"Concerns Over Damage in Some Areas Due to Carbon Neutrality Promotion... Collective Impact Must Be Utilized"

KCCI's 'Fair Transition of Regional Economy and Collective Impact'
Concerns Over Economic Decline and Job Reduction in Closed Mines and Power Plants

[Asia Economy Reporter Oh Hyung-gil] Balsan Village, once a hillside neighborhood in Seo-gu, Gwangju, has become a representative attraction of Gwangju since February 2015 through a collaboration led by Hyundai Motor Group with Gwangju City, Seo-gu Office, and the social enterprise Public Art Prism. The project included painting and design work for the entire village and support for young companies to move into abandoned houses. As it gained fame through social media (SNS), the average monthly visitors increased about 40 times compared to before the project started, and the housing vacancy rate decreased by 30%.

There is a claim that 'collective impact,' where various stakeholders such as the government, companies, and civil society come together to solve social problems, will help address social and environmental issues in local communities that may arise during the carbon neutrality promotion process.

According to the report "Fair Transition of the Regional Economy and Collective Impact" released by the Korea Chamber of Commerce and Industry on the 25th, the regional economy is expected to be affected by industrial restructuring and job changes during the energy policy transition process.

It is pointed out that polarization between regions and unbalanced development may accelerate, especially in local cities centered on high-carbon industries such as steel, refining, and coal-fired power plants.

Among all industries in South Korea, high carbon-emitting sectors such as steel, petrochemicals, refining, and cement account for 8.4%, significantly exceeding Japan's 5.8%, the European Union's (EU) 5.0%, and the United States' 3.7%. Employment in these industries is mostly concentrated in local cities such as Gyeongbuk (11.2%), Chungnam (9.1%), Chungbuk (7.1%), and Jeonnam (6.5%), except for Gyeonggi (23.8%).

The report stated, "The importance of a fair transition is emphasized as a basic direction and practical strategy to successfully settle the energy policy transition and minimize damages."

Fair transition means supporting vulnerable industries and enabling each local community to have the capacity to respond independently so that no regions or social classes are left behind during the industrial transition process. To prevent exclusion of regions and classes in this process, it is necessary to build a cooperative system based on stakeholder consensus, and the report proposed 'collective impact' as a strategy for this purpose.

Gwangju's Cheongchun Balsan Village is a representative case where companies, local governments, and civil society joined forces to promote urban regeneration projects as the textile industry declined and the city deteriorated.

Kim Cheon-gu, a research fellow at the Korea Chamber of Commerce and Industry's SGISGI (Sustainable Growth Initiative), emphasized, "During the carbon neutrality implementation process, some local cities face factory closures, mine and power plant shutdowns, raising concerns about regional economic decline and job losses. It is a time when proactive measures are needed by benchmarking domestic and international cases using collective impact to solve regional problems."

As measures to promote collective impact for a fair transition of the regional economy, the report suggested a leading role for the private sector, redefining government roles, establishing tailored cooperative systems, and various policy supports.

Won So-yeon, a research fellow at the Korea Institute of Public Administration, explained, "Fair transition, which ensures growth together without leaving any marginalized groups behind during the future industrial structure transition process, is a very important value and standard. To realize fair transition, it is important to design the cooperation process to resolve power and resource imbalances among stakeholders and to fairly distribute incentives given to each participant through collaboration."