Moon Seung-wook: "Carbon Neutrality is a Challenging Task... Korea Has Sufficient Capability"

Government Presents 'Vision and Strategy for Industrial and Energy Carbon Neutrality Transformation' at 'Carbon Neutral Leading Companies Invitation Strategy Briefing'

Realizing the Cessation of Coal Power Generation by 2050
Expansion of Environmental Dispatch and Power Market Reform
Public-Private Investment of 94 Trillion KRW for Carbon Neutrality

Full Support for Industrial Structure Transformation with 'Tax + 35 Trillion KRW Policy Finance'
Incentives Under Review for Large-scale Project Investments

Moon Seung-wook, Minister of Trade, Industry and Energy. (File photo)

[Asia Economy Reporter Joo Sang-don] Moon Seung-wook, Minister of Trade, Industry and Energy, stated on the 10th, "Carbon neutrality is certainly a challenging task, but we have already steadily laid the foundation for a low-carbon transition and possess sufficient capabilities."

Minister Moon made these remarks while attending the 'Strategic Report Meeting for Carbon Neutrality Leading Companies' held at the Blue House, where he announced the 'Vision and Strategy for Industrial and Energy Carbon Neutrality Transformation' jointly with related ministries.

Minister Moon emphasized, "The main players responsible for our economy, not only in past growth but also in the future low-carbon market, are our manufacturing industry and companies," adding, "It is time for us to challenge a broad and high low-carbon future rather than remain trapped under the high-carbon glass ceiling."

This report meeting was organized to mark the first anniversary of the carbon neutrality vision declaration, inviting leading companies driving changes in our industry and energy sectors to the Blue House main building to express deep gratitude and to unite public and private will toward carbon neutrality.

At this event, the government announced the vision and strategy for industrial and energy carbon neutrality transformation. Over the past year since the carbon neutrality declaration, the government has established a continuous communication system with companies to discuss measures for achieving carbon neutrality by 2050, and based on this, prepared a comprehensive strategy outlining mid- to long-term tasks and policy directions.

First, the government decided to innovate the energy system centered on clean energy to realize carbon neutrality by 2050. The plan includes shutting down 24 aging coal power plants by 2034 and expanding the application of coal power generation caps to private power producers to achieve the goal of ceasing coal power generation by 2050. It will mandate the installation of distributed energy for high energy-consuming businesses and introduce systems such as Virtual Power Plants (VPP) and Distribution System Operators (DSO) by 2023.

The government will also build infrastructure and foundations such as markets and pricing to promote energy transition. In response to the expansion of renewable energy, the power grid system will shift to a 'grid reinforcement first, power facility construction later' approach, and a power grid impact assessment system will be introduced (starting in 2022) to encourage demand dispersion. Additionally, the government plans to gradually establish a cost-based tariff system and expand the time-of-use tariff system for residential customers, currently implemented in Jeju, nationwide.

The government plans to invest more than 94 trillion KRW by 2025 in collaboration with the private sector. Through leading investments of 61 trillion KRW by government finances and public enterprises, it aims to stimulate 33 trillion KRW worth of private sector energy carbon neutrality investments.

To promote low-carbon transformation of the industrial structure, the government will start by doubling the 2022 industrial carbon neutrality R&D budget (from 213 billion KRW in 2021 to 408.2 billion KRW in 2022), proceed with a large-scale preliminary feasibility study worth 6.7 trillion KRW, and continuously expand investments by restructuring R&D around carbon neutrality. In 2023, it plans to increase the share of carbon neutrality investments in industrial R&D from the current 16.7% to over 30%.

Effective support such as tax and financial incentives proportional to corporate efforts will also be pursued. The Ministry of Trade, Industry and Energy plans to designate technologies with high reduction effects and real demand as new growth and core technologies through consultations with related ministries, expanding tax credits for facility and technology development investments to reduce corporate burdens. R&D costs for new growth and core technologies will be increased to 20-30% for large and medium-sized enterprises and 30-40% for small and medium enterprises. A 3% tax credit will be applied to increased facility investments regardless of company size.

Measures to improve the carbon market are also under review. Referring to Germany's 'Carbon Contract for Difference' system, the government is discussing a plan to pre-contract carbon prices for mid- to long-term application between the government and companies and compensate the difference if emission allowance prices fall below the contracted carbon price. This aims to induce investment in innovative technologies by guaranteeing carbon prices, costs, and effectiveness at the time of technology adoption.

Minister Moon said, "Since carbon neutrality is an irreversible trend, special preparation is necessary to maintain and enhance the industrial competitive advantage we have painstakingly built," adding, "Furthermore, as the global industrial landscape undergoes drastic changes, this is a golden opportunity for our industry, which has remained a 'follower,' to leap forward as a 'leader.'"

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