More ‘Creative’ Than ‘Destructive’?

More ‘Creative’ Than ‘Destructive’? Synthesizing Schumpeterian and Developmental State Perspectives

By Elizabeth Thurbon, Sung-Young Kim, John A. Mathews and Hao Tan

The team has just published an article with The Journal of Environment & Development at: https://doi.org/10.1177/10704965211013491. We are delighted to share the accepted version here.

Abstract

We develop a new way of analysing the state’s strategic role in the clean energy shift. We do so by synthesizing Schumpeterian understandings of ‘creative destruction’ and techno-economic change with cutting-edge developmental state theorizing centred on ‘developmental environmentalism’. Our approach allows us to explain South Korea’s mixed results in the clean energy shift over the 2008–2020 period by focussing on varying degrees of alignment between the state’s ‘creative’ and ‘destructive’ ambitions and capabilities. Following a period of misalignment characterized by a creative emphasis (2008–2015), we have seen growing alignment between the state’s ‘creative’ and ‘destructive’ endeavours (2015–present). On the basis of our analysis, we anticipate that Korea’s hitherto mixed results are likely to give way to more consistent strides towards greening the national economy. Beyond Korea, our fresh analytical approach may be applied to other national contexts, helping to advance broader debates about the state’s strategic role in the clean energy shift.

Keywords South Korea, clean energy shift, developmental environmentalism, Schumpeter, creative destruction, hydrogen, fuel-cell electric vehicles

Since the announcement of its landmark ‘National Strategy for Green Growth’ in 2008, South Korea has been widely criticized for its lack of progress towards a clean energy transition by policy observers and scholars alike.1 Critics rightly point out that in some key areas, the government’s ambitious greening goals have not been realized. For example, since 2008, Korea’s per capita emissions have continued to rise while its domestic uptake of renewables has lagged behind OECD averages, reaching only around 7% of total energy generation in 2018 (IEA, 2018). These criticisms of Korea’s progress are certainly valid.

Yet, it is also true that on other key measures, Korea has performed well since 2008 and is now well placed to green its economy in ways that simultaneously advance environmental and developmental goals (cf. Kim & Thurbon, 2015). These achievements include the hard-won liberalization of Korea’s power generation system in 2016 which has encouraged renewables-based power companies into the market, the development of world-class smart grid systems based on local technologies2 and the achievement of global leadership in key energy storage technologies including lithium ion batteries and hydrogen fuel cells.3 Moreover, since 2018, Korea has made significant moves towards coal exit at both national and regional levels – to the extent that the IEA expects Korean coal imports to at least halve by 2040 (IEA, 2017a).

How, then, can we explain Korea’s mixed results? We contend that Korea’s particular pattern of progress since 2008 is revealing of two important realities about the role of the state in the clean energy shift not just in Korea, but also more broadly.

The first reality – which seems obvious but is often overlooked – is that the clean energy shift requires policymakers to simultaneously and successfully navigate two distinct but interrelated dynamics: the creation and mass commodification of new green technologies on the one hand and the destruction of powerful fossil-fuel incumbencies on the other. These dynamics are interrelated insofar as it is difficult to destroy fossil-fuel incumbencies without first creating clean energy alternatives and making them widely available at an affordable price. Similarly, it is difficult to make clean energy alternatives widely available and affordable without first destroying fossil-fuel incumbencies, or else convincing incumbents to abandon fossil fuels and deliver clean energies instead. In sum, if policymakers wish to expedite the clean energy transition, they must be willing and able to expedite both the ‘creative’ and ‘destructive’ aspects of the Schumpeterian dynamic central to all major techno-economic shifts, not least the greening of energy systems.4

The second related reality is that the ‘creative’ and ‘destructive’ aspects of the clean energy shift involve very different political constituencies and require different kinds of state capabilities. As a result, some governments may be more willing and/or able to expedite green industry ‘creation’ than fossil-fuel sector ‘destruction’, thereby slowing a country’s overall greening progress. By focusing on degrees of (mis)alignment between the state’s creative and destructive ambitions and capabilities - and the factors that might help or hinder closer alignment over time - we are able to explain patterns of greening progress in particular national settings.

Our Argument

This brings us to the core of our argument about Korea’s mixed pattern of performance since 2008, which has two parts. First, we argue that between 2008 and 2015, there existed serious misalignment between the Korean state’s ‘creative’ and ‘destructive’ ambitions and capabilities. Korean policymakers were highly committed to advancing the creative aspects of the clean energy shift, thanks largely to the Korean state’s long-standing developmental tradition or, more specifically, its developmental environmentalism (DE) (Kim & Thurbon, 2015).5 While policymakers faced some problems translating their ‘creative’ ambitions into action during this period, Korea nevertheless made some significant progress on the clean energy creation front. However, this success was not matched on the ‘destructive’ front, where the state’s willingness and ability to progress fossil-fuel phase-out and thus emissions reduction proved wanting (for reasons explored below).

The second part of our argument is that since 2015, there has been growing alignment between the Korean state’s creative and destructive ambitions and capabilities. That is, policymakers have been deepening and extending their techno-industrial activism, while at the same time taking significant steps to dismantle fossil-fuel incumbencies, especially via coal exit. We further identify three factors that explain this recent invigouration of the state’s creative and destructive ambitions and capabilities: intensifying international competition, Presidential orientation and ambition, and newfound local government activism.

In sum, we argue that Korea’s distinctive pattern of performance in the clean energy shift since 2008 can be explained by varying degrees of alignment between the state’s creative and destructive ambitions and capabilities. Following a period of misalignment characterized by a creative emphasis (2008–2015), we have seen growing alignment between the state’s ‘creative’ and ‘destructive’ endeavours (2015–present). On the basis of our analysis, we anticipate that Korea’s hitherto mixed results are likely to give way to more consistent strides towards greening the national economy. In this crucial respect, our analysis differs from existing studies, which continue to emphasize the obstacles of Korea’s greening efforts, especially on the GHG emissions reduction front (e.g. Kalinowski, 2020). We certainly do not underestimate the challenges still facing Korean policymakers in their developmental-environmental ambitions. However, our distinctive analytical approach draws our attention to the factors now lending real momentum to both the creative and destructive aspects of those ambitions, leading us to draw more (cautiously) optimistic conclusions about the future trajectory of Korea’s greening shift.

Importantly, while our analysis centres on Korea, the novel analytical approach we develop herein has much wider relevance, insofar as it has the potential to advance broader debates about the state’s role in the clean energy transition. We synthesize a Schumpeterian understanding of the creative and destructive dynamics driving techno-economic change with cutting-edge developmental state theorizing centred on ‘developmental environmentalism’. In doing so, we articulate a new way of both thinking about and analysing the state’s strategic role in the global green shift. Future studies might employ this fresh approach to illuminate the conditions under which states in other national contexts may (or may not) adopt a more ambitious, strategic approach to the clean energy transition.

Our Approach and Innovation

As indicated, our analysis is inspired by Schumpeterian theorizing, insofar as we view capitalism as a dynamic system characterized by the relentless process of creative destruction: ‘a process of industrial mutation … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one’ (Schumpeter, 1942: 83). Drawing on cutting-edge Schumpeterian scholarship, we take as our analytical starting point the idea that ‘greening is [essentially] a process of creative destruction – a destruction of the entire fossil-fuel industrial order and its supersession by an alternative energy and resources order based on renewable inputs. This is not the mere substitution of one or two products by different products … (but) a whole system transition or shift from one system based on fossil fuels to another system powered ultimately by renewables’ (Mathews, 2018, 17).

