Government and Private Sectors to Invest a Total of '94 Trillion+α' in Energy Carbon Neutrality by 2025

Government Presents 'Vision and Strategy for Energy Carbon Neutrality Transformation' at the 'Carbon Neutral Leading Companies Invitation Strategy Report Meeting'

Innovative Technology Development → Minimizing Transitional Greenhouse Gas Emissions and Promoting Carbon Neutrality Realization
Expansion of Carbon Neutrality Investment to Create New Growth Engines and Jobs

Direction for Achieving Carbon Neutrality in the Energy Sector.

[Sejong=Asia Economy Reporter Joo Sang-don] The government has decided to induce the activation of private sector energy carbon neutrality investments by expanding leading investments worth 61 trillion KRW from government finances and public enterprises to achieve carbon neutrality by 2050. The government expects a total investment of 94 trillion KRW in energy carbon neutrality by 2025 through this effort.

On the 10th, the government held the 'Carbon Neutral Leading Companies Invitation Strategy Report Meeting' at the Blue House and jointly announced the 'Vision and Strategy for Industrial and Energy Carbon Neutrality Transformation' with related ministries.

The strategies for energy carbon neutrality include ▲transition to clean energy ▲establishing a foundation to accelerate energy transition ▲supporting the creation of new growth engines ▲strengthening a smooth carbon neutrality implementation system.

First, the government plans to significantly expand joint public-private investments in energy carbon neutrality. Along with large-scale fiscal input under the Green New Deal plan, it will utilize the Energy Special Account, Electricity Fund, Climate Response Fund, and others to expand investments in the energy sector's carbon neutrality. By 2025, it plans to invest 61 trillion KRW (based on national funds) in Green New Deal areas such as green transformation of urban, spatial, and living infrastructure, expansion of low-carbon and distributed energy, and establishment of a green industry innovation ecosystem.

The government will also induce large-scale investments in carbon neutrality by private energy conglomerates. According to a survey by the Ministry of Trade, Industry and Energy, 11 large companies plan to invest 33 trillion KRW in energy carbon neutrality by 2025. Combined with government investments, a total of 94 trillion KRW will be invested in energy carbon neutrality by 2025.

The power grid expansion system will shift from the existing 'reinforcing the grid after power plant construction' to 'reinforcing the grid first, then constructing power plants.' This proactive grid reinforcement aims to respond to the expansion of renewable energy. Next year, a 'Power Grid Impact Assessment System' will be introduced to evaluate in advance the impact of large-scale power-consuming facilities on the grid to ensure stable operation.

Efforts will also be made to improve and strengthen carbon-neutral-friendly electricity market systems. Following recommendations from the Carbon Neutrality Committee, environmental dispatch will be expanded to reflect environmental factors as well as economic efficiency when determining the dispatch order in the electricity market. Starting in 2022, environmental dispatch reflecting emission costs will be implemented. In 2023, a renewable energy generation bidding system will be introduced, allowing renewable energy to bid into the electricity market like current central dispatch resources, with additional incentives provided upon fulfillment of bid quantities.

Based on price signals, rational demand will be induced by expanding the time-of-use rate system for residential customers, which has been implemented in Jeju since September this year, nationwide after next year. Additionally, a gradual establishment of a cost-based tariff system will be promoted to ensure that supply costs are recovered at appropriate rates throughout the entire process of electricity 'production-trade-consumption.'

Along with this, to accelerate the transition to a clean energy system, the government has set a goal to halt coal power generation by 2050 through bold reductions. Specifically, it plans to retire 24 coal power plants by 2034 and convert them to liquefied natural gas (LNG) power generation. For remaining coal power plants after 2034, early reduction directions will be reviewed through consultations with operators during the establishment of the '10th Basic Plan for Electricity Supply and Demand.'

For fossil fuel power generation, which is inevitably used during the transitional period, greenhouse gas emissions will be minimized through co-firing and full firing of ammonia and hydrogen. Commercialization of 20% ammonia co-firing (2030) and full firing (2050) for coal power plants will be pursued. Simultaneously, commercialization of 50% hydrogen co-firing (2035) and full firing (2050) for LNG power plants will also be promoted.

Incentive systems to expand the use of distributed energy will also be established. In 2023, installation obligations for distributed energy will be imposed on large electricity-consuming businesses. This means mandating installation of solar power, fuel cells, etc., when large-scale housing or urban development projects and large electricity-consuming businesses are located. Additionally, the introduction of a Virtual Power Plant (VPP) system that aggregates small and medium-sized renewable energy for market bidding and a Distribution System Operator (DSO) system that performs dispatch and control of distributed energy will be pursued within the same year.

The government will also establish support systems for vulnerable industries and groups in the energy sector. Through the enactment of the Energy Transition Support Act, systematic support will be provided to related industries and regions during the energy transition process, including nuclear and coal power reduction. Furthermore, regions expected to experience rapid changes such as job losses and economic downturns during coal phase-out and eco-friendly industry transitions will be designated as 'Just Transition Special Zones' to support the transformation of regional key industries and the recovery of jobs and local economies.

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