Net Zero Readiness Index: South Korea

South Korea faces a significant challenge in decarbonization due to the role petrochemicals play in its economy. However, the government has committed to a transition with a target of reaching Net Zero by 2050 announced in October 2020. President Moon Jae-in’s plans, made as part of a budget address to the national assembly, include spending 8 trillion South Korean won (KRW) (USD7 billion) on a Green New Deal, including KRW4.3 trillion on infrastructure for electric and hydrogen-powered vehicles and KRW2.4 trillion on upgrading buildings and urban spaces. He also said that the country would replace coal-fired power stations with renewable generation.¹ 

“It gives a strong signal to Korean companies that they need to figure out how to mitigate greenhouse emissions or remove carbon from their portfolios by 2050,” says Ah-Ryung Lee, Manager, KPMG in Korea. But she adds that specific action plans or guidelines for corporates have not been prepared yet, making it difficult for companies to decide how to achieve this.

South Korea is ranked 10th on electricity and heat, with demand- and supply-side market mechanisms for the adoption of clean energy contributing to this. While coal remains the largest source of power, the government has said it intends that 20 percent of power will come from renewables by 2030,⁴ and Korean companies now have solid ways to purchase electricity generated solely from renewable sources through power purchase agreements after the official launch of K-RE100 this year. Some energy-intensive manufacturers have announced their own plans to decarbonize with Posco, the country’s largest steel maker, having said it will move to carbon neutrality by 2050 through the use of hydrogen and carbon capture, utilization and storage technologies.⁵

Although power generation and industry are the most significant sectors in moving South Korea to Net Zero, the government has also published specific plans for adopting electric vehicles. Its voluntary K-EV100 project offers financial support for companies that pledge to power their fleets entirely with electricity by 2030, as well as spending announced by the president for charging infrastructure.