- BNEF’s New Energy Outlook: South Korea indicates that decarbonizing electricity supply is key to the country staying on track with the Paris Agreement’s goals this decade
- More than $2.7 trillion in investment and spending is required by 2050 in a net-zero pathway, 37% more than in an economics-led transition
- Solar and wind capacity needs to increase more than 10-fold by 2050
Seoul, October 31, 2024 – It’s still possible for South Korea to get on track for net-zero emissions by 2050 and help limit global warming to well below 2C. Doing so rests on a rapid scale-up of clean electricity and carbon capture and storage capabilities, according to a report published today by BloombergNEF.
The power sector is the country’s biggest source of emissions. Based on the findings of New Energy Outlook: South Korea, in order to be on track with a net-zero-by-2050 pathway, emissions from electricity generation need to drop by more than two-thirds by the end of this decade.
South Korea’s Nationally Determined Contribution – its plan to help achieve the goals of the Paris Agreement – aims for emissions to fall by 40% by 2030, relative to 2018 levels. This is less ambitious than the 50% cut envisaged by BNEF’s Net Zero Scenario. Should the country’s energy transition proceed along an economics-driven trajectory – what BNEF calls its Economic Transition Scenario – there would only be an 18% decline over this period.
“South Korea still has a chance to meet its 2030 emissions reduction target,” said David Kang, BNEF’s Head of Japan and Korea Research. “In order to do so, the country needs to accelerate the deployment of renewables and electric vehicles, while laying the groundwork to reduce emissions from hard-to-abate sectors over the next five-years.”
Carbon capture takes center stage, bucking global picture
Carbon capture and storage does the heavy lifting for emissions reduction in South Korea in the Net Zero Scenario, accounting for 41% of abatement by 2050 versus a ‘no transition’ pathway. That’s much higher than the 14% seen at the global level. Clean power from renewables and nuclear comes in second place, responsible for 17% of the country’s emissions savings by mid-century – far below the 45% share in abating global emissions.
“The high share of abatement for carbon capture and storage highlights South Korea’s geographical challenges”, said Seohee Song, an analyst in BNEF’s Energy Economics Team and the lead author of the report. “Finding suitable land for large-scale renewable energy projects is becoming increasingly challenging in the country, putting upward pressure on the cost of solar and wind, thus creating more need for carbon capture and storage to fully decarbonize power and industry.”
Reaching net zero would still require South Korea to accelerate deployment of solar and wind to reach 304 gigawatts of capacity by 2050, a 10-fold increase from today. In addition, almost a third of the country’s 73 gigawatts of fossil-fuel-driven power plants would need to be equipped with carbon capture by the end of this decade. Right now, no power plants in South Korea are fitted with carbon capture technology.
A multi-trillion-dollar opportunity
The journey to net-zero emissions hinges on $2.7 trillion of investment and spending between now and 2050 to decarbonize South Korea’s energy system, 37% higher than in an economics-led transition. On an annual basis, this translates to $102 billion of capital outlay in the Net Zero Scenario, equivalent to 6% of the country’s gross domestic product in 2023.
South Korea’s investment in the energy transition came in at $25 billion last year. A clear and consistent policy framework is necessary to boost investor confidence and match the spending needs of a net-zero future.
“The higher investment requirement for the Net Zero Scenario represents a significant economic opportunity for the country,” said Analeigh Suh, BNEF’s South Korea analyst and co-author of the report. “Under this pathway, South Korea would reduce emissions and increase its energy security thanks to a reduced need for fossil-fuel imports. The country would also create more demand for technologies such as electric vehicles and batteries, which are the forte of Korean manufacturers.”
This research forms part of a series of regional and sector reports diving deeper into results from BloombergNEF’s global New Energy Outlook report.
Contacts
Oktavia Catsaros
BloombergNEF
ocatsaros@bloomberg.net
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