A survey on impediments to investing low-carbon technologies in the petrochemical industry in Korea

Event: Annual Conference of Japan Society of Environmental Economics and Policy Studies (JSEEPS)
Conference Proceeding

This paper identifies barriers hindering implementation and investment by companies in low-carbon technologies (LCTs) for energy saving and greenhouse gas reduction, through a survey study targeting petrochemical industries in Korea. A total of 35 samples were analyzed by employing statistical analysis and ordered logistic regression. Out of this total, 32 companies are targeted companies of the Korean domestic emission trading scheme (ETS), representing 63% of the total CO2 of all petrochemical companies under ETS. Overall, the surveyed companies are large energy consumers and heavy carbon emitters. Companies that evaluated their existing technologies have a limited potential for energy savings. In order to conserve energy and reduce CO2, companies indicate their focus on the introduction of LCTs and devices in the production process. However besides the barrier of a lack of financial support, there are other impediments to investment in LCTs such as lower investment priority, economic loss during new technology replacement, and uncertainty of technologies. Less pressure on energy prices is associated with a company’s decision on what is a priority for its management, and its evaluation of the economic advantage of introducing high-efficiency equipment. In this study, by applying the MBDC survey method, the payback period for the LCTs investment companies accept was calculated. The range of the payback period on the part of 50% of the samples was between 2.4 to 3.6 years. This preference for short-term profitability on LCTs investment may make it difficult to come to an investment decision. Financial support and information on LCTs are useful for stimulating investment in LCTs. Companies agree on the incentive of economic instruments such as the ETS as a supportive policy. This empirical study indicates the policy implications in promoting climate change policy implementation for the introduction and expansion of LCTs from an industry perspective.

Lee SangYeop
Yu Shim Jeong