GANGWON PROVINCE, South Korea – Kim Han-il does not sell pizzas, but he has a good story about one.
“There was this father and daughter who went into a pizza shop and the daughter ordered a pizza, but the father did not have enough money to pay for it,” Kim recounted. “The pizza shop owner took pity and gave them the pizza for free.”
The reward came later: “When that story got out, that pizza shop got hundreds of orders.” And that, Kim maintains, is how a socially responsible company should behave.
Kim, it is fair to say, knows a bit about food & beverage. As the senior director of McDonalds Korea, Kim is overseeing a range of initiatives to ensure that his burger business is seen in the same light.
Kim, and others were talking up ESG – Environmental, Sustainable, Governance – initiatives at last month’s Jeongseon Forum, an annual conference that takes place in the mountains of Gangwon province, site of the 2018 Winter Olympics, in South Korea’s northeast.
While businesspeople, officials, academics and activists discussed solutions, one thing became clear: While these initiatives may have much to offer on the tactical side, on the strategic side, Korea’s carbon neutrality ambitions are far from assured.
In the waning months of the Moon Jae-in administration, which leaves office next spring, there is still minimal clarity in terms of the heavily industrialized country’s future energy mix.
In other words: while there are plentiful plans to go green in the downstream space, how clean upstream generation can be achieved in a country with an anti-nuclear policy and a tiny renewable energy capacity is still unclear.
In one sense this is odd. Before many countries came under climate-change pressure to made greenhouse gas emission reduction pledges, Koreans had heard it all before.
“About 15 years ago, Korea was a frontrunner in green growth, under the Lee Myung-bak administration,” (2008-2013),” said Park Ho-jeong, a professor of food and resource economics at Korea University. “But it was a political slogan, and was not supported by business or citizens.”
Climate change suffers from what Park calls “the discount phenomenon.” “We tend to discount the seriousness of an issue when it is distant,” he said.
Even so, industry is “reluctantly willing” to adopt carbon neutrality, Park said, given that it is “a global phenomenon – we don’t have any choice.”
Downstream solutions
McDonalds Korea is doing the right – or necessary – thing, motivated by several driving forces.
One, Kim said, is government regulation. Another is the multinational’s brand-related desire to be the industry leader for eco-friendliness. Three, is its sense of social responsibility as a global company. And of course, Kim admits, “I can’t deny NGO pressure.”
Globally, McDonalds – the unwitting subject of the scathing 2004 documentary, “Supersize Me” – has shifted from palm oil to the more sustainable sunflower oil. In a bid to reduce plastic, drinks cups now have drinking holes; straws are only offered on request. By 2025, the company plans to operate with 100% renewable packaging.
It looks doable. To reach that goal, Kim said, the Korean branch needs to just cut out its last 26% of plastics.
Across the country, five flagship stores have installed solar paneling, Kim said. And McDonalds is working closely with local farmers to upgrade localization to north of 60% of produce, while implementing animal-health and antibiotic programs.
Famed for its economical meals, McDonalds innovated in the cost-saving space. It was the first restaurant chain in Korea to establish digital menus – thereby increasing customer throughput and freeing up serving staff – and 70% of its stores have “non-tact” drive-through facilities – “a good competitive advantage during Covid,” Kim said.
But ESG innovations cost money, Kim admitted.
“It’s a big challenge balancing social responsibility and maintaining costs,” Kim told Asia Times. Last year’s transition from palm to sunflower oil upped costs, and the photovoltaic initiative is experimental and can only be placed on restaurants that – in this population-dense, high-rise country – have roofs. “Honestly, it is not that cost-effective in Korea,” he said.
Likewise, one of the biggest obstacles in the way of a holy grail of the sector – bio-degradable plastic – is economics, Kim said.
One man who knows a bit about recycling plastic is Gangwon province Governor Choi Moon-soon.
“We are using a ‘carrot policy’ for PET bottles,” Choi said. Polyethylene terephthalate, or PET, is a thermoplastic commonly used to make disposable bottles and food containers, as well as being used in industry.
Under Choi’s scheme, PET is recycled from disposable plastic that chokes terrestrial and marine environments into non-disposable textiles used in garment manufacturing. Provincial businesses can receive subsidies for gathering their used PET materials, while Choi plans to pay citizens for collecting and handing in waste plastic.
Like McDonald’s Kim, Choi admits it is not economical. It is “15% more expensive” than regular textile processes, he said.
However, upscaling may produce efficiencies. The provincial government is planning a purchase process from citizens that will reward numbers: “If we collect 100 of these bottles, that would be really effective.”
In a province that depends on tourism, most particularly nature tourism – Gangwon is famed for its mountain hiking trails and ski slopes, as well as its long, beaches washed by Pacific rollers – and gets about 150 million visits a year. Choi plans to leverage this in his scheme.
“We think we can test policies on our residents, then expand these policies to visitors,” he said. “For example, we can offer some incentives to collect waste.”
Korea’s energy dilemma
Alarming statistics make clear the scale of the challenge to create a more sustainable future.
In the next 15 years, global infrastructure will double; in the next 20 years, global GDP will double; and in the next 40 years, global urban populations will double. Given that July 2021 was the hottest July on record, while the last decade was also the hottest on record, these huge increases are going to massively increase pressure on natural resources and raise the climate heat.
South Korea has pledged to be carbon neutral by 2050, but a detailed roadmap is lacking and Park is doubtful.
