메뉴 바로가기 본문 바로가기

Energy Climate Policy Think Tank

Find the NEXT

NEXT group is an independent energy and
climate policy think tank contributing to Asia’s
net-zero energy transition.

SPOTLIGHT

Carbon Budget Database In order to limit global warming to 1.5°C, countries must submit its 2035 Nationally Determined Contribution(NDC) target to the United Nations by 2025. This database sets Korea’s 2035 NDC target based on the scientific emission allowance called the carbon budget and shows the emission reduction path to net-zero by 2050. A key feature of this database is its ability to present results derived from various methodologies and assumptions. It also aims to contribute to the international community’s efforts to address climate change by considering the feasibility of emission reduction targets. --> var divElement = document.getElementById('viz1741847964140'); var vizElement = divElement.getElementsByTagName('object')[0]; if (divElement.offsetWidth > 800) { vizElement.style.width = '1280px'; vizElement.style.height = '795px'; } else if (divElement.offsetWidth > 500) { vizElement.style.width = '1280px'; vizElement.style.height = '795px'; } else { vizElement.style.width = '100%'; vizElement.style.height = '1627px'; } var scriptElement = document.createElement('script'); scriptElement.src = 'https://public.tableau.com/javascripts/api/viz_v1.js'; vizElement.parentNode.insertBefore(scriptElement, vizElement); --> var divElement = document.getElementById("viz1741847964140"); var vizElement = divElement.getElementsByTagName("object")[0]; vizElement.style.width = "1280px"; vizElement.style.height = "795px"; var scriptElement = document.createElement("script"); scriptElement.src = "https://public.tableau.com/javascripts/api/viz_v1.js"; vizElement.parentNode.insertBefore(scriptElement, vizElement); --> document.addEventListener("DOMContentLoaded", function () { document.title = "NEXT group | Carbon Budget Database"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | Carbon Budget Database"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "In order to limit global warming to 1.5°C, countries must submit its 2035 Nationally Determined Contribution(NDC) target to the United Nations by 2025."); }); 2025.03.13
NEXT group has released 2024 annual report NEXT group has released its inaugural annual report, summarizing key activities and outcomes from 2024. NEXT group navigated 2024 with research that drives bold policy adoption through an insider approach and strategic engagement with multiple stakeholders. Significant progress was made in the following areas: Strengthening the 2035 Nationally Determined Contribution (NDC) target Facilitating discussions on coal phase-out Addressing challenges in offshore wind market development Accelerating decarbonization in the steel and petrochemical industries Building public support through strategic outreach NEXT group successfully collaborated with leading research institutions, civil society organizations, and philanthropic entities, including Agora Energiewende, the Greenhouse Gas Inventory and Research Center of Korea, the International Network of Energy Transition Think Tanks, the Korea Institute of Energy Technology, TARA, and U.S. National Laboratories. Looking ahead to 2025, NEXT group will refine its 2024 efforts by developing implementation strategies for coal phase-out, industrial decarbonization (steel and petrochemical sectors), and offshore wind supply chains. Additionally, the organization will expand its international engagement by establishing regional partnerships in ASEAN countries and disseminating its proprietary OPEN-Model with regional partners. --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | NEXT group has released 2024 annual report"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | NEXT group has released 2024 annual report"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "NEXT group has released 2024 annual report, summarizing key activities and outcomes from 2024."); }); 2025.03.12
Offshore grid governance: a prerequisite for timely offshore wind deployment South Korea, which is still in the early stages of offshore wind power deployment, has yet to establish a clear offshore grid governance system. This issue brief examines the current situation in Korea and international case studies, emphasizing the need for Korea to establish a well-defined offshore grid governance framework. --> HIGHLIGHTS : The expansion of offshore wind power is increasing the importance of offshore grids in transmitting power to land. However, Korea lacks clear offshore grid governance, complicating efficient design and operation. The main models of offshore grid governance include transmission system operator (TSO)-led, generator-led, and third-party (OFTO)-led models, which differ in terms of who builds the grid, who pays for it, and how efficient