Insight
The Path to
Carbon Neutrality
Jun, 2021









Amid Worsening Climate Change, the World is Taking Steps Toward ‘Net-zero’

Since the Industrial Revolution, the development of human civilization has been in line with the expanded use of fossil fuels. Over the past 200 years, the world’s population has increased eight-fold, GDP 120-fold, and energy consumption 30 times. 84% of the energy produced comes from fossil fuels such as coal, oil, and natural gas. Due to greenhouse gases emitted in conjunction with fossil fuel use, the concentration of airborne carbon dioxide has increased from 280 ppm before the Industrial Revolution to 413 ppm today, and the global average temperature has risen by 1.2°C. As a result, climate crises such as sea-level rise, damaging typhoons and floods, droughts, heat waves, increased infectious diseases, food shortages, and the rainy season that lasted 54 days in Korea in 2020 are apparent.



<Climate Crisis and Energy Revolution; Source: Korea Institute of Energy Research >


In a special report, the IPCC (Intergovernmental Panel on Climate Change) recommends limiting global warming to 1.5°C above pre-industrial levels by 2100 to prevent catastrophic climate change. To this end, it is essential to achieve carbon neutrality by 2050, which implies reaching net-zero CO₂ emissions globally, minimizing greenhouse gas (GHG) emissions from human activities and absorbing or removing GHG through CCUS (Carbon Capture Utilization and Storage). It is essential that mankind is successful in the extremely difficult task of transforming our fossil fuel civilization built over the past 200 years into a carbon-free energy society in the next 30. So far, around 130 countries, including Germany, the United Kingdom, France, Japan, the United States, and China, have announced their intention to achieve carbon neutrality between 2030 and 2060. Korea also vowed to go carbon neutral by 2050 in October last year. In April this year, the Leaders Summit on Climate was held, attended by the leaders of 40 major countries, including the United States, the EU, China, and Korea. At the summit, the U.S. announced a 50-52% (previously 26-28%) reduction in greenhouse gas emissions from 2005 levels by 2030, the EU 55% (previously 40%) from 1900 levels, and Japan 46% (previously 26%) from 2013 levels. Korea will also announce within this year its updated target to reduce 24.4% from 2017 levels. As such, efforts for carbon neutrality are being further strengthened globally. Climate crisis management will be at the heart of politics, economy and society for the next 30 years.


Carbon neutrality is becoming a matter of growth and survival for the national economy as well as for businesses. A number of countries are announcing their intention to close down coal-fired power plants before 2040, and more than 20 countries are pushing to ban the sale of internal combustion engine vehicles before 2035. The EU and U.S. have been discussing the possibility of introducing a 'carbon border tax' in the mid-2020s, which, if realized, could make it difficult for products, which are produced by countries or companies with large greenhouse gas emissions, to be exported economically. More than 290 global companies are participating in the RE100 campaign, an initiative seeking to source 100% of electricity consumption from renewable sources by 2050, while also are requiring their suppliers to manufacture products using 100% renewable energy.


The primary energy used in Korea was 303 million *toe in 2019, 83.5% of which is produced from fossil fuels (38.7% oil, 27.1% coal, 17.7% natural gas). Greenhouse gas emissions in 2018 were 730 million tons of CO₂, 87% of which, or 630 million tons of CO₂, were generated from the energy sector. Final energy consumption by category was industry (61.8%), transport (18.6%), household and commercial (17.3%), and public (2.3%).


*toe (tons of oil equivalent): a normalized unit of energy. 1TOE = 100 million Kcal.



<Green Gas Emissions and Final Energy Consumption Status; Source: Korea Institute of Energy Research>

Electricity accounts for 25.2% of total final energy consumption. Thermal energy accounts for 74.8%. Electricity can be produced without carbon dioxide emissions through renewable energy, nuclear power, and fossil fuel-fired generation & CO₂ capture and storage (CCS), but thermal energy is produced mostly from fossil fuels. Therefore, in order to achieve carbon neutrality, electrification that replaces 74.8% of thermal energy with carbon-free electricity must be accomplished.

