Beyond Coal - Towards Net-Zero Emissions: South Korea and Germany Share Experiences

 

Beyond Coal – Towards Net-Zero Emissions

South Korea and Germany Share Experiences

[The webinar was held on 27 January 2021 4-6:15 PM organized by the German Embassy in Seoul, Solutions For Our Climate (SFOC), and Climate Transparency]

 

A Global Shift Away From Coal

(Hannah Schindler, Senior Project Coordinator, Climate Transparency)

Coal phase-out is key to achieve the Paris Agreement, but countries still build new coal plants

Share of coal in power generation (2019) and 5-year trend (2014-19) for top G20 countries

South Africa	India	China	Indonesia	Australia	South Korea
88%	71%	65%	63%	57%	42%
Turkey	Japan	Germany	USA	Russia	EU
37%	33%	29%	25%	17%	15%

G20 countries supporting the coal sector as part of their Covid-19 recovery packages (top users)

India: 15.1 billion USD

Germany: 4.8 billion USD

South Korea: 2.5 billion USD

 

The End of Coal is coming

Global coal power generation decreased by 3% (2019) and pipeline shrinks as investors face financial risks

Global planned and cancelled coal capacity, 2015-2020 (GW)

Year 2020:

Cancelled (since 2010): 1,580

Permitted: 93

Pre-Permit: 124

Announced: 114

 

Lower costs: renewables + storage replace coal

Renewables are already approaching 3-% of power generation in the G20

Renewable energy costs declined rapidly:

Solar photovoltaics: 82%;

Concentrating Solar Power: 47%;

Onshore wind: 39%;

Offshore wind: 29%

 

Policies Restricting Coal Use are Increasing Quickly

Governments and over 130 financial institutions are planning for coal phase-out

Frontrunner: Canada, France, Italy, UK (Policies + coal phase-out date before 2030 (OECD and EU28) or 2040 (rest of the world)

-High: Germany (Policies + coal phase-out decided)

-Medium: Brazil, China, EU, (some policies in place for reducing coal)

Low: Australia, India, Indonesia, Japan, Mexico, Russia, SA, SK, Turkey, USA (no target or policy in place for reducing coal)

 

Opportunity: invest in a green and modern energy system

Six G20 countries have hydrogen strategies and EU, France, and Germany aim to decarbonize H2 production

Japan: Basic Hydrogen Strategy (December 2017), Green Growth Strategy (December 2020)

Target (consumption volume): up to 3 million tonnes of hydrogen/year

To become a ‘hydrogen society’

 

South Korea: Hydrogen Economy Roadmap (January 2019)

Target (end-use): 15 GW fuel cell power generation by 2040; +6.2 million fuel cell e-vehicles, 60,000 H2 buses

 

Australia: National Hydrogen Strategy (November 2019)

Target: to be the world’s largest hydrogen exporter by 2030

Emphasis on “clean”, not “green energy”

 

Germany: National Hydrogen Strategy for Germany (June 2020)

Target (production capacity): 5 GW generation facilities by 2030

Aim to decarbonize hydrogen production

Plans for hydrogen development in partner countries

 

EU: Hydrogen Strategy for a Climate-neutral Europe (July 2020)

Target (production capacity): 40 GW EU electrolyser capacity for green hydrogen by 2030

Aim to decarbonize hydrogen production

 

France: National Hydrogen Strategy (September 2020)

Target (production capacity): 6.5 GW of capacity from non-fossil resources by 2030

Aim to create 50,000 to 150,000 direct and indirect jobs

 

South Korea’s Plans to Achieve Net-Zero Emissions in the Power Sector (Changhoon Lee, KEI)

The session discussed the challenges on a coal phase-out date and explore the role that green hydrogen can in moving towards a carbon-neutral economy

Coal Phase-out Proposal by the National Council on Climate and Air Quality

Necessity to reduce coal power generation: 90%

Coal power shutdown (before 45 years): 71%

Before 2039 (19%)

2040 (27%)

2045 (25%)

 

Alternative power source (renewable energy center): 63%

Renewable energy (63%)

Nuclear power (23%)

Natural gas (13%)

 

Considerations: 84%

Stable electricity collection (98%) - 지역경제 피해보상 (84%)

 

1. 2050 Carbon-Neutral Scenario Preparation (1st half of 21)

Discuss the timing of abolition of coal power generation in the process of creating a carbon-neutral scenario in 2050

2. Preparation and implementation of the coal-free roadmap (expected)

Through the Carbon Neutral Committee, which is scheduled to be launched in the first half, prepare a just transformation plan

Reflected in the 10th basic plan for power supply and demand (established in 2022), a legal plan

 

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Theme: South Korea’s plans to achieve net-zero emissions in the power sector

Role of the Power Sector in Rapid Decarbonization of the Country: suggestions for a coal phase-out and the use of hydrogen (Jeehye Park, Director, SFOC)

Korea’s electricity generation by source: thermal power, such as coal, accounts for 70%

Renewable energy is growing rapidly, but only accounts for 5% of the total generation (2019)

 

Ambitious Coal Phase-Out Planning that Aligns with the Carbon Neutrality Target

In 2034, coal is planned to account for 30% (29 GW) of Korea’s total generation

The coal phase-out timeline must be expedited to meet the Paris Agreement

Economic outlook for new coal power – costly construction and low capacity factor

l  Construction cost much higher than the standard investment cost suggested by the Korea Power Exchange. The situation has increased to 150% of the construction cost)

l  Even if only current energy policies such as the 3rd Basic Energy Plan and the 2030 National Greenhouse Gas Reduction Roadmap are reflected, there is a prospect that the realistic utilization rate will drop sharply.

