Green Infrastructure Finance
Green Investment Climate Country Profile – Republic of Korea East Asia and Pacific Region
Copyright Š2013 International Bank for Reconstruction and Development/The World Bank East Asia and Pacific Region/Water and Energy Management Unit (EASWE) 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org
All rights reserved This volume is a joint publication of the staff of the International Bank for Reconstruction and Development/ The World Bank and the Australian Agency for International Development (AusAID). The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of The World Bank, its Board of Executive Directors, the governments they represent, or AusAID. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Moreover, the statistical database and other country-related information is time sensitive and subject to updates and/or changes. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to the work is given. For permission to reproduce any part of this work for commercial purposes, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; Telephone: 978-750-8400; Fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Task Team Leader, Aldo Baietti: The World Bank, 1818 H Street NW, Washington, DC 20433, USA; e-mail: abaietti@worldbank.org.
Design: Miki FernĂĄndez, ULTRA Designs, Inc., miki@ultradesigns.com
Table of Contents Acknowledgements................................................................................................................................................ iii List of Abbreviations and Acronyms.......................................................................................................................iv 1. Statistical Overview........................................................................................................................................... 2 2. Energy................................................................................................................................................................ 4 3. Green Policies and Incentives............................................................................................................................ 6 4. Green Programs and Institutions.................................................................................................................... 11 5. Green Regulatory Framework........................................................................................................................ 13 6. Investment Trends and Challenges................................................................................................................. 16 7. Concluding Remarks........................................................................................................................................ 19 8. Summary of Policy Instruments...................................................................................................................... 21 9. Annex............................................................................................................................................................... 22 10. References........................................................................................................................................................ 34 List of Tables and Figures: Table 1: Electricity Generation Sources (% of total).............................................................................................. 4 Table 2: Ten Policy Agendas.................................................................................................................................... 7 Table 3: Fifteen Strategic Green Technologies....................................................................................................... 8 Table 4: Incentives for R&D...................................................................................................................................... 8 Table 5: Incentives for RE......................................................................................................................................... 9 Table 6: Standard and Poor’s Foreign Currency Rating....................................................................................... 16 Table 7: FiTs Rates................................................................................................................................................... 27 Figure 1: Total Primary Energy Supply.................................................................................................................... 4 Figure 2: Global Competitiveness Index............................................................................................................... 16 Figure 3: FDI (net BoP, current US$)...................................................................................................................... 17 Figure 4: Private Investment in New or Additional RE Capacity......................................................................... 17
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Green Investment Climate Country Profile - Republic of Korea
Acknowledgements
T
his country profile has been prepared by the East Asia and Pacific Region of the World Bank. The work was led by Aldo Baietti, Lead Infrastructure Specialist (EASWE) under the overall guidance of John Roome, Sector Director (EASSD) and Charles Feinstein, Sector Manager (EASWE). The team and co-authors included Andrey Shlyakhtenko and Roberto La Rocca (EASWE) from the World Bank. The team wishes to acknowledge the peer reviewers and other contributors inside and outside the World Bank Group including, Bokyoung Jung, Director (Ministry of Environment), Myung-Shin Ko, Researcher (Korea Energy Economics Institute), Yun-Sung Kim, Researcher (Korea Environment Institute), Jaemin Song, Assistant Professor (The University of Seoul), Alexander Jett, Research Analyst (TWISI), John Probyn (PPIAF), Bastiaan Verink (TWISI), Banuchandar Nagarajan, Amar Causevic (EASWE) and 10EQS, Ltd. Edward Charles Warwick edited the report. Finally, the team wishes to acknowledge the generous support from the Australian Agency for International Development (AusAID) provided through the World Bank East Asia and Pacific Infrastructure for Growth Trust Fund (EAAIG).
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Green Infrastructure Finance
List of Abbreviations and Acronyms AFE
Average Fuel Economy
BAI
Board of Audit and Inspection
BAU
Business-as-Usual
BTL
Build-Transfer-Lease
BTO
Build-Transfer-Operate
CAFE
Corporate Average Fuel Economy
CCS
Carbon Capture and Storage
CDM
Clean Development Mechanism
CER
Certified Emission Reduction
CO2
Carbon Dioxide
CPI
Corruption Perceptions Index
EE
Energy Efficiency
ESCO
Energy Service Company
ETBI
Environmental Technology Business Incubator
ETS
Emission Trading System
FDI
Foreign Direct Investment
FiTs
Feed-in Tariffs
FYPGG
Five-Year Plan for Green Growth
GDP
Gross Domestic Product
GGGI
Global Green Growth Institute
GHG
Greenhouse Gas
GIR
Greenhouse Gas Inventory and Research Center of Korea
GW
Gigawatt
IGCC
Integrated Gasification Combined Cycle
KEC
Korea Electricity Commission
KEMCO
Korea Energy Management Cooperation
KEPCO
Korea Electric Power Corporation
Kgoe
Kilogram(s) of Oil Equivalent
KIER
Korea Institute of Energy Research
KIEST
Korea Institute of Environmental Science and Technology
km
Kilometer
KPX
Korea Power Exchange
KVER
Korea Voluntary Emission Reduction Program
kW
Kilowatt
iv
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Green Investment Climate Country Profile - Republic of Korea
kWh
Kilowatt Hour
LED
Light-Emitting Diode
LNG
Liquefied Natural Gas
MEPS
Minimum Energy Performance Standards
MOE
Ministry of Environment
MOKE
Ministry of Knowledge Economy
MOSF
Ministry of Strategy and Finance
MMst
Million Short Tons
Mt
Metric Ton
Mtoe
Million Tons of Oil Equivalent
MW
Megawatt
NA
Not Available
NOx
Nitrogen Oxide
NSGG
National Strategy for Green Growth
OECD
Organization for Economic Co-operation and Development
PIMAC
Public and Private Infrastructure Investment Management Center
PPP
Public-Private Partnership
PV
Photovoltaic
RE
Renewable Energy
Republic of Korea
South Korea
RPS
Renewable Portfolio Standard
R&D
Research and Development
SMEs
Small and Medium Enterprises
SOx
Sulfur Oxide
TJ
Terajoules
toe
Tons of Oil Equivalent
TPES
Total Primary Energy Supply
TSP
Total Suspended Particles
TWh
Terawatt Hours
UNFCCC
United Nations Framework Convention on Climate Change
US$ ₩
United States Dollar South Korean Won
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Green Investment Climate Country Profile - Republic of Korea
Republic of Korea
(South Korea) is located on the southern half of the Korean Peninsula and has a predominantly mountainous terrain. South Korea has limited domestic natural resources making it one of the top energy importers in the world. As the country is not connected to any international oil or natural gas pipelines, its choices of imported energy are limited to liquefied natural gas (LNG) and crude oil. With higher than average wind speeds, South Korea has one of the world’s largest wind resources. Surrounded by the Sea of Japan and the Yellow Sea and known for high tides and strong tidal currents on its southern and western coasts, South Korea holds great potential for tidal power. South Korea also has significant hydropower resources owing to its suitable terrain, weather and other natural conditions, and has successfully developed sizable nuclear energy generation capacity.