Our study pushes Schumpeterian theorizing in important new directions by illuminating the role of the state in the ‘creative destruction’ dynamic embodied in the global green shift.6 Conventional Schumpeterian scholarship emphasizes the role of private sector entrepreneurs in driving ‘creative destruction’. In the context of the clean energy transition however, a primary focus on private entrepreneurs is problematic; it is now widely accepted that states have a crucial role to play in hastening the global green shift, not least because of the environmental urgency of the transition and the market and political power of energy incumbents seeking to block it (see, for example, Rodrik, 2014). Moreover, it is now clear that in East Asia generally and Korea in particular, state actors rather than private entrepreneurs have played a lead role in green industry creation and are now actively promoting fossil-fuel phase-out under their net-zero emissions pledges.7

To be clear, we do not seek to downplay or deny the crucial role of private entrepreneurs in Korea’s green transition, or in the global green shift more broadly. However, for the reasons just stated, we argue that to explain Korea’s mixed pattern of performance in the clean energy shift, we must take seriously the state’s role in the creative destruction dynamic that underpins it. To this end, we engage in some conceptual innovation by deploying Schumpeter’s ‘creative destruction’ terminology in our analysis of the state’s strategic activism. Specifically, we frame our analysis around (what we call) the state’s ‘creative’ and ‘destructive’ ambitions and capabilities. To explain Korea’s pattern of performance, we identify the domestic and international factors that have influenced the state’s will and ability to promote not just green industry creation, but also more recently fossil-fuel sector destruction.

To account for the Korean state’s evident creative ambitions and capabilities, we draw on our existing research to highlight the importance of Korea’s long-standing developmental tradition, which in the mid-2000s became manifest in a newfound ‘developmental environmentalism’ (Kim & Thurbon, 2015). At the most fundamental level, developmental environmentalism refers to a set of interrelated beliefs that shape the actions of a nation’s policy and political elite. These beliefs relate to: (i) the primary purpose of economic activity (building and strengthening the nation); (ii) the state’s primary economic goals (manufacturing capacity, technological autonomy and export competitiveness); (iii) the essential relationship between economic and environmental goals (complementary); and (iv) the appropriate role of the state in advancing those goals (strategic interventionism) (Kim & Thurbon, 2015, 220).

In the distinctive official mindset of developmental environmentalism (DE), the traditional developmental goals of manufacturing capacity, technological autonomy and export competitiveness retain their centrality.8 However, the established means of achieving these goals – by promoting fast followership in fossil-fuelled manufacturing industries – is viewed as no longer viable thanks to the growing economic, environmental and political costs associated with this approach. In light of these costs – and in the context of an enduring developmental commitment – policymakers believe that the state can and should step in to help secure Korean leadership in the technologically advanced, environmentally friendly manufacturing industries of the future, from renewable energies to smart grids to electric vehicles and beyond. The ultimate ambition is to create a new growth model capable of simultaneously advancing developmental and environmental goals.

This mindset of DE is not unique to Korea. However, since the mid-2000s, key segments of Korea’s policy and political elite have enthusiastically embraced DE ideas, which originally found their expression in the language of ‘green growth’ (Kim & Thurbon, 2015). As we will show, despite numerous changes of government in Korea since 2008, the primary emphasis of DE has remained the creation, commercialization, production and export of green technologies and clean energies as new engines of national economic advancement.

As an analytical perspective, DE has shed important new light on the central role of the state in East Asia’s clean energy shift. There exists a large and growing body of literature devoted to both rationalizing and advocating ‘green industrial policy’ generally and to analysing the detail and effectiveness of these policies in different national settings.9 The DE approach adds value to this literature by explaining not just what some states are doing in the green industrial policy sphere but why particular East Asian states (especially South Korea, Taiwan and China) have embraced green industrial policies so enthusiastically.

Importantly however, we argue that a DE approach is necessary but insufficient if we wish to explain Korea’s mixed results in the clean energy shift. For while DE can explain why the Korean state has enthusiastically embraced green industry creation, it alone cannot explain why Korea’s performance has been so mixed. To address this blind spot, we synthesize a DE-centred analysis with a Schumpeterian understanding of the clean energy shift and the creative destruction dynamic it embodies. Doing so compels us to look beyond the states’ creative ambitions and capabilities (which can be explained using a DE approach) and explore the factors influencing the state’s destructive (read: fossil-fuel exit) ambitions and capabilities, and bringing creative and destructive ambitions and capabilities into greater alignment.

A Note on the Importance of Nomenclature

We appreciate the political sensitivities of using the term ‘destructive’ to describe a state’s ambitions and actions; few policymakers would wish their policies – especially in the economic arena – to be described as ‘destructive’. Nevertheless, politics aside, we see two important analytical reasons for using Schumpeter’s terminology in our analysis. First, following Schumpeter, we maintain that ‘creative destruction’ is principally a capitalist market dynamic. It is highly probable that, absent state intervention, private entrepreneurs would seek to disrupt the existing fossil-fuel order and pioneer clean energy industries in order to capture first-mover profits.

We insist on Schumpeter’s terminology to highlight the fact that in seeking to expedite ‘creative destruction’, Korean policymakers are not trying to displace wider capitalist market dynamics, but to kickstart and harness the power of those dynamics. Specifically, they are seeking to hasten ‘creative destruction’ by employing the kind of ‘market-conforming modes of intervention’ (see Johnson, 1982: 28) that have long distinguished East Asia’s developmental states. As Chalmers Johnson first observed in the context of post-WWII Japan, policymakers believed that national economic competitiveness (and national security) ultimately depended on private firms investing in new industries, rather than established industries destined for gradual decline. Yet, they also believed that firms in established industries were more likely to try to protect their incumbent position rather than embrace radical change. Policymakers thus anticipated to find few, if any, powerful domestic interests favouring economic change.

Japan’s post-WWII policymakers were thus faced with a problem very similar to that facing many policymakers worldwide today: while they knew that radical economic change was crucial to the nation’s long-term prosperity and security, they faced powerful private resistance to it. Japan’s policymakers thus saw for themselves a key role in aggressively supporting new industry creation, as well as market competition within new industries to ensure that local firms would be able to survive and thrive in global markets. This distinctive ‘market conforming’ approach to industrial policy – which involved trying to hasten and harness the market dynamic of ‘creative destruction’ being resisted by powerful incumbents – was subsequently emulated by South Korea and Taiwan.

Second, while the term ‘destruction’ may appear contentious when viewed through the lens of electoral politics, we seek to foster a more nuanced understanding of the original meaning of ‘destruction’ in foundational Schumpeterian theorizing. For Schumpeter, the ‘destruction’ of established economic orders serves a transformative and ultimately productive economic and social purpose; it frees up resources from ‘old’ industries (which in the case of energy are environmentally and socially damaging) to deploy to more dynamic (and sustainable) ‘new’ industries. Moreover, while the ‘destruction’ of the established order potentially involves some economic pain for particular groups of firms and their employees, the nature and extent of that pain is by no means guaranteed and can be mitigated by the state’s activism. That is, the destruction of the fossil-fuel order need not involve the destruction of incumbent firms (and related jobs). Rather, it may involve incumbent firms – with government assistance – adapting to the new order by re-directing their investments towards emerging industries (and new job creation).

