations.

Kim Nok-young, Director of the Sustainability Management Center at the Korea Chamber of Commerce and Industry, said, "The survey results show that while our companies recognize 2050 carbon neutrality as an inevitable task, they are concerned about the realistic difficulties of carbon reduction and the adverse effects on corporate management," adding, "The path to realizing carbon neutrality lies in the stable supply of renewable energy and innovative decarbonization technologies, so active government R&D support and close cooperation with the industry are necessary."

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