it is. The UK emphasizes competition through an OFTO-led model, while Germany and Denmark have adopted a TSO-led model to realize economies of scale. South Korea needs to improve the cost burden structure of offshore grids and proactively establish a clear governance system to support the introduction of meshed offshore grids and their efficient deployment. --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | Offshore grid governance: a prerequisite for timely offshore wind deployment"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | Offshore grid governance: a prerequisite for timely offshore wind deployment"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "South Korea, which is still in the early stages of offshore wind power deployment, has yet to establish a clear offshore grid governance system. This issue brief examines the current situation in Korea and international case studies, emphasizing the need for Korea to establish a well-defined offshore grid governance framework."); }); 2025.03.10
Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions This Issue Brief points out the shortcomings of the policy to raise the competitiveness of the country’s petrochemical industry announced by the government on December 23, 2024, and suggests directions for improvement. 주요 내용 --> On December 23, 2024, the Ministry of Trade, Industry and Energy (MOTIE) of South Korea announced a policy to raise the competitiveness of the country’s petrochemical industry. The announcement primarily envisions ① rationalizing surplus naphtha cracking facilities, ② strengthening the sector’s global competitiveness, and ③ transitioning to high-value-added specialty products and ecofriendly products. However, the policy seems to fall far short of rescuing the industry in several respects—its lukewarm restructuring plan, the focus of new investment support placed on merely keeping the sinking industry afloat, and the prolonged absence of effective research and development (R&D) plans. The operating rate of naphtha cracking facilities has slumped to around 70-percent range. If it is to rebound to 90 percent or above, one-third of the current naphtha cracking facilities must be retired by 2030. With the looming risk of missing the golden hour for restructuring the industry while business conditions rapidly deteriorate, the Fair Trade Act needs to loosen its grip to facilitate M&A, government-led big deals. The government, hand in hand with the Daesan Industrial Complex, is contemplating the construction of an ethane terminal and an ethane cracker. However, a colossal investment against the global race to carbon neutrality portends high risk, especially given the uncertainty surrounding South Korea’s price advantages over China and the Middle East. There has been almost no discussion of key technologies required for transitioning the petrochemical industry. The petrochemical industry’s 2025-2030 R&D investment roadmap, slated to be released in the first half of 2025, must prioritize decarbonization technologies such as electrically heated furnaces, methane pyrolysis-driven hydrogen production, and heat pumps. Keeping the industry afloat as it is not the answer. There is no time to lose. South Korea’s petrochemical sector must be frogmarched through transformation, even if the hour is already late. The government is urged to take decisive action with a clear vision. ※ 관련 보고서 --> * This Issue Brief can be better understood in depth when read alongside A Net Zero Roadmap for South Korea’s Petrochemical Industry>, published in November 2024. --> --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "This Issue Brief points out the shortcomings of the policy to raise the competitiveness of the country’s petrochemical industry announced by the government on December 23, 2024, and suggests directions for improvement. "); }); 2025.03.06
A Net Zero Roadmap for South Korea's Petrochemical Industry Climate-related trade regulation and global supply gluts are the two major challenges facing South Korea’s petrochemical industry. Climate regulations are becoming intertwined with national trade policies across the globe, making carbon emissions management essential to corporate survival and competitiveness. The European Union’s Carbon Border Adjustment Mechanism (EU CBAM), as well as the US’s Clean Competition Act (CCA) and Foreign Pollution Free Act (FPFA), are spearheading the rush of slapping carbon costs on carbon-intensive products. Government-led expansions in China’s petrochemical industry are stifling South Korea’s petrochemical exports to its massive neighbor, and oil-rich Middle Eastern countries are flurrying into this overcrowded industry, fueling the global oversupply. While capacity expansions in China and the Middle East are squeezing South Korean petrochemical manufacturers, forcing them to scramble for increasingly elusive profits, the planned introduction of thermal-crude-to-chemicals (TC2C™) by S-Oil is expected to trigger a realignment of the competitive landscape in the South Korean market. Since 2022, South Korean players have been underperforming. The picture was no different in the first half of 2024.  