In order to achieve carbon neutrality, the following energy transition is necessary:
① Producing carbon-free electricity that does not generate carbon dioxide
② Building next-generation power grids that utilize intermittent renewable electricity, and establishing integrated energy infrastructures such as energy storage systems, gas networks capable of hydrogen supply, and heating grids
③ Electrifying the energy system
④ Using carbon neutral fuels such as hydrogen (H2), ammonia (NH3), and biofuels or introducing industrial processes that utilize them in areas where electrification is difficult to be adopted
⑤ Using as little energy as efficiently as possible and reducing energy demand by circulating waste resources
⑥ Capturing and storing greenhouse gases generated from gas power plants, cement plants, oil refineries, and steel plants (when hydrogen-reducing steel-making is not possible) that are expected to continue to operate in 2050


<Massive Transformation for Carbon Neutrality; Source: Korea Institute of Energy Research>


Accelerated Transition to Renewable Energy, Expectations for 'Solar and Wind Power'

The BP Energy Outlook 2020 suggested that by 2050, electricity would account for 58.9% (83% of which is renewable electricity) of final energy consumption, hydrogen 15.7%, and bioenergy 8.3% to achieve carbon neutrality (Net-zero). In 2020, Korea produced 552 TWh of electricity. If electrification proceeds as projected, it is expected that 1,200~1,300 TWh of electricity will be needed by 2050.

Today, the energy transition to phase out fossil fuels is taking place actively around the globe. According to IEA statistics, Germany produced 46.7% of its total power generation from renewable energy in 2020, the U.K. 45.2%, Spain 45.0%, and Italy 42.9%. Korea still stands at 7%, but it plans to expand to more than 20% by 2030 in line with its energy transition policy. 

The key to carbon-free electricity generation is to use solar and wind power sources. Since mountains cover about 70% of Korea, areas for widescale installation are not sufficient, and the country must improve the efficiency of PV generation and develop thin film solar cells that can be installed in diverse places. The theoretical efficiency of silicon solar cells, which are now the nucleus of the market, is 29.4%, while the efficiency of solar modules that are currently being supplied is 20-22%. The government plans to develop *a tandem solar cell that combines a silicon solar cell with a perovskite solar cell to increase efficiency by more than 35% by 2040. Moreover, thin-film solar cell technology that can overcome the limitations of applications and aesthetics of existing solar cells, that is lightweight, flexible and can achieve more than 30% efficiency, and that can be applied to vehicles and mobile power supplies as well as to buildings should be developed. If solar cells with 35% efficiency are installed on 3% of the land area, 405 TWh of electricity can be produced annually with 303 GW. The area for solar power installation should be increased as much as possible to achieve carbon neutrality.

*Tandem solar cells: Categorized as a 2nd generation solar cell technology. These types of cells combine Si solar cells with perovskite-based tandem solar cells to produce electricity by absorbing different parts of the light spectrum. Perovskite solar cells are considered very promising, as they can be fabricated at a temperature below 150°C and have the potential to significantly reduce the space required for cell or module production.



<PV Technology Development Roadmap; Source: Korea Institute of Energy Research>

For wind power, extra-large, long-life generators are being developed to reduce generation costs. Korea has commercialized 4.3-5.5 MW of wind turbines and is now developing 8-10 MW models. Europe, the United States and other countries have commercialized 8 MW wind turbines and are piloting 12 MW turbines. Since Korea lacks windy flatlands and has low acceptance by local residents, it has no choice but to install offshore wind turbines. The wind power market potential, combining onshore and offshore, is estimated to be 129 TWh a year. Unfortunately, all 55 generators in five wind farms built in Korea in 2019 were imported. Korea aims to install large offshore wind farms, including a 8.2 GW facility in Shinan, Jeollanam-do Province, and 2.4 GW farm in Southwestern Jeollabuk-do Province. In order to use the installation of domestic products in these wind farms, development of domestic technology and industry must be actively carried out, and the localization of increasingly value-added maintenance technologies needs to be achieved as well.

