An Island Paradise Offers a Cautionary Tale for Net-Zero Goals

(Bloomberg) -- The world’s busiest airline route during the pandemic has been the one-hour flight from Seoul to the resort island of Jeju, and even in the chilly winter months, the airport is packed. Outside the terminal, electric Hyundai and Renault Samsung taxis idle silently, their blue license plates identifying them as battery-powered cars.

From the airport, a drive to Hallasan Mountain or the luxury beach enclave Seogwipo takes visitors along the coasts, where nearly 100 windmills churn in the isle’s notorious ocean gusts. Add in the solar panels that dot rooftops of houses and resorts, and it’s easy to get the impression that Jeju could be well on its way to powering the entire island with renewable energy.

Island policymakers made that an official goal roughly a decade ago. Jeju would become completely independent of fossil fuels by 2030. Wind and water are abundant, and there’s no heavy industry to rehabilitate. It was a bold target, officials thought, but not an impossible one. If it was successful, it would have much to teach the rest of South Korea, which has pledged to cut emissions by 40% from 2018 levels by 2030 on the way to climate neutrality by 2050.

But more than halfway through its initiative, Jeju is way behind. As of today, the island produces only a small fraction of the clean energy it needs, and some of it still goes to waste. Electric vehicles aren’t replacing gas-powered cars quickly enough. From 2009 to 2019, the latest data available, the island’s carbon-dioxide emissions rose 13%. “We really thought at the beginning that the Carbon-Free Island project could be successful by 2030,” said Woo Keun-min, a former Jeju governor who retired in 2014. “We wanted Jeju to be a beautiful green island full of artists like Naoshima in Japan.”

Islands like Naoshima and Jeju are appealing laboratories for experiments like this. Residents pay high prices for energy that has to travel from the mainland and are eager to lower their costs. Geography plays a role as well. In addition to coastal winds and sunshine, an island’s circular shape and limited land mass are an advantage for electric vehicle adoption. Hawaii and Hainan have set similar targets. If these projects can be successful, the thinking goes, the efforts can be scaled up and replicated on the mainland.

But there may be at least as much to learn from failure as from success. Jeju’s two biggest sources of rising CO2 emissions are gas-powered vehicles, which accounted for nearly 37% in 2019, and fossil fuel-based power generation, which contributed 26%, according to data from the environment ministry. To zero out emissions by 2030, the island needed to tackle both at the same time.

The plan called for encouraging electric vehicle adoption and more sources of renewable power. It assumed that an increase in both would crowd out traditional cars and fuel. It hasn’t.

Some 15 million people visit Jeju every year, more than 20 times the island’s year-around population. Once they get there, most of them rent a car. To encourage residents – and, more importantly, the taxi drivers and the owners of the island’s rental fleets – to go electric, the local government offered up to $12,000 in subsidies plus a $4,000 tax break, among the country’s most generous incentives for EV adoption. Until 2019, the government offered to install charging stations at EV owners’ homes for free. 

And, in fact, the number of EVs has grown. About 6.4% of vehicles on the island are now electric, the highest proportion in the country. It’s still far short of the 2022 interim goal of 23%, which was lowered from the original 2020 target of 30%. Nor did those EVs replace the island’s gas-powered cars, which have doubled in the past decade to 600,000.

Then there’s the problem of batteries. As a way to reduce costs for consumers, the Jeju government agreed to own the batteries — the most expensive part of an EV — for cars bought after Jan. 1, 2021. Many of those batteries have run their course. There’s no local way to get rid of the spent batteries or to recycle them, and shipping them to the mainland is expensive. For now, they’re piled up near Hallasan Mountain, in a national park near the center of the island.

In the later half of this year, Korea’s trade ministry is expected to establish standards for a secondary battery market. When it does, Jeju Technopark, a government business development agency, aims to help residents trade used batteries and to reuse the packs. Elsewhere, they're used in energy storage or for backup power. .