As we shall see, this is precisely what is occurring in Korea, where the state is encouraging the destruction of the fossil-fuel economic order not by seeking to harm incumbent firms but by heavily supporting them to switch their investments towards ‘green’ projects. Thus, in the hydrogen arena, we observe the state’s targeted support for established automaker Hyundai in its efforts to pioneer local and global fuel-cell electric vehicle (FCEV) markets and for coal-invested KEPCO to lead the nation’s charge into green hydrogen for baseload and other purposes. In this sense, when we write of the state’s ‘destructive ambitions and capabilities’, we are not arguing that the state is engaged in efforts to destroy particular firms – especially not Korea’s ‘national champions’ like Hyundai and KEPCO that are so important to the national economy (and the state’s developmental ambitions). Rather, we are focussed on the state’s ambition to expedite the ‘destruction’ of the established fossil-fuelled economic order. This involves the state working productively with incumbent firms to ensure they adapt, survive and thrive in the new green economy.

Case Selection

We develop our arguments through a case study of Korea’s efforts to develop hydrogen-related technologies and industries. We focus on hydrogen for three reasons. First, hydrogen has formed a key part of the government’s developmental strategy since 1988 and its ‘National Strategy for Green Growth’ since 2008. A hydrogen focus thus allows a long-term analysis of the government’s creative and destructive ambitions and capabilities and how they have evolved over time.

Second, despite some controversies around hydrogen, it is clear that Korea’s policy leadership now views hydrogen as key to Korea’s ability to decarbonize its economy, especially the emissions-intensive transport and electricity production sectors.10 It is widely acknowledged that promoting ‘green vehicles’ is crucial reducing national emissions. And while battery-powered EVs (BEVs) can reduce passenger vehicle emissions, hydrogen FCEVs have more potential to decarbonize heavier vehicles – from buses, trucks and trains to even ships and planes – thanks to hydrogen’s energy density. Density also means that hydrogen fuel cells can be deployed beyond transport in stationary settings including electricity generation. Eventually, clean hydrogen power plants could replace fossil-fuelled ones – including coal and nuclear plants and oil refineries – and generate enough energy to power entire nations. Hydrogen thus provides an incredibly powerful platform for decarbonizing not just particular sectors like transport, but the whole economy (IEA, 2019). For this reason, Japan and Korea have now both released plans to become ‘hydrogen societies’.11

Third, while the Korean state’s creative ambitions and capabilities in the hydrogen arena have long outstripped its destructive ones, this imbalance now seems to be shifting. Our hydrogen focus thus enables us to explore the factors underpinning these shifts and that are now bringing the state’s creative and destructive capabilities into greater alignment.

As hydrogen has a wide range of industrial applications, we focus mainly on the promotion of hydrogen fuel-cell electric vehicles (FCEVs). This allows us to demonstrate the growing alignment of creative and destructive forces within a particular industry over an extended period (1988–present). Importantly however, we also canvas the more recent focus on promoting hydrogen fuel cells for baseload purposes, especially as a replacement for coal-fired power stations. This allows us to give crucial context to – and key insights into – the forces now helping to enliven the state’s destructive capabilities.

In the sections that follow, we examine the traditional developmental underpinnings of Korea’s hydrogen industry-building ambitions prior to 2008 and the shift from developmentalism to developmental environmentalism from 2008–2015. We then examine the evident misalignment between the state’s creative and destructive ambitions and capabilities between 2008 and 2015, before charting their growing alignment from 2015 onwards. Based on an in-depth analysis of statements by Korea’s relevant political and policy leaders combined with official policy documents and media, policy expert and scholarly commentary, we attribute this growing alignment to three key factors: intensifying competitive pressures, Presidential orientation and newfound local government activism.12

From Developmentalism to Developmental Environmentalism in Korea’s Hydrogen Strategy (1988–2015)

It is important to note that the Korean government’s original interest in promoting hydrogen broadly and FCEVs in particular had nothing to do with environmental concerns. Rather, policymakers were first motivated to explore hydrogen industry creation by traditional developmental ambitions, coupled with growing concerns about the viability of the country’s long-standing developmental strategy. That strategy involved making massive investments in established fossil-fuelled industries (especially automobiles and shipbuilding) in order to rapidly catch up with advanced economies. In the 1980s, numerous factors led policymakers to question this fossil-fuelled, fast-follower approach and embrace a new ‘frontier technology’ strategy. These factors, examined in detail elsewhere (Kim & Thurbon, 2015), included growing anxieties about Korea’s acute dependence on fossil-fuel imports, especially oil, for domestic energy needs and about the negative impact of energy insecurity on the competitiveness of Korea’s leading export industries – especially automobiles, which were also under pressure from China’s rise. These anxieties led policymakers to start exploring hydrogen as an alternative energy source and FCEVs a means of securing the fortunes of Korea’s auto industry.

Korea’s early hydrogen promotion efforts cannot detain us here.13 Suffice to note that from 1988, the government made major investments in hydrogen and fuel-cell R&D programs and was soon joined by Korea’s major auto manufacturers led by Hyundai. Between 1988 and 2003, Korea’s combined public–private investments in hydrogen technologies totalled US$91.5 million, making Korea one of the world leaders in FCEV-related R&D (Haslam et al., 2012). China’s WTO accession in 2001 lent fresh impetus to Korea’s ‘frontier technology’ strategy and related hydrogen push, and FCEVs featured strongly in a succession of national development plans. By 2007, public–private investment exceeded US$110 million p/a (see Haslam et al., 2012). By 2005, Korea was just 2–5 years behind technology level of Japan and the US (Song & Chen, n. d.:6).

Yet, as noted, Korea’s first hydrogen push had nought to with environmental ambitions. On the contrary, the FCEVs being developed by Korea during this period were far from ‘green’; the hydrogen fuelling them would be derived not from electrolysis powered by renewable energies (i.e. green hydrogen) but from fossil fuels (mainly gas) via a process that created significant volumes of CO2. Indeed, prior to 2008, Korea demonstrated no interest in green hydrogen, or in greening its economy more broadly. Environmental considerations did not rate a mention in FCEV debates, even as the early 2000s progressed, and there was certainly no talk of a broader ‘green car’ revolution or of promoting a wider range of EVs – such as battery-powered EVs (BEVs). Rather, the government’s key concern was to address the limitations of Korea’s traditional developmental strategy and secure the nation’s future economic competitiveness by pioneering ‘frontier technologies’ regardless of their environmental impact. This changed markedly in 2008.

The Embrace of Developmental Environmentalism in 2008

The limited resonance of environmental concerns changed dramatically in 2008. The Global Financial Crisis (GFC) marked the enthusiastic embrace of DE ideas amongst key segments of the Korean policy elite and the start of the government’s ambitious drive to promote ‘green cars’ more broadly (i.e. FCEVs and BEVs) as cornerstones of the nation’s future economic prosperity. How can we account for this shift? Like previous crises, the GFC amplified concerns about Korea’s energy security and export competitiveness, and the collapse of the Korean won driving up oil import prices and squeezing traditional manufacturing industries. However, unlike other crises, the GFC occurred against the backdrop of growing global concerns about, and action on, climate change. So, as governments around the world sought to ward off the worst effects of the GFC, they placed major emphasis on green stimulus packages, including ambitious spending programs to promote the development and uptake of green cars and other clean energy technologies.

