Conclusion and Implications
In July 2020, the government announced the Korean New Deal Comprehensive Plan to overcome the economic crisis caused by COVID-19. Among this plan, KGND aims for a carbon-neutral (net-zero) society and includes eight initiatives in three areas for infrastructure and energy green transition and green industry innovation. The government wants to achieve the GHG reduction target in 2030 through the Green New Deal and smoothly implement the RE 3020 plan.
This report has examined measures to increase the reduction effect of KGND as a driving force for accelerating GHG reduction. To this end, we compared the energy system integration strategy of EU Green Deal with KGND's major energy and GHG-related projects and derived the complementary direction for KGND. Next, we calculated the GHG reduction potential of the RE supply support project and the green remodeling project among the KGND projects. Based on the results, we evaluated how much these projects would contribute to the national GHG reduction target and sought ways to promote each project.
Currently, energy consumption sectors (transport, industry, buildings, etc.) and energy sources (electricity, gas, etc.) operate under different value chains, rules, infrastructures, or schemes. In July 2020, EC observed that it would be challenging to achieve 2050 carbon neutrality at minimal cost if this pattern continued. Accordingly, EC has announced a strategy to establish an integrated energy system that comprehensively plans and operates by linking various energy carriers, infrastructure, and consumption sectors (KEEI, 2020c).
EU strategy on energy system integration suggests six action plans for building such a system: ① Building a more circular energy system with the energy efficiency first principle; ② Accelerating the electrification of energy demand based on RE power generation; ③ Renewable low-carbon fuel supply, including hydrogen, to sectors where decarbonization is difficult; ④ Establishing an energy market suitable for decarbonization and distributed resources; ⑤ Integrating energy infrastructures; and ⑥ Digitizing energy systems and establishing innovation frameworks (EC, 2020b).
Regarding the energy sector of the KGND, we paid attention to three tasks in the diffusion of low-carbon and distributed energy and the task in the urban, spatial, and living infrastructure green transition (zero energy for public facilities closely related to people's lives). The diffusion of low-carbon and distributed energy prepares for a future energy paradigm shift by spreading sustainable RE throughout society through R&D and facility investment. This field comprises three tasks:
energy management efficiency improvement and intelligent smart grid construction, RE dissemination support for base and just transition, and expansion of green mobility such as EVs and HVs.
Zero-energy public facilities closely related to people's lives are divided mainly into green remodeling and green smart schools. Among
them, green remodeling is highly relevant to the energy sector. Green remodeling preemptively promotes zero energy by installing PV in public buildings and replacing eco-friendly insulation materials to improve the energy efficiency of private buildings.
As a result of comparing the details of the KGND with the six action plans suggested by EU strategy on energy system integration, we conclude that the KGND is sufficiently dealing with the technology development and dissemination support of individual energy sources (especially RE). However, KGND does not adequately consider the link between energy sources, energy consumption, and supply sectors, while EU strategy focuses on these issues.
Based on the above review, we drew some implications for the complementary direction of the KGND. First, as the current KGND does not present a vision for the future energy system of Korea, the government must set the vision first and suggest tasks and measures to overcome obstacles to realize it. Then, KGND should include relevant projects and tasks (Figure 6-1).
Second, the Korean New Deal 1.0 lacks information on the linkage between various energy sources and sectors, including green hydrogen production, P2G, P2H, and V2G. These measures based on energy transition technology provide an opportunity for highly volatile renewable energy generation to be put into the grid on a large scale.
Therefore, the government should make efforts to develop and disseminate related technologies.
Third, the government should consider the supply of sustainable low-carbon fuels (biogas, biomethane, biofuels, synthetic fuels), including hydrogen, to industrial processes and aviation and shipping sectors where electrification is not easy. In particular, the risk of failure and cost burden is high for the development and
commercialization of new industrial processes to be carried out by the private sector alone. To solve this problem, the government needs to promote the development of a new approach using hydrogen jointly through the KGND.
