Daesung chair addresses the hoopla and presents vision
This year, the world seems to be slowly recovering from the unprecedented global pandemic. At the same time, the global energy industry landscape is shifting quickly, with countries phasing out fossil fuels, affecting every industry.
Younghoon David Kim, Daesung Group chairman, said we are currently in a major energy transition, where the next-generation industrial revolution is in progress.
Chairman Kim is a major figure in the global energy industry as not only the World Energy Council honorary chairman but also a member of the President’s National Council on Climate Change and Air Quality headed by former United Nations Secretary General Ban Ki-moon.
“Decarbonization, decentralization and digitalization is currently in progress,” Kim said. “Because [energy] innovation is happening at a rapid pace, the next industrial revolution will be much more dramatic than the first two.”
In December 2020 Kim became the recipient of the Silver Tower Order of Industrial Service Merit — the highest accolade given by the government to a Korean energy company.
Not only was his contribution in raising Korea’s reputation in the international community acknowledged but his work in pioneering renewable energy was also noted.
Kim began his involvement with the World Energy Council (WEC) when he became WEC’s regional vice chair for Asia Pacific and South Asia in 2005 and subsequently served as the organization’s chair between 2016 and 2019. The World Energy Council is the world’s largest non-governmental energy organization.
Daesung Group was founded by Kim’s father, Kim Soo-keon, and started off manufacturing briquettes. The company later expanded its businesses to include coal mining, LPG, petroleum, natural gas and renewable energy.
Kim is the third son of the founder and now runs Daesung Holdings, Daesung Energy, Daesung Eco-Energy and Daesung Private Equity. Daesung also is the sole operator of Skype in Korea.
Kim earned a law degree from Seoul National University, a master's in comparative law and business administration from the University of Michigan as well as a master's in theology from Harvard Divinity School.
Since 2004, he has been attending the World Economic Forum in Davos, Switzerland every year meeting with global leaders and scholars.
He said the World Economic Forum’s theme this year is “The Great Reset.”
Kim met with the Korea JoongAng Daily recently at his office in central Seoul.
The following are excerpts from the interview with Kim.
Q. Can you share your thoughts on the Silver Tower Order of Industrial Service Merit awarded to you recently?
A. I am glad that they recognized such efforts, especially by the private sector. Our energy industry has long been led by the public sector, including state-owned Korea Electric Power Corporation.
Although little by little, the energy sector is being privatized, the overarching energy policy is driven by the government.
However, in major countries such as Europe and the United States, energy is strictly a private sector endeavor.
There’s a strong perception [in Korea] that the energy sector should be strictly controlled by the public sector.
Preparing for the World Energy Congress [in Daegu in 2013] wasn’t an easy task, especially for us, a medium-sized private company.
Yet, the government acknowledging our efforts shows that the private sector could play a central role in the energy sector.
Q. What major shifts are we seeing in the energy sector in recent years?
A. We are currently at a time where a grand transition is happening in all stages from production to distribution and consumption. We will soon feel that impact. Energy has played a significant role.
Innovation in the energy sector has always led to industrial revolutions.
The first started with James Watt improving the efficiency of a steam engine, while the second industrial revolution kicked off with Nicola Tesla’s alternating current.
The first industrial revolution was a grand transition in production. It was solving a problem of how to convert energy into power. The second was a transition on distribution. It was on how far electricity could be sent.
Today we’re in a transition where decarbonization is happening in production, driven by global warming, decentralization in energy distribution and digitalization in consumption.
Until now, energy has been distributed through a centralized system where a major power plant is built in a remote area.
Today, however, we have solar panels and wind farms that can be set up anywhere including in the middle of a city. There’s no centralized control.
This decentralization improves energy by efficiency as energy will no longer be lost as it does not have to travel from a power plant located in a remote area.
Consumption-wise, energy digitalization is happening. Thanks to internal computer chips, every home appliance now has a higher energy efficiency.
As such, with innovation in the energy sector, a major industrial revolution is underway.
Q. Is renewable energy the energy innovation that would bring about massive changes?
A. Many are talking about renewable energy. However, if you take out hydropower and biomass, renewable energy only accounts for less than 10 percent of the global energy mix.
The reason, despite the huge hoopla, is because the quality of renewable energy is exceptionally low.
The quality is low because the energy production drops to zero when snow covers the solar panels and at night when the sun sets. And wind doesn’t blow every day. The weather makes production unreliable.
If renewable energy accounts for 50 percent of the global mix, the entire infrastructure could collapse because of its low reliability.
The solution to this problem is a major energy storage system.
Energy storage systems are everything from the batteries that are used on electronic watches to laptops.
We have reached the point of developing a lithium battery for electric vehicles (EV).
However, global electricity demand is massive.
We need an energy storage system that is on a massive scale that could power all industries nationwide.
People believe that we are prepared. But that’s a delusion.
I haven’t seen a company or a country that has succeeded in such large utility-scale storage.
And it is not an easy task. If you look at lithium batteries for EVs alone, they even have problems like catching fire.
Although everyone agrees that the future is oriented toward renewable energy, if we just take a step back, there’s a serious problem.
Q. What are your thoughts on nuclear energy, which is also a clean energy?
A. I believe nuclear energy will last for 100 years based on estimated uranium reserves.
However, 100 years flies by quickly.
We have to think about where the energy sector would go after 100 years.
