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Greenflation” or price hikes in renewable technology resources such as metals, minerals, and others is becoming a concern due to surging energy prices and the government's finalized plan to drastically cut greenhouse gas emissions.
According to industry sources, South Korea "has plenty of reasons to be nervous" about soaring utility costs.
On Monday, the US West Texas Intermediate (WTI) Crude Futures reached a seven-year high of $83.73 per barrel while Brent Crude oil hit a three-year high price of $86.04 per barrel.
With China struggling with its energy supply and other key economies rebounding from the pandemic facing higher energy demand, the shortages of natural gas and coal are in full view.
South Korea’s new goal of cutting greenhouse gas emissions has increased by 40 percent by 2030 from 2018 levels.
The new goal would require manufacturing businesses to drastically overhaul their facilities coal and liquefied natural gas account for 60 percent of their energy supply.
It costs 276 won per kilowatt-hour to generate electricity from a 20-gigawatt floating offshore wind farm to be built by South Korea by 2034--five times more than the cost of generating electricity through nuclear power plants, which the Moon government seeks to phase out.
Consequently, the Federation of Korean Industries (FKI) has been against the government's plan.
They argued that the government is "not being sufficiently cautious" in its green campaign implementation and "not considerate" about the difficulties faced by enterprises in the carbon neutrality transition.
Incheon National University professor Son Yang-hoon said that greenflation’s effects would possibly be "felt across every corner of society, including households."
Son added that greenflation may be passed on to future generations if not properly addressed.