Fourth, the government should reform the system so that GHG-related costs can be adequately reflected in the price of each energy source. The ETS should gradually increase the paid allocation ratio and expand the allocation method of the emission efficiency benchmark (BM) so that companies can bear the reduction costs in line with GHG emissions. In addition, to induce a reduction in power consumption, the cost of GHG generated during power generation must be reflected in the power price. To this end, the government should establish a system in which climate and environmental charges among electricity rates are adjusted annually following the rules.
Finally, the government should disclose which detailed projects are included in the Green New Deal, how much budget has been set, and how each project is progressing. In addition, project performance should be periodically checked to help increase the effectiveness of KGND. Accurate measurement of the GHG reduction effect in the KGND is not only necessary for enhancing the effectiveness of projects but also for reporting under the Paris Agreement.
Figure 6-1. Comparison of EU Green Deal and KGND and Complementary Direction of KGND
Source: Created by the authors
In Chapter 5, we evaluated the contribution to 2030 NDC by calculating the GHG reduction potential of the RE supply support project and the green remodeling project among the KGND projects.
As a result, we estimated that the 2025 GHG reduction of power generation facilities distributed from 2020 to 2025 through the RE dissemination support project would be 783,000 tCO2eq, and the 2025 GHG reduction of heat production facilities would be 255,000 tCO2eq.
In the case of the green remodeling project, completed green remodeling for 119,706 old public rental housing units from 2020 to 2025 will result in a reduction of 167,000 tCO2eq in 2025. During the same period, the completed green remodeling of 5,500 public buildings would reduce GHG emissions in 2025 by 138,000 tCO2eq (Table 6-1).
Table 6-1. Reduction Potential of RE Dissemination Support and Green Remodeling (2020-2025)
(Unit: 1,000 CO2eq)
The GHG reduction potential of power generation facilities distributed through the RE dissemination support project is 1.0% of the reduction of 78.1 MtCO2eq in the transition sector in 2025, according to the upgraded NDC plan. This project's contribution to transition-related GHG reduction is not so high because it targets more self-generation users than generators. In the end, to significantly reduce GHG in the transition sector, it is essential to reduce GHG in large-scale fossil fuel power plants. However, the benefits of the RE
Projects Sectors Reduction
RE dissemination support
power generation facilities 782.7 heat production facilities 255.3 Green Modeling old public rental housing 167.6
public buildings 137.9
dissemination support project are not limited to GHG reduction. RE dissemination support helps avoid overinvestment in the power grid and increases the stability of the energy system by distributing power generation sources through the extensive self-consumption of RE (MOTIE, 2021c).
According to our analysis, the direct emission reduction potential of the heat production facility and green remodeling project distributed through the RE dissemination support project was 351,000 tCO2eq. The upgraded NDC plan shows that this figure corresponds to 3.3% of the 10.8 MtCO2eq reductions in the building sector in 2025. The original purpose of the old public rental housing green remodeling project is to improve the quality of life of the underprivileged by improving the living environment. The green remodeling project for public buildings focuses on encouraging private investment and establishing green remodeling commercialization. However, these projects will also need to focus on finding directions to promote GHG reductions.
To expand RE self-generation and consumption and promote green remodeling projects, the government needs to provide incentives to facility investors. The first way is to provide economic compensation for facility investment by issuing REPs to building owners or facility investors. The second measure is introducing a T&D rating system so users can experience more significant energy cost savings when consuming self-generated electricity.
Building owners should be able to receive additional incentives for the expansion of green remodeling. To this end, the government may need to consider linking the green remodeling project with EERS.
To join the international trend for responding to climate change, Korea declared carbon neutrality in 2050 and raised its greenhouse gas reduction target by 2030. Achieving carbon neutrality requires a
transition in the energy system. To switch to a different energy system than before, we need to build new infrastructures and operating systems and invest in a just transition related to the existing infrastructure. We believe that the KGND will do a great job in achieving carbon neutrality in this respect.
The energy transition cannot be achieved in a few years in the short term. It has to be progressed with a long-term perspective until 2050.
The KGND project cannot carry out all necessary projects at once. In the energy transition process, we may miss some critical tasks, or new issues may arise due to changes in circumstances. Therefore, the government should actively communicate with stakeholders, experts, and the general public and continuously check and supplement project implementation.
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