Skip to content
  • KOSPI 3015.06 +26.42 +0.88%
  • KOSDAQ 990.54 +7.11 +0.72%
  • KOSPI200 393.19 +3.60 +0.92%
  • USD/KRW 1188.3 -6.70 -0.56%
  • JPY100/KRW 1,044.71 -10.43 -1.00%
  • EUR/KRW 1,378.19 -7.77 -0.56%
  • CNH/KRW 184.65 -0.47 -0.25%
View Market Snapshot

Climate change

Korean govt urged to hike diesel tax, ban fossil fuel cars by 2035

By Nov 24, 2020 (Gmt+09:00)

South Korea should raise its tax on diesel to match the price of gasoline and phase out internal combustion engine cars by 2035 to tackle air pollution and climate change, according to a government advisory group.

The National Council on Climate and Air Quality (NCCA) on Nov. 23 also urged the government to adopt coal-free power generation by 2045 or earlier to meet President Moon Jae-in’s stated aim of going carbon neutral by 2050.

“The era of conflict between the environment and the economy is over,” said NCCA Chairman Ban Ki-moon, former UN secretary-general, during a press conference. “Our economic policy should tackle the climate crisis.”

Ban Ki-moon, head of the presidential advisory group on Korea's climate change, holds a press conference.
Ban Ki-moon, head of the presidential advisory group on Korea's climate change, holds a press conference.

The NCCA, a presidential advisory group launched in April 2019, proposed that the government adjust its diesel tax to raise diesel prices to 95% that of gasoline over the next three to five years and eventually match gasoline prices to reduce demand for diesel vehicles.

Currently, the fuel tax for diesel is about 530 won ($0.50) per liter compared to 746 won ($0.70) for gasoline. Korea’s diesel price relative to gasoline ranks 28th among the 35 OECD member countries.

The council also suggested a total ban on cars using gasoline or diesel in 2035 or by 2040 at the latest and move toward eco-friendly vehicles such as electric cars and hydrogen fuel cell cars to reduce greenhouse gas emissions.

The proposal follows similar decisions by the UK to ban vehicles driven by fossil fuels by 2030, China by 2035 and France by 2040.

CARBON-NEUTRAL KOREA BY 2050

The Moon Jae-in government declared in October that the country will go carbon neutral by 2050, bringing it into line with other major economies. He vowed to end the country’s dependence on coal and replace it with renewables as part of the Green New Deal, a multibillion-dollar plan to invest in green infrastructure, clean energy and eco-friendly vehicles.

As part of the government initiative, the country plans to reduce its greenhouse gas emissions by 37% from current levels by 2030.

The Korean government has been advised to hike diesel taxes and ban fossil fuel cars by 2035.
The Korean government has been advised to hike diesel taxes and ban fossil fuel cars by 2035.

The advisory group also recommended that the government phase out coal-powered energy generation by 2045 and reflect 50% of environmental costs in electricity bills by 2030 to help reduce air pollutants such as fine dust.

Korea operates some 60 coal-fired power plants, generating about 40% of the country’s electricity, but is facing growing calls to improve its air quality, rated as one of the worst among the OECD nations.

Analysts say the government will consider implementing the advisory group’s proposals to achieve its carbon neutral policy goals.

GOVT INITIATIVE TO HIT AUTO INDUSTRY HARD

But the oil, petrochemical, steel and auto industries have expressed concerns over the government initiative to shift its energy policy toward the green economy.

“We share the same view that our country should move toward lowering greenhouse gas emissions and tackle fine dust. But the cost to achieve that goal is too much for the diesel car drivers to bear,” said Lee Dae-geun, a public relations director at the Korean Public Service and Transport Workers’ Union’s cargo truck drivers unit.

Korean govt urged to hike diesel tax, ban fossil fuel cars by 2035

According to the transport ministry, about 83% of the nation’s 422,761 cargo trucks are powered by diesel.

The Ministry of Trade, Industry and Energy said a quick paradigm shift to a low-carbon economy could result in massive job cuts to the auto industry in particular.

“The auto industry accounts for 7% of local employment. A swift shift toward the green economy will hit the auto parts makers hard as EVs and other eco-friendly cars use fewer components,” said a ministry official.

Write to Eun-Seo Koo, Soo-Young Seong and Il-Gue Kim at koo@hankyung.com

In-Soo Nam edited this article.

Comment 0

0/300