Public corporations must lead in energy
The 2015 UN Climate Change Conference in Paris has concluded. The Paris Agreement is the first global agreement that applies to all 196 parties, unlike the Kyoto Protocol that required only developed countries meet greenhouse gas reduction goals.
With the new agreement, Korea is faced with a turning point in energy policy. In the Paris conference, the Korean government proposed a plan to reduce expected greenhouse gas emissions by 37 percent from business-as-usual levels by 2030. It is a challenge, with manufacturing making up a large part of Korea’s economy. But the government and companies should consider a low carbon policy as an opportunity for sustainable growth. President Park Geun-hye declared in Paris that Korea will create a 100 trillion won ($85 billion) market and 500,000 jobs with the new energy industry by 2030.
The fundamental causes of the economic slump and structural limits in industrial competitiveness are not external but rather, stems from failure to develop new industries. Korea needs to nurture new industries rather than defend existing ones. Major countries are already changing policies to focus on energy industries. The United States is increasing the portion of new renewable energy to 28 percent by 2030 and plans to supply one million electric vehicles by 2015. The United Nations is most aggressive in renewable energy, planning to invest 5 billion euros on renewable energy and electric vehicles, and to supply 4.7 million electric cars by 2020.
New energy industries will be key to creating new growth engines as Korea breaks through the climate change crisis. Government agencies, public corporations and private companies related to energy need to work together to build new industrial mechanisms and advance to overseas markets.
New energy industries require major early investment, and the investment won’t be recovered soon. Therefore, public corporations that can make long-term investments play a key role. Investment conditions have matured for the Korea Electric Power Corporation (Kepco) as its management is improving and the company has a surplus. It has been aggressively pursuing research and development, as well as the commercialization of smart grid, microgrid, electric car charging infrastructure, electricity storage devices and renewable energy businesses.
Kepco has exported a 13 billion won microgrid to Canada and was the first Korean company to participate in the Dubai smart city project. Energy industry exports are a golden opportunity for improving the Korean economy and energy industry. Public corporations need to pioneer new energy industries and lead Korea’s response to the global challenge of climate change.
by Kim Hee-jip,Professor at the Graduate School of Public Administration at Seoul National University