Sensing shifting global conditions, a small segment of Korea’s policy elite began to see the writing on the wall: the global economy was changing, climate change concerns were here to stay and Korea was at risk of being left behind in the new green industries of the future if it did not urgently lift its game – especially considering the early moves of Japan, Europe and China in the EV space. At the outset, this small group of agents were concentrated in the Presidential Office and included President Lee’s closest advisors, among the most important being Presidential Secretary for National and Future Vision Kim Sang-Hyup.14 While Kim and his associates believed the global economy was changing, they also believed that these changes held enormous new opportunities for Korea. By focussing on the creation and export of green technologies, Korea could solve its economic competitiveness and energy insecurity challenges in one hit and ‘manufacture energy security’ (cf. Mathews & Tan, 2014). Moreover, by advocating ‘green growth’, Korea could establish itself as a model global citizen, enhancing the nation’s international prestige – a core developmental concern. Thus was born the philosophy of developmental environmentalism in Korea.

The story of how this small group of change agents were able to promote DE as a shared way of thinking amongst the wider elite, and to translate their ideas into meaningful policy action, including in the EV arena, has been elaborated elsewhere. Kim and Thurbon (2015) have examined the crucial role of the Presidential Office and of the Presidential Committee for Green Growth (PCGG) in devising and executing Korea’s ambitious National Strategy for Green Growth (2009–2050). They have also examined the developmental-environmental underpinnings of Korea’s ‘Green Car’ initiative, the first Five-Year Plan for Green Growth (2009–2013), and the 2010–2015 Green Car Roadmap. Under the Roadmap, Korea aimed to become the world’s fourth largest manufacturer of EVs by 2015, with 10% of the global EV market. To this end, Korea would produce 1.2 million green cars, 900,000 of which would be exported, while EVs would reach 21% of the domestic vehicle market within 5 years (IEA, 2017b).

Korea’s EV promotion programs over the 2008–2015 period were distinguished by their developmental character: their emphasis on promoting local manufacturing capacity, technological autonomy and export competitiveness (Kim & Thurbon, 2015). The aim was to create a nationally integrated industry that could then form the basis of a new export platform. Key EV-related initiatives during this period included the quest to develop a fully local, full-speed, full-battery EV, involving forty-four local firms led by Hyundai in collaboration with public research institutes, and the ‘Smart Transport’ projects initiated under Korea’s Smart Grid pilot project on Jeju Island.15 These initiatives were overseen by the Ministry of Knowledge Economy and the Ministry of the Environment, which were jointly responsible for the Green Car Roadmap.

Evidently, there existed a high degree of ‘creative’ ambition amongst key segments of Korea’s policy elite over the 2008–2015 period, and the government made some strong progress on EV industry-building initiatives. However, despite that progress, some obstacles prevented policymakers from fully translating all of their creative ambitions into action. This meant that despite some solid progress, the government fell short of its Green Car Roadmap goals, especially those related to the domestic uptake of EVs. Moreover, the government’s very high level of ‘creative’ ambition – and its solid industry development achievements – was not matched on the ‘destructive’ front. As a result, the government made no progress at all towards fossil-fuel exit during this period. In the section that follows, we identify the key obstacles contributing to the misalignment between the states’ creative and destructive ambitions and capabilities over the period in question.

Creative–Destructive Obstacles and Misalignments (2008–2015)

Conflicts Within the State Over Industry ‘Creation’ Strategy

The first major obstacle to Korea’s progress on ‘industry creation’ was disagreement within the state about the desirability of promoting EVs broadly and BEVs in particular. Korea’s powerful Ministry of Strategy and Finance (MOSF) proved especially reluctant to throw its weight behind ambitious EV initiatives. The reason was largely financial; EV uptake would reduce gasoline consumption, and gasoline consumption tax constituted a major source of tax revenue.16 The MOSF thus tended to limit financial support for EV projects, especially major charging infrastructure initiatives. Key figures within Korea’s powerful industry Ministry MOTIE17 were also reluctant to support the ambitious EV promotion goals, often joining forces with the MOSF to prevent more generous subsidies for BEVs. MOTIE’s position may be explained by its close relationship with Korea’s top auto firm Hyundai, which was also sceptical of the government’s BEV push (explained below). Our key point is that while Korea’s Science and Industry Ministries made major investments in EV development programs under the First Five-Year GG Plan, and serious headway in creating new products for export, bureaucratic conflicts about the EV strategy saw Korea fall short of the ambitious targets set under the 2010–2015 Green Car Roadmap.

Conflicts Within Business Sector Over Industry ‘Creation’ Strategy

The second major obstacle to Korea’s progress on ‘industry creation’ was conflicts within the business sector about the emphasis of the government’s EV strategy. The government had originally set its sights on dominating the global BEV market, not least because Korean company Samsung had a critical edge as a battery supplier. However, Korea’s lead automaker Hyundai preferred to hedge its bets by focussing on the development of FCEVs, albeit while not neglecting BEVs. A number of factors are likely to have influenced Hyundai’s emergent FCEV emphasis. A focus on FCEVs would allow Hyundai to pioneer and lead an entirely new technology and market and to capture associated first-mover advantages. It could also help Hyundai protect its existing share of the domestic and global auto market; there was always the chance that the popularization of BEVs might pave the way for Korea’s hyper-competitive IT and electronics companies (i.e. Samsung and LG) to enter the auto industry and erode Hyundai’s market share. These fears were not unfounded. The world had watched American firm Tesla – backed by IT entrepreneur and PayPal founder Elon Musk – grow exponentially (Park, 2014). Moreover, during this period, the idea of rapidly scaling up BEV production proved politically contentious, with Korean labour unions depicting the move as a threat to jobs; manufacturing BEVs requires about 30% less labour than traditional combustion engines, thanks to fewer parts.18 Hyundai thus appeared reluctant to mobilize completely behind the government’s BEV push.

Yet, when it came to FCEVs, Hyundai was very supportive of the government’s green car push. As noted, Hyundai had been investing in FCEVs since the early 1990s, backed by government support. In 2013, these investments finally bore fruit as Hyundai became the world’s first company to produce a FCEV for commercial sale – the Tucson ix FCEV. With a range of 249 miles per charge, it provided a real alternative to BEVs, eliminating the problem of ‘range anxiety’. The Tucson established Hyundai as a world leader in this frontier technology arena. The problem was, thanks to the MOSF’s green car scepticism, the government had failed to roll out any public refuelling infrastructure for hydrogen cars (or indeed significant infrastructure for BEVs). So, despite its success in bringing a world-first product to market, Hyundai was unable to sell its product at home. The government’s under-investment in refuelling infrastructure thus threatened to stymie Hyundai’s first-mover advantage. Meanwhile, although Japan trailed Korea in the race to commercialize FCEVs, its government had had the foresight to start investing in refuelling infrastructure in 2009. So, when Toyota announced Japan’s first FCEV for commercial use in 2014 – 1 year after Korea – Toyota was immediately able to sell its vehicles domestically, giving it an edge over Hyundai (Lee, 2016). The Korean government’s lack of investment in FCEV refuelling infrastructure was the cause of considerable frustration for Hyundai, who believed it still had the lead over Japan in FCEV technologies, even after Japan had released its commercial version.19

In sum, despite significant ambition and action on the ‘creative front’ (measured in terms of policy commitments, institutional innovations and hard investments), lack of consensus both inside and outside the state over Korea’s EV strategy seriously hampered policymaker’s industry promotion goals. Where Korea had intended for EVs to make up 21% of all domestic car sales by 2015, they achieved only 2%. This had major implications for Korea’s ability to meet its broader greening goal of reducing GHG emissions, given the transport sector’s major contribution to total emissions.

