As the government presented a 2035 national greenhouse gas reduction target (NDC) of at least 50% or more from 2018 levels, concern is growing across industry. Major carbon-emitting sectors such as steel, cement, petrochemicals, and refining are pushing back, calling it an unachievable figure. The current goal is to cut emissions 40% by 2030.
The Ministry of Climate, Energy and Environment held a public hearing on the government's 2035 NDC plan on the 6th at the main conference hall of the National Assembly Members' Office Building. The ministry narrowed the 2035 target emissions plan to two options. Option 1 sets a reduction rate of 50% to 60% from 2018 levels, and Option 2 sets 53% to 60%. The NDC will be submitted to the United Nations next week after deliberation and approval by the presidential 2050 Carbon Neutrality and Green Growth Commission and the Cabinet.
The steel industry says the NDC was raised based on hydrogen direct reduced iron technology that has not yet been secured, arguing its feasibility is low. The NDC is expected to include a plan to cut at least 1.5 million tons of greenhouse gases through hydrogen direct reduced iron. Nam Jeong-im, Deputy Minister at the Korea Iron & Steel Association, said, "The commercialization timing of hydrogen direct reduced iron technology is 2037," and added, "The government should set targets in light of the timing of the technology's development and commercialization."
Concerns are also emerging in the power generation area, both private and public. The government plans to gradually raise the paid allocation ratio under the emissions trading system for the power generation sector from the current 10% to 50% by 2030. Currently, power generation companies purchase 10% of their carbon allowances (paid allocation) and receive 90% for free.
If the paid allocation ratio rises to 50%, generators' cost burden is expected to increase fivefold. The emissions allowance expense borne by East-West, Western, South-East, South, and Central Power is projected to rise from about 130 billion won a year now to as much as 660 billion won.
The semiconductor industry says a lack of infrastructure such as renewable energy makes it hard to meet the NDC within the deadline. The petrochemical industry remains in a slump due to oversupply from China, leaving little room to invest in large-scale eco-friendly facilities.
The auto and airline industries have also been put on alert by environmental regulations. The auto industry is pushing back, saying the government's target to supply 8.4 million to 9.8 million zero-emission vehicles by 2035 (30% to 35% of all cars) is effectively the phaseout of internal combustion vehicles. The Korea Automobile & Mobility Association, together with the Korea Automobile Manufacturers Association and the Korean Metal Workers' Union Federation, issued a joint request to the government, saying, "There are concerns about serious side effects such as large-scale job losses."
The airline industry is on edge over the government's mandate, made official in September, to introduce sustainable aviation fuel (SAF). SAF is fuel made from feedstocks such as used cooking oil and municipal waste. It is eco-friendly but 2.5 times more expensive than conventional jet fuel. Last year, Korean Air spent 4.58 trillion won on fuel, and Asiana Airlines spent 2.22 trillion won.
Starting in 2027, the government plans to require that SAF be blended at a minimum of 1% for flights departing Korea and to expand that to 10% by 2035. Korean Air estimated up to 68.7 billion won in additional expense, and Asiana Airlines projected 33 billion won. The costs are likely to be passed on to airfares.
A business community official said, "We asked that realistic reduction capacity and industrial competitiveness be considered, but none of it was reflected," and added, "I don't know if the president's promise that corporations are the center of economic growth was sincere."