[Working paper] Heterogeneous public attitudes toward high-voltage power transmission lines and willingness to pay for undergrounding projects

DOI: 10.22982/NEXTWP.2022.9.1AbstractThe expansion and improvement of high-voltage power transmission lines (HV-PTL) are critical and unavoidable energy concerns, causing potential public conflict. However, to date, there have not been sufficient discussions on this topic in South Korea. In this study, we analyzed public attitude toward HV-PTL and classified people into four subgroups based on their common characteristics using latent class models. Furthermore, using the contingent valuation method (CVM), we estimated the public willingness to pay (WTP) for the conversion of overhead transmission lines to underground cables, focusing on the differences between the identified subgroups. According to empirical analysis, people in South Korea can be classified into four classes based on the perceived necessity for residents’ participation in the decision-making process, perceived health risk, and perceived property loss risk. This study contributes to the understanding of scholars and policymakers of the linkage between public attitudes toward HV-PTL and overhead-to-underground conversion.

[] Governments must be responsible for creating demands for yet costly low-carbon green products

[Issue Briefs] Revisiting Korean Green Public Procurement Policies to Promote Green Steel Demand

(Summary) Korea has been operating green public procurement policies (GPP) including the Mandatory Purchase of Green Products Program (MPG) of public institutions since 2005 and the Minimum Green Standard Product Purchase Program (MGS) since 2010, which have shown relatively successful outcomes in terms of the number of green products purchased. However, the measurement of the results is limited to procurement size (in financial terms), which does not provide information on other aspects of the environmental impact. Moreover, although projects to reduce industrial GHG emissions are becoming urgent, no study has been conducted on whether the public procurement policies in Korea significantly encourage the production of low-carbon steel in reality. Moreover, as stronger international regulations being imposed on traded products, a government must play a greater role in incentivizing the domestic industries to decarbonize and thereby maintain and strengthen their competitiveness. This brief aimed to analyze the effects of the current GPP programs in Korea on creating demand for low-carbon steel and to propose policy suggestions to enhance these effects. In addition, it proposes a new standard for low-carbon steel, which has not yet been defined clearly.※ The research was jointly conducted between NEXT Group and the Solutions for Our Climate. ※ The Policy Brief was updated on October 25, 2022, with new research methodologies.   - Revised pages: pp.18-20, pp.27-28.

[Reports] Costs of Climate Inaction of Emission-intensive Companies in Korea Series 2: Cement, Display, and Nonferrous Metal Industries

SummaryAs a follow-up project of Costs of Climate Inaction of Emission-intensive Companies in Korea, this report identified and analyzed the magnitude of estimated climate-related risks of three most emission-intensive companies in Korea from the cement, display and nonferrous metals industries. These industries form the very foundations of Korea's industrial sector but their climate risks have not been actively discussed so far. According to the report, their operating profits will get reduced by as much as 44.6% in 2030 (compared to 2021). In sum, the report gives policy guidance on how the industry sector and the government can effectively handle the increasing climate-related risks.  ContentsExecutive Summary I. Introduction: Climate-related risks are not just problems only for conglomerates II. Pathways through which Climate-related Risks Affect Financial Statements of a Company  III. Financial Impact of Climate-related Risks on Three Domestic Emission-intensive Companies in Korea 1. Methodology 2. Results of analysis by company   1) Cement lndustry – Ssangyong C&E   2) Display Industry – LG Display   3) Nonferrous Metals Industry – Korea ZincⅣ. Conclusion: Climate risk management is critical for financial stability   Appendix-1. Policy goals and regulations related to climate change in Korea and overseas   Appendix-2. Cost increases caused by climate-related regulations   Appendix-3. Strengthened K-ETS ScenarioReference 