Exacerbation of supply-demand imbalances and high-flying oil prices are weighing heavily on South Korean petrochemical producers. Notably, those with portfolios dominated by commodity products are floundering deep in the red. Credit rating agencies are downgrading one petrochemical chemical corporation after another, piling additional financial pressure onto them. Restructuring and diversification are called on to turn the tide. Without swift and decisive restructuring momentum in South Korea’s petrochemical industry, the plague of financial difficulties could worsen further, particularly for weaker players. With corporate treasuries draining, the sector may lose financial resources for investing in decarbonization technologies, risking a downward spiral of eroding mid- to long-term global competitiveness and threatening its sustainability. In recent years, upstream-focused portfolios have been taking a heavy toll on their owners, and some companies have turned to asset-light strategies and restructuring to mitigate the risks. Plant assets do not appear to be easy sells, though. South Korea’s petrochemical industry must proactively shift its strategies towards specialties with particular focus on high-value-added products and ecofriendly products. High-performance plastics may reward South Korea with high profitability and a competitive edge over China in the global market, if the country fully leverages its technological advantages. Bioplastics and recycled plastic materials will serve as stepping stones to a circular economy, sharpening competitiveness in the global decarbonization race. Decarbonization technologies must be actively adopted to reduce the carbon intensity of products. To ensure minimal regulation costs and long-term competitiveness in the midst of the shifting international trade dynamics, companies must adapt by introducing ecofriendly production methods. The petrochemical industry—a well-known heavy emitter of greenhouse gases (GHGs)—is expected to see a yawning gap in product differentiation, depending on corporate investment in carbon emission reduction technologies.  A vast share of GHG emissions from the petrochemical industry occurs in the course of producing basic feedstocks, especially the naphtha cracking process, which generates more than 70 percent of total GHG emissions from the sector. This requires zeroing in on the decarbonization of the naphtha cracking process.  Fuel Substitution Strategy for Petrochemical Decarbonization: Byproduct Methane-Based Hydrogen Production and Electrification  South Korea’s petrochemical industry can resort to a two-pronged fossil fuel substitution strategy: byproduct methane-based hydrogen production and electrification of its industrial complexes through the introduction of electric heating furnaces (e-furnaces) and heat pumps, and other advanced equipment. Byproduct methane and natural gas should be replaced by hydrogen and renewable electricity as fuels for naphtha cracking, and conventional fuel-powered boilers for steam production equipment used across-the-board in a petrochemical complex can be replaced by heat pumps powered by renewable electricity. BASF, the German based petrochemical giant, is currently piloting methane pyrolysis-driven hydrogen production and e-furnaces, with the aim of commercializing them by 2030. From 2030 onwards, commercial-scale fuel substitution facilities are expected to be ready technologically for petrochemical complexes in South Korea. In the case of heat pumps, their more affordable capital investment costs suggest a possibility of commercial operation even before 2030. However, challenges in securing renewable power, high operational costs, and other practical constraints necessitate robust institutional and financial support from the government. Feedstock Substitution Strategy for Petrochemical Decarbonization: Greater Use of Bio- Naphtha and E-Methanol and Pyrolysis Oil  Approximately 60% of the emissions generated throughout the lifecycle of petrochemical products can be attributed to the production of naphtha and the incineration of petrochemical waste.   