K-eco’s head claims tax reforms will lead to carbon neutrality

Ahn Byung-ok is the chairman of Korea Environment Corporation (K-eco) and sits down with the Korea JoongAng Daily for an interview at his office in the K-eco headquarters located in Seo District in Incheon on Monday, March 21. [PARK SANG-MOON]

 
Ahn Byung-ok, Chairman and CEO of Korea Environment Corporation, (K-eco), stressed that tax reforms are essential to incentivize companies to reduce greenhouse gases as the country strives to achieve carbon neutrality.
 
The 59 year-old environmental expert was elected fifth head of K.eco on Dec. 31, for a term of three years. He said that he would work towards the agency’s efforts in leading Korea’s digital transformation as well as its carbon neutrality movement.
 
Ahn said that to achieve carbon neutrality, major tax reforms are necessary. Ahn spoke to the Korea JoongAng Daily in an interview on March 21. This was before Ahn’s 100th day in office, which fell on Sunday. A price on carbon is the best way to accelerate your progress towards net-zero. Companies will start looking for ways to reduce carbon emissions when there is a price on carbon.
 
He said that tax incentives should be provided to encourage companies to reduce greenhouse gases and to balance out carbon pricing.
 
K-eco is a quasi-government organisation providing environmental services to the Ministry of Environment. It was founded in 2010 and aims to efficiently operate greenhouse gas reduction programmes, improve the environment, manage resources, and respond to climate changes.
 
Ahn was previously a vice environment minister and chairman of the executive management board of the National Council on Climate and Air Quality. He was also the former president of Korea’s Institute for Climate Change Action as well as an AI content convergence professor at Hoseo University.
 
Ahn stated that he doesn’t anticipate any major changes in environmental policies under the Yoon Sukyeol government. Areas like climate change are universal problems.
 
In his campaign, President-elect Yoon also indicated a shift away the Moon Jae in governments nuclear phase out policy. Yoon pledged to use nuclear power to reduce carbon emissions and Korea’s dependence on foreign energy. He also promised to keep operating current nuclear reactors as long as safety is guaranteed.
 
Ahn suggested that there might be some speed control regarding the phasing-out of nuclear reactors under the new government, while stressing the importance to continue to search for renewable energy sources.  
 
The European Union is pushing ahead its carbon border adjustment mechanism (CBAM), a tariff that will be applied to imported goods based upon their carbon content. CBAM will force European importers to purchase digital certificates that would cover their imports in certain areas.
 
Ahn observed that Europe’s CBAM could pose problems for Korea as a major exporter. He said that the CBAM system could pose problems for Korea’s major exporter country, but that Korean industries are better prepared because the ETS greenhouse gas emissions trading scheme is similar to the European Union.
 
Ahn, a South Jeolla native, received his bachelors’ and masters degrees at Seoul National University in Oceanography. He also received a doctorate on applied ecology at Germany’s University of Duisburg–Essen.
 
These are edited excerpts taken from the interview.
 
 
Q. It’s been almost 100 days since your appointment as chairman of K-eco. What were your initial thoughts? What have you been working on?
 
A. K-eco Korea’s only comprehensive environmental service agency. It oversees many of the measures that directly relate to carbon neutrality. Carbon neutrality isn’t something Korea or K-eco thinks is important. It’s a milestone established on a global level through the Paris Agreement. [on climate change]and the new system. I believe digital transformation and carbon neutrality will soon be a reality. K-eco is a ship to me, and it is up to me to get past this hailstorm without sinking. The captain of the ship is the chairman. The captain is not the only person responsible for the ship’s direction.
 
K-eco has been a learning experience over the past three months. This was a chance to see the agency’s full potential and strengths as well as to understand why these efforts aren’t flourishing. I visited approximately half of our regional branches, and was reminded by K-eco that they are the agency on the forefront of environmental policies.
 
 
K-eco was established in 2010 as Korea’s largest comprehensive environmental agency. What is K-eco’s main role? How does it differ from the Ministry of Environment in its tasks?
 