 

Clear policy signal needed to cut ties with the outdated technology

Guide the hydrogen policy’s direction to serve as the key strategy for carbon neutrality

l  So far, the existing strategy for hydrogen economy focuses on infrastructure expansion

l  Bias towards fuel cell power generation and grey hydrogen is of particular concern

l  outside of Korea, why is fuel cell’s power generation function not at the center of its strategy?

Risk of natural gas-based fuel cells becoming stranded assets should be considered

 

Conclusion: implications of 2050 Carbon Neutrality Target

Ø  Scenario presented in the IPCC 1.5°C report

Ø  By 2050, the share of coal power generation worldwide

It will drastically reduce to 0.82% (0-7.53%), and the remaining CCS installed in most of coal power plants (33-100%)

• In the case of hydrogen, emission reduction (mainly in the industry, transportation sector, energy

Introduced as an auxiliary means for storage)

 

Experiences from Germany’s Coal Phase-out and Hydrogen Policies

Insights from Germany’s Coal Commission and Coal Legislation (Philipp Litz, Project Manager, Agora Energiewende)

Germany’s long goodbye from coal: insights from Germany’s coal commission and coal legislation

Shared Challenge:

South Korea and Germany share the challenge of phasing-out coal to meet their climate pledges

 

Timeline

2014: government fails to implement a national CO2-price for coal

2015: first proposal to implement a Coal Commission is published

2016: ‘Climate Action Plan 2050’ enacts to implement a ‘Coal Commission’

2017: New government’s coalition treaty confirms to implement a ‘Coal Commission’

2018, the German government implemented a ‘Coal Commission’ to come up with a coal phase-out roadmap

2019: Coal Commission publishes its final report

2020: ‘Coal phase-out law’ passes parliament (also: EU pledges climate neutrality in 2050)

 

Mandate:

The ‘Coal Commission’ was mandated to resolve a number of conflicts around the phase-out from coal:

meeting climate targets

Keeping power prices to a minimum

Ensuring the security of supply

Allowing a ‘just transition’ for workers and regions

 

Composition:

The commission had 31 members, which represented most social and economic interests in a balanced way: trade unions, environmental associations, administration, regions, business, and industry, science, parliament (no voting rights)

The government was not part of the Commission

 

Pro

The Coal Commission developed a comprehensive set of measures to phase out coal by 2038 the latest reflecting most of the other policy fields concerned

A.    Phase-out coal (shut down until 2035 or 2038 the latest)

B.     Support transformation of traditional mining regions (create new jobs, etc.)

C.     Modernize the power system (safeguard emission mitigation, ensure the security of supply, make the power system more flexible)

D.    Alleviate hardship for those concerned (maintain the competitiveness of industries and affordability for households, compensate utilities, ensure a ‘just transition’, conduct dialogue)

E.     Monitor and adjust measures (monitor and report progress, take additional action if needed)

 

The German model enables a Just Transition for region and workers in the plants and mines

 

Con

The phase-out date of 2038 is not compatible with the ‘Climate Neutrality in 2050’ pledge of the European Union

The Coal Commission’s recommendations entail substantial additional costs to the federal budget

Source: www.agora-energiewende.de

 

Experiences from Germany’s coal phase-out and hydrogen policies

Germany’s National Hydrogen Strategy 2020

Ulrich Benterbusch, Deputy Director-General, Federal Ministry for Economic Affairs and Energy, Germany

 

Background

Ambitious climate targets require climate friendly alternatives where green electrons and energy efficiency will not be enough.

ü  Green Molecules will be needed as alternatives to fossil fuels

ü  Hydrogen and products derived from it will be a key element in Germany’s energy transition

ü  Hydrogen offers opportunities for new value chains

 

Hydrogen in Germany: state of play and future

Total yearly production: c.a 55 TWh mainly grey hydrogen; mainly used for ind. Processes, e.g. production of ammonia, methanol, etc.; 3,85 TWh of hydrogen are produced via electrolysis; H2-infrastructure: private networks operated by Air Liquide

 

2030 Target: 5 GW electrolysis

Action Plan: necessary steps to success

n  Focus on ‘integrated projects’ along the whole value chain

n  Use where the gap to ‘profitability’ smallest or no other alternative

n  European approaches (esp. via IPCEI)

 

H2-production

l  Improve framework conditions (RED II implementation, CO2-pricing)

l  Fair design of state induced price components for electricity (esp. EEG-surcharge)

l  Transparency on CO2-footprint of production (needed for a European methodology)

 

Infrastructure

l  Initiating possibilities for reconversion/use of existing structures

l  Market consultation on the regulatory framework needed for future H2-infrastructure

l  Promoting the integration of electricity, heat and gas infrastructures

 

Industry and mobility

u  CAPEX: dedicated programs, IPCEI

u  OPEX: where needed, a new pilot program for Carbon Contracts for Difference

u  Sector-specific dialogues

u  Ambitious implementation of the EU Renewable Energies Directive (RED II)

u  A push on H2-refuelling stations

 

EU and international cooperation

l  Hydrogen as a focus area of the German presidency of the EU council: climate and industrial policy common understanding; development of European standards for hydrogen

l  Establishment of integrated EU IPCEI projects along with the whole value chain in order to promote H2 technologies

l  Promotion of H2 in new and existing energy partnerships

l  Pilot projects in partner countries to show whether and how green H2 can be produced and marketed sustainably and competitively

 

PANEL DISCUSSION

How to phase out coal and increase the use of green hydrogen to decarbonize Korea’s economy

 

The above contents are mainly based on the documents shared during the webinar held on the date mentioned above.

 

Prepared by Abraham Sumalinog