Investment in Low-carbon Industries Projected to Expand
The author is an analyst of NH Investment & Securities. He can be reached at ys.hwang@nhqv.com. -- Ed.
The US-led Leaders’ Climate Summit was held over Apr 22~23. Participation in the event by both China and Russia confirmed global cooperation on climate change prevention. Investment in low-carbon industries is projected to expand more rapidly in response to boosted greenhouse gas reduction targets in each country.
Deepening in greenhouse gas reduction targets, by country
Chaired by US President Joe Biden, the Leaders’ Climate Summit was held over Apr 22~23, attracting leaders from 40 countries. The fact that both China and Russia participated (despite recent tense relations with the US) evidences global cooperation in responding to climate change. The event also served as an opportunity to confirm the US’s return to the forefront of climate change initiatives.
Notably upping its greenhouse gas reduction target, the US unveiled plans to reduce emissions by 50~52% by 2030 compared to the 2005 levels. In his closing speech, Mr Biden thanked countries for their new commitment to handling climate change, and confirmed that financial aid plans are being prepared to help developing economies in their reduction efforts.
The EU, including Germany and France, boosted their greenhouse gas emission reduction targets to cuts of more than 55% by 2030 below the 1990 level, up from 40%. Japan’s target for cutting emissions was raised to 46% by 2030, up from 26%, while Canada raised its goal to a decrease of 40~45% by 2030 below the 2005 level, up from 30%. In South Korea’s case, President Moon announced that the country will strengthen its 2030 greenhouse gas reduction target further and submit the new target to the UN within this year. He also drew attention to the policy of suspending domestic and foreign financial support for coal power generation.
Coal regulation countdown and expansion of alternative industries
China has not raised its greenhouse gas reduction target, but the country did present a roadmap for reducing coal usage. In detail, the Chinese government announced plans: 1) to strictly control the increase in coal consumption during its 14th 5-year period (2021~2025); and 2) to gradually reduce coal consumption during its 15th 5-year period (2026~2030). India and Russia, which rank third and fourth, respectively, in terms of the world’s greenhouse gas emissions, made no mention of a change in their greenhouse gas reduction targets.
In the run-up to the UN’s General Assembly on Climate Change (COP26), which will be held in Glasgow in the UK in November, several more countries are expected to unveil upward revisions to their greenhouse gas emission targets and to present details of specific reduction goals by sector. The achieving of such goals is to entail both beefed up policy support and expanding investment in certain industries. While coal power generation is to shrink significantly going forward, investment in renewable energy industries (such as wind and solar energy) should strengthen. In addition, likely rapid growth of the EV/secondary battery, hydrogen car/hydrogen industries is to reduce oil usage. Discussions on the eco-friendly merits of existing nuclear power models will likely continue for now, but moving ahead we expect to see an acceleration in the development of alternatives such as small modular nuclear power plant (SMR) businesses.