“In Korea, we need to take drastic measures to achieve net zero by 2050,” he said. “I highly doubt we will achieve it.”
According to data delivered to the forum, among greenhouse gas emissions, the largest sectoral contributors globally are electricity generation (25%), followed by agriculture (24%) and manufacturing (21%). Korea is the world’s 10th largest economy, but the seventh largest emitter of GG emissions despite having the third-smallest population among the Top 10 listing of leading national emitters.
While Korea is not home to a huge agricultural sector, it needs to produce huge amounts of electricity.
It must keep its 24/7, digitally active, middle-class population comfortable in a nation that suffers extremes of steamy summers and frigid winters. And it needs to keep its energy-hungry manufacturing base – chipmakers, shipbuilders, carmakers, petrochemical refiners, steelmakers – supplied. Heavy industry requires stable, non-oscillating sources of high wattage energy that cannot be supplied by renewables.
This may explain why South Korea – widely seen as an innovative, fast-moving economy and fast-adopting society – has been so slow to shift to clean or green energy.
“It is the economic structure of Korea,” Yoo Yeon-chol, a former climate change ambassador to the UN, said.
Upstream conundrum
South Korea – a mountainous peninsula surrounded by the sea on three sides – may appear to be perfectly located to leverage wind, hydro and wave energy. Yet, in 2018, according to the International Energy Agency, Korea “had the lowest share of energy from renewable sources in energy supply among all IEA countries.”
According to Our World in Data, the share of energy from renewables in Canada was 27.64%; in Germany, 17.4%; in the UK, 14.45%; in China, 12.26%; in Japan, 9.31%; in the US, 8.71%; and in India, 7.78%. South Korea’s percentage was just 2.54%, though government officials told Asia Times that this number has risen and other sources (see below) put the number marginally higher.
One measure Park suggested is price increases for energy consumers.
“Power prices need to go up,” he insisted. “The Korean government controls the price artificially. There is no motive for consumers to cut power consumption.”
Of course, that could be a massive risk for any politician who dared to implement it. And power generation is certainly a headache for those in office.
“In our country, we are the highest province, with 16% of renewables. The national average is about 3%,” Choi said. “We are going to increase that status to 20% by 2030, and we drew up a plan for carbon neutrality by 2040.”
Hardly earth-shaking ambitions, but Choi is a realist.
Due to the centrality of nature tourism, he is mindful of how his province’s aesthetics could be ruined by renewable energy facilities.
“If we want to focus on solar or wind we have to destroy the natural environment. We would have to disrupt the mountains,” he said. “We have to consider all those things, and that is why our renewables target is modest.”
It is not just optics. Another issue is sustainable supply. Even for Gangwon – the least populated part of the country, lacking the heavy industry embedded elsewhere – renewables are not fully feasible.
“We have set out our policy for liquefied hydrogen for the future,” Choi said. “Wave and wind and hydro and solar are not enough to produce the energy to meet demands.”
Hydrogen, a clean-energy silver bullet, is central to the national strategy to replace fossil fuels. As of this year, government agencies have been talking up hydrogen as a fuel for vessels, cars and trains – and are cooperating with major national manufacturers to that end.
But hydrogen comes at a price: It requires power to make and money to use.
“It takes a lot of cost, it is not affordable, but the technology is advancing very quickly,” Choi said. “Even if it takes costs, we have to go to the right directions.”
A lot of hope is being invested in future technologies.
“60% of the CO2 in the province comes from power plants and the cement industry,” he said. “If we develop CO2 capture technologies, we can achieve carbon neutrality faster.”
Achieving carbon neutrality presents a massive problem. Korean industry cannot rely on renewables, and the other major clean energy source, nuclear, is mired in controversy.
“This is the big question, it will be a big difficulty facing the next presidential candidate,” Yoo said, referring to race ahead of the March 2022 presidential election. “We face a black hole in energy.”
In 2019, according to the Energy Information Administration, South Korea’s energy mix was: Petroleum and other liquids 43%; coal 28%; natural gas 16%; nuclear 10%; and renewables 3%.
Yet South Korea is highly competitive in nuclear generation. In 2009, in a deal heavily promoted by the “Green Growth” Lee Myung-bak administration, a Korean consortium won a $20 billion contract to supply UAE with nuclear reactors.
But however clean atomic energy may be, the 2011 Fukushima nuclear plant meltdown horrified South Korea. In 2017 President Moon Jae-in, an anti-nuclear politician by conviction, took office and announced a plan to entirely phase out nuclear energy within 45 years. It was not without controversy.
“The government made a choice about nuclear energy,” Yoo said. “It created many conflicts.”
Though two reactors were shut down under Moon, 24 remain in operation. With the situation roiled by debate, opacity continues right up to the end of Moon’s term. His plans to phase out nuclear, “remain preliminary,” according to the World Nuclear Association.
In recent years, Korea has been choking on the fine dust which seasonally coats the land, causing multiple health and respiratory problems.
While much blame is placed on pollution blown across the Yellow Sea from China, data makes clear that much of the fine dust – depending on time of year – is generated from domestic, coal-fired power plants.
Yet the “discount phenomenon” may again make be in play. The (albeit, so far unrealized) potential for a deadly Korean nuclear catastrophe may grip the imagination more fiercely than the more insidious, long-term risk of fine dust.
“If technology develops, it may be safe, but at the moment, I cannot agree with the assumption that nuclear is safe,” Yoo said. “And safety is more important – it is a matter of life and death.”