[Choi Ji-woong's Energy War] Two Factors That Will Determine the Speed of Energy Transition

Global Carbon Reduction Efforts... Energy Trend Changes Inevitable
Participation Must Be Encouraged Based on Equity for Developing Countries
Creating Demand Through Electric Vehicle Competitiveness Also Key

The change in energy trends due to abnormal climate and global carbon reduction efforts is an undeniable flow of the times. Therefore, what is important now is not the direction but the measure of speed. It is nearly impossible to predict that speed accurately, but two key factors that determine it can be identified.

Jiwung Choi, Researcher at Korea National Oil Corporation Smart Data Center

First is the change in developing countries. Currently, Europe is leading the energy transition. The coal power generation ratio in the power sources of the UK, France, Spain, and Italy has decreased to single digits. In the UK and France, it is about 1-2%. On the other hand, the coal power generation ratio in China, India, Indonesia, and the Philippines is around 60-70%, and in Korea, it is over 30%. Europe is in a position to criticize developing countries for their slow energy transition.

However, developing countries do not think they must maintain the same transition speed as developed countries. Historically, developed countries achieved economic development by using fossil fuels first and more extensively. Therefore, developing countries argue that it is unfair to impose equal carbon reduction obligations on them as on developed countries. Thus, the Kyoto Protocol signed in 1997 required only 38 developed countries to bear carbon reduction obligations. Later, the 2015 Paris Agreement established that almost all countries, 195 in total, regardless of developed or developing status, would formulate carbon reduction plans.

Although developing countries joined the Paris Agreement under the imperative of addressing climate change, their dissatisfaction has not disappeared. At the Conference of the Parties to the Climate Agreement held in Egypt last November, this conflict emerged as the biggest issue. In this negotiation, developed countries agreed to establish a fund to compensate for the 'loss and damage' suffered by developing countries due to climate change. However, specific details such as fund formation methods and support mechanisms are still under discussion.

Of course, carbon reduction can be said to prioritize urgency over equity. However, without equity as a premise, it is difficult to elicit active participation from developing countries, so more effort from developed countries is necessary. This will be an important factor determining the speed.

The second factor is electric vehicles. Currently, about half of petroleum is used as automobile fuel. Arithmetically, if all cars worldwide were replaced by electric vehicles, half of the petroleum demand could disappear. However, consumers currently choose electric vehicles mainly because of low fuel costs and subsidies. Gasoline is subject to high taxes such as fuel tax, but electricity charges bear much less tax burden. Electric vehicle demand heavily depends on policy support such as tax benefits and subsidies. Then, when will electric vehicles create demand by their own competitiveness? That time will likely be around when fully autonomous driving technology is commercialized.

Of course, autonomous driving technology can also be applied to internal combustion engines. However, future cars are said to be 'electronics rather than machines,' as autonomous driving is a combination of cameras, sensors, artificial intelligence, and communication systems. A power supply unit is needed to operate these various electronic devices, and in this regard, electric vehicles have a significant advantage. Also, internal combustion engines have mechanical characteristics involving fuel intake, compression, and explosion processes, making computer driving control more difficult.

Electric vehicles have far superior energy efficiency compared to internal combustion engines, so consumption should be encouraged through policy. Therefore, current electric vehicle distribution relies on policies such as taxes and subsidies. It is difficult to predict the completion time of fully autonomous driving technology now. When electric vehicles eventually create strong demand on their own through the combination with autonomous driving, the speed of energy change will gain momentum from the market rather than policy.

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

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