With the Paris Agreement on Climate Change having become effective on November 4, the South Korean steel and petrochemical industries are predicted to take a hit.
The local steel industry is claiming that it has achieved a very high level of energy efficiency through continuous investment and, as such, it is rarely capable of reducing greenhouse gas emissions as of now. According to the State Department of the United States, the energy efficiency of the Japanese, Australian and U.S. steel industries is 104, 106 and 118 when that of the South Korean steel sector is regarded as 100.
The South Korean petrochemical industry, in the meantime, is saying that the tighter emissions control will cast a damp over the business conditions that are turning for the better these days. Local petrochemical companies are also claiming that their energy efficiency is second to none in the world and thus emissions reduction requirements are likely to lead to an increase in production cost attributable to credit purchase. Last year, companies in the industry had to spend 36 billion won or so for additional credit purchase for an allowance shortage of two million tons.
Meanwhile, renewable energy companies such as Hanwha and OCI are seeing the agreement as an opportunity as the agreement is likely to result in an increase in demand for solar power and wind power facilities. The shipbuilding industry is expected to benefit from the agreement as well because South Korean shipbuilders are better at building environmentally friendly ships than their Chinese and Japanese counterparts.
Automakers are planning to accelerate the development of green cars while reducing greenhouse gas emissions from their manufacturing facilities. The Hyundai Motor Group, for example, completed the largest rooftop solar power system in South Korea in its Asan plant in late 2013 and is making use of various recycling techniques in order to minimize environmental pollution.