[Choi Ji-woong's Energy War] To Make Carbon Reduction a Profit, Not a Cost

The biggest obstacle to carbon reduction is cost. Companies must give up cheap energy sources, and governments must mobilize vast amounts of land and capital to build new low-carbon energy infrastructure. Someone's cost becomes someone else's profit. The more carbon reduction is recognized as an important value, the more technologies contributing to it will become significant sources of revenue. The reason electric vehicles and secondary batteries are currently considered the most promising items is that they emit less carbon than internal combustion engines.

The main profit opportunities will be created in the energy industry. Fierce competition is already underway in this field. In the wind power sector, European energy companies are leading. BP, Shell, Equinor, and Ørsted are competing in the global market. In the solar power sector, Chinese companies dominate. Chinese-made products overwhelmingly occupy the market in solar power components such as wafers, cells, and modules. One of the main purposes of the U.S. Inflation Reduction Act (IRA) announced last year was to curb Chinese companies in the solar industry.

The share of renewable energy in Korea's power generation is around 8%. The government has pledged to increase this to 21.6% by 2030. Although this is a recently lowered target, it is uncertain how much controversy and complaints will arise during the process. In a reality where even transmission towers are perceived as undesirable facilities, constructing large-scale wind and solar power facilities and the associated transmission and distribution networks is not easy.

In this reality, another alternative is the new utilization of existing coal-fired power plants. That is, co-firing hydrogen or ammonia, which emit no carbon, with coal for power generation. The biggest attraction of ammonia co-firing power generation is that it can utilize the sites of coal-fired power plants and transmission infrastructure. Compared to the enormous land and transmission facilities that must be newly secured when building renewable energy facilities, this is a tremendous advantage. However, the technology to co-fire hydrogen or ammonia with coal for power generation has not yet been commercialized.

Today, coal-fired power accounts for the largest share of global power generation, about 40%. At the same time, it is the largest source of carbon emissions. Much of carbon reduction depends on the abolition or transformation of coal-fired power generation. Therefore, if ammonia co-firing is commercialized, it will greatly contribute to carbon reduction, and the winner of that technology will secure tremendous growth momentum.

When discussing the economics of ammonia co-firing power generation, the most frequently pointed out issue is that the production volume of clean hydrogen and clean ammonia is still too low. However, this aspect needs to be reconsidered. From the perspective of companies engaged in hydrogen and ammonia businesses both domestically and internationally, the biggest risk and complaint is the uncertainty of demand. This is understandable. Hydrogen vehicles are still rare, and ammonia is not yet used as a fuel for power generation. With no demand, production is naturally low. However, if ammonia co-firing power generation technology is perfected, it will become an important trigger for creating demand.

The energy market, where the most funds are currently traded in international trade, involves oil and gas. In the new energy market that will unfold in the future, enormous wealth will also be exchanged, and depending on technology and resource possession, some will enjoy profits while others bear costs. In Korea, Korea National Oil Corporation and many private companies are promoting ammonia projects. Considering that no country will easily give up its massive coal-fired power generation facilities and related infrastructure, it is necessary to pay attention to the strategic and environmental value of ammonia.

Choi Ji-woong, Researcher, Smart Data Center, Korea National Oil Corporation

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