[Issue Briefs] Carbon Pricing Methods

Highlights •  The carbon pricing method may vary depending on its purpose and use. Currently, there are three types of carbon pricing methods adopted by some countries and international financial institutions: "social cost of carbon" converting damages to be caused by 1 tCO2 of greenhouse gases into monetary value, "marginal abatement cost" to reduce additional 1 tCO2 of greenhouse gases, and "potential carbon price" to incentivize economic actors to reduce greenhouse gas emissions to Nationally Determined Contributions (NDC).•  The carbon price outlook for different scenarios published by the Network for Greening the Financial System (NGFS) in 2021 provides the shadow price of carbon as a normative carbon price to be set to achieve reduction goals, which is referenced by many research institutes and financial institutions in Korea and abroad.•  The U.S., UK, and French governments define their carbon prices, taking into account their unique greenhouse gas reduction goals, reduction technology levels, and climate change damages, and reflect the prices in cost-benefit analysis when introducing public projects or policies.•  While the function of carbon pricing is expected to be reinforced to enhance the Korean economy's resilience to respond to climate change, it is time to examine carbon prices that reflect the level of Korea’s reduction technologies and the uniqueness of policy goals.

[] On why carbon neutrality policy that induces corporates' innovation for decarbonization is needed

[Issue Briefs] A Proposed Amendment to the Hydrogen Economy Promotion and Hydrogen Safety Management Act, the First Step towards Boosting the Clean Hydrogen Economy

Highlights  1.  Definition of clean hydrogen (Article 2.10): Hydrogen is divided into carbon-free hydrogen, low carbon hydrogen, and low carbon hydrogen compounds depending on greenhouse gas emissions produced during production and import. 2.  Certification of clean hydrogen (Article 25.2): It prepares the legal basis to certify clean hydrogen by grade for hydrogen or hydrogen compounds meeting certification criteria prescribed by Presidential Decree. 3.  Obligations to sell and use clean hydrogen (Article 25.5): With obligations to sell and use clean hydrogen in place, fuel suppliers and power generation business entities are obligated to sell and use clean hydrogen for most hydrogen facilities, such as hydrogen vehicles, construction machinery, military logistics, ships, aviation, and power generation. 4.  Obligations to purchase and supply power generated from hydrogen (Article 25.6): Power business entities are obligated to purchase or supply power generated from hydrogen above a certain percentage prescribed by Presidential Decree. 5.  Definition of the hydrogen industry (Article 2.7): The definitions of the hydrogen industry, hydrogen fuel supply facilities, and hydrogen fuel using facilities,    which are limited to hydrogen for fuel cells, are expanded to include the equipment that uses hydrogen, such as fuel cells and hydrogen gas turbines.

[Reports] 2050 Carbon Neutrality Roadmap for Korea: K-Map Scenario for Industrial Sector

Summary The "2050 Climate Neutrality Roadmap for Korea: K-Map Scenario" (joint research by Green Energy Strategy Institute, Institute for Green Transformation and Germany's Agora Energiewende) released in February 2022 laid out a more detailed and ambitious sectoral roadmap for Korea's climate neutrality than the government's proposal. This report covers details for the industrial sector only and provides an excellent source of reference for researchers and stakeholders who are interested in finding the optimal pathways for decarbonizing Korea's industrial sector.Table of ContentsIntroductionEmissions by Industrial SectorProposed Carbon Neutrality Scenario for the Industrial SectorKey Strategies in the K-Map Scenario for the Industrial SectorRecommended Scenario for the Industrial SectorDifferences from the Government’s ProposalSub-sectoral AnalysisCalculated Investment Scale for Carbon Neutrality in the Industry SectorPolicy Suggestions for Carbon Neutral Industrial SectorPolicy to support the adoption of low carbon processes/technologiesPolicy to expand the use of hydrogenConclusionAppendix. Methodology1. Model Settings and Assumptions2. Assumptions for Cost AnalysisReferences

[] [Letter] About the climate and energy policy future of South Korea’s new administration and the Group’s stance on it

