As of May 2022, according to the World Meteorological Organization (WMO) 's "The Global Annual to Decadal Climate Update," the global average temperature in 2021 was 1.1°C higher than the pre-industrial baseline, and temperatures will continue to rise as long as greenhouse gases continue to be emitted. The oceans will be warmer, glaciers will continue to melt, sea levels will continue to grow, and the weather will become more extreme.
Despite the global efforts for the climate crisis, the Earth continues to heat up. Innovative technologies that contribute to greenhouse gas reduction and climate change mitigation have become essential to shift the existing carbon-centered industry paradigm and strengthen the competitiveness of the low-carbon industry. Climate technologies such as energy efficiency improvements, alternative fuels such as hydrogen, carbon capture mill storage technologies, and low and zero-emission electricity can dramatically reduce carbon emissions from industries.
Technological innovation is already recognized as indispensable worldwide to achieve carbon neutrality. Korea also enacted the Climate Change Response Technology Development Promotion Act in April 2021 to foster and develop climate technology to achieve carbon neutrality goals.
Korea's "Climate Change Response Technology Development Promotion Act" describes climate change response technologies in two ways: greenhouse gas reduction and adaptation technology. In other words, climate technology aims to reduce greenhouse gases and mitigate and adapt to climate change.
For the development of climate technology, the Korean government selects and fosters ten core technologies (△ solar power △ wind power △ hydrogen △ bio-energy △ steel and cement △ petrochemical △ industrial process advancement △ transportation efficiency △ building efficiency △ digitalization △ carbon collection, utilization, and storage technology). In March 2021, to technically support "2050 Carbon Neutral," the company announced the "Carbon Neutral Technology Innovation Promotion Strategy" and selected the top 10 technologies to be strategically secured. The top 10 technologies were selected in consideration of long-term low-carbon development strategies and links with complete national plans such as the Green New Deal, contribution to greenhouse gas reduction, and advancement of significant industries and infrastructure technologies. The government plans to strengthen the cycle from core technology development to commercialization through pan-ministerial cooperation to "towing 3050 Korea's carbon neutrality through technological innovation."
In addition, to systematically support the national climate change response from the R&D perspective, the necessity to promote technological development legislation for climate change response has emerged. Accordingly, the Climate Change Response Technology Development Promotion Act was enacted in April 2021 and took effect in October of the same year. In January last year, the Ministry of Science and ICT designated the Korea Energy Technology Institute as the Climate Change Response Technology Policy Support Center and the Green Technology Center as the Climate Technology Cooperation Policy Support Center to support technology development and international cooperation.
Our country is going through the carbon-neutral goal-setting stage to the implementation stage. We recognize that climate technology is essential and are challengingly expanding support to develop it. In particular, significant countries commonly include investments in hydrogen and transport-related mobility technologies. Therefore, we should pay more attention to the potential and possibility of the development of technology.
Meanwhile, Korea's R&D investment in the climate technology industry in 2020 was $5.716.5 billion, accounting for more than 70% of the total investment in energy demand, energy storage, and renewable energy. Energy demand, a technology sector for energy efficiency in transport, construction, and industrial processes, was the highest at $1.795.37 billion (27.8%), followed by $1.486.91 billion (26%) in energy storage and $1.115.28 billion (19.5%) in renewable energy.
In addition, Korea's climate technology-related support has been focused on policy funds, and private-led climate technology venture investment is just beginning. Korea's first private venture capital fund specializing in climate technology investment was formed in late 2021. Impact Venture Capital Invitation Partners created the Envisioning Climate Solution Fund worth $60.18 million at the end of December last year. The fund was formed with an increase of $7.91 million in just three months after its formation as large companies continued to participate in the first formation with $52.27 million in September 2021. Private companies such as Hanwha Solution, GS, and Musinsa invested in the fund. This is a glimpse of the high interest in responding to climate change. In addition, impact investment company Picnic Ventures formed an investment association in April focusing on investing in early climate technology startups in Korea. The inflow of funds into the climate technology market is expected to grow.
(Note: Manager Kim Hye-ryeon, Deloitte Insights, Emergence of Climate Technology and New Technology, Part01 Technology Innovation that began with the climate crisis)