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Green Infrastructure Finance
Indonesia
Philippines
Vietnam
China
Rep. of Korea
Singapore
Malaysia
1. Statistical Overview
847
225
124
7,318
1,116
240
278
242
95
88
1,344
50
5
29
49.9
48.7
30.4
49.2
82.9
100
72
5.1
4.5
6.4
9.6
3.4
5.8
4.5
24.7
50.9
48.8
16.5
34.7
108.3
51.8
5.4
4.7
18.7
5.4
4.0
5.2
3.2
Agriculture
15
12
21
10
3
0
11
Industry
47
33
41
47
39
28
44
Services
38
55
38
43
58
72
45
Energy production (Mtoe)8
352
24
77
2,085
44
0.03
90
Energy use (Mtoe)
202
39
64
2,257
229
19
67
Net energy exports/imports (Mtoe)9
147
(19)
11
(185)
NA
(51)
18
71
90
98
99
100
100
99
Electric transmission and distribution losses (%)
9.4
12.1
9.6
4.9
3.7
5.2
3.8
Energy intensity (kgoe/US$1,000 2005 PPP)
230
126
274
273
184
80
191
Macro Indicators GDP (current US$ billion)1 Population (million)
2
Urban population (% of total)
3
Economic Indicators Constant GDP 10 Year CAGR (%)4 Public debt (% of GDP)
5
Inflation, consumer prices (annual %)
6
Sector mix (% of GDP)7
Energy Indicators 8
Electricity access (% of population)
10 11
12
CO2 emissions (Mt of CO2)
376
71
114
6,832
515
45
208
Electricity tariffs (US$/kWh)14
0.07
0.14
0.05
NA
0.13
0.22
NA
6,095
348
165
126,215
139
NA
4.4
13,i
Fossil fuel endowment
15
Coal (2008, million short tons)
3.9
0.1
4.4
20.4
0
0
4
141.1
3.5
24.7
107
0.3
0
83
Coal and peat
15.1
15.2
19.7
67.2
28.3
0
15.8
Crude oil
Oil (2012, billion barrels) Natural gas (2012, trillion cubic feet) Total Primary Energy Supply (%)16
26.5
19.3
4.2
16.8
39.5
61.4
35.5
Oil products
6.7
14.3
21.2
0
0
0
0
Natural gas
17.4
8.3
11.1
3.3
13.8
38.4
43.4
0
0
0
0.8
16.8
0
0
Nuclear Hydro
0.5
2.2
4.0
2.4
0.1
0
0.9
Geothermal, solar, wind
7.9
22.9
0
0.5
0.1
0
0
i CO2 emissions from fuel combustion only.
2
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Indonesia
Philippines
Vietnam
China
Rep. of Korea
Singapore
Malaysia
Green Investment Climate Country Profile - Republic of Korea
26.0
17.9
39.3
9
1.3
0.2
4.5
0
0
0.5
0
0
0
0
Renewables
13.3
32.6
36
17.5
1
0.1
6.3
Oil
22.8
8.7
2.5
0.4
4.4
18.8
2.0
0
0
0
1.9
32.7
0
0
Natural Gas
22.1
32.1
43.4
1.4
15.6
81.0
60.7
Coal
41.8
26.6
18
78.8
46.2
0
30.9
S&P’s Credit Rating (Foreign Currency)18
BB+
BB+
BB-
AA-
A+
AAA
A-
Doing Business Ranking
129
136
98
91
8
1
18
CPI Transparency Ranking
100
129
112
75
43
5
60
FDI, net (% of GDP)21
1.6
0.3
6.8
2.2
(1.9)
8.5
1.6
37,113 45,114
8,328
78,438
NA
NA
46,401
Energy Indicators (cont.) Combustible renewable and waste Electricity and heat Electricity Sources (%)
17
Nuclear
Investment Climate 19 20
PPI (US$ million)22,ii PPI renewable energy (US$ million)
22
Lending interest rate (%)
23
Lending - deposit spread (%)24 Liquid assets to deposits and short term funding (%)
25
3,876
3,844
1,839
8,380
NA
NA
198
13.2
7.7
13.1
5.9
5.4
5.6
5
6
4
2
3
2
5
3
30
29
35
20
8
37
27
ii Investments amounts include greenfield projects, concessions and management, and lease contracts.
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Green Infrastructure Finance
2. Energy
S
outh Korea has enjoyed rapid economic growth and development over the last 30 years. The growth, however, imposed an ever increasing energy demand — especially for petroleum and natural gas. Endowed with limited natural resources, South Korea has thus has become dependent on energy imports. By 2009, the energy dependency of South Korea exceeded 80 percent. The country is now the world’s second largest importer of LNG, the third largest importer of coal, and the fifth largest importer of crude oil. Over the last three decades, South Korea has been making an effort to decrease its reliance on oil. However, oil still constitutes about 40 percent of the country’s total primary energy supply (TPES).27 At the same time, coal consumption has reached 126 MMst in 2010 — over one-third increase since 2005 — and now coal is the second largest source of energy supply. This was driven primarily by growing demand from the power sector. Domestic coal production remains at less than 3 MMst.
Figure 1: Total Primary Energy Supply Combustible renewables and waste 1.3%
Natural Gas 13.8% Nuclear 16.8% Oil 39.5%
Hydro 0.1% Coal Oil & Peat 28.2% 61.4%
Geothermal, Solar, etc. 0.07%
Renewables 1.5%
Source: International Energy Agency, 2009.26
Recognizing the need to diversify the energy supply, South Korea introduced natural gas to its energy mix in 1987. Since then gas-based power generation has been aggressively expanding, reaching 13.8 percent of TPES and 15.6 percent of electricity generation in 2009. The increase, however, has been constrained by the inability to access international gas pipelines and the need to import gas by LNG tankers. In 1978, the Government introduced nuclear energy to the country’s energy mix. Since then nuclear power reached 32 percent of country’s energy mix, alleviating the problem of very limited domestic energy resources, improving energy security, and increasing energy diversification. In addition, it allowed South Korea to create a cleaner energy mix.
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Table 1: Electricity Generation by Source (% of total) Renewables Oil Natural gas Coal Nuclear Sources Source: International Energy Agency, 2009.28
2002 1.0 9.6 12.7 40.6 36.1
2009 1.0 4.4 15.6 46.2 32.7
Green Investment Climate Country Profile - Republic of Korea
While nuclear plays an important role in the country’s energy mix, in 2009 renewable energy (RE) constituted only one percent, a level not yet comparable to those of other Organization for Economic Co-operation and Development (OECD) countries.iii The majority of the energy generated by renewables comes from combustible renewables and waste (over 88 percent of the 3.5 Mtoe in 2009), with the remainder coming from hydro (about seven percent) and wind and solar (five percent).iv The growth of RE, however, is the fastest across the energy mix (seven percent annually) with combustible renewables growing at eight percent and solar and wind at six percent per year.
Natural gas 13.8%
iii According to the KEMCO, the RE share was 2.5 percent in 2009. The difference is due to different calculation methods. iv According to the KEMCO, the majority of the energy generated by renewables comes from combustible renewables and waste (74.89 percent of the 6 Mtoe in 2009), with the remainder coming from hydro (9.97 percent) and wind and solar (4.42 percent).
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Green Infrastructure Finance
3. Green Policies and Incentives
S
outh Korea has experienced tremendous economic growth during the last 30 years. To sustain the growth, energy policies have been focused on ensuring a stable and adequate energy supply with the Government playing a central role in regulating the energy sector and energy prices. While in the 1970s the primary focus was placed on oil, the second oil crisis in 1979 heightened the importance of diversifying energy sources and expanding energy supply infrastructure. However, with increasing demand for energy, South Korea has seen a substantial increase of the greenhouse gas (GHG) emissions. South Korea is the 15th largest GHG emitter in the world, accounting for 1.3 percent of the world total by 2005.29 The Government is now seeking a new direction in energy policy that will support the three facets of sustainable development namely, energy, economy, and environment. On the occasion of South Korea’s 60th anniversary in August 2008, the President of South Korea articulated a Low Carbon/Green Growth vision. The new strategy for the country development was formulated based on that vision.30 This vision was accompanied by the National Strategy for Green Growth (NSGG), which expects the country’s share of RE sources in TPES to reach six percent by 2020, 11 percent by 2030 and 30 percent by 2050. It includes the following three objectives: ■■
Mitigate climate change and promote energy independence;
■■
Create new engines for economic growth; and
■■
Improve the quality of life and enhance South Korea’s international standing.31
The NSGG and the Five-Year Plan for Green Growth (FYPGG) drawn up in July 2009 declared the goal of making South Korea one of the seven largest green countries by 2020 by strengthening energy sufficiency, reducing dependency on oil, carrying out research and development (R&D) for green technology, using R&D results as a driving force for growth, and fostering green industries. The plan covers areas such as investments, infrastructure, technology development and programs to promote RE. The plan will: (i) call for spending two percent of GDP on green growth between 2009-2013; (ii) induce production worth ₩182-206 trillion (around 20 percent of 2009 GDP); and (iii) create 1.6 to 1.8 million jobs (10 percent rise in employment) by 2013.29,v A total of ten policies were presented in the FYPGG and the NSGG, including those policies mentioned above. These policies are:
v South Korean Won (₩) exchange rate is approximately ₩ ₩1,100 = US$1.
