The Green Road to Growth in South Korea: The Conditions for Success. Prof. Jae-Seung LEE Korea University

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1 The Green Road to Growth in South Korea: The Conditions for Success Prof. Jae-Seung LEE Korea University

2 Energy Situation in Korea: Overview Natural Resource is scarce. The 13 th largest economy (GDP) South Korea is the 10 th largest oil consumer in the world. South Korea is the 5 th largest net importer of oil in the world. South Korea is the 2 nd largest importer of LNG in the world behind Japan. Korea is very vulnerable to external market conditions 2

3 Introduction of Green Growth Strategy Backgrounds Climate Change Vulnerable to climate change Energy Problems New Engines for Economic Growth Excessive fossil fuel use resource depletion & increase in carbon emission High overseas dependency (97% of total energy) Movement to seek economic growth through green technology and renewable energy Paradigm Shift to Green Growth

4 Concept of Green Growth Strategy In Korea, Green Growth means development strategy to promote environmentally sustainable economic growth through creation of jobs and new growth engines based on green technology. Virtuous cycle of environment and economy Improvement of quality of life and green conversion Enhancement of international standing Environment & Economy Green Growth

5 History of South Korea s Green Growth Strategy Aug, 2008 Sep, 2008 Green Growth Declaration Comprehensive Basic Plan on Responding to Climate Change Jan, 2009 Feb, 2009 Green New Deal Project Establishment of Presidential Committee on Green Growth (PCGG) Jul, 2009 National Strategy & the 1 st 5-year Plan for Green Growth ( ) Apr, 2010 The Framework Act on Low Carbon Green Growth (Legal Basis) Apr, 2014 Evaluation of the 1 st 5-year Plan for Green Growth Jun, 2014 The 2 nd 5-year Plan for Green Growth ( )

6 The 1 st 5-year Plan for Green Growth ( ) Vision World s 7 th ranking green economy by 2020 World s 5 th ranking green economy by Climate change adaptation and energy independence 2. Creation of new engines for economic growth 3. Improvement of the quality of life and enhancement of international standing Effective mitigation of GHG emissions Reduction of the use of fossil fuels and the enhancement of energy independence Strengthening the capacity to adapt to climate change Development of green technologies The greening of existing industries and the promotion of green industries Advancement of industrial structure to increase services Engineering a structural basis for the green economy Greening land and water, and building green transport infrastructure Bringing the green revolution to daily lives Becoming a role-model for the international community as a green growth leader

7 Key Contents of the Green Growth Strategy Indicators (Target) Share of Renewable Energy 2.24%(by 2006) >11% (by 2030) Solar Power (global market share) 0.3% 5% Green Industries Enhanced Quality of Life Global Leadership Green Car Related Jobs (thousand workers) Green Homes (households) 14,500 >100,000 Share of LED <1% 30%(by 2015) Share of Nuclear Energy (in terms of electricity capacity) 26% 41%(by 2030) Fuel Economy for Vehicles (<1,600cc) 12.4km/l 14.55km/l Co-generation Facilities Energy Efficiency Certifications for Buildings Public buildings All buildings Hybrid Vehicles 1,386 30,000 Waste Regeneration (%) 1.8% 31% Expansion of Carbon Sinks 625 million m million m 2 Public Participation on Climate Action 23.6% 60% Greenhouse Gas Emission (ton CO 2 ) % by 2020 (BAU) Climate Change Plans by Local Government (%) <10% 100% Share of ODA on Green Growth 11% 18%

8 Fiscal Expenditure on Green Growth for Key Category Total 1) Rate of Increase (%) Total Mitigation of Climate Change & Energy Independence Creating New Engines for Economic Growth Improvement in Quality of Life and Enhanced International Standing (Unit: trillion KRW, %) 1) The total amount eliminated overlaps among allocations to projects under the 10 policy directions. Source: Presidential Commission on Green Growth, Road to Our Future : Green Growth, National Strategy and the Five- Year Plan (2009~2013) (2009) 8

9 Key Achievements & Limitations Effective mitigation of GHG emissions Institutions Setting the long-term reduction target (30% reduction by 2020, BAU) (2009) Target management system (2010) Emission Trading System (introduced in 2012 and implemented since 2015) Performance Total GHG emissions and GHG emissions per GDP Total GHG emissions (million ton CO2e) Limitation Continuous increase in GHG emissions due to the economic growth based on energy-intensive industry

10 Key Achievements & Limitations Reduction of the use of fossil fuels & the enhancement of energy independence Institutions Renewable Portfolio Standard (RPS) replacing Feed-in-tariff system (2012) Establishment laws and institutions for smart grid (2011) Performance Renewable energy supply rate Oil & gas self-development rate (%) (%) Energy consumption per GDP (Unit: TOE / million won) Limitation Relatively weak energy demand management due to the policies depending on supply-side management system Changing focus into DSM

11 Key Achievements & Limitations Strengthening the capacity to adapt to climate change Institutions Establishment of National Climate Change Adaptation Center (2009) National Climate Change Adaptation Plan (2010) Development of National Standard Climate Change Scenario and Weather Resource Maps (2011) Performance Food Self-sufficiency rate Ratio of governmental budget for disaster prevention (%) (%) Expansion of Forest Carbon Sink : 1.25 million ha ( ) Limitation Insufficient communication with citizens during project process Passive participation of local governments and private sector

12 Key Achievements & Limitations Development of green technologies Institutions Selection of 27 key green technologies (2012) Expansion of R&D investment Performance Ratio of R&D Green R&D to total governmental R&D expenditure (%) R&D to GDP (%) The level of 27 key green technologies compared to other developed countries: 51.3%(2009) 77.7%(2011) Limitation Lack of market creation and industrial growth based on key green technologies