Conflicts Inside and Outside the State Over Fossil-Fuel Order ‘Destruction’

Moreover, during the 2008–2015 period, the government’s significant ‘creative’ ambitions and actions were not matched on the ‘destructive’ front. Despite efforts, DE-minded policymakers failed in their attempts to introduce an emissions trading scheme (ETS), thwarted by staunch opposition from business groups led by the powerful Korean Chamber of Commerce and Industry (KCCI). Business’ concern was that higher energy prices would undermine the competitiveness of major Korean export industries, especially steel.20 Some politicians also feared the political costs of higher energy prices as cheap energy for households had come to be viewed as a social right, especially amongst liberals.

For the same reasons, DE-minded policymakers failed in their attempts to liberalize the domestic power market. Since the 1960s, that market had been effectively monopolized by state-owned power utility KEPCO, which had ploughed its financial resources into coal and nuclear power assets. By 2008, KEPCO was heavily invested in coal and nuclear locally and globally, as the owner of coal mines across the developed and developing world, and the successful exporter of coal and nuclear power plants. DE-minded policymakers knew that to encourage the uptake of renewables in Korea, they would have to reduce KEPCO’s stranglehold on the domestic market through liberalization (Kim & Mathews, 2016). Yet, during the 2008–2015 period, liberalization remained elusive. Even, following the 2011 Fukushima disaster, which shook Korea’s confidence in nuclear, the government failed to fill the resulting ‘energy gap’ with renewables. Key policymakers – including President Lee’s successor Park Geun-hye – supported coal expansion instead because the costs of doing otherwise were deemed too economically and political risky.

Indeed, upon coming to power in 2013, to make up for the reduction in cheap nuclear power, President Park pledged to double Korea’s coal-fired capacity by 2027, promising 27 new coal-fired power plants. This decision sparked major objections nationally and internationally. Snowballing opposition from civil society groups led by the South Korea Federation for Environmental Movements (KFEM) and Greenpeace over 2014–2015 culminated in high-profile protests and an internationally reported hunger strike in 2016.21 However, President Park was undeterred in her coal commitment, fearing an economic blow-back. So, while the government’s investments in the ‘creative’ aspect of Korea’s clean energy shift proceeded apace under President Park (2013–2017), lack of progress on the ‘destructive’ front severely damaged Korea’s international reputation on climate change. Between 2011 and 2015, Korea’s Climate Action Tracker ranking – which assesses the adequacy of a country’s climate change policies – slipped from ‘sufficient’ to ‘inadequate’ (Kalinowski, 2020, p.4).

Growing Creative–Destructive Alignment (2015–2021)

From 2015 onwards, we observe a growing alignment between the Korean state’s creative and destructive ambitions and capabilities. This is evidenced by policymakers’ renewed momentum for the Hydrogen FCEV push and their growing efforts to dismantle fossil-fuel incumbencies and promote a clean energy shift more broadly. We attribute this growing alignment to three key factors, which we consider in turn.

Intensifying international pressure and competition

In 2016, snowballing global action on climate change culminated in the Paris Accord. This significant international development enlivened the Korean state’s ‘destructive’ (read: fossil-fuel exit) ambitions and actions. Under the Accord, governments around the globe embraced ambitious new carbon reduction commitments, and Korea entered into binding commitments for the first time. Although Korea’s commitments were comparatively small, this development deserves mention as the government’s first concrete step on the ‘destructive’ front. Three further steps soon followed. First, the government finally implemented Korea’s long-delayed ETS, which put a modest price on carbon and laid the legislative foundations for more aggressive future pricing. Second, the government partially liberalized the power market in 2016, which loosened KEPCO’s monopoly and allowed greater uptake of renewables into the grid. Third, the government marginally revised the Renewable Energy Portfolio Standard, projecting an increase to 7% by 2020 (Kim & Mathews, 2016).

The Paris Accord also added fresh impetus to the government’s creative ambitions, especially in the EV arena. By prompting governments worldwide to embrace tougher vehicle emissions standards, the Accord paved the way for the exponential expansion of the global EV market, presenting Korea with exceptional new export opportunities. Yet, by that time, it was clear that Korea would face intensifying competition from China in global markets, especially in the area of BEVs. In 2014, China looked set to leapfrog Korea as the world’s number two provider of electric vehicle batteries (Japan has long ranked number 1) and actually overtook Korea in 2015. Batteries are by far the most valuable component of BEVs, and the component in which Korea had become hyper-competitive globally, thanks to Samsung’s and LG’s long-standing experience in consumer batteries.

As Figure 1 and 2 show, China’s rapidly expanding share of the global EV market – and the battery market in particular – was built on the growth of its domestic market under dedicated government sponsorship. That is, China’s EV battery makers were supplying Chinese auto manufacturers who were supplying Chinese consumers. Korean firms on the other hand were mainly supplying Japanese, American and European car manufacturers – and thus still retained a significant technological advantage over their Chinese counterparts. Nevertheless, China’s rapid rise in the BEV space was confronting for Korea.

Figure 1. EVs: stock and new EV sales: 2014–2019. Data: IEA.

Figure 2. Market share of EV battery by shipment: 2014–2019. Data: collated by the author, sources include insideev.com, koreajoongangdaily.com, Forbes.com and reneweconomy.com.

Intensifying competition from China gave fresh momentum to Korea’s creative ambitions and actions in the EV arena, which were reflected in the government’s launch of Korea’s Second Five-Year Plan for Green Growth of 2014 and its new Green Car Plan of 2015. The bold nature of these plans revealed that the creative ambitions that had emerged under President Lee Myung-bak would not only be sustained, but be deepened under President Park Geun-hye, who replaced Lee in 2013. Intensifying competition also sharpened the state’s strategic focus on FCEVs as a frontier technology arena in which Korea might actually retain a long-term competitive advantage over China. While the 2014 and 2015 plans pledged to support both BEVs and FCEVs, FCEVs soon took centre stage in the government’s future car plans.

