[Insight & Opinion] Eco-Friendly Energy Competition and a Realistic Alternative: 'Small Modular Reactors'

U.S. President Joe Biden's noble first promise was to address climate change. Having returned to multilateralism by rejoining the Paris Climate Agreement, he is also advocating "America First" to foster domestic industry and create jobs. The Inflation Reduction Act (IRA), which embodies a vision for eco-friendly energy, is based on this spirit. The IRA is an energy policy plan that supports renewable energy and electric vehicle projects with $369 billion (approximately 480 trillion KRW) in tax credits and subsidies.

Through this, the U.S. aims to reduce its greenhouse gas emissions by 40% by 2030. Although primarily targeting China, the electric vehicle support conditioned on North American raw materials and local manufacturing, including the U.S., has raised alarms in South Korea as well. The U.S. has continued its efforts to counter China in semiconductor, electric vehicle, and energy policies, which are expected to be major future markets. Import bans have been implemented on products containing raw materials from China's Xinjiang region.

Shares of solar-related companies, including Hanwha Solutions, have shown strength. Since polysilicon, the raw material for solar panels, is largely produced in the Xinjiang region, concerns about a potential decrease in the supply of Chinese solar products have emerged. China strongly opposed this, claiming that the U.S. is attempting to disrupt the global industrial network and dismantle China's supply chain. Following Europe, the South Korean government has also requested the U.S. trade authorities to relax the IRA subsidy requirements and expressed concerns that the law might violate trade norms such as the Korea-U.S. FTA and WTO agreements.

Recently, Europe, which has been at odds with Russia over natural gas issues, announced that it will implement a Battery Passport policy starting in 2026. The European Union (EU) policy requires transparent disclosure of the history and compliance with environmental regulations within the supply chain for products traded within the region. It digitally records and shares the entire lifecycle information of batteries?including production, use, disposal, reuse, and recycling?to enhance battery safety, optimize usage, and promote recycling. Building a battery circular economy that is compatible with and expandable to the EU Battery Passport is expected to become an urgent task.

It also seems certain that European automakers will demand Life Cycle Assessment (LCA) data to reduce carbon emissions. Although electric vehicles emit no carbon during driving, carbon emissions occur during the mining of minerals for batteries and the battery manufacturing process. South Korea needs to accelerate the production of renewable energy such as wind and solar power, but the targets are considered unrealistic. Nuclear power has been recognized as green energy in Europe because it does not produce carbon dioxide.

At this point, it is necessary to highlight the role of U.S. nuclear power leaders, including Bill Gates. They are focusing on developing small modular reactors (SMRs, under 300 MW) that do not use water as a coolant and do not require nuclear fuel replacement. What new energy source suits South Korea, a peninsula surrounded by seas with world-leading shipbuilding, marine, and nuclear industries? Ulsan, the energy industry hub of South Korea, is paying attention to the fact that the lead-cooled fast reactor (LFR), which uses liquid lead in SMR technology, is the most advanced in commercialization. This technology was used in nuclear submarines in the former Soviet Union. In the competition to protect domestic industries and create jobs, we must accelerate consideration of realistic SMR technologies suited to our circumstances.

Jowon Kyung, Professor at UNIST / Director of the Global Industry Cooperation Center