13 Key Achievements & Limitations The greening of existing industries and the promotion of green industries Institutions Basic Plan for Resource Recirculation (2011) Setting targets for resource productivity and resource recirculation rate 8 ecological industrial parks (EIP) Performance Resource consumption per GDP Sales in renewable energy industry (Kg/1,000won) (billion won) , ,078 9, , ,000 4, ,369 4, ,000 1, Limitation Difficulties of project diffusion to private companies

14 Key Achievements & Limitations Advancement of industrial structure to increase services Institutions Development of cutting-edge convergence technology Increase in investment and sales in high value added service industry Performance Ratio of service and ICT industry in gross value added Service industry (%) ICT industry (%) Investment in the development cutting-edge convergence technology: 79.6 billion won (2010) 96.3 billion won (2011) Investment in high value added service industry: 2.4 trillion won (2009) 2.9 trillion won (2011) Limitation Difficulties in changing industrial structure due to the relative increase in the ratio of manufacturing industry

15 Key Achievements & Limitations Engineering a structural basis for the green economy Institutions Certification of green technology, products and companies (2010) Plan for Green job creation and training (2009) Performance Ratio of environmental tax to GDP (%) Support of financing institutions for green business: 1.9 trillion won (2009) 6.3 trillion won (2012) Approximately 70,000 Job trainee ( ) Limitation Lack of sufficient economic incentives including environment-friendly tax reform and price structure improvement

16 Key Achievements & Limitations Greening land and water, and building green transport infrastructure Institutions Performance Sustainable Traffic and Logistics Development Act (2009) Green Building Support Act (2012) Total Maximum Daily Loads for energy consumption of buildings (2011) Urban forest area per person Ratio of expenditure for environmental protection to GDP (m 2 /person) (%) Share of subway in passenger services % 24.3% 25.0% 25.7% 25.9% Limitation Lack of substantial outcomes in increase in green construction and transportation

17 Key Achievements & Limitations Bringing the green revolution to daily lives Institutions Expansion of public-private partnership for green life movements Educating green leaders and supporting their activities, green growth education Promotion of green products purchase Performance 1.5 Home energy and water consumption per capita energy consumption (TOE 1 / person) water consumption (KL / 0.5 person / day) amount of household 0 waste (kg / person / day) Households participating in carbon point mileage: 2.9 million Issuance of green card: 7.35 million Limitation Needs to increase substantial outcomes including decrease in energy consumption and water consumption per capita

18 Key Achievements & Limitations A role-model for the international community as a green growth leader Institutions Agenda setting about green growth during G20 Summit (2010) Holding Global Green Growth Summit ( ) Attracting GCF Secretariat and making GGGI an international organization (2012) Performance Ratio of ODA to GNI Green growth ODA in total ODA (%) (%) Bilateral green ODA : $100 million (2008) $211 million (2011) Limits Lack of efforts to find new markets of related industries when implementing projects to support developing countries

19 The 2 nd 5-year Plan for Green Growth ( ) Vision Realization of public happiness through the harmonized development of economy and environment Objectives Establishing Low-carbon economy and social structure Realizing a creative economy through the convergence of green technology and ICT Constructing living conditions that are clean and resilient to climate change 1. Effective GHG reduction 2. Building a sustainable energy system 3. The ecosystem of green creative industries 4. Realizing a sustainable green society 5. Strengthening global green cooperation Achieving the GHG reduction goal by implementing the National GHG Reduction Roadmap Implementing an efficient emissions trading system Devising a longterm national GHG reduction goal Ensuring carbon sinks Strengthening energy demand management Expanding renewable energy supply Building a distributed generation system Securing safety in energy infrastructure Developing and commercializing green technologies Promoting green creative industries Establishing an economic structure of resource recycling Reasonable regulations Strengthening adaptation capabilities Expanding environmentally friendly living conditions Creating green country space Ensuring cooperative green governance Devising an effective scheme for the climate change regime Strengthening regional and global cooperation Increasing cooperation with developing countries Expanding cooperation with GCF, GTC & GGGI

20 Summary: Characteristics of Green Growth The Green Growth Strategy of South Korea: A new vision with a paradigm shift A green strategy from a non-g7, non-annex I country Globally oriented: Global Market & Institutions (GGGI, GCF) Main Characteristics: A strong top-down initiative A strong emphasis on industrial policy A strong political momentum A generous budget allocation From Feed-in-tariffs (FIT) to Renewable Portfolio Standard

21 Internal Changes New Changes & Challenges New administration: Continued support but different policy priorities South Korea s contribution of $100 million to the GCF: South Korea s continued support to tackle climate change Presidential Committee on Green Growth to the Prime Minister s Office From a sacrosanct doctrine to a political taboo (?) Critique on the Four River Restoration Projects, which was politically overblown Dealing with nuclear energy External Changes Global economic downturn Recession in global renewable industries Shale revolution and cheaper fossil fuels Effectiveness of ETS Uncertain global climate change regime

22 Moment of Truth & The Conditions for Success The Moment of Truth for Green Growth Green Growth strategy in South Korea is still undergoing a process of consolidation It is too premature to make a judgment whether it was a success or a failure The ideational platform of green growth is still strong The framework of green growth is still valid Reshaping its path toward a more durable long-term policy agenda What needs to be done? Realistic scoping of action plans Continued political support while depoliticizing the content More bottom-up approaches & citizen participation Industrial adjustment

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