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Green Investment Climate Country Profile - Republic of Korea
Table 2: Ten Policy Agendas 1. Effective mitigation of GHG emissions:
The Government will pursue mitigation strategies for buildings, transport and industry, require reporting on emissions and promote forestation.
2. Reduction in the use of fossil fuels and the enhancement of energy independence:
South Korea will reduce energy intensity to the OECD average, increase the use of RE and expand nuclear power capacity.
3. Strengthening the capacity to adapt to climate change:
South Korea will launch the “Four Major Rivers Restoration Project” and increase the share of “environmentally friendly” agricultural products to 18% by 2020.
4. Development of green technologies:
The Government will pursue the development of important green technologies, boosting its world market share in the relevant sectors to 8% within five years.
5. The “greening” of existing industries and promotion of green industries:
Exports of green goods in the major industries will rise from 10% in 2009 to 22% in 2020 and the Government will help SMEs green their business.
6. Advancement of the industrial structure to increase the role of services:
The Government will develop health care, education, finance, contents industry, software and tourism as the core of high value-added services.
7. Engineering a structural basis for the green economy:
The Government will gradually introduce an emissions trading system, make the tax system greener and extend public credit guarantees to green industry.
8. Greening land and water and building the green transport infrastructure:
The share of passenger travel by rail will rise from 18% in 2009 to 26% in 2020, and metropolitan mass transit from 50% to 65% over the same period.
9. Bringing the green revolution into daily lives:
Carbon footprint labeling will be enacted, the Government will increase mandatory procurement of green goods and education on green growth will be expanded.
10. Becoming a role-model for the international community as a green growth leader:
South Korea will actively engage in international climate-change negotiations and increase the share of green Official Development Assistance from 11% to 30% in 2020.
Source: Green Growth Korea, 2012.31
The FYPGG includes ₩23.5 trillion (about US$21.5 billion) to finance new growth engines, in part by greening existing industries and promoting new green industries.29 For example, among the 17 new growth engines announced in January 2009, six were in the green technology industry, namely: (i) new RE; (ii) low carbon energy; (iii) water technology; (iv) light-emitting diode (LED) application; (v) green transport system; and (vi) high-tech green city development. The Government has launched a number of initiatives to provide financial resources to green industry. First, it introduced tax incentives in 2010 for financial instruments that invest in green technology and industry. Dividends and interest from bonds, deposits and investment funds that invest at least 60 percent of their capital in firms and projects with green certificates are
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Green Infrastructure Finance
tax-exempt up to certain ceilings. Second, Government’s lending for green firms and projects will be expanded. Third, public credit guarantees for green firms will be increased from ₩2.8 trillion (about US$2.5 billion) in 2009 to ₩7 trillion (about US$6.4 billion) in 2013, and provided under more favorable conditions. Moreover, the Government plans to launch a green private equity fund.32 These green finance measures will fund firms, projects and technologies that are granted “green certificates”, under a program introduced in April 2010. The certificates will be given by public institutes based on technological impact, feasibility, the degree of greening and environmental impact. Green firms are defined as those for which certified green technology accounts for more than 30 percent of sales. In recognition of the importance of R&D and to support the Green Growth Vision, the Government chose 15 strategic green energy technologies in May 2009 and developed a strategic plan for these technologies in order to accelerate early commercialization. To promote investment in Table 3: Fifteen Strategic Green Technologies R&D and boost economic 1. Solar Energy 9. LED growth, the Government 2. Wind Power 10. Nuclear Energy increased its tax assis3. Fuel Cell 11. Small-scale cogeneration, tance for R&D. The new 4. IGCC 12. Green Car measures include an R&D 5. CCS 13. Superconductivity reserve fund, an increase in 6. Clean Fuel 14. Energy Conservation building investment tax credits for 7. Energy Storage 15. Heat Pump R&D facilities from seven 8. Electric Information Technology percent to 10 percent, and Source: Korea Institute of Energy Technology Evaluation and Planning, 2011.33 an increase in the deduction for R&D grants paid by corporations to universities from 50 percent to 100 percent.34 The Government has placed Table 4: Incentives for R&D a substantial focus on the ■■ Increase in investment tax credits for R&D facilities from 7% to 10% development of the RE technologies. It estimates ■■ Increase in the deduction for R&D grants paid by corporations to universities from 50% to 100% that 43.2 TWh of additional RE potential can be realSource: Asia-Pacific Economic Cooperation, 2011.34 ized by 2020.29 That will be equivalent to 12 percent of total electricity generated in 2005.29 In particular, South Korea has relatively large potential in solar PV (10.4 TWh) and offshore wind (9 TWh).
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Green Investment Climate Country Profile - Republic of Korea
Recognizing the importance of RE in achieving sustainable development, the Republic of Korea also passed the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy in 2004 and announced that a total of ₩40 trillion (US$34.2 billion) will be invested in RE by 2015.35 The act foresees an investment of ₩22.4 trillion by the 30 largest industrial groups as well as a ₩10.6 trillion contribution by the Government. In the past two years, the Government continued demonstrating commitment to development of RE technologies with governmental investments alone reaching ₩2 trillion (US$1.7 billion). The green energy targets were supported further by the Government through the release of the Development Strategy for New and Renewable Energy Industry in October 2010. Under this strategy the Government plans to invest US$36.4 billion in new and RE between 2011 and 2015.36 The Government has established various incentives to support green growth. These include grants and contribution for RE investments, support for construction of one million ‘green homes’ between 2009 and 2020, incentives for the wider use of RE sources in new and newly-renovated buildings and complementary investments in infrastructure. In addition, all RE technol- Table 5: Incentives for RE ogies receive a five percent ■■ In 2009, import duties were halved on all components/equipment tax credit and import duties used in RE power plants were halved on all compo■■ Subsidies to local governments of up to 60% for the installation of nents/equipment used in renewable facilities RE power plants (in 2009). ■■ Low interest loans (5.5%-7.5%) to RE projects with a 5-year grace The Government subsidies period followed by a 10-year repayment period are also available to local governments for up to 60 Source: Renewable Energy World, 2010.37 percent for the installation of renewable facilities, as well as low-interest loans (5.5 to 7.5 percent) to RE projects, including a five-year grace period followed by a ten-year repayment period. The greening of the economy is further supported with various incentives in energy efficiency (EE). For example, the Government allocated approximately US$14.2 billion for an EE initiative that aimed to improve EE by 11.3 percent by 2012 compared with 2007 levels, and to save 34.2 Mtoe of carbon emissions. Such provision was included in the long-term energy plan (approved in 2008), which aims to achieve a 4.6 percent annual EE improvement by 2030.38 While all these measures helped to slowdown the growth of GHG emissions (emissions almost doubled between 1990 and 2005), they are still increasing. In response, the Government has developed several measures to exercise better control over the growing GHG emissions. The key measures include: (i) voluntary and negotiated agreement systems; (ii) EE programs; (iii) Clean Development Mechanism (CDM); and (iv) the establishment of carbon trading market
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Environmental taxes, which account for 9.5 percent of the country’s total tax revenues, are another measure used by the Government to curtail GHG emissions. The Renewable Portfolio Standard (RPS), introduced in 2012, replaced the feed-in tariffs (FiTs) regime for wind and solar power that was originally established in 2005. This RPS will require the 14 power utilities with capacities exceeding 500 MW in the country to generate four percent of energy from renewable sources by 2015, increasing to 10 percent by 2022.39 Effective as of 2012, this program will mandate an additional 350 MW/year of RE capacity until 2016, and 700 MW/ year thereafter.40 A regional emission cap-and-trade program was introduced in 2008 covering emissions is NOx, SOx and Total Suspended Particles (TSP) in the capital region. The system began with large-scale emitters and was extended to mid-size emitters in January 2010. Targeting 136 factories, it covers 84 percent of NOx, 78 percent of SOx and 57 percent of TSP emissions.29 In this context, vehicles are a major pollution source in the capital region, accounting for around half of NOx emissions. To further support the country’s green growth, the Government will introduce a nationwide cap-and-trade program. The launch of the system was initially scheduled for 2013 with the system covering the majority of CO2 emissions. However, due to strong resistance from industry, its launch has been delayed. The Government now expects the emission trading scheme to start in 2015.