“I thought about buying an EV previously but gave up after I heard managing a battery is a headache,” said Hong Gyeong-hwa, a 58-year-old Jeju resident who dives to harvest seafood, one of the island’s legendary haenyeo. And if Jeju would let residents trade in their used batteries? “Oh yes,” she said. “If that happens, I'll buy one.''

Even if all the cars on the island ran on electricity, they won’t be a truly carbon-neutral option unless the power they use comes from renewable sources. Geographically, Jeju is the best place in Korea to harvest wind power, and clean energy has long been a priority. As of now, residents pay Korea’s highest energy costs, because they rely on shipped diesel or natural gas. 

To power the island solely with renewables, wind and solar capacity needs to rise to 2.3 gigawatts and 1.4 gigawatts, respectively. As of this month, Jeju had installed enough to generate 828 megawatts, just 22% of what it says it will need by the end of the decade. 

Worse yet, Jeju couldn’t even use all the renewable energy it did produce. Funneling it into the existing power grid could have overloaded the infrastructure, so the island was forced to “curtail,” or release, the excess. More than 19 gigawatt-hours of electricity was lost from curtailments in 2020, the latest figures available from the Korea Power Exchange, almost 128 times the amount curtailed five years before.

“How ironic is it to curtail renewable energy at a time when it’s supposed to ramp up,” said Kim Jeongdo, a policy director at Korea Federation for Environmental Movement of Jeju. “The government only has a plan to increase renewable energy but it doesn’t have detailed plans about how it’s going to shun fossil fuel-based power plants.”

The island can’t simply switch off thermal and gas-based generators to accommodate renewable energy because it can make the whole grid unstable, said Yoon Hyeong Seok, director general at the Jeju government’s future strategy bureau. Without an adequate storage facility on the island, there’s little the government can do. 

To clear the structural hurdles, Jeju has proposed building a smart microgrid system that could minimize the effects of any outage, said Lee Yong Jae, a professor emeritus at Chung-Ang University who has studied Jeju’s project . But that runs afoul of the state-run Korea Electric Power Corp, the country’s only grid operator. As long as Kepco’s monopoly remains, microgrids require the approval of Korea’s parliament, and it’s currently reviewing legislation that would clear that hurdle for Jeju.

Jeju was also chosen as the site of the nation’s biggest energy storage facility. It’s expected to cost more than 100 billion won ($81 million) and the government plans to complete it next year.

The rate of curtailment is forecast to rise to about 12% of the total installed capacity in 2030 with the expected uptake in wind and solar, according to Jeju Research Institute. To address this issue, Kepco is spending more than 200 billion won to build an undersea cable to send excess electricity to the mainland.

“Jeju's ambition to become a carbon-zero island is in a big mess, and given the time we have, it's going to be impossible and unrealistic to achieve the goal by 2030,”  said Environment Movement’s Kim. “Unless the government suddenly pours trillions of won into the project, it's not going to happen.”

Jeju’s targets are not legally binding. There’s no penalty for missing the 2030 goal. The governor of Jeju can permit wind power projects, but without central government approval, many of the projects planned by the provincial government and power authority are on hold.

The fact that Jeju is facing stark challenges even absent heavy industry should be a warning for Korea, said Lee. The island is “by far the easiest place in the country to achieve any climate goals as it doesn't house any heavy-emitting industries,” he said. “If Jeju fails to achieve the carbon-free island target, Korea will never get anywhere close to its net-zero goal.”

Jeju and other places that aspire to overhaul their energy mix should have set out plans to phase out fossil fuel-based electricity, Lee said. Politically, that’s a harder sell. For South Korea, clean energy will be more expensive than coal, LNG or nuclear power, at least for the foreseeable future.

“The transition will only be made when the government, companies and the public are willing to bear higher costs for clean energy,” he said. “Jeju’s plan should be redesigned based on this notion. Until then, a true transition won’t happen in Jeju — or in South Korea.” 

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