A body is made up of many organs. K-eco can be compared to the arms and legs, and the Environment Ministry as the heart. K-eco is now playing a greater role in environmental policy and can even function as the brain. The most important aspect of achieving carbon neutrality is to reduce greenhouse gas emissions. Around 75 percent of all emissions come from the industrial sector. In 2015, the Act on Allocation and Trading of Greenhouse Gasemission Allowances was passed. This Act allowed industries to remain competitive while still reducing their emissions. Since then, K-eco has played a crucial role in this important task of allocation. The Framework Act on Carbon Neutrality and Green Growth passed last year. New measures such as a climate fund will be introduced. The government will provide support to industries with 2.5 trillion-won. [$2 billion]Each year, climate response funds are invested in facilities and technologies to achieve carbon neutrality.
 
It is also important to consider the role of local governments. The carbon neutrality perspective is used to filter out projects that are promising but not sustainable. K-eco monitors and monitors the Greenhouse Gas Reduction Cognitive Budget System. [which analyzes the impact of government plans on greenhouse gas reduction when national funds are set up].
 
 
Carbon incentives have been a key component of your advocacy for green growth in the private sector. Can you please elaborate?
 
Major tax reforms are necessary to achieve carbon neutrality. Because in a capitalist economy, putting a price tag on carbon is the best way to accelerate the journey to net-zero. Companies will start looking for ways to reduce carbon emissions when there is a price on carbon. Many countries have adopted carbon pricing. These include carbon taxes or greenhouse gas ETS. Korea has already implemented an ETS and the government appears to be actively considering introducing carbon taxes.  
 
Even though a carbon price is inevitable, it can have many side effects. Industries with high carbon emissions could see an increase in expenditures. Their price competitiveness will drop, according to a company’s point of view. They will be discouraged from making capital investments in green growth and carbon neutrality. It is too costly and could place too much burden on the company, which could threaten its competitiveness, and even its survival. We must lift this burden.
 
Carbon pricing should be used to guide companies to reduce greenhouse gas emissions and pollutants. The government must also provide incentives to encourage such emission reductions. This is the purpose of carbon tax reform, to balance such a heavy burden. A grand design is needed in tax reforms. This could include reducing corporate taxes for companies and income tax for individuals. As producing greenhouse gases and pollutants is a serious problem, it is fair to lower taxes in exchange for a higher price. If there is this balance, our industries can accelerate their progress towards carbon neutrality.
 
 
In terms of carbon neutrality policy, the European Union appears to be in the lead. Are there carbon-related policies Korea should be watching?
 
Europe does not see environment and economy as separate fields. They don’t view economy and environment as colliding but rather see them as one. The EU believes that proper consideration of the environment and appropriate investments are both economically beneficial. This thought was once only common in the EU. However, global financial institutions as well as investors are now moving in this direction. It is difficult to separate the tasks of achieving carbon neutrality and trade and financial regulations at this time. Companies that disregard the environment will struggle to compete in a global market.
 
Similar pledges were made by the EU under the European Green Deal, which amounts to 1 trillion euros [$1 trillion]In sustainable investments over the next ten years to support this. The European Commission described the Green Deal as a policy to prevent climate change and a new industrial strategy. CBAM is another example of this. EU policymakers believe that if only European companies are working towards reducing greenhouse gas emissions and other countries lag behind then global climate response will not work. It will also be unfair to European businesses, which will be competing in a competitive market for trade and commerce because carbon pricing.
 
 
Do Korean industries need to be concerned about the CBAM
 
The CBAM will be in force next year. Korea, which is heavily dependent on exports, could find it problematic. I believe that the United States could, at any time, implement a carbon-border tax system after the EU. However, Korean companies are better able to deal with Europe’s CBAM since we have an emissions trading system. The Korean ETS is somewhat comparable to the EU ETS. From Europe’s perspective, Korea has similar institutional conditions that require greenhouse gas emission reductions. However, standards may not be as high as EU standards. While Korea is not in the worst position relative to other countries, Korean companies urgently review how CBAM will work and how it will impact them.
 
 
Are you expecting any major changes to environmental policy under the Yoon Suk-yeol government’s control? Do you have any suggestions on the key areas that should be the focus of the incoming administration? What role will K-ecos play in achieving this?
 
There is a possibility that energy policy might shift, particularly in relation to nuclear power plants. However, I believe there will not be major changes in traditional environmental issues like air pollution, climate change and water recycling. There is very little room for environmental policies to be changed compared to other fields due to differences in policy positions.
 