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Green Investment Climate Country Profile - Republic of Korea
4. Green Programs and Institutions
R
esponsibility for energy policy development and implementation is shared among a number of governmental institutions. The Government established the National Energy Committee, which is chaired by the President and includes experts from the Government and outside. The committee’s role is to deliberate and mediate major energy policies and plans, and to discuss the National Basic Plan for Energy, emergency preparedness, foreign energy resource development, nuclear energy policy, the coordination of energy policies and projects, the prevention and settlement of social conflict related to energy issues, the transportation of and physical distribution plan for energy, the effective execution of the energy budget, and energy issues within the United Nations Framework Convention on Climate Change (UNFCCC).
The National Committee on Saving Energy launched a voluntary agreement system in 1998 to encourage EE in the business sector. Firms that participate in the program sign agreements with the Government specifying their voluntary energy conservation and GHG emissions reduction targets. These are then monitored by the Government. In return, the firms are eligible for low-interest rate loans on energy-saving facilities, tax benefits and technical support. By 2008, a total of 19 Mtoe had been saved, which is equivalent to a 58 million tons reduction in CO2 emissions (around 10 percent of annual emissions). The Government launched a Pilot Project of Mandatory Negotiated Agreements on Energy Use in 2010. It includes 38 firms, covering 41 percent of total energy consumption in the industrial sector. The negotiations resulted in agreements to reduce energy use by 3.7 percent (relative to the average of 2007-2009) between 2010 and 2012. This system will be replaced by the GHG Emissions and Energy Target Management System, which aims to set targets for GHG emissions reduction for large emitters, which will be subjected to non-compliance penalties.29 The Government will select entities to be controlled based on the average GHG emission and energy consumption performances over the previous three years. The targets for GHG emissions and energy consumption will then be set through negotiations. Controlled entities will submit performance plans and reports to sector-specific responsible organizations.vi The Government then will evaluate the performance of the controlled entities in terms of GHG emissions and energy consumption. It will issue improvement orders or even enforcement notices if an entity’s performance has not reached the target or if the reports are not adequate. Entities with improvement orders should incorporate the improvements into their new implementation plans. The Government has the right to impose penalties if companies fail to follow the scheme.
vi Sector-specific responsible organizations are: (i) Industry and electricity generation (Ministry of Knowledge Economy); (ii) Building and transport (Ministry of Land, Transport, and Maritime Affairs); (iii) Agriculture and livestock (Ministry for Food, Agriculture, Forestry, and Fisheries); and (iv) Waste (Ministry of Environment).
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In October 2011, the Government confirmed and notified the controlled entities of the targets for GHG emissions and energy consumption for 2012. The total target amount for GHG emissions for all controlled entities in 2012 was 598 million tons of CO2, a 1.4 percent reduction compared to the business-as-usual (BAU) level. For the year of 2013 — the first year of the GHG Emissions and Energy Target Management System’s implementation — it was made sure that the initial targets will not impose a heavy burden on the controlled entities. Also, the Government will help the controlled entities achieve the target by providing consulting and technical auditing services. The Building Energy Rating System is a form of EE system developed by the Government. The Building Energy Rating System, which was originally applied to apartments, was expanded to office buildings. This rating system qualitatively evaluates the amount of heat energy produced and CO2 emitted, giving grades based on the evaluation. In addition, when new construction is approved, all buildings must deliver a plan for EE. These are important measures in a South Korea that have a high urbanization rate (82.9 percent) compared to other East Asia and Pacific countries.3 In order to save fuel and reduce GHG emissions by cars, the Government launched the Average Fuel Economy (AFE) regulation in January 2006, which was patterned on the United States Corporate Average Fuel Economy (CAFE) system. Under South Korea’s regulation, the AFE of all cars sold by a manufacturer over one year must meet certain standards, depending on engine capacity. This system boosted AFE by 6.6 percent (10.8 to 11.5 km/liter) between 2006 and 2008 and reduced CO2 emissions by 7.3 percent.31 South Korea, as a non-Annex I country, has been actively involved in the CDM since 2005, when unilateral projects — those funded by developing countries’ own money and not by Annex I countries — were allowed. South Korean investment companies own the Certified Emission Reductions (CERs) and can sell them to any Annex I country in the market. South Korea has 35 projects registered, with RE projects accounting for a third of them. Another 47 projects are in the process of registration.29 As of February 2010, the UNFCCC expected South Korea’s registered projects to reduce CO2 equivalent by an average of 15 million tons per year, accounting for 4.4 percent of the total emissions, ranking South Korea fourth behind China (59 percent), India (12 percent) and Brazil (6 percent). The First Korea Carbon Fund and the Korea Carbon Credit Fund provide further support for the CDM projects. The Korea Carbon Fund invests in domestic and overseas CDM projects and GHG reduction projects with aggregated commitments of ₩76 billion, while the Korea Carbon Credit Fund invests in domestic and overseas carbon credit (e.g. CER) related sectors with aggregated commitments of ₩29 billion. An Environmental Venture Fund created by the Ministry of Environment (MOE) to promote environmental technologies has identified and supported promising venture companies. In particular, the Environmental Technology Business Incubator (ETBI) is a program supervised by the Korea Environmental Industry and Technology Institute to help venture companies deploy environmental technologies.
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Green Investment Climate Country Profile - Republic of Korea
5. Green Regulatory Framework
T
he Ministry of Knowledge Energy (MOKE) is the primary governmental body for formulating energy policy. The Korea Energy Economics Institute develops energy policies related to: (i) energy conservation and climate change; (ii) the petroleum industry; (iii) the gas industry; (iv) the electricity industry; and (v) the RE industry, among others. It is financed directly by the Government. South Korea has been restructuring its energy sector since the late 1990s. It introduced competition in industries such as electricity and natural gas that were traditionally considered as natural monopolies. In January 1999, in a move to phase in competition in the electricity industry, the Government announced the Basic Plan for Restructuring the Electricity Industry. The plan included the unbundling and privatization of South Korea’s state-owned electricity monopoly, Korea Electric Power Corporation (KEPCO). Part of the plan has been implemented, including the establishment of the Korea Power Exchange (KPX) and the Korea Power Commission in April 2001. In the same year, as part of its liberalization efforts in the energy sector, the Government established the Korea Electricity Commission (KEC) to regulate the electric power sector and to manage the technical and professional competition policy. The power generation part of KEPCO was split into six wholly-owned companies (five thermal generation companies and Korea Hydro and Nuclear Power Company Limited). Five thermal generation companies were to be privatized in stages. However, in July 2008, the Government announced there would be no further privatization of KEPCO and its five subsidiaries. At the end of 2009, 51 percent of KEPCO (as a holding company) was owned by the Government. KEPCO is still a dominant player in the electricity sector, controlling 94 percent of total power generation and 100 percent of transmission and distribution in South Korea. The Government has also made moves to restructure the gas industry. In November 1999, the Government sold 43 percent of its equity in the Korea Gas Corporation and developed the Basic Plan for Restructuring the Gas Industry to promote further competition in the industry. The plan outlines a scheme to introduce competition into the import and wholesale gas businesses, to promote the development of the gas industry, and to enhance consumer choice and service quality. A detailed implementation plan was announced in October 2001. The plan covers the replacement of existing import and transportation contracts, the privatization of import and wholesale businesses, and the revision of related legislation and enforcement.39
Competition in the retail sector, which is currently operated under a monopoly system within each region, will be introduced in stages, in conjunction with the progress made in the wholesale sector. As of the end of 2011, no decision on the liberalization of the gas market had been reached and no regulatory commission for the gas industry was introduced.41
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The Korea Institute of Energy Research (KIER), funded by the Government, is South Korea’s major energy technology research institute. KIER’s mission is to contribute to economic growth by developing industrial core energy technologies and deploying outcomes. The Korea Energy Management Corporation plays a key role in achieving South Korea’s R&D goals for EE, energy conservation, clean energy, and new and RE technologies. It also manages R&D planning and management. The Fair Trade Commission is South Korea’s anti-trust agency and monitors monopoly problems and unfair business practices in the energy sector. The public-private partnership (PPP) framework was introduced in 1994 to promote private sector participation in infrastructure services. The framework was modified significantly in 1999 to accommodate the needs and the capabilities of the Government. Now it is based on the PPP Act and PPP Enforcement Decree. According to the framework, the responsibility for overseeing South Korea’s PPP program is concentrated in the Ministry of Strategy and Finance (MOSF). The MOSF is responsible for developing PPP policy and establishing the Government’s comprehensive PPP investment plans, through the creation of an annual PPP plan and guidelines document. The MOSF controls the quality of projects delivered by Line Agencies through the review of quarterly PPP implementation status reports. Most of the decisions on large PPP deals are delegated to a specialized the Project Review Committee within the MOSF. This Committee generally is staffed by high-ranking governmental officials, but may also include private consultants as “technical experts”. The primary work on PPP project implementation is undertaken by various South Korean Sponsoring Agencies, (such as the Ministry of Land, Transportation and Maritime Affairs in the case of a national transport infrastructure project). The relevant agency develops the project, including conducting a project feasibility study and value for money appraisal, managing the procurement process, identifying the preferred bidder, approving the engineering plan, and confirming project completion. Oftentimes, line agencies request technical assistance from the Public and Private Infrastructure Investment Management Center (PIMAC) — the Government’s “primary administrative entity for interfacing with the private sector on infrastructure investment projects” during the project development.42 The role of PIMAC includes reviewing project proposals, helping in negotiating concession contracts and mediating disputes. In addition, PIMAC offers educational workshops to increase private sector interest in infrastructure finance and conducts research on the infrastructure market.43 To assist under-skilled local governmental authorities, PIMAC specifically works to protect the interests of the Government in their dealings with private sector concessionaires.42 The Board of Audit and Inspection (BAI) is the public auditor of South Korea. This agency works to make sure “that administrative practices and services of government and public bodies are fair, reasonable and appropriate”.44 The BAI provides independent oversight of the PPP process, auditing the practices (specifically in terms of procurement) of the line agency.