Korea’s drive to dominate the FCEV frontier was first articulated under the Park administration’s Five-Year Green Car Plan of December 2015. The plan’s stated aim was to significantly reduce GHG emissions by dramatically expanding the production and local uptake of EVs.22 At the same time, Hyundai announced its own aggressive Green Car Plan, aiming to dramatically increase its EV offerings and local sales volumes. In 2016, the Park administration made it clear that it would put FCEVs at the centre of its efforts. Thus, in April 2016, the government announced the establishment the Hydrogen Fusion Alliance (since renamed H2Korea). Trade Minister Joo Hyung-hwan articulated the DE ambitions that lay behind the government’s FCEV push and its establishment of H2Korea thus:

The importance of hydrogen fuel-cell vehicles has risen not only as a center of the nation’s future car plans but also as a countermeasure for environmental issues such as emissions and fine dust … The alliance will push ahead with its plans for promoting the nation’s hydrogen auto industry. (Cited in Jhoo, 2016)

As a genuine fusion of public and private actors and interests, H2Korea brings together representatives from national and local governments, large auto firms (namely, Hyundai Motor) and their small suppliers, hydrogen producers and suppliers, energy companies and learned societies. Its primary purpose is to serve as a ‘control tower’ to facilitate the creation, commercialization and distribution of FCEVs and their infrastructure. One of its most important functions is to coordinate the creation of Special Purpose Companies (SPCs) charged with developing and building hydrogen refuelling stations. This initiative has recently come to fruition with the creation of HyNet, Korea’s first FCEV SPC dedicated to executing the government’s hydrogen refuelling infrastructure ambitions by building 100 refuelling stations across Korea by 2022.23 The first of these – in Sejong City – was opened to the public September 2020.

Presidential Orientation and Ambition

The second factor driving greater alignment between the Korean state’s creative and destructive ambitions and capabilities since 2015 has been the strong developmental-environmental orientation and ambition of President Moon Jae-in, elected in May 2017. As previous studies have shown, the Presidential Office in Korea has, since the 1960s, been endowed with distinctive status and authority. This has meant that the orientations and ambitions of Korean presidents have often served as a hinge-factor when it comes to the momentum behind and execution of developmental initiatives, even in the democratic era (Thurbon, 2016, 5–7). As noted, President Park Geun-hye was less personally invested in DE ideas than her counterpart Lee Myung-bak. While supportive of the ‘creative’ (industry-building) aspects of Lee’s Green Growth initiative, President Park was far from ambitious on the ‘destructive’ front. The same cannot be said of President Moon. Our argument is that Moon’s election has been crucial to enlivening not just the ‘creative’ but also the ‘destructive’ (read: fossil-fuel exit) aspect of Korea’s clean energy shift.

Moon came to power on a platform of clean energy action, pledging to phase out coal and nuclear. One of his first actions was to appoint Hanyang University Professor of Energy Engineering Paik Un-gyu as the Minister for Trade, Industry and Energy. As an expert in renewable energy, Paik was a well-known advocate of a clean energy transition and had advised Moon on his election commitments for nuclear and coal exit. As Minister, Paik was responsible for the development of Korea’s 8th Basic Plan for Long-Term Electricity Supply and Demand (2017–2031). That plan introduced an Energy Transition Roadmap to phase out nuclear, dramatically reduce coal and increase the share of renewable energy to 20% of generation output by 2030 (since increased to 37% by 2030). These measures would reduce Korea’s GHG emissions by 26% by 2030 (MOTIE, 2017, p.45). Concrete steps towards coal exit under the roadmap included refusing new licenses to build or operate coal-fired generators and a coal consumption tax increase of 6 won/kg.24 A 28% increase in the coal import tax soon followed (Nicholas & Buckley, 2019).

We see these as significant steps by the Moon administration aimed at expediting the ‘destruction’ of the established fossil-fuel order. Indeed, on the basis of Korea’s 2017 Basic Plan, the IEA predicts that Korean coal imports will collapse by at least 50% by 2040 (IEEFA, 2019, p.5).25 Importantly however, the Moon administration is taking ambitious steps to ensure that incumbent firms in the fossil-fuel order – many of which are Korea’s national export champions – will adapt, survive and thrive in the new green era. For example, Moon’s coal exit announcement hit the share price of KEPCO hard, with fears that coal import and consumption tax increases drive up KEPCO’s operating costs by forcing it to rely on more expensive gas imports to meet baseload generation demands. To address these concerns and secure KEPCO’s future, Moon has sought to turbocharge the creative aspects of Korea’s clean energy shift. This includes encouraging KEPCO to rapidly expand its green industry-building activities – especially in the hydrogen arena – putting KEPCO in charge of the nation’s green hydrogen technology development and business promotion efforts. (Fuelcellworks, 2019a). Moon has also dramatically stepped up support for the FCEV industry, working closely and collaboratively with long-time fossil-fuel incumbent Hyundai Motor to ensure that it maintains its competitive national and global position in the green car arena.

In June 2018, the Moon administration announced a plan to thrust Korea into world leadership in the rapidly growing FCEV industry.26 The plan, led by MOTIE, set ambitious targets across three key areas: the technological and cost-competitiveness of FCEVs; the technological competitiveness and availability of refuelling stations and localizing and expanding hydrogen production. It was backed by the world’s most ambitious funding package for FCEVs; 2.6 trillion won (US$2.34 billion) was committed to FCEV development by 2022, putting South Korea far ahead of its two key competitors – Japan and the United States (read: California) – in terms of financial support (Crolius, 2018). As 2018 progressed, President Moon took an increasingly high-profile interest in Korea’s FCEV industry, throwing his personal weight behind efforts to increase the profile of Korean FCEVs in domestic and international markets. For example, Moon travelled to France to publicly test drive Hyundai’s Nexo on the streets of Paris and mark the signing of an MOU between Hyundai and French companies that would see Hyundai export 5000 FCEVs to France by 2025 (Kim, 2018).

In 2019, Moon elevated FCEVs to one of the flagship economic issues of his Presidency, situating the ambition to dominate the global FCEV market in the context of a broader vision to transform Korea into a ‘Hydrogen Economy’. Moon announced this vision in a landmark speech in Ulsan, the industrial capital of Korea (Moon 2019). The location (emphasized by Moon) was deeply symbolic: the birthplace of Korea’s first industrial revolution in 1962. Ulsan is also home to Korea’s automobile, shipbuilding and petrochemical yards – three traditional fossil-fuelled strategic industries that stand to be transformed and re-born under a Hydrogen Economy revolution. In this landmark speech, Moon launched Korea’s Hydrogen Economy Roadmap, with FCEVs as the centrepiece; by 2040, Korea would emerge as a global technological leader in FCEVs, produce 6.2 million hydrogen cars and distribute 15-GW fuel cells for power generation. As Figure 3 reveals, Korea’s creative efforts in the FCEV arena have paid off, with Korea now dominating world in market share.

Figure 3. Market share of fuel-cell electric vehicle sales: January 2019–September 2020. Data: Hyundai motor group.

We view Moon’s emphasis in his speech on renewable Hydrogen as important in the context of wider concerns and criticisms that hydrogen generally and FCEVs in particular are not really ‘green’.27 Critics point to the fact that currently, hydrogen is mainly derived from fossil-fuel by-products (i.e. extracted from petrochemical plants or gas plants). But as Moon’s statements – and a growing body of evidence – indicate Korea is committed to rapidly making the shift from fossil-fuelled to emissions-free ‘green hydrogen’ (created by renewables-powered electrolysis). The government has also pledged to source at least 70% of all hydrogen from renewable sources by 2040. This commitment was made prior to Moon’s landslide election win of April 2020, and the announcement of his government’s even more ambitious Green New Deal, discussed below.