Discussions on the decarbonization of the sector would be incomplete without giving due attention to ways to curtail emissions from the first and last stages of petrochemical product lifecycles. Hence feedstock substitution strategies are quintessential. Feasible alternative feedstocks include bio-naphtha (derived from biomass) and e-methanol (produced by combining hydrogen and carbon dioxide captured from petrochemical processes through carbon capture, utilization, and storage (CCUS) technology). Mechanical recycling (also known as physical recycling) can not only reduce naphtha consumption; it can also boost the share of recycled raw materials, along with chemical recycling, such as producing pyrolysis oil from used plastics. Feedstock substitution must overcome two major obstacles—R&D for technology advancement and procurement of resources such as biomass and hydrogen. A Net-Zero Roadmap for South Korea’s Petrochemical Industry: Sharpening Competitiveness and Supporting the 1.5°C Goal This report maps two pathways leading South Korea’s petrochemical industry towards the goal of carbon neutrality. In the Base Scenario, current naphtha cracking facilities remain unchanged into 2035 when companies eventually decide to shut down their naphtha crackers, whereas the more proactive Restructuring Scenario posits that about one-third of the current naphtha cracking facilities will undergo restructuring, accompanied by the minimization of commodity products in product portfolios. The two scenarios, however, share common propositions regarding production projections for basic petrochemical feedstocks and the adoption timelines for decarbonization technologies. Both scenarios cover Scope 1 emissions exclusively. In the short run, as international oversupply will hit basic petrochemical production in South Korea, emissions will drop sharply, and from 2030 onwards, emissions will fall further, with the introduction of byproduct methane-based hydrogen production and e-furnaces. Starting in 2035, the adoption of clean feedstocks such as bio-naphtha and e-methanol will bring down the input of traditionally produced naphtha. All these, in combination, will pull down total emissions from the petrochemical industry to 7.6 million tCO2 by 2050. This represents a reduction of more than 85 percent from 2021 levels. In the Base Scenario, the emissions reduction trajectory progresses at a gradual pace until 2040—dropping from 27.8 million tCO  in 2030 to 22.7 million tCO  in 2035. On the other hand, the Restructuring Scenario  follows a steeper trajectory, accelerated by the simultaneous adoption of decarbonization technologies and restructuring in 2030. The cumulative emissions gap from 2030 to 2040 between the two scenarios amounts to about 60 million tCO2, which exceeds annual total emissions from the petrochemical industry today. Between 2040 and 2050, these two scenarios converge on the same emissions trajectory as the implementation of decarbonization technologies is scaled up progressively. Increased production of alternative feedstocks reduces dependence on fossil fuels, enabling the petrochemical industry to target 7.6 million tCO2 by 2050, a reduction of more than 85 percent from 2021 levels. Lagging in commercializing decarbonization technologies, the sector’s net emissions will linger in positive territory but will eventually converge on net zero as the share of clean raw materials increases. Electricity will progressively replace fossil fuels, representing 40 percent of total fuel input by 2050. With the advent of heat pumps and e-furnaces, electricity begins to oust petroleum, coal, and gas. However, the scale of electrification will grow only gradually due to the high CAPEX and limited technological readiness. By 2030, electricity is expected to account for 20 percent of the petrochemical industry’s fuel input in terms of calorific value, with the proportion rising to 36 percent by 2040 and 40 percent by 2050. Clean feedstocks replacing crude oil-based naphtha will gain ground at a gradual pace, representing five percent of total naphtha input by 2030 and reaching 56 percent by 2050. Traditionally produced naphtha is expected to resist rapid replacement because technologies to replace it with cleaner alternatives are still under development and because the initiative relies on resources that are scarce domestically such as biomass and green hydrogen. A meager five percent of crude oil-based naphtha will be replaced by bio-naphtha, e-methanol, and pyrolysis naphtha, and this ratio will rise gradually to 22 percent by 2040 and 56 percent by 2050. The primary drivers of petrochemical decarbonization are byproduct methane-based hydrogen and electrification. Until 2050, fuel substitution involving primarily hydrogen and electrification will be the most conspicuous driver of emissions reductions in South Korea’s petrochemical industry. Hydrogen will replace byproduct methane and electrification will replace fossil fuel, both resulting in fewer emissions. Production of methane- based hydrogen and electrification will be feasible within one or two years, and these decarbonization strategies will play a critical role in steadily reducing emissions from 2025 to 2050. Decreased output volumes from naphtha cracking operations, driven by the streamlining of naphtha cracking facilities and the increasing share of recycled raw materials, will also contribute to the gradual reduction in emissions from the present till 2050. The emissions reduction impact of clean and recycled feedstocks will be rather limited. However, CCUS technology will play a significant role as it will handle emissions from the treatment of residual naphtha, capturing 9 million tCO2 annually. 2025.02.19