[Reports] 2050 Climate Neutrality Roadmap for Korea: K-Map Scenario

PrefaceThe global race to net zero is speeding up. The US has rejoined the Paris Agreement while the EU has laid out its European Green Deal, which aims to mobilize at least €1 trillion up to 2030 for climate mitigation measures. As of February 2022, more than 120 nations had increased their NDC targets for 2030, while countries emitting about 70% of global greenhouse emissions have avowed to achieve net zero by 2050 or soon after. Just three years after Greta Thunberg’s School Strike in September 2018, powerful momentum for change has developed in international climate policy. South Korea (hereinafter Korea) has also joined the race. In October 2020 Korea pledged to achieve climate neutrality by 2050, backing up this commitment in October 2021 by announcing its 2050 Carbon Neutrality Scenario and revised NDC for 2030. This is remarkable progress, especially considering the country had been criticized in the past as a climate villain by the international community. However, Korean commentators and international organizations have noted that the Korean NDC target for 2030 – which relies on international carbon credits, as well as CCUS – is insufficient and incompatible with the 1.5°C target set forth by the Paris Agreement. In addition, while targets are important, a concrete implementation pathway for Korea that is undergirded by sound policy instruments has been lacking to date. Against this backdrop, three leading Korean climate and energy think-tanks – the Green Energy Strategy Institute, Institute for Green Transformation, and NEXT Group – have developed a detailed and ambitious climate neutrality roadmap for Korea – the so-called K-Map. The research for this roadmap was performed in partnership with Agora Energiewende and in close consultation with various expert organizations in Germany, in order to incorporate the most recent lessons learned from Europe. This research finds that Korea can avoid more than 1.6 gigatons of additional emissions cumulatively by 2050 compared to the government plan with domestic endeavours alone. In doing so, Korea would not only honour its international obligations to protect the climate, but also avoid passing the buck to future generations. With less than eight years to 2030, the next Korean administration that takes office in spring 2022 has a journey of great importance to undertake. We hope this study will help Korean policymakers successfully navigate the challenges ahead. Key Findings at a Glance 1. Korea can achieve net zero by 2050 with a significant increase in renewables deployment, improved energy efficiency, the gradual electrification of enduse sectors, and reliance on green hydrogen where direct electrification is not possible. An interim target of at least 53% renewables in power generation is required in 2030 to transition to an 84% share by 2050. Coal power plants must be phased out by 2035; natural gas power plants by 2045. The gradual electrification of heat, transport, and industry, as well as various flexibility options (such as storage and demand-side flexibility) will facilitate the deployment of renewables while reducing emissions to net zero by 2050. 2. On the road to climate neutrality by 2050, Korea should adopt a more ambitious 2030 target and accelerate its domestic efforts while avoiding reliance on international carbon credits. It should also focus on domestic renewables expansion, rather than on CCUS. This would better align with the Paris Agreement’s 1.5°C target while also enabling a smoother path to climate neutrality by 2050. 3. Korea has to kick-start enhanced climate action as soon as possible. The new administration needs to focus on key strategic action areas, including the rapid expansion of renewable energy (such that wind and solar power are expanded by 18 GW annually); the promotion of electric vehicles (such that 10 million EVs are on the road by 2030); the accelerated energy refurbishment of buildings, including a heating fuel switch (with 1.4 million heat pumps installed by 2030); the development of a hydrogen infrastructure where direct electrification is not possible; the rapid deployment of livestock manure fermentation facilities; and a strengthening of the Emissions Trading Scheme in the power and industrial sectors. 4. The path to climate neutrality will require a comprehensive investment program similar to the Miracle on the Han River period. Investing a total of 1 300 trillion KRW by 2050, or 45 trillion KRW annually (2.5% of Korea’s real 2020 GDP), will not only substantially reduce emissions, but also provide a strong boost to the national economy and, last but not least, improve quality of life for Korea’s citizens by reducing noise and air pollution.