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Another important player in the South Korean PPP regulatory space is the Korean Infrastructure Credit Guarantee Fund, which provides funding guarantees to private providers. Guarantees can take the form of a term loan structured to protect the project’s senior debt (available upon demand), or a revenue guarantee loan.
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6. Investment Trends and Challenges
S
outh Korea was hit hard by the 1997-1998 Table 6: Standard and Poor’s Foreign Currency financial crisis. Nevertheless, reforms of Rating the underlying macroeconomic structures Country Rating and the financing sector enabled the country to China AArecover quickly. Countermeasures undertaken Indonesia BB+ to mitigate the crisis included: (i) significantly Philippines BB+ liberalizing the financial market; (ii) lifting Singapore AAA restrictions on foreign investment; (iii) floating Korea, Rep. of A+ the exchange rate; and (iv) encouraging foreign Vietnam BBcapital (foreign investment was soon 40 per18 Source: Standard & Poor’s, 2012. cent of total listed shares). Banks were pushed to restructure, recapitalize, and improve basic soundness. South Korea’s rising competitiveness was reflected in strong export growth for the 10 years since 1997. By the end of 2007, the country’s foreign exchange reserves rose to US$262 billion, from only US$20 billion in 1997. South Korea’s rising competitiveness was reflected in strong export growth for the 10 years since 1997. By the end of 2007, the country’s foreign exchange reserves rose to US$262 billion, from only US$20 billion in 1997.45 However, these efforts did not create enough resilience and the global financial crisis of 20072008 affected South Korea more than its neighbors. The impact was visible in the collapse in export demand and the tightening financial markets, which resulted in a liquidity shortage. Nonetheless, the country was able to recover and mitigate the effects of the global crisis quickly, launching policy reforms and expansionary monetary and fiscal policy. South Korea enjoyed six percent growth in 2010 and was ranked as the 19th most competitive country (out of 144) in the world.46 Although, South Korea followed proactive policies to attract foreign direct investment (FDI), the inbound FDI volumes have been rather disappointing. While South Korea is ranked 16th in the 2008 FDI Potential Index, the actual inward
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Figure 2: Global Competitiveness Index Stage of development Transition 1-2
1 Factor driven
2
Transition 2-3
3
Efficiency driven
Innovation driven
Institutions 7 Innovation
6
Infrastructure
5
Business sophistication
Macroeconomic environments
4 3 2
Health and primary education
1
Market size
Technological readiness
Higher education and training
Financial market development
Goods market efficiency Low market efficiency
Korea, Rep.
Efficiency-driven economies
Source: World Economic Forum, 2012.46
Green Investment Climate Country Profile - Republic of Korea
FDI Index was just 126 among the 141 countries surveyed.47 While inbound FDI has continued to decrease (to a mere US$5.3 billion), outbound FDI by South Korean companies has grown markedly (reaching US$23 billion in 2010).
US$ billion
The potential growth of green industry, there- Figure 3: FDI (net BoP, current US$) fore, provides a great opportunity for South 5.00 Korea to re-energize its efforts in attracting 0.00 inbound FDI. To realize that potential, the FDI environment in South Korea could be 5.00 enhanced through an improvement in the -10.00 transparency and consistency of regulations. Certain regulatory aspects, including a set of -15.00 newly introduced capital control measures, -20.00 can discourage FDI by creating uncertainty for -25.00 investors. Although, South Korea has devel02 003 004 005 006 007 008 009 010 oped a hard-working, educated and highly 2 2 2 2 2 2 2 2 20 productive workforce and high levels of instiSource: World Bank, 2010.48 tutional labor protections, foreign investors cite volatility in labor-management relations as an issue that can hamper direct investment.
(â‚Š100 billion)
Nevertheless, existing PPP regulations proFigure 4: Private Investment in New or Additional vide South Korea with the opportunity to RE Capacity attract FDI as well as accelerating growth 50 n 2009 n 2010 38.8 by building partnerships with foreign mul40 30.3 30 tinationals on Green Energy technologies 24.6 18.6 20 and RE Projects. The two schemes most 10 4.9 6.1 0.7 1.3 widely implemented in South Korea are: (i) 0 PV Wind Others Total build-transfer-operate (BTO); and (ii) build(+63.3%) (+24.1%) (+83.6%) (+57.9%) transfer-lease (BTL).49 The BTO scheme (% change) includes user-fees and minimum revenue Source: World Bank, 2010.51 guarantee for solicited projects while BTL projects are only for solicited projects that include governmental payments. BTL projects have lower risk and shift the demand risk to the Government. The Government may provide different types of assistance to PPP projects, including support for land acquisition, construction subsidies, financial support, foreign exchange rate risk measures, tax benefits, compensation on termination and some short-term credit guarantees (through social overhead capital fund) for PPP projects to enhance the timely payments for debt service. This regulatory framework was successful in attracting attention to PPPs. During the period from 2003 to 2009, the number of BTO projects under operation greatly increased, reaching 188 with investment levels equaling US$6.3 billion.vii Also, the share of PPP to traditional infrastructure vii In 1998, BTO had six projects.
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procurement increased from 5.6 percent in 2003 to 15.4 percent in 2009.50 By 2008, ₩71.6 trillion (about US$65.5 billion) had been invested in 422 PPP (BTO + BTL) projects.51 Private sector investment amounted to ₩56.2 trillion (about US$51.5 billion), which was 78.5 percent of total investment. Public sector construction subsidies amounted to ₩14.7 trillion (about US$13.5 billion), or approximately 20 percent of total investment.43 However, the PPP framework could be enhanced to accommodate green investments, which are largely represented by solar photovoltaic (PV) and wind.51 For example, PPP projects should be expanded to include environmentally friendly infrastructures (this will require revision in the PPP Enforcement Decree).