Nuclear energy currently is relatively cheap, stable and clean. But what do we have afterwards? It’s a serious issue we need to think about.
While in our country there’s a hot debate on phasing out nuclear energy, I hope the discussion focuses on “post nuclear.”
What is there after nuclear energy? We have to set up plans on the post-nuclear era starting now.
Even if we want to build additional nuclear plants, we don’t have the land to do so. And even those that support nuclear power plants would be against it if it were to be built in their own backyard.
What we should talk about is how to maximize our nuclear technology that we currently have.
Currently there is a renewed interest in nuclear energy. It is being seen as a nuclear renaissance.
Countries that discontinued or were planning to phase out including Britain, Taiwan and Japan are again showing interest in nuclear energy.
There are about three countries that have capabilities over the entire lifecycle of a nuclear power plant, from designing to construction and management.
However, in the case of Russia, many still remember Chernobyl. Additionally, the political relationships between Russia and Western countries, including those in Europe and the United States, are not good.
China, while aggressive, is relatively new.
Korea, on the other hand, has received the highest safety recognition from both the United States and Europe.
Technology-wise, or even in its political relationship with other countries, it is in an advantageous position.
It is open season in the nuclear energy market.
If the government aggressively markets our strength in nuclear energy, we will be able to lead the market much like in smartphones and TV displays.
This could help us reshape the global order and possibly be induct into the G7.
With the lead in nuclear energy in the global market, we should take the opportunity in preparing for the post-nuclear era.
Pax Britannica happened because Britain was the center of the first industrial revolution. Pax Americana came about as the United States led the second industrial revolution through energy innovation.
Along these lines, I believe we could even hope for a Pax Koreana where Korea leads the global economy.
Q. Tesla is now growing at an alarming rate, including its stock prices. What impact will it have on the global energy market?
A. With more people driving EVs, there will be a huge demand for energy.
Many people think that these energies are generated from renewable energy.
But solar wind cannot cover 100 percent of the energy that is being used.
The energy that is generated comes from coal-powered plants, liquefied natural gas (LNG) plants and nuclear plants.
EVs will also be a huge opportunity for Korean companies.
The most important component in EVs is the battery, which we are leading in.
Even a toy car runs on a battery.
Q. Covid-19 has affected the world’s energy consumption. What are your thoughts?
A. One of my biggest concerns is the eventual surge in demand versus cuts that were made in infrastructure investment [due to Covid-19].
World petroleum consumption fell 8 percent last year.
The international crude price is currently stable, an indication that the Organization of the Petroleum Exporting Countries has made huge cuts.
What really worries me is the cut in investment. Infrastructure investment [in energy] dropped 18 percent [in 2020].
A surge in demand on absolute energy is inevitable with economic expansion. But if energy infrastructure fails to meet demands, energy prices will spike, which could lead to a major crisis.
In the past, there was a situation where crude prices doubled from $60 to 70 [per barrel] to $135. At the time, petroleum supply only fell 1 percent.
Q. You seem to have a huge interest in biotechnology as an energy source.
A. Yes. I see biotechnology development as the post-nuclear energy solution.
Until now, we have used dead microorganisms as energy whether it’d be coal or petroleum.
But such reserves are limited, and we can only depend on these fossil fuels for so long.
Instead, we should now be focusing on live microbes.
Our affiliate Daesung Eco-Energy has been operating a landfill heating gas for an apartment complex in Daegu that provides heat for 15,000 households.
All we do is cover the waste collected from all around Daegu with dirt and leave it for two to three years. And then we collect methane gas, which is used for heating.
The anaerobic bacteria floating in the air alive does its jobs on its own in creating methane gas.
Not only is this good for pollution but also for the economy.
Daesung Eco-Energy is one of our most profitable affiliates.
For one, it cuts logistical costs.
When bringing LNG, we first have to acquire the gas in foreign countries such as the United Arab Emirates, Qatar, Australia or Malaysia. The gas then has to be liquefied before being shipped to a port in Pyeongtaek [in Gyeonggi]. Then the gas is deliquified and distributed to homes via pipes.
In the case of the landfill, all we need to do is cover the waste with dirt and collect the gas.
Even when selling the gas to regional heating corporations for a value below the market price, we still make profit.
The next step is utilizing microorganisms that generate its own electricity.
One example is pouring such microbes into a tank full of water. The power that is produced from the tank is then used in powering home appliances.
The ultimate goal of ours is to develop technologies that will raise energy efficiency.
Q. You have also focused on environment issues overseas including reforestation in Mongolia.
A. I always thought it was obvious [to build hybrid solar and wind power system SolarWin]. The desertification in Mongolia is happening. The wind in [the Gobi Desert of] Mongolia is so strong that a special break has to be installed on the wind generators. And since there are no[dramatic] weather changes mixing solar and wind power, connecting it to an energy storage, seemed to be a solution.
Until recently, we’ve been involved in projects that supply power through solar, wind and hydro systems in other areas such as Bangladesh, Central Asia, Ethiopia and the Galápagos Islands.
Q. What is your business philosophy?
In the bible there is a saying, “A good name is more desirable than great riches.”
I believe the most profitable business model is working for the public’s good.
Business-wise, it's energy efficiency. Our entire enterprises will be focusing on efficiencies.
Energy efficiency is often referred to as the fifth fuel.
However, I believe that energy efficiency, in fact, is the first fuel.
BY PARK HYE-MIN, LEE HO-JEONG