Latest Publications

See more publications
Reports NEXT group has released 2024 annual report NEXT group has released its inaugural annual report, summarizing key activities and outcomes from 2024. NEXT group navigated 2024 with research that drives bold policy adoption through an insider approach and strategic engagement with multiple stakeholders. Significant progress was made in the following areas: Strengthening the 2035 Nationally Determined Contribution (NDC) target Facilitating discussions on coal phase-out Addressing challenges in offshore wind market development Accelerating decarbonization in the steel and petrochemical industries Building public support through strategic outreach NEXT group successfully collaborated with leading research institutions, civil society organizations, and philanthropic entities, including Agora Energiewende, the Greenhouse Gas Inventory and Research Center of Korea, the International Network of Energy Transition Think Tanks, the Korea Institute of Energy Technology, TARA, and U.S. National Laboratories. Looking ahead to 2025, NEXT group will refine its 2024 efforts by developing implementation strategies for coal phase-out, industrial decarbonization (steel and petrochemical sectors), and offshore wind supply chains. Additionally, the organization will expand its international engagement by establishing regional partnerships in ASEAN countries and disseminating its proprietary OPEN-Model with regional partners. --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | NEXT group has released 2024 annual report"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | NEXT group has released 2024 annual report"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "NEXT group has released 2024 annual report, summarizing key activities and outcomes from 2024."); }); 2025.03.12 / NEXT group
Issue Briefs Offshore grid governance: a prerequisite for timely offshore wind deployment South Korea, which is still in the early stages of offshore wind power deployment, has yet to establish a clear offshore grid governance system. This issue brief examines the current situation in Korea and international case studies, emphasizing the need for Korea to establish a well-defined offshore grid governance framework. --> HIGHLIGHTS : The expansion of offshore wind power is increasing the importance of offshore grids in transmitting power to land. However, Korea lacks clear offshore grid governance, complicating efficient design and operation. The main models of offshore grid governance include transmission system operator (TSO)-led, generator-led, and third-party (OFTO)-led models, which differ in terms of who builds the grid, who pays for it, and how efficient it is. The UK emphasizes competition through an OFTO-led model, while Germany and Denmark have adopted a TSO-led model to realize economies of scale. South Korea needs to improve the cost burden structure of offshore grids and proactively establish a clear governance system to support the introduction of meshed offshore grids and their efficient deployment. --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | Offshore grid governance: a prerequisite for timely offshore wind deployment"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | Offshore grid governance: a prerequisite for timely offshore wind deployment"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "South Korea, which is still in the early stages of offshore wind power deployment, has yet to establish a clear offshore grid governance system. This issue brief examines the current situation in Korea and international case studies, emphasizing the need for Korea to establish a well-defined offshore grid governance framework."); }); 2025.03.10 / Yonghyun Song et al