Covid-19 has been a difficult time for us. It has lasted over two years. Covid-19 has been a difficult time for the environment due to factors like the rise in single-use plastic waste from food deliveries. In the post-coronavirus age, it is not only about the economic sector. People-to-people interactions are also important. Covid-19 has also disrupted the delicate relationship between human society, the natural environment, and other aspects of human society. This relationship can be restored by implementing environmental policy. I believe that the new administration is going to push more for environmental policies. K-eco will also be ready to help in that instance. I believe that resource circulation may play a particularly important role.  
 
Another urgent task is to reduce greenhouse gas emissions in the country by 40 percent from its peak in 2018. It must be done by 2030. The term of the new administration is for 2027. However, the international community regularly monitors the progress and puts pressure upon countries. Therefore, the new government must consider how to achieve the emission reduction targets by 2030. K-eco, in turn, will manage policies to help achieve the nationally determined contributions [NDC]We will work harder to ensure that such measures run efficiently.
 
 
You mentioned that the government could abandon the current policy of nuclear phase-out.
 
While we call it a nuclear-free strategy, the current plans allow nuclear reactors to continue operating until 2080. Safety is essential for nuclear power stations. The idea is to reduce nuclear reactors while keeping safety in mind. I believe there could some speed control [under the new government]. While renewable energy sources may be more accessible than we expected in terms of climate change response, we must also consider other options if this is not the case. The new government might consider nuclear power as an option.
 
 
Can you give us an example of your digital transformation vision that was mentioned in your inauguration speech.
 
The fourth industrial revolution is a time when digital technologies are moving at a much faster pace than expected. However, these digital technologies can be used to create jobs for others and take away jobs for some. It is currently predicted that more jobs will disappear than new ones are created. Digital transformation can help us work more efficiently if we flip this. These technologies can be used for repetitive jobs. However, human resources can be used to create new, more productive fields. Many K-ecos projects use digital technology, such as compiling data about water and air pollution levels or resource circulation. If data is collected efficiently, it can be used in future projects and shared with public.  
 
 
Over the years, you have been working to eliminate the fine dust problem. How do you diagnose the problem? Do you have any suggestions on improving the air quality situation?
 
We have implemented the fine dust seasonal control system [a government measure to reduce fine dust particles through the banning of Grade 5 emission vehicles and a reduction in the operation of coal-fired power stations]Since winter 2019, for four months, between December and March 2019. Some believe that the Covid-19 situation has caused the fine dust level to drop. From March 2020 to December 2020, there were some effects due to global coronavirus locksdowns. In 2020, fine dust levels were lower than in previous years. However traffic and industry returned to normal operations by November and Dec., which was in line with economic recovery expectations. If we were to assume that fine dust levels had improved solely because of Covid-19 then winter 2021 and this winter would have been very different.
 
Atmospheric conditions are the most important factor, as they can spread fine dust levels from domestic and international locations. A strong measure is also the season management system. I believe people underestimate their importance in reducing fine dust levels. If the atmospheric conditions remain the same, we will see a steady improvement in air quality. We still have a lot to do, when compared to fine dust levels found in major cities such as London and Tokyo.
 
 
Korea stated that it is willing to share its knowledge and experience in carbon neutrality with other countries. Do you know of any K-eco projects that you would recommend?
 
There are many areas where cooperation is possible in carbon neutrality policies as well as in our environmental infrastructures such water treatment plants, waterworks and incinerators. Korea is a country that has had to transition from being a developing nation and has seen both air and water pollution. K-eco has unique knowledge in the construction, management and operation of basic environmental infrastructures that reduce pollutants. Developing countries want to improve their economic growth while reducing pollution. Therefore, I believe we have an obligation share our technologies with our neighbours.
 
 
What is your greatest goal as K-eco chief during your tenure?
 
K-eco is a quasi government agency and a public institution. It has the greatest responsibility and role in environment issues, out of all public institutions. K-eco is an agency that can lead in carbon neutrality, which is acknowledged by the public. This agency should leverage carbon neutrality goals, digital transformation, and ESG. [environmental, social, and governance]. We need to be recognized at a global scale for providing high-quality services in the environment.
 
 

BY SARAH KIM [[email protected]]