However, expanding the installed capacity of intermittent and volatile electricity source, such as solar and wind power, can reduce the quality of electricity supply, making it difficult to manage in existing power grids. With the current power grids, wasted renewable electricity will increase from 2030, when renewable energy will account for more than 20%. In the future, core technologies for increasing renewable energy accommodation capacity, strengthening system reliability, and autonomous power grids will need to be developed in advance and deployed widely. Technologies, including supply and demand optimization, to deal with the increased supply of renewable resources, grid-scale power storage technology, *P2X (heat, hydrogen, etc.) technology, optimized AI-based demand management resources, and distributed resource network operation technology are essential.

*P2X: A method of storing electricity, such as renewable energy, in the form of hydrogen, heat, and other synthetic fuels


<Comprehensive Energy Infrastructure Roadmap; Source: Korea Institute of Energy Research>


'Electrification' of All Energy Systems to Produce Carbon-free Electricity

As carbon-free electricity generation grows further, the transport, industry, and building sectors must be electrified. The government plans to supply 1.13 million units of electric vehicles by 2025 and 3 million units by 2030 to convert internal combustion engine vehicles into electric vehicles. BloombergNEF predicted that electric vehicles will account for 54% of total car sales worldwide by 2040. Electric boilers, electrically-driven heat pumps, electrochemical processes, etc. should be introduced in the industry. Most air conditioning and heating and hot-water distribution systems for buildings must be electrified as well.


Realization of Carbon-free Energy, 'Hydrogen', to Change Future Energy

Carbon-neutral fuels such as hydrogen, ammonia, and biofuels may be used for trucks, aircraft and ships that are difficult to electrify. Recently, major countries around the world are focusing not only on carbon neutrality, but also on the hydrogen economy as an alternative to overcoming the economic depression caused by COVID-19. Hydrogen can directly contribute to greenhouse gas reduction in transport, electricity generation, and industry sectors. It can also compensate for the intermittency of renewable energy and contribute to carbon neutrality as a storage material for redundant power produced from renewable energy. BP Energy Outlook 2020 predicted that hydrogen will account for 15-16% of the world's final energy consumption by 2050, while the IEA points to hydrogen or ammonia as a renewable energy carrier, highlighting that countries must prepare for an era of renewable energy trading instead of fossil fuel-based energy trading in the future. McKinsey expects that the global hydrogen market will reach about 3,000 trillion won by 2050. By 2050, the world's hydrogen demand is expected to be 400 to 800 million tons per year and Korea's demand is expected to increase to 20 to 30 million tons. To this end, producing green hydrogen with water electrolysis equipment using renewable electricity produced in the Middle East, Australia, Chile, Mongolia, and northern Africa, which are rich in sunlight and wind, and transferring it to liquid hydrogen, ammonia, or LOHC form, or producing *blue hydrogen in areas that are rich in natural gas or coals and using it are being considered.

*Green/Blue/Grey hydrogen: Green hydrogen is produced from electrolysis powered by renewable electricity. Blue hydrogen is created from natural gas, where carbon emissions released during the production process are captured and stored. Grey hydrogen is produced by steaming the natural gas without capturing the CO₂ generated in the process. 


<Global hydrogen resource and demand distribution; Source: Hydrogen Insight Report 2021>

Between 2019 and 2021, 30 countries, including Europe, Australia, Japan, and Korea, announced national hydrogen technology development and distribution strategies, and expanded investment. The EU aims to install 40 GW of *water electrolyzers by 2030 and Germany some 10 GW by 2035, while the U.S. aims to supply 5.3 million hydrogen vehicles and 5,600 charging stations by 2030. Korea also aims to produce 6.2 million hydrogen vehicles, distribute 2.9 million units in the domestic market, and build 1,200 charging stations by 2040. To achieve this goal, it is most vital to produce green hydrogen, which does not produce greenhouse gases, at a low price. The hydrogen used currently is grey hydrogen that releases CO₂, and is being produced by reforming byproduct hydrogen from petrochemical plants and natural gas. The cost of grey hydrogen is around KRW8,000 per kg. If the ratio of renewable energy increases and the generation cost decreases after 2030, green hydrogen, which is produced from electrolysis, will be able to be supplied at less than KRW4,000 per kg, but the cost will have to be further lowered to less than 2,000 per kg by 2050 through technology development. When prices of electrolysis equipment, such as **alkaline, ***polymer electrolyte membrane (PEM), and **** solid oxide electrolysis cells (SOEC), are lowered to around US$300/kW, the market for water electrolyzers would exceed USD300 billion.