Issue Briefs Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions This Issue Brief points out the shortcomings of the policy to raise the competitiveness of the country’s petrochemical industry announced by the government on December 23, 2024, and suggests directions for improvement. 주요 내용 --> On December 23, 2024, the Ministry of Trade, Industry and Energy (MOTIE) of South Korea announced a policy to raise the competitiveness of the country’s petrochemical industry. The announcement primarily envisions ① rationalizing surplus naphtha cracking facilities, ② strengthening the sector’s global competitiveness, and ③ transitioning to high-value-added specialty products and ecofriendly products. However, the policy seems to fall far short of rescuing the industry in several respects—its lukewarm restructuring plan, the focus of new investment support placed on merely keeping the sinking industry afloat, and the prolonged absence of effective research and development (R&D) plans. The operating rate of naphtha cracking facilities has slumped to around 70-percent range. If it is to rebound to 90 percent or above, one-third of the current naphtha cracking facilities must be retired by 2030. With the looming risk of missing the golden hour for restructuring the industry while business conditions rapidly deteriorate, the Fair Trade Act needs to loosen its grip to facilitate M&A, government-led big deals. The government, hand in hand with the Daesan Industrial Complex, is contemplating the construction of an ethane terminal and an ethane cracker. However, a colossal investment against the global race to carbon neutrality portends high risk, especially given the uncertainty surrounding South Korea’s price advantages over China and the Middle East. There has been almost no discussion of key technologies required for transitioning the petrochemical industry. The petrochemical industry’s 2025-2030 R&D investment roadmap, slated to be released in the first half of 2025, must prioritize decarbonization technologies such as electrically heated furnaces, methane pyrolysis-driven hydrogen production, and heat pumps. Keeping the industry afloat as it is not the answer. There is no time to lose. South Korea’s petrochemical sector must be frogmarched through transformation, even if the hour is already late. The government is urged to take decisive action with a clear vision. ※ 관련 보고서 --> * This Issue Brief can be better understood in depth when read alongside A Net Zero Roadmap for South Korea’s Petrochemical Industry>, published in November 2024. --> --> document.addEventListener("DOMContentLoaded", function() { document.title = "NEXT group | Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions"; document.querySelector('meta[property="og:title"]').setAttribute("content", "NEXT group | Myopic Government Policy for Petchem in Peril: Shortcomings and Solutions"); let metaDescription = document.querySelector('meta[name="description"]'); if (!metaDescription) { metaDescription = document.createElement("meta"); metaDescription.name = "description"; document.head.appendChild(metaDescription); } metaDescription.setAttribute("content", "This Issue Brief points out the shortcomings of the policy to raise the competitiveness of the country’s petrochemical industry announced by the government on December 23, 2024, and suggests directions for improvement. "); }); 2025.03.06 / Sugang Kim
Reports A Net Zero Roadmap for South Korea's Petrochemical Industry Climate-related trade regulation and global supply gluts are the two major challenges facing South Korea’s petrochemical industry. Climate regulations are becoming intertwined with national trade policies across the globe, making carbon emissions management essential to corporate survival and competitiveness. The European Union’s Carbon Border Adjustment Mechanism (EU CBAM), as well as the US’s Clean Competition Act (CCA) and Foreign Pollution Free Act (FPFA), are spearheading the rush of slapping carbon costs on carbon-intensive products. Government-led expansions in China’s petrochemical industry are stifling South Korea’s petrochemical exports to its massive neighbor, and oil-rich Middle Eastern countries are flurrying into this overcrowded industry, fueling the global oversupply. While capacity expansions in China and the Middle East are squeezing South Korean petrochemical manufacturers, forcing them to scramble for increasingly elusive profits, the planned introduction of thermal-crude-to-chemicals (TC2C™) by S-Oil is expected to trigger a realignment of the competitive landscape in the South Korean market. Since 2022, South Korean players have been underperforming. The picture was no different in the first half of 2024.  Exacerbation of supply-demand imbalances and high-flying oil prices are weighing heavily on South Korean petrochemical producers. Notably, those with portfolios dominated by commodity products are floundering deep in the red. Credit rating agencies are downgrading one petrochemical chemical corporation after another, piling additional financial pressure onto them. Restructuring and diversification are called on to turn the tide. Without swift and decisive restructuring momentum in South Korea’s petrochemical industry, the plague of financial difficulties could worsen further, particularly for weaker players. With corporate treasuries draining, the sector may lose financial resources for investing in decarbonization technologies, risking a downward spiral of eroding mid- to long-term global competitiveness and threatening its