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| Smoke rises from the chimneys of plants at an industrial complex in this undated photo. Yonhap |
By Yi Whan-woo
Surging energy prices and the government's finalized plan to drastically cut greenhouse gas emissions are prompting concerns over "greenflation" ― price hikes in metals, minerals and other natural resources needed for renewable technologies.
Industry sources said Tuesday that Korea "has plenty of reasons be nervous" about increases in utility costs, as the prices of major energy sources worldwide have been climbing sharply.
On Monday, Brent Crude oil hit a three-year high price of $86.04 per barrel, while U.S. West Texas Intermediate (WTI) Crude Futures reached a seven-year-high of $83.73 per barrel.
The shortages of natural gas and coal are in full view, as China is struggling with its energy supply and other key economies are facing higher energy demand as they rebound from the pandemic.
Against this backdrop, the official commitment made by President Moon Jae-in, Monday, to reduce greenhouse gas emissions by 40 percent from 2018 levels by 2030, is pushing businesses to alternate using fossil fuels with more expensive green energy.
Aimed at achieving carbon neutrality by 2050, the new goal of cutting greenhouse gas emissions has increased from the 26.3 percent previously set in 2020.
To meet this goal, manufacturing businesses will be required to undergo a major overhaul in their facilities, as coal and liquefied natural gas account for 60 percent of their energy supply.
Updating the facilities will be very costly. For instance, it costs 276 won ($0.23) per kilowatt-hour to generate electricity from a 20-gigawatt floating offshore wind farm to be built by the government by 2034, according to data released by main opposition People Power Party (PPP) lawmaker Han Moo-kyung.
The lawmaker said that this figure is more than five times the cost of using electricity generated through nuclear power plants, which the Moon government seeks to phase out.
"You can see why we have been against the government's plan," a Federation of Korean Industries (FKI) official said, referring to the business lobby group's statement released on Monday.
The statement argued that the government is "not being sufficiently cautious" in the implementation of its green campaign as well as "not considerate" about the difficulties faced by enterprises in the transition toward carbon neutrality.
"I would not disagree with those who say the country is being pushed to the brink of greenflation," the official said
Son Yang-hoon, an Incheon National University professor, said that the effects of greenflation are feared to be "felt across every corner of society, including households."
"The bigger concern is that such greenflation may persist and be passed on to future generations if it is not tackled properly," the professor said.
