Target damages competitiveness

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Target damages competitiveness

The government’s new carbon agenda announced last month with a higher reduction goal has drawn heavy protests from the corporate sector as well as opposition from environmentalists. Under the plan, Seoul will work to reduce 37 percent of estimated greenhouse gas emissions by 2030 - an increase from earlier proposals that included cuts between 14.7 and 31.3 percent. Industries complain that the new goal will damage their ability to compete, while environmentalists say the government is still falling short on its green agenda pledges.

The government on June 30 finalized its 2030 target of cutting greenhouse gas emissions by 37 percent from business-as-usual (BAU) levels. The proposal was higher than the earlier four scenarios on cuts - 14.7 percent, 19.2 percent, 25.7 percent or 31.3 percent from BAU levels.

In a statement, the government said it went beyond earlier reduction scenarios to demonstrate global responsibility and commitment to global climate control efforts. Despite the noble idea behind its motivation, it raises concern that the government chose to ignore public hearings on the four plans and suddenly came up with a unilateral plan.

The 37 percent reduction target, first of all, is beyond local capacity. In terms of accumulated carbon emissions from 1850, the United States contributed to 28 percent in global emissions, the European Union 25 percent, China 11 percent and Japan 4 percent. Korea contributed 1 percent. Because Korea was late to industrialize, its emissions have increased over the recent decades. Carbon emission in the future is also inevitable to keep up growth. Its reduction capacity, too, is limited.

The government proposes to scale down the power supply through the burning of fossil fuels through expansion in new renewable and nuclear energy. But new renewable energy could cost 1.6 times or 2.6 times more than traditional fossil fuel power plants. Despite government endeavors, the share of renewable energy edged up just 1.4 percentage points between 2003 and 2013, underscoring the difficulties in promoting renewable energy. Environmental groups also strongly resist increasing nuclear reactors, especially following the nuclear meltdown at Fukushima Daiichi. Over-eagerness without consideration of a myriad of practical problems for the country does not befit the purpose of the Intended Nationally Determined Contribution, which is a voluntary action plan to control carbon emissions by incorporating individual national conditions for universal design to combat global warming.

The burden from cutting emissions is overly heavy on local industry. The corporate sector has been eager to contribute to the national campaign toward climate control by achieving a 3.78 percent annual cut, beyond the government-set reduction cap of 1.41 percent since 2012. It also complied with the launch of the world’s second-largest carbon emissions market that imposes caps on emissions from 525 local companies. The domestic manufacturing sector maintains one of the world’s highest levels of efficiency. The energy efficiency rate in steelmaking exceeds that of the United States by 18 percent. The efficiency level in the petrochemical sector also is about 67 percent higher than in America.

Because higher energy efficiency levels can translate into less carbon emissions, Korean companies can be some of the world’s least carbon-emitting enterprises. It also means that they cannot further reduce. The government outline suggests that it takes the corporate endeavors for granted. Japan has not made a formal statement, but it plans to keep its reduction rate around 6.5 percent for industry while cutting down national emissions by 26 percent from 2013 levels. China said it will scale down emissions around 2030.

The government is repeating its past mistake. Its goal for after 2020 is no different from the previous reduction outline running up to 2020. In setting a 2020 goal, the government claimed that the burden on the industrial sector would be limited. But it stunned the industry by announcing the imposition of carbon credit. Forty-five companies in four industrial sectors have filed suits against the government for causing losses. And the government has yet again surprised the industry by setting a goal higher than the discussed range. At the same time, it lacks a specific action plan to meet the target.

The new goal also could end up doing the same. The government must come up with a plausible action plan to ease industry concerns. The government also should undo its wrongs by revising the credit-permit system to include more realistic and flexible terms to restore creditability to public policies.

Translation by the Korea JoongAng Daily staff

*The author is the head of the Industry Division at the Federation of Korean Industries.

by Yoo Hwan-ik
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