[Plaza] Carbon Neutrality and Energy Market Innovation

Seongjin Kim, Executive Vice President of the Korea Display Industry Association

Sungjin Kim, Executive Vice President of the Korea Display Industry Association

Carbon neutrality has emerged as the key issue of our time. It refers to absorbing the carbon dioxide emitted to achieve a net zero emission, also known as "carbon zero." Since the Paris Agreement came into effect in 2016, 121 countries have joined the "2050 Carbon Neutrality Target Climate Alliance," making carbon neutrality not a choice but a necessity. Major countries such as the European Union (EU), Japan, China, and the United States have participated in carbon neutrality efforts, and Korea declared its participation last year. This year, the government established the "2050 Carbon Neutrality Committee" under the direct control of the president to respond on a national scale.

The display industry, along with the semiconductor sector, launched the "Semiconductor and Display Carbon Neutrality Committee" on March 9 and is exploring various measures to achieve carbon neutrality. Since the emissions trading system was implemented in 2015, the industry has invested approximately 100 billion KRW in facilities to reduce process gases and plans to continue expanding investment and research and development (R&D). The use of renewable energy will also be increased, and various programs for energy saving will be promoted. The semiconductor and display industries have held two carbon neutrality committee meetings so far, requesting the government to expand support for carbon reduction investments and R&D, improve systems for corporate renewable energy purchases, and recognize contributions to reduction from low-power new products.

Now, climate change and carbon neutrality have become a global new paradigm. It is no longer "someone else's problem" but "my problem." What was once a future issue to be addressed someday has become an urgent reality that must be solved immediately. Against this backdrop, the government announced the "2050 Carbon Neutrality Promotion Strategy" last year. It presented a so-called "3+1" strategic framework consisting of three main policy directions?"low-carbon economic structure, creation of a low-carbon industrial ecosystem, and fair transition to a carbon-neutral society"?and "strengthening the institutional foundation for carbon neutrality." While there is general agreement on the overall direction and implementation measures, I believe there are many issues that need further discussion, especially in the energy sector.

First is the issue of energy mix?how to adjust the proportions of coal, gas, nuclear power, and renewable energy sources. Although the direction is to reduce fossil fuels and expand renewable energy, there is no mention of nuclear power. It is practically impossible to compose the energy mix solely with renewable energy. Nuclear power, which emits zero carbon, is a clean energy source that, if safety issues are resolved, will be the most suitable energy source for carbon neutrality alongside renewable energy. This is why public discussion on nuclear phase-out should be resumed at this critical time when carbon neutrality has become the era’s key issue.

Next is innovation in the energy market. Currently, the energy market is centered on public institutions based on fossil fuels, such as Korea Electric Power Corporation (KEPCO), the five power generation companies, Korea Gas Corporation, and Korea Coal Corporation. If renewable energy becomes the main energy source in the future, the market structure must also change. In the mid to long term, the establishment of a dedicated renewable energy organization, the construction of a hydrogen energy infrastructure, and a transition to a market structure suitable for distributed power sources are necessary. In this process, discussions on private sector market participation and restructuring toward a competitive market structure will be needed.

Finally, institutional innovation must proceed simultaneously. Energy-related regulations and systems must be drastically changed to widely adopt IT and creative convergence technologies and to apply various new business models. First, I hope the third-party power purchase agreement (PPA), which allows electricity consumers to trade directly with renewable energy producers, will be activated. It is said that in the era of the Fourth Industrial Revolution, it is not the big fish but the fast fish that survives. Energy must also transform into a "fast system" capable of adapting to change and innovation.

Energy is a core national foundation that affects all areas?from citizens’ lives and industrial competitiveness to environment, safety, and security. Because various stakeholders are involved, policies based on only one aspect are bound to fail. Moreover, coordinating interests inevitably requires time and cost. We must look ahead and prepare. If problems arise, it means we have already missed the opportunity. Successfully achieving carbon neutrality in the energy sector will not only reduce the burden on the industrial sector but also provide various options to encourage voluntary participation from the industry. I hope discussions on the major transformation of the energy system will become more active in response to the era’s demand for carbon neutrality.