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Green Investment Climate Country Profile - Republic of Korea
7. Concluding Remarks
S
outh Korea has enjoyed tremendous growth over the last 30 years. However, this has resulted in heavy dependence on fossil fuel imports to meet significant energy needs. Nevertheless, South Korea provides important lessons for developing countries on how to stimulate economic growth, despite a scarcity of natural resources. Recently, South Korea has made a significant shift in its energy policies in order to accommodate to a changing world energy market and to address increased environmental concerns. Energy policies are now principally aimed towards ensuring sustainable development, which considers both economic growth and environmental preservation. South Korea has implemented a number of new green policies to foster the development of RE and expand RE related R&D programs. Most notably, South Korea has voluntarily agreed to reduce GHG emission by 30 percent by 2020 compared to its BAU case. This commitment was formalized with the NSGG which was enacted into the Framework Act on Green Growth. South Korea also announced the intent to establish an Emission Trading System (ETS) by 2015 and is now in the process of implementing a target management approach whereby major emitters agree to individual emissions reduction targets. The transition from the target management system to ETS requires transparency and clear definition of sectors and reduction targets. South Korea has developed several EE policies and strategies in the transport and building sector to supplement the 30 percent voluntary emission reduction target. Some examples include stricter fuel efficiency standards and stronger building design codes. Specifically, South Korea announced a new fuel economy standard (2009) for car manufacturers and importers and a performance based energy code (2011) that limits the total energy use per unit area in commercial buildings. In addition to these steps, the Government has also introduced policies for private sector participation in the energy sector. These efforts included: (i) the unbundling of the state electricity monopoly, the KEPCO, into generation, transmission and distribution components; (ii) the development of the KPX to coordinate a wholesale market for electricity; and (iii) the expansion of South Korea’s electricity transmission system. Another major feature of South Korea’s energy policy has been an increasing focus on energy-sector cooperation with other countries. Despite its commitments to green growth, South Korea still faces significant challenges. Notwithstanding the rise of green industries, many green technologies are still considered to be in their infancy and more effort is needed for these to yield notable results in the form of GHG reduction. Although the contribution of RE in TPES in South Korea has increased almost threefold, from 93 Mtoe to 258 Mtoe between 1990 and 2011, it still constitutes only 1.5 percent of the electricity supply. This tamed growth reveals several important challenges that South Korea is facing.
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The major challenge is observed in the implementation of the mature RE technologies. Increased capital requirements and land issues are preventing the smooth development of RE potential. For example, hydropower, which has a cost structure that is competitive with conventional technologies, provides South Korea with a 57.7 GW of RE potential. Yet only 1.6 GW of this potential has been realized. The impact of hydro projects on land use and on downstream communities is increasing the requirement for pre-investment financing. Civil complaints from local residents and the unequal distribution of seasonal rainfall that decrease the operation rate are other issues that affect the economic feasibility of hydro projects.52 Another challenge for South Korea relates to the uncertainties and risks inherent in the transition from a FiTs system to an ETS. The Government replaced its FiTs scheme with a RPS scheme in 2012. The ETS will be put in force in 2015. This policy has the potential to provide a comprehensive and economically efficient means of reducing emissions. However, the volatility of the emissions prices over the long term is forcing investors to delay their decisions for RE investment. In some cases they choose technologies that reduce their exposure to the carbon price, such as gas-fired power generation alternatives.53 Although the Government is expressing its political commitment to the scheme’s long-term duration, this challenge will remain until the details of the scheme are clarified. Lastly, the extensive collaboration efforts of the Government with the private sector in R&D also face some major challenges. The Government is trying to transfer and deliver R&D outcomes with the private sector through burden-sharing schemes where the private sector is required to contribute 50 percent of R&D costs. However, such mechanisms carry the risk of directing government-sponsored R&D towards technologies approaching commercialization, which are the most attractive to industry. These challenges behoove the Government to focus on the highly risky phases of technology development, while expecting the private sector to make research investments without public R&D support in areas covering the later stages of R&D.
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Green Investment Climate Country Profile - Republic of Korea
8. Summary of Policy Instruments Below is a summary table of renewable energy, energy efficiency and market-based instruments for seven selected East Asia and Pacific countries. China
Korea, Rep. of
Indonesia
Philippines
Tax Incentives
●
●
●
Carbon Tax
●
Capital Subsidy/Grants - RE
●
●
Policy Distortions
●
Feed-in Tariff
●
●
Domestic
●
●
Foreign
●
●
●
●
Renewable Energy
Concessional Financing
Partial Risk Guarantee Renewable Portfolio Standard
Energy Efficiency & Green Tech
Market Based
Singapore
Vietnam
Malaysia
●
●
●
●
●
●
●
●
●
●
●
●
●
●
● ●
●
●
● ●
●
●
Tax Incentives
●
●
●
●
●
●
Capital subsidy/Grants - EE
●
●
●
●
●
●
Domestic
●
●
●
●
●
●
Foreign
●
●
●
●
●
●
Concessional Financing
Partial Risk Guarantee
●
Green Labeling
●
Awareness Campaigns
●
●
●
●
CDM
●
●
●
Carbon market
●
●
●
Cap-and-trade scheme
●
●
●
●
●
● Full implementation ● Limited scale and/or early stage implementation ● Existing barriers
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9. Annex Table of Contents 9.1 Policies, Objectives, and Targets...................................................................................................... 23 9.2 Financial and Economic Instruments............................................................................................... 27 9.3 Programs and Institutions................................................................................................................ 29 9.4 Regulatory Environment.................................................................................................................. 32
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9.1 Policies, Objectives and Targets Overarching Policies • Low Carbon, Green Growth National Vision • Five Year Plan for Green Growth (2009-2013) • Framework Act on Low Carbon, Green Growth • Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy
Low Carbon, Green Growth National Vision was proposed by President Myung-bak Lee in 2008 on the 60th anniversary of National Liberation Day. The vision focuses on a new development paradigm based on new renewable resources.
Five Year Plan for Green Growth (2009-2013) recognized the potentially disastrous consequences of climate change and growing concerns over rapidly increasing emissions in South Korea. The plan lays out mid-term goals for the Government’s new vision for green growth and has three major objectives accompanied by ten policy directions.54 1. Mitigation of climate change and energy independence: ■■
Effective mitigation of GHG emissions;
■■
Reduction of fossil fuel use and enhancement of energy independence; and
■■
Strengthened capacity to adapt to climate change.
2. Creation of new engines for economic growth: ■■
Development of green technologies;
■■
Greening of existing industries and promotion of green industries;
■■
Advancement of industrial structure; and
■■
Development of structural foundation for green economy.
3. Improvement in quality of life and enhancement of international standing: ■■
Greening the land and water and building green transportation infrastructure;
■■
Bringing green revolution into daily life; and
■■
Becoming a role-model for the international community as a green growth leader.
This is the first of a series of Five-Year Plans intended to ensure that South Korea becomes the world’s seventh-largest green economic power by 2020 and the fifth largest by 2050.
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Framework Act on Low Carbon, Green Growth was adopted in 2010. The framework is intended to effectively address climate change and promote sustainable development. This act serves as a comprehensive legal framework of relevant policies to develop a NSGG, to promote green economy and industries, to establish basic plans to cope with climate change and energy issues, and to increase public awareness on green growth. The major contents of the Act’s enforcement decree include: ■■
Thirty percent reduction in GHG emissions from the BAU projection for 2020.
■■
Governmental control of GHG emissions and energy consumption for: • Non-designated target entities with total annual average GHG emissions and energy consumption of no less than 125,000 tons and 500 TJ in 2011, respectively; and • Designated target entities with total annual average GHG emissions and energy consumption of no less than 25,000 tons and 100 TJ in 2011 respectively.
■■
Establishment of the GHG Information Center under the MOE to manage the national integrated information management system for GHGs. The MOE shall verify the information and statistics on GHG, and maintain the status of a national integrated information manager on GHG.55
Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy contributes to: (i) the preservation of the environment; (ii) the sustainable development of the national economy; and (iii) the promotion of national welfare by diversifying energy sources. The Act aims to: (i) achieve its objectives through the promotion of technological development, use and distribution of new energy and RE; (ii) the activation of the new energy industry and the RE industry; (iii) the promotion of stable supply of energy; and (iv) the reduction of GHG emissions.
Renewable Energy Policies • Electricity Business Law and the Price Stabilization Act
Electricity Business Law and the Price Stabilization Act prescribed the procedures for the approval and establishment of rates charged for the electricity sold. In order to revise the rates charged or change the electricity rate structure, recommendations are submitted for review to the MOKE. MOKE then makes a final determination following consultation with the Electricity Rates Expert Committee of the MOKE and the MOSF. Under this Law the FiT regime was introduced. On April 2, 2001, the KPX was established under this law to deal with the sale of electricity and work out regulations governing the electricity market to allow for electricity distribution via a competitive bidding process. The Government also established the KEC on April 27, 2001 to regulate the restructured South Korean electricity industry and to ensure fair competition.