sustainability. In recent years, upstream-focused portfolios have been taking a heavy toll on their owners, and some companies have turned to asset-light strategies and restructuring to mitigate the risks. Plant assets do not appear to be easy sells, though. South Korea’s petrochemical industry must proactively shift its strategies towards specialties with particular focus on high-value-added products and ecofriendly products. High-performance plastics may reward South Korea with high profitability and a competitive edge over China in the global market, if the country fully leverages its technological advantages. Bioplastics and recycled plastic materials will serve as stepping stones to a circular economy, sharpening competitiveness in the global decarbonization race. Decarbonization technologies must be actively adopted to reduce the carbon intensity of products. To ensure minimal regulation costs and long-term competitiveness in the midst of the shifting international trade dynamics, companies must adapt by introducing ecofriendly production methods. The petrochemical industry—a well-known heavy emitter of greenhouse gases (GHGs)—is expected to see a yawning gap in product differentiation, depending on corporate investment in carbon emission reduction technologies.  A vast share of GHG emissions from the petrochemical industry occurs in the course of producing basic feedstocks, especially the naphtha cracking process, which generates more than 70 percent of total GHG emissions from the sector. This requires zeroing in on the decarbonization of the naphtha cracking process.  Fuel Substitution Strategy for Petrochemical Decarbonization: Byproduct Methane-Based Hydrogen Production and Electrification  South Korea’s petrochemical industry can resort to a two-pronged fossil fuel substitution strategy: byproduct methane-based hydrogen production and electrification of its industrial complexes through the introduction of electric heating furnaces (e-furnaces) and heat pumps, and other advanced equipment. Byproduct methane and natural gas should be replaced by hydrogen and renewable electricity as fuels for naphtha cracking, and conventional fuel-powered boilers for steam production equipment used across-the-board in a petrochemical complex can be replaced by heat pumps powered by renewable electricity. BASF, the German based petrochemical giant, is currently piloting methane pyrolysis-driven hydrogen production and e-furnaces, with the aim of commercializing them by 2030. From 2030 onwards, commercial-scale fuel substitution facilities are expected to be ready technologically for petrochemical complexes in South Korea. In the case of heat pumps, their more affordable capital investment costs suggest a possibility of commercial operation even before 2030. However, challenges in securing renewable power, high operational costs, and other practical constraints necessitate robust institutional and financial support from the government. Feedstock Substitution Strategy for Petrochemical Decarbonization: Greater Use of Bio- Naphtha and E-Methanol and Pyrolysis Oil  Approximately 60% of the emissions generated throughout the lifecycle of petrochemical products can be attributed to the production of naphtha and the incineration of petrochemical waste.   Discussions on the decarbonization of the sector would be incomplete without giving due attention to ways to curtail emissions from the first and last stages of petrochemical product lifecycles. Hence feedstock substitution strategies are quintessential. Feasible alternative feedstocks include bio-naphtha (derived from biomass) and e-methanol (produced by combining hydrogen and carbon dioxide captured from petrochemical processes through carbon capture, utilization, and storage (CCUS) technology). Mechanical recycling (also known as physical recycling) can not only reduce naphtha consumption; it can also boost the share of recycled raw materials, along with chemical recycling, such as producing pyrolysis oil from used plastics. Feedstock substitution must overcome two major obstacles—R&D for technology advancement and procurement of resources such as biomass and hydrogen. A Net-Zero Roadmap for South Korea’s Petrochemical Industry: Sharpening Competitiveness and Supporting the 1.5°C Goal This report maps two pathways leading South Korea’s petrochemical industry towards the goal of carbon neutrality. In the Base Scenario, current naphtha cracking facilities remain unchanged into 2035 when companies eventually decide to shut down their naphtha crackers, whereas the more proactive Restructuring Scenario posits that about one-third of the current naphtha cracking facilities will undergo restructuring, accompanied by the minimization of commodity products in product portfolios. The two scenarios, however, share common propositions regarding production projections