EU-Korea Climate Action Project

The EU-Korea Climate Action project together with the Korea Business Council on Sustainability Development (KBCSD), the European Chamber of Commerce in Korea (ECCK), and Yulchon LLC organized the 'EU-Korea Business Webinar to Achieve 2050 Climate Neutrality' on 27 May 2021. Speakers invited from Dentons LLC, the Ministry of Environment of Korea, Yulchon LLC, BASF Korea and POSCO informed the audience about the EU’s Carbon Border Adjustment Mechanism, Korea’s GHG policies, ESG strategies implemented by European and Korean companies and best practice cases to achieve carbon neutrality. The webinar was livestreamed from a conference room of Yulchon LLC, with Korean speakers attending in person and European speakers connected online.  

Il-young Oh, Director at the Ministry of Environment presented Korea’s revised GHG emissions reduction targets for 2050 climate neutrality. Having committed to 2050 carbon neutrality in October 2020, the Korean government established 10 key strategies to achieve the target such as accelerating energy transition, innovations to carbon intensive industrial structure, mobility shift, and circular economy. The attitude of the private sector towards climate issues also started to change – with both public and private organizations having committed to no investment in coal power plants both domestically and internationally, and companies starting to establish in-house ESG committees to manage their climate risks. To deliver on the commitment, the Korean government is making direct efforts such as establishing the carbon neutrality committee, preparing for an enactment of the carbon neutrality law, and providing financial support to R&D projects while indirectly supporting societal reforms such as just transition, decarbonization led by local governments, and developing a green finance system.  

Following Il-young Oh´s presentation, Adam Brown, Lawyer at Dentons LLC delivered his presentation on the Carbon Border Adjustment Mechanism (CBAM). He explained the background of the mechanism, the policy framework to support the CBAM and the EU Emission Trading Scheme, key features of the CBAM, the EU Parliament´s resolution, and main challenges. He said while a global legal binding of GHG emissions is nearly impossible, the CBAM is to create tax impacts on carbon intensive imports, therefore accelerating GHG emissions reductions around the world. The Parliament agreed in principle on the needs for developing the CBAM to prevent carbon leakage, and the framework should reflect key features of the EU ETS. However, calculating the carbon price is challenging while the policy can also create unintended side effects such as a further increase in the export price of European products.

Yonghee Yoon, Partner at Yulchon LLC delivered a presentation on ESG management strategies covering the background of the ESG management principles, regulations and systems.  He explained that ESG management means reflecting various stakeholders’ opinions in the management practices including customers, staff and partners. It is largely considered beneficial to companies as corporate and social values are believed to increase from active ESG management in the mid to long-term. There are three types of ESG standards - firstly international and domestic ESG investment standards such as UN Principles for Responsible Investment and Korean Stewardship Codes and responsible investment principles of Pension Funds, secondly ESG disclosure initiatives such as Global Reporting Initiative (GRI), and TCFD (Taskforce on Climate-related Financial Disclosures), and thirdly regulations related to ESG elements such as emissions trading system, resource circulation law, and labor laws. 

Han Yu, Asia Sales Team Lead Energy Storage at BASF, shared the company’s carbon neutrality commitment and strategies with the audience. He said that 70% of GHGs are emitted from base chemical production, and that BASF is making strong efforts to reduce GHGs by introducing electric  and electric steam cracker furnaces using renewable energy, and by implementing renewable energy projects including wind and hydrogen.     

The final speaker of the event, Jae-yong Heo, Economist at POSCO, presented POSCO’s decarbonization strategy. He highlighted the fact that POSCO committed to carbon neutrality in 2020 and has made a substantial level of investment in waste energy recovery and energy efficiency improvement as well as in R&D activities to develop technologies for reducing GHGs. POSCO’s key zero carbon strategies cover both production and user sides – on the production side, POSCO will widely deploy hydrogen-based reduction processes while focusing on supplying low carbon steel products on the user´s side. POSCO established a carbon neutrality strategy for the three key business areas including steel, battery materials, and hydrogen, in order to meet investor’s demands.   

During the Q&A Session questions were asked first to Adam on the CBAM. Having been questioned about the Individual Adjustment Mechanism, he explained that the purpose is to allow producers from outside the EU to demonstrate the carbon neutrality of their products, mentioning however that it requires tracking of the supply chains and verifying the greenness of the products. On another question about the perspective of the CBAM to be approved by the EU Parliament, he said it is a complicated administrative and political process but that these obstacles will be overcome eventually. One of the questions asked to Ilyoung was about the future milestones of the amendment of the Nationally Determined Contribution (NDC) of Korea. He answered that the Ministry will release the draft revised NDC in the second quarter of this year and take opinions from the general public in August or September. The draft target will be finalized upon approval by the National Carbon Neutrality Committee at the end of this year before being submitted to the UNFCCC.