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Energy Efficiency Policies • Rational Energy Utilization Act • Building Energy Rating System • Average Fuel Economy (AFE)
Rational Energy Utilization Act contributes to the sound development of the national economy and the promotion of the national welfare by: (i) realizing the stability of the demand and supply of the energy; (ii) increasing the utilization of the energy; and (iii) reducing the environmental damages caused by the consumption of energy.
Building Energy Rating System was originally applied to apartments is now expanded to office buildings. This rating system qualitatively evaluates and grades the amount of heat energy produced and CO2 emitted. In addition, when new construction is approved, all co-ops must deliver a plan for EE. In comparison with developed countries, South Korean standards have similar insulation standards for the outer wall, roof and floor, but have lower standards for windows and doors.
Average Fuel Economy (AFE) was launched in 2006. AFE regulation patterned on the CAFE system. Under South Korea’s regulation, the AFE of all cars sold by a manufacturer over one year must meet the standards that are based on engine capacity. This system boosted AFE by 6.6 percent (10.8 to 11.5 km/liter) between 2006 and 2008 and reduced CO2 emissions by 7.3 percent.
Environmental Laws • Development of and Support for Environmental Technology Act • Fair Labeling and Advertising Act • Promotion of Purchase of Environmentally Friendly Products Act Fuel Economy (AFE) • Carbon Labeling System
Development of and Support for Environmental Technology Act was originally enacted by the MOE in 1994 and a major amendment was introduced in 2000. This Act became one of the first important legislations among the number of other policies and guidelines that promote sustainable manufacturing and consumption practices through programs related to eco-labeling. The Act provides a legal basis for developing and distributing eco-design techniques.
Fair Labeling and Advertising Act enacted in 1999 by the Fair Trade Commission is another major law related to eco-labeling. This aims to: (i) prevent unfair labeling and advertising that might mislead consumers; and (ii) to facilitate provision of fair and useful information to consumers.56 These two major acts have created three different types of eco-labeling systems in South Korea. Those are: ■■
Type 1: The eco-labeling system is designed to certify products that generate relatively less pollution or those that preserve resources in the process of manufacturing, distribution, consump-
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tion and disposal compared to other products of the same use. It is based on the Development of and Support for Environmental Technology Act. ■■
Type 2: A system that defines methods and conditions that allow manufacturers to verify if their products have less harmful impact on the environment. It is based on the Fair Labeling and Advertising Act.
■■
Type 3: The Environmental Declaration of Products Program is a system that provides quantified environmental data of materials and products, calculated from a life-cycle assessment factored in every step of manufacturing, distribution, consumption, and disposal. This program is based on Article 18 of the Development of and Support for Environmental Technology Act.57
Promotion of Purchase of Environmentally Friendly Products Act was enacted by the MOE in July 2005.58 This act promotes environmentally friendly products by marking those that meet certain standards with an “E-Mark” or “Good Recycled”.
Carbon Labeling System was launched by the MOE in January 2009, after commissioning a pilot carbon labeling project covering ten categories of products in 2008. The carbon label informs customers of the overall amount of GHG associated with the project life-cycle. Industries with significant energy use (annual energy use of 2,000 toe or more) are subject to a mandatory energy audit by the MOKE as a response to the UNCCC and the Kyoto Protocol. In addition, financial support is available in the form of a subsidy for energy audit costs for SMEs using less than 5,000 toe of energy per year.59
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9.2 Financial and Economic Instruments Fiscal Incentives and Direct Subsidies • Restriction of Special Taxation Act
Restriction of Special Taxation Act prohibits for a tax deduction to encourage industries to pursue energy conservation and efficiency improvements. Ten percent of the total investment can be deducted from the income tax or corporation tax of installers of energy conservation facilities. A similar tax deduction is also available for investors in facilities that are built with an environmental conservation objective.60
Financial Measures • Long-term and Low-interest Loans for both Customers and Manufacturers • Feed-in Tariffs (FiTs) • Environmental Venture Fund • Environmental Technology Business Incubator (ETBI)
Long-term and Low-interest Loans for both Customers and Manufacturers of RE systems have been provided by the Government since 1980. The loans aim to encourage deployment of RE, such as PV power, wind power, hydrogen fuel cells, bio systems, geothermal power, solar thermal power and hydro power. Installation loans are aimed at customers who want to install RE systems, while operation loans are provided for manufacturers of RE facilities. Up to 90 percent of the total costs (up to 50 percent for large corporations) can be covered by the loans. In addition, up to 20 percent of the total costs for installation of RE facilities can be deducted from income and corporate income tax.61
Feed-in Tariffs (FiTs) were introduced in 2001 by the MOKE based on the Electricity Business Law to promote utilization of RE. Since its first adoption, it has undergone several modifications and has been relatively successful in deploying PVs and wind energy in the country. For example, PV installation increased dramatically from 200 kW before 2004 to 297 MW in 2008.61 The FiTs vary by technology as indicated in the following table.
Table 7: FiTs Rates Technology PV Wind Small hydro Tidal/ocean Landfill gas
FiT (₩/kWh) 716.40 107.60 73.70 62.81 61.80
Source: Korean Energy Management Corporation, 2012.62
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Environmental Venture Fund created by the MOE to promote environmental technologies has actively identified and supported promising venture companies.
Environmental Technology Business Incubator (ETBI) is a program supervised by the Korea Institute of Environmental Science and Technology (KIEST) to help venture companies deploy environmental technologies.
Market-based Mechanisms • Nationwide Cap-and-trade Program • Korea Voluntary Emission Reduction Program (KVER) • Korea Carbon Fund and Korea Carbon Credit Fund
Nationwide Cap-and-trade Program was initially scheduled by the Government to launch in 2013, covering the majority of CO2 emissions. However, due to strong resistance from industry, its launch has been delayed and the Government now expects the emission trading scheme to start between 2013 and 2015.63
Korea Voluntary Emission Reduction Program (KVER) was implemented by the Government in addition to the work on a cap-and-trade system and in an attempt to commence experiments with market-based instruments. The KVER is the first system in South Korea that allows GHG offset credits (Korea CERs) from emission reduction projects to be registered and purchased by the Government. Its objective is to elicit active participation of South Korean companies and to build capacity to respond to the climate change.64
Korea Carbon Fund and Korea Carbon Credit Fund were initiated by the Korea Investment Trust Management Company in 2007. The Korea Carbon Fund invests in domestic and overseas CDM projects and GHG reduction project-related sectors with aggregated commitments of ₩76 billion, while the Korea Carbon Credit Fund invests in domestic and overseas carbon credit-related (e.g. CER) sectors with aggregated commitments of ₩29 billion.
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9.3 Programs and Institutions Programs • Green Company Designation Program • Energy Service Company (ESCO) • Energy-saving Office Equipment and Home Electronics Program • Eco-Technopia 21 Project
Green Company Designation Program was launched by the MOE in 1995, which was initially called the Environmentally-friendly Companies Certification System. As of March 2011, 195 companies from diverse industry sectors had been designated as a Green Company.65 The certification program aims to encourage industries to voluntarily become green by assessing the influences of the entire business process on the environment and develop an environmentally-friendly strategy.66 Energy Service Company (ESCO) project is a system designed to promote and improve EE. ESCOs invest on behalf of customers who are unable to replace or supplement their existing energy-using facilities due to technical and financial barriers with ones with higher efficiency. ESCOs provide technical and financial support for such companies, while collecting returns from energy saving. The project, which started in 1992, is operated by the Korea Energy Management Cooperation (KEMCO). As of May 2008, 160 companies had been registered.67
Energy-saving Office Equipment and Home Electronics Program is a voluntary partnership initiative between the Government and manufacturers. It was introduced in 1999 by the MOKE and implemented by the KEMCO. It encourages manufacturers to voluntarily meet the EE guidelines set by the KEMCO by providing “energy-saving labels” on their eligible products.