The International Maritime Organization (IMO) enacted measures to reduce greenhouse gas emissions from shipping by at least 50% by 2050 compared to 2008 levels. In response to this, Korea's three major shipbuilding companies are already developing ammonia-powered ships with the goal of commercializing them by 2025. In Europe, ammonia fuel cells for ships have high importance, and development is currently underway.

* Water Electrolyzer: uses electricity to break water into hydrogen and oxygen in the electrolysis process
**Alkaline: uses hydrogen ion (OH-)-inducing polyelectrolytes
*** Polymer Electrolyte Membrane (PEM): uses proton (H+)-inducing fluorinated polyelectrolytes with platinum, rubidium and iridium as electrodes
**** Solid Oxide Electrolysis Cell (SOEC): uses proton-inducing solid-state ceramics as an electrolyte.



<CO₂-free hydrogen production roadmap; Source: Korea Institute of Energy Research>


Technologies that increase resource efficiency and circulation to reduce energy demand

We also need to make efforts to effectively use electricity generated from zero-carbon sources and carbon neutral fuels, as well as reduce energy demand through proactive resource circulation. In Korea, the percentage of final energy consumption in the industrial and building sectors (residential, commercial, public buildings) is 61.8% and 19.6%, respectively. To improve the efficiency of almost countless energy equipment and devices used in these sectors, and to reduce the demand for energy is the most practical and cost-effective carbon neutrality approach. According to the IEA World Energy Technology Perspectives, improvement in energy efficiency will be the biggest contributor (37%) to limiting the global temperature rise to 1.5 °C. To achieve this, it is necessary to increase efficiency for end-user processes and devices by improvement in industrial process, achieving ultra-high levels of efficiency in industrial devices, constructing carbon-neutral buildings and further utilization of unused energy sources. Relevant technologies also have to be developed and widely available. In addition, to improve energy efficiency in the future, factory energy management systems (FEMS) and building energy management systems (BEMS) should be more widely used, coupled with D.N.A. (Data, Network and AI) technology. The technology to collect and process plastic and recycle it into other plastic products or hydrogen is an important technology to respond to the possible legislation of a plastic packaging tax.  To achieve carbon neutrality, we will need to embark on an era where we recycle all the products we are using.


Carbon capture and storage technologies to complete carbon neutrality 

Even in 2050 when LNG generation and electrification are expected to become mainstream, for the steel, cement and petrochemical industries, it might be inevitable to emit a significant amount of CO₂ due to process characteristics. To realize carbon neutrality, CO₂ emitted from production processes has to be captured and stored.  In Korea, a 10 MW dry and wet absorption process was developed recently to absorb CO₂ emitted from thermal power plants and industry. In the U.S., a project plant facility is in operation to capture and compress emissions from a 240 MW coal-fired power plant and transport it via a 130 km pipeline for enhanced oil recovery (EOR). What is most important is the cost. Currently, the cost of CO₂ capture and storage (CCS) is USD100 per ton-CO₂, which is still high.  Another problem is that appropriate facilities to store CO₂ have not yet been secured. Korea needs locations to store 100 million tons of CO₂ per year (up to 5 billion tons) and exert strategic efforts to secure the storage with both domestic and overseas partners. In the case of CO₂ utilization technology, there are uncertainties with respect to its actual contribution to reducing greenhouse gases, difficulties securing hydrogen or zero-carbon energy to transform CO₂ into a product, and in terms of market size and competitiveness.  However, it is necessary to take action to improve the technology using all technical approaches as a carbon-neutral technology that can reduce greenhouse gas emissions and create profit. 

Carbon neutrality is very difficult to achieve; however, it should not be neglected in order to foster a sustainable future for human beings.  I hope that innovative carbon-neutral technologies developed in Korea will vitalize the economy, while keeping the earth clean.

#Energy Insight
#Carbon Neutrality
#Professional Column
#Net-zero
#Renewable energy
#Carbon-free electricity
#Hydrogen
#Carbon capture and storage technologies
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