The sincerity of this commitment was reflected in high-level discussions between Korean and Australian government officials. While Australia has long supplied Korea with a secure and stable supply of coal and LNG, Korea now sees Australia as a reliable future supplier of renewable hydrogen. Korea’s hydrogen society ambitions have thus sparked a wave of Korean investment in green hydrogen projects in Australia, which is seeking to transform itself into a renewable hydrogen superpower (Australian Government, 2019). In recent discussions, Korean officials made it clear that they expect their hydrogen imports from Australia to be emissions-free (ASTE-NAEK, 2020). Korea is also pioneering the development of a green hydrogen certification system to guarantee that its hydrogen imports are truly green (Kim, 2020).

In sum, by pursuing the rapid development of Korea’s green hydrogen industry alongside nuclear and coal exit plans, Moon has demonstrated commitment to expediting both the creative and destructive aspects of Korea’s clean energy shift. Moon’s ‘destructive’ ambitions have certainly raised the ire of some domestic fossil-fuel interests. However, the emergence of renewable hydrogen as a viable coal and nuclear alternative has helped Moon articulate a clear economic vision for Korea as a future renewable energy power – and a central role for erstwhile fossil-fuel incumbents (namely, Hyundai and KEPCO) in that order. This again highlights our point that while the government is seeking to expedite the destruction of the existing fossil-fuelled economic order, this does not involve the ‘destruction’ of fossil-fuel incumbents. Rather, the government is seeking to work collaboratively with incumbents to ensure that they can survive and thrive in the new green era.

In 2020, Moon’s renewable energy ambitions were lent fresh momentum by his landslide election win of April and the global COVID-19 pandemic, which has seen governments across the globe embrace green stimulus packages and ambitious new clean energy targets, at the urging of global bodies including the International Energy Agency (IEA 2020). Under Korea’s Green New Deal, Moon will attempt to write into law Korea’s commitment to a net-zero emissions target by 2050, in addition to turbocharging the nation’s hydrogen development plans (see Stangarone, 2020).

Moon has also found crucial support for his politically contentious ‘destructive’ ambitions in a somewhat surprising quarter: local governments with strong coal-fired power station presence. These local governments are now helping to enliven both the ‘destructive’ and ‘creative’ aspects of Korea’s clean energy shift.

The Emergent Role of Local Governments As ‘Creative–Destructive’ Allies

We identify the newfound activism of local governments as the third key factor helping to enliven the crucial ‘destructive’ aspect of Korea’s clean energy shift. In 2018, Moon’s destructive ambitions were given fresh support from an unlikely quarter: the provincial government of South Chungcheong (Chungnam). This was surprising because Chungnam represents some of Korea’s largest coal assets (discussed below). Nevertheless, in October 2018, Chungnam became the first region in Asia to announce its intention to exit coal by 2050. Under its 2050 Energy Vision, the Province will close 14 coal-fired plants (18 GW of capacity) by 2026 and increase renewable energy from 8% to 48% of the local power mix. To guard against policy reversal, the Chungnam Provincial government officially joined the global Powering Past Coal Alliance – becoming the very first Asian jurisdiction to do so (see Kang, 2018).

The Chungnam development is significant in the context of President Moon’s national coal exit ambitions because Chungnam is home to 50% (or 30/61) of Korea’s coal-fired power plants, including the second and third largest plants in the world (Kang, 2018). Chungnam’s announcement coincided with the announcement by two of Korea’s Pension Funds (Teachers Fund and Government Employees Pension Fund) that they would boycott any future coal financing (Shin, 2018).

To explain this somewhat dramatic shift at the local level, one must consider the growing importance of civil society movements and the growing responsiveness of local governments to their concerns. As noted above, President Park’s decision to expand the number of coal-fired power stations elicited an unprecedented wave of public opposition, not least in Chungnam Province. The primary concerns were environmental – terrible air quality was proving a major health risk to the community and a major headache to the government. Sensitive to the political implications, the Governor of Chungnam was responsive to this growing local discontent, lending his voice to locals arguing for the suspension of coal expansion plans. Kim Hongjang, the mayor of one of Chungnam’s largest cities, Dangjin, even joined the 2016 hunger strike against the proposed coal plant in his region. The national government eventually suspended the coal plant in late 2016. The Mayor’s participation in the hunger strike was reported to have been crucial in the Park government’s decision to suspend the plant indefinitely (Burton, 2016).

Yet, while growing environmental concerns have undoubtedly played a part, local government actors have been both empowered and emboldened to pursue more ‘destructive’ (read: coal exit) activities by the recent emergence of renewables broadly and hydrogen in particular as economically viable alternatives to fossil fuels, including for baseload power. This economic viability has come about by virtue of the central government’s ambitious ‘creative’ activities since the mid-2000s. As noted at the outset, hydrogen fuel cells are not just useful in transport but have major potential as baseload power. And it is this potential that Chungnam is now seeking to develop. In 2019, a consortium of local companies began construction on what will be the world’s largest hydrogen fuel-cell power plant, located in Chungnam.28 And since 2015, the government of Chungnam has had its eyes on becoming Korea’s FCEV ‘Mecca’, ploughing resources into developing the FCEV parts and components industry under a dedicated five-year industrial development planning initiative.29 These crucial local-level developments are now also lending support to the ‘creative’ aspect of Moon’s ‘creative–destructive’ endeavours.

Conclusion

We began by contrasting Korea’s ambitious efforts to build a globally competitive suite of clean energy industries with its widely lamented lack of action on the GHG emissions reduction front. Drawing on Schumpeterian theorizing, we sought not just to explain this paradox but to identify the factors now driving its resolution by bringing the Korean state’s ‘creative’ and ‘destructive’ ambitions and capabilities into greater alignment. Our approach has led us to draw more cautiously optimistic claims than others about the future trajectory of Korea’s clean energy shift. It has also enabled us to shed new light on the conditions under which states may become more actively involved in expediting the clean energy shift, not only by investing in the clean industries of the future, but in proactively dismantling the fossil-fuelled industries of the past.

In light of prevailing pessimism about the pace of Korea’s clean energy shift, it is important for us to state clearly the limits of our claims. In highlighting the growing alignment between the state’s creative and destructive ambitions and capabilities, we are not suggesting that Korea’s path to fossil-fuel exit will now be easy. Despite growing evidence of the cost-competitiveness of renewables, the Korean government is likely to face ongoing pressure to keep fossil-fuel lines open from local consumers and entrenched business interests alike, in the name of energy equity and economic competitiveness. Nor are we arguing that Korea’s clean energy transition will be swift enough to limit global warming to the 1.5 degrees necessary to avert a climate catastrophe. Our claim is more modest: that there are now at least three factors lending momentum to Korean policymakers’ clean energy building (creative) and fossil-fuel exit (destructive) ambitions and bringing these ambitions into greater alignment.

Yet, while our key claims are modest, in light of recent global developments, it also seems reasonable to entertain the possibility that the pace of Korea’s clean energy shift from this point on might surprise even the most optimistic observers. As noted above, the COVID-19 pandemic has energized governments of some of the world’s largest economies, which have now introduced some of the largest and greenest stimulus packages in history. These massive public investments are likely to have a profound impact on both the technological and market dynamics underpinning the clean energy shift, further driving economies of scale and reducing renewables costs.