Eco-Technopia 21 Project was a ten-year project operated from 2001 to 2010, by the MOE. Its main focus was to promote environmental technologies in the field of environmental conservation/ restoration and precautionary pollution prevention. Support of ₩1 trillion was provided by the Government for implementation of this project.68
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Institutions • Global Green Growth Institute (GGGI) • President Committee on Green Growth • Korea Energy Management Cooperation (KEMCO) • Greenhouse Gas Reduction Registry Department • Korea Institute of Environmental Science and Technology (KIEST) • Green Company Council
Global Green Growth Institute (GGGI) was founded in June 2010. It promotes economic growth and development while reducing carbon emissions, increasing sustainability, and strengthening climate resilience. It is a non-profit institute that plans to become an international organization by 2012. Its focus is not limited to South Korea but also on developing countries. The Institute intends to assist the creation and implementation of national and local strategies for green growth through promoting best practices, building capacity, providing grants and encouraging international cooperation.69
President Committee on Green Growth was established in 2009. The committee is directly responsible to the President and seeks to promote low-carbon growth as a national agenda.70 It is designed to complement the GGGI, which aims to disseminate green growth strategy on the international level with a special focus on developing countries. Thus, the Committee promotes green growth across all sectors of the society and facilitates dialogue among relevant governments, industries and the public for successful implementation of green growth policies. It consists of experts from diverse fields such as legislation, finance, culture, and arts as well as from the more directly related fields including climate change, energy and green technologies and industry.71
Korea Energy Management Cooperation (KEMCO) is a governmental agency under the MOKE. KEMCO is in charge of implementing national EE and conservation policies and programs in South Korea. It was established in 1980 and has been actively involved with energy-saving programs, energy audits and surveys, promotion of EE and relevant R&D.72
Greenhouse Gas Reduction Registry Department was launched in July 2005 by the KEMCO and the MOKE. The Department is responsible for the KVER Program. It covers the registration and certification of GHG emission reduction projects, and the management of validation and verification entities which are designated from the MOKE. In addition, it is also involved in governmental purchase of credits.64
Korea Institute of Environmental Science and Technology (KIEST) was founded in 2001. KIEST supports planning, evaluation and management of R&D projects related to environmental technology and facilitates deployment and the practical application of those technologies. It manages several programs such as the Eco-Technopia 21 Project for next generation, National Long-term
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Ecological Research, Geo-advanced Innovative Action Project, Soil Pollution Diffusion Prevention Project, PCBs Research, and the ET Edu-innovation Project.73
Green Company Council (initially called the National Eco-friendly Company Council) was established in 2001 to promote the Green Company Designation and assist member companies create green management strategies and reduce GHG.65 It actively participates in environmental projects initiated by the MOE to spread advanced environmentally-friendly management techniques, including environmental reporting, environmental accomplishment assessment, and environmental accounting
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9.4 Regulatory Environment Procedures and Mechanisms • Energy Efficient Standards and Labeling System • Design Standard for Energy Efficiency • Greenhouse Gas Target Management
Energy Efficient Standards and Labeling System were initiated in 1992 by the MOKE and have been supervised by the KEMCO. The Standards have two categories: (i) the Minimum Energy Performance Standards (MEPS); and (ii) the Target Energy Performances Standards. The former aims to regulate minimum requirements for the manufacture and sales of products to ensure that products with high energy use above the minimum would be removed from the market, while the latter encourages manufacturers to enhance the EE of their products to technically feasible and economically acceptable levels. The MEPS mandatorily apply to 23 items including refrigerators and air-conditioners.74 EE labels inform customers of EE grade of products, with five grades from 1 to 5. Products labeled with grade 1 save energy 30 to 40 percent more than products assessed as grade 5. The labeling requirement for high-energy appliances is intended to encourage manufacturers and importers of subjected products to improve EE, while assisting customers to choose energy efficient projects. Since 2008, CO2 emissions labeling has also been mandated for 18 products including automobiles, refrigerators and washing machines, in addition to the EE grades.75
Design Standard for Energy Efficiency is a mandatory standard for eight types of large high-energy consuming buildings, including offices and hospitals. The standard has been mandated since June 2001 to minimize energy consumption through the use of energy conservation equipment and materials.
Greenhouse Gas Target Management is required to set and implement a target for GHG emission reduction, energy conservation and EE for large business regulated under the Framework Act on Low Carbon and Green Growth.
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Regulatory Agencies • Ministry of Knowledge Economy (MOKE) • Ministry of Environment (MOE) • Greenhouse Gas Inventory and Research Center of Korea (GIR)
Ministry of Knowledge Economy (MOKE) was founded in 1948 and has undergone several significant reforms throughout its history. Nevertheless, it remains the main ministry for energy cooperation projects, expanding renewable resources and distribution networks, and establishing environmentally-friendly economic policies in the country. In particular, the Ministry is committed to the promotion of responsible energy use and conservation in industrial, transportation, construction and public sectors through various policy measures and strategies. In accordance with the national NSGG it has established the National Climate Change Plan and the Green Energy Industry Development Plan.76 The KVER Program also operates under the guidance of the Ministry.77
Ministry of Environment (MOE) was established in 1967. MOE carries out a mission to improve the quality of life of all people by preventing environmental pollution and damage. Its responsibilities include: “(i) enactment and amendment of environmental laws and regulations; (ii) introduction of environmental institutions; (iii) building up framework structure for environmental administration; (iv) drafting and implementation of mid-long term comprehensive measures for environmental conservation; (v) setting up standards for regulations; (vi) providing administrative and financial support for environmental management to local governments; (vii) inter-Korean environmental cooperation; and (viii) environmental cooperation with other countries”.78
Greenhouse Gas Inventory and Research Center of Korea (GIR) is based on the Framework Act on Green Growth. GIR was launched on June 15, 2010 to serve as a GHG inventory hub and GHG reduction research think tank. It has five priority activities: (i) to operate a top tier GHG information center; (ii) to support national and sectoral GHG reductions; (iii) to expand international cooperation and spread a green growth paradigm; (iv) to offer support for GHG and energy target management; and (v) to conduct worldwide research on GHG reduction potential.79 Furthermore, the GIR will set GHG reduction goals and evaluate the performance of major emitters and public agencies subject to the Framework Act on Green Growth.
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10. References World Bank Data Bank. “GDP (current US$).” Accessed July 21, 2013. http://data.worldbank.org/ indicator/NY.GDP.MKTP.CD.
1
World Bank Data Bank. “Population, total.” Accessed July 21, 2013. http://data.worldbank.org/ indicator/SP.POP.TOTL.
2
World Bank Data Bank. “Urban population (% of total).” Accessed July 21, 2013. http://data. worldbank.org/indicator/SP.URB.TOTL.IN.ZS.
3
International Monetary Fund. “World Economic Outlook Database 2011.” Accessed July 21, 2013. https://www.imf.org/external/pubs/ft/weo/2011/01/weodata/weoselco.aspx?g=2001&sg=All+countries.
4
Economist Intelligence Unit. “EIU Country Data.” Accessed July 21, 2013. http://www.eiu.com/ site_info.asp?info_name=EIUcountryData&=entr.
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World Bank Data Bank. “Inflation, consumer prices (annual %).” Accessed July 21, 2013. http:// data.worldbank.org/indicator/FP.CPI.TOTL.ZG.
6
Central Intelligence Agency. “GDP Composition by Sector.” Accessed July 21, 2013. https://www. cia.gov/library/publications/the-world-factbook/fields/2012.html#rp.
7
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
8
Adapted from:
9
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/. U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www. eia.gov/countries/data.cfm. World Bank. “Winds of Change: East Asia’s Sustainable Energy Future.” Accessed July 23, 2013. http://siteresources.worldbank.org/INTEASTASIAPACIFIC/Resources/226262-1271320774648/ windsofchange_fullreport.pdf. World Bank Data Bank. “Energy imports, net (% of energy use).” Accessed July 23, 2013. http:// data.worldbank.org/indicator/EG.IMP.CONS.ZS. 10
Adapted from:
Indriyanto, Asclepias R., Nasrullah Salim, Fabby Tumiwa, Tri Mumpuni et al. “Electricity Governance in Indonesia: Assessment Report.” World Resources Institute, 2007. Accessed July 23, 34
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2013. http://pdf.wri.org/egi_report_indonesia.pdf. International Energy Agency. “Access to Electricity 2011.” Accessed July 21, 2013. http://www. worldenergyoutlook.org/resources/energydevelopment/accesