Gov’t slated for short-sighted emissions target

This July, the Ministry of Environment raised its 2030 greenhouse gas emissions reduction target for all industries to 20.5 percent from business-as-usual (BAU) levels, up from the previous target of 11.7 percent.

The revised target has been met with huge backlash from businesses in heavy industries like chemicals, steel and oil, who argue that the Environment Ministry has set unrealistic goals relying on unavailable technology without taking into account that the capacity to reduce emissions differs by industry.

When it announced the revised reduction plan in July, the Environment Ministry projected that businesses would be able to use the CCUS (Carbon Capture, Utilization and Storage) technology to cut 10.3 million tons of greenhouse gases by 2030.

CCUS is the process of capturing carbon dioxide emissions from power plants and either storing or reusing them to prevent waste from entering the atmosphere. If stored, carbon dioxide is usually pumped into natural underground geological formations like oil, gas and saline reservoirs.

The problem is that no government in the world has yet been able to adopt CCUS technology for commercial use.

“The United States and other advanced countries in Europe are expecting the commercialization of CCUS technology to occur after 2030,” said a spokesman from the Korea Carbon Capture & Sequestration R&D Center, an organization affiliated with the Ministry of Science and ICT.

Similarly, the government is counting on brand new technology that is only in the research stage to cut greenhouse gas emissions in the steel industry. Steelmakers today use a specific type of coal known as coking coal to remove oxygen from iron ore and reduce it to pure iron, a process that results in large-scale production of carbon dioxide. In recent years, leading global steelmakers, including Posco, have begun exploring ways to reduce iron ore by using hydrogen instead of coal, which promises to leave only water as a by-product.

Experts estimate that research and development for such a hydrogen-based iron ore reduction technology will only be completed after 2024, with commercial adoption expected to be available at a much later date.

Heavy industries are also taking issue with how the government is pushing for radical change without addressing current problems such as the steep rise in certified emission reduction (CER) allowance prices.

CER allowances are a type of carbon credit that a government issues to qualified companies to grant them the right to emit one metric ton of greenhouse gas as a means of meeting country targets for emission reduction under the Kyoto Protocol.

Six greenhouse gases that contribute to global warming are covered under this system - carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulfur fluoride.

Since the Korean government launched the national Emissions Trading Scheme - which allows companies to trade CER allowances among themselves through the Korea Exchange - in January 2015, the domestic CER allowance market has proven to be very volatile, with prices skyrocketing by 159 percent in the past three years.

The first tradeable CER allowances sold for 8,640 won ($7.60) in 2015. Last Friday, they were valued at 22,000 won.

“The problem with the CER allowance market is that businesses are scared of the limited allowance supply and high price fluctuations,” said Eom Yi-seul, a senior analyst at accounting firm Samjong KPMG. “Though the oil and chemical industries complain about a chronic lack of CERs, industries that have an oversupply of CERs are holding on to them to protect themselves against future uncertainties.”

Under the Moon Jae-in administration, the Environment Ministry has been active in pushing for green energy policies.

In revising the greenhouse gas emission target, experts believe that the government could have done more to communicate with relevant industries and explain why it set the final target numbers and how it expects companies to meet them.

Companies have found it unfair that the government slapped a blanket reduction target on all industries, even though the capacity to reduce emissions varies wildly by sector.

They have been vocal in expressing their frustrations - even taking legal action. Out of the 525 companies that had been issued CER allowances between 2015 and 2017, 243 have submitted complaints regarding the unfair distribution between industries and other grievances.

Some 59 companies have filed administrative litigation against the Environment Ministry, although most have lost the lawsuit.

“Businesses are questioning the transparency of the ministry’s environment policies because the government has not explained its decision-making process behind allotting the CER allowances,” said Kang Youn-young, a professor of energy resources engineering at Seoul National University.

“As much as businesses developing renewable energy are contributing to reducing greenhouse gases, the government should grant them more CER allowances,” said Ahn Byung-heon, head of the Korea Research Institute on Climate Change. “This will bring in revenue for the industry, which they can use to grow businesses and further develop renewable technology.”

BY KIM DO-NYUN AND KIM MIN-JOONG [kim.eunjin1@joongang.co.kr]