Finally, while our analysis has focussed on the state’s role in the clean energy shift, this shift is now being driven as much by technological and economic forces as political ones. Indeed, as Bell (2020) argues and Kim (2020) reminds us, we are now entering an era of ‘symbiosis and mutually reinforcing leads’ between national governments and markets that will continue to drive up clean energy investment, drive down clean energy prices and drive policymakers to take ever more ambitious strides towards a clean energy shift. So, while the challenges facing Korea in its greening quest remains real and significant, from this point forward policymakers will finally be pushing in the same direction as transformative technological and market forces.

Acknowledgments

The authors wish to acknowledge the excellent research assistance of Ms Carol Huang and Mr Alexander M. Hynd, and the helpful comments and suggestions of Professor Keun Lee and two anonymous reviewers on earlier versions of this article.

Declaration of Conflicting Interests The author(s) declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding The author(s) disclosed receipt of the following financial support for the research, authorship and/or publication of this article: The work was supported by the Australian Research Council under ARC Discovery Grant project DP190103669 (2019–2022).

Notes

1.For example, Ha and Byrne (2019) and Sonnenschein and Mundaca (2016).

2.For example, Kim and Mathews (2016) and Kim (2019, 2020).

3.For example, Dent (2018) and Kalinowski (2020).

4.For pathbreaking Schumpeterian analyses of the clean energy shift in East Asia and more broadly, see Mathews (2013, 2017, 2018, 2020).

5.Numerous studies now emphasize the role of Korea’s developmental tradition in driving the industry-building (read: ‘creative’) aspects of its green shift, for example, Dent (2018), Kim (2019, 2020) and Kalinowski (2020). Developmentalism is also informing greening efforts in other East Asian countries, including Singapore (Han, 2017), Taiwan (2020) and Japan (Dent, 2018).

6.We join a small but influential body of Schumpeterian scholarship investigating the state’s role in driving and shaping economic innovation and change at the sectoral and national levels, including Mathews (2018) and Lee (2019).

7.On the state’s catalytic role in Asia’s green shift, see Mathews (2014, 2017), Kim and Thurbon (2015), Dent (2014), Kim (2020) and Tan et al. (2021).

8.On the origins and manifestations of the traditional developmental mindset in East Asia broadly and Korea in particular, see Thurbon (2016).

9.See, for example, Hallegatte et al. (2013), Rodrik (2014) and Matsuo and Schmidt (2019).

10.The transport sector (land, sea and air) makes up a significant proportion of Korea’s GHG emissions. Since 2002, transport has outpaced manufacturing to become the country’s 2nd largest CO2 emitter, just after electricity and heat production (Ritchie and Roser, 2017). In 2016, Korea’s transport sector emitted 98.8 million tons of CO2, 14.2% of the national total (OECD (2020). Of this, road transport contributed 94.6 million tons, or 95.8% (Greenhouse Gas Inventory and Research Centre of Korea (2019) 118–119, Table 3–33).

11.See Nagashima (2018) on Japan. Korea’s plans are detailed below.

12.COVID-19 disrupted our fieldwork plans and made in-person interviews with policy officials impossible in the time frame required for this article. However, based on our extensive fieldwork in Korea for our previous studies of environmental developmentalism, and our method of triangulating findings for this article drawing on a combination of public statements by policy officials, policy documents, and media, policy and scholarly analysis, we are confident in the robustness of our findings.

13.For an historical overview, see Haslam et al. (2012).

14.For a discussion of the emergence and institutionalization of DE ideas under President Lee Myung-bak, see Kim and Thurbon (2015).

15.For detailed analyses of these projects, see Kim and Thurbon (2015), Kim and Mathews (2016) and Kim (2019).

16.For example, in 2013, Korea took 52.24% of the gas price as tax, compared to 11% in the United States. So, in 2013 alone (on MOSF figures), the government collected 19.4 trillion won (US$17.5 billion) in oil taxes – which accounted for about 9.5% of total tax revenue for the period (Park 2014).

17.Whose name changed from MKE to MOTIE in 2014.

18.Indeed, this remains an issue in Korea; in 2020, Kia workers in Korea threatened to walk off the job thanks to the company’s plans to produce electric vehicles. See Reuters (2020).

19.A Hyundai Motor Spokesperson noted in 2016: ‘We have confidence that we have leading technologies for hydrogen cars as our developments began in the late 1990s … If the appropriate infrastructure is established, we can top the hydrogen car markets’ (cited in Lee (2016)).

20.See, for example, Kim (2012).

21.See Burton (2016). On civil society’s role in the fight against fossil fuels in Korea, see Kalinowski (2020).

22.The plan sought to boost domestic production of EVs from just under 80,000 per annum in 2015–920000 p/a 2020; increase domestic market share of EVs from 2% in 2015 to nearly 20% of all new vehicles sold by 2020 and reduce the amount of GHG released into the atmosphere by 3.8 million tonnes p/annum (up from previously planned 200,000-tonne reduction p/a). See .

23.For missions, objectives and participants, http://www.h2korea.or.kr/

24.Additionally, old generators (30 years+) would be closed during Spring and younger generators transitioned to LNG (MOTIE, 2017, p.12).

25.This prediction pre-dated the coal-exit announcement by Chungnam Provincial Government, discussed below. The significant national and provincial policy commitments made since the 2017 are likely to see coal imports fall by more than 50%.

26.As a Business Korea analyst put it: ‘The government and the industry plan to strategically cooperate to preempt the global hydrogen car market. They are going to establish a hydrogen car industry ecosystem, involving all stakeholders ranging from hydrogen car producers and hydrogen filling station operators to hydrogen energy suppliers’ (Herh, 2018).

27.In Moon’s words: ‘Available anywhere, hydrogen is an inexhaustible resource. As of now, it is commonly extracted from fossil fuels, but it will become commonplace to produce it while utilizing renewable solar, wind and bio energies’ (Moon, 2019).

28.See Fuelcellworks (2019b) and Power Technology (2018).

29.Chungnam Government Media Release (2015) ‘Production of FCEV parts emerging as a new growth engine’. July 2. Available at: http://www.chungnam.go.kr/multi/multiMedia.do?article_no=MD0000796531&med_action=view&email_addr=kts00@hanmail.net&mnu_cd=CNNMENU01149&orderby=REG_DATE

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Author Biographies

Elizabeth Thurbon is Scientia Associate Professor of International Relations in the School of Social Sciences at UNSW Sydney. Her work examines the state’s role in techno-industrial transformation, especially under conditions of globalization and climate change. Her most recent book Developmental Mindset (Cornell University Press) offers a fresh way of conceptualizing and analysing East Asia’s developmental states.

Sung-Young Kim is Senior Lecturer in International Relations in the Discipline of Politics & International Relations, Macquarie School of Social Sciences. His research has been published in Review of International Political Economy, New Political Economy, Global Policy, Politics & Society and The Asia-Pacific Journal: Japan Focus.

John A. Mathews is Professor in Emeritus in the Macquarie Business School, Macquarie University. He publishes widely on the dynamics of technological catch up and green industrial strategy. His articles have appeared in Nature, and recent books include Global Green Shift (Anthem Press) and Greening of Capitalism (Stanford University Press).

Hao Tan is Associate Professor with the University of Newcastle, Australia. His research is predominantly focussed on energy transitions from management and policy research perspectives. He has published in leading journals such as Nature, Journal of World Business, Energy Policy, California Management Review and Journal of Cleaner Production