for basic petrochemical feedstocks and the adoption timelines for decarbonization technologies. Both scenarios cover Scope 1 emissions exclusively. In the short run, as international oversupply will hit basic petrochemical production in South Korea, emissions will drop sharply, and from 2030 onwards, emissions will fall further, with the introduction of byproduct methane-based hydrogen production and e-furnaces. Starting in 2035, the adoption of clean feedstocks such as bio-naphtha and e-methanol will bring down the input of traditionally produced naphtha. All these, in combination, will pull down total emissions from the petrochemical industry to 7.6 million tCO2 by 2050. This represents a reduction of more than 85 percent from 2021 levels. In the Base Scenario, the emissions reduction trajectory progresses at a gradual pace until 2040—dropping from 27.8 million tCO  in 2030 to 22.7 million tCO  in 2035. On the other hand, the Restructuring Scenario  follows a steeper trajectory, accelerated by the simultaneous adoption of decarbonization technologies and restructuring in 2030. The cumulative emissions gap from 2030 to 2040 between the two scenarios amounts to about 60 million tCO2, which exceeds annual total emissions from the petrochemical industry today. Between 2040 and 2050, these two scenarios converge on the same emissions trajectory as the implementation of decarbonization technologies is scaled up progressively. Increased production of alternative feedstocks reduces dependence on fossil fuels, enabling the petrochemical industry to target 7.6 million tCO2 by 2050, a reduction of more than 85 percent from 2021 levels. Lagging in commercializing decarbonization technologies, the sector’s net emissions will linger in positive territory but will eventually converge on net zero as the share of clean raw materials increases. Electricity will progressively replace fossil fuels, representing 40 percent of total fuel input by 2050. With the advent of heat pumps and e-furnaces, electricity begins to oust petroleum, coal, and gas. However, the scale of electrification will grow only gradually due to the high CAPEX and limited technological readiness. By 2030, electricity is expected to account for 20 percent of the petrochemical industry’s fuel input in terms of calorific value, with the proportion rising to 36 percent by 2040 and 40 percent by 2050. Clean feedstocks replacing crude oil-based naphtha will gain ground at a gradual pace, representing five percent of total naphtha input by 2030 and reaching 56 percent by 2050. Traditionally produced naphtha is expected to resist rapid replacement because technologies to replace it with cleaner alternatives are still under development and because the initiative relies on resources that are scarce domestically such as biomass and green hydrogen. A meager five percent of crude oil-based naphtha will be replaced by bio-naphtha, e-methanol, and pyrolysis naphtha, and this ratio will rise gradually to 22 percent by 2040 and 56 percent by 2050. The primary drivers of petrochemical decarbonization are byproduct methane-based hydrogen and electrification. Until 2050, fuel substitution involving primarily hydrogen and electrification will be the most conspicuous driver of emissions reductions in South Korea’s petrochemical industry. Hydrogen will replace byproduct methane and electrification will replace fossil fuel, both resulting in fewer emissions. Production of methane- based hydrogen and electrification will be feasible within one or two years, and these decarbonization strategies will play a critical role in steadily reducing emissions from 2025 to 2050. Decreased output volumes from naphtha cracking operations, driven by the streamlining of naphtha cracking facilities and the increasing share of recycled raw materials, will also contribute to the gradual reduction in emissions from the present till 2050. The emissions reduction impact of clean and recycled feedstocks will be rather limited. However, CCUS technology will play a significant role as it will handle emissions from the treatment of residual naphtha, capturing 9 million tCO2 annually. 2025.02.19 / Sugang Kim et al

1:1문의하기

이메일 (필수)
제목 (필수)
내용(필수)
Q&A 등록
이용약관

개인정보보호법에 따라 회원가입 신청하시는 분께 수집하는 개인정보의 항목, 개인정보의 수집 및 이용목적, 개인정보의 보유 및 이용기간, 동의 거부권 및 동의 거부 시 불이익에 관한 사항을 안내 드리오니 자세히 읽은 후 동의하여 주시기 바랍 니다. 1. 수집하는 개인정보 이용자는 회원가입을 하지 않아도 정보 검색, 뉴스 보기 등 대부분의 Next group 동의 거부권 및 동의 거부 시 불이익 에 관한 사항을 안내 드리오니 자세히 읽은 후 동의하여 주시기 바랍니다. 개인정보보호법에 따라 회원가입 신청하시는 분께 수집하는 개인정보의 항목, 개인정보의 수집 및 이용목적, 개인정보의 개인정보보호법에 따라 회원가입 신청하시는 분께 수집하는 개인정보의 항목, 개인정보의 수집 및 이용목적, 개인정보의 보유 및 이용기간, 동의 거부권 및 동의 거부 시 불이익에 관한 사항을 안내 드리오니 자세히 읽은 후 동의하여 주시기 바랍 니다. 1. 수집하는 개인정보 이용자는 회원가입을 하지 않아도 정보 검색, 뉴스 보기 등 대부분의 Next group 동의 거부권 및 동의 거부 시 불이익 에 관한 사항을 안내 드리오니 자세히 읽은 후 동의하여 주시기 바랍니다. 개인정보보호법에 따라 회원가입 신청하시는 분께 수집하는 개인정보의 항목, 개인정보의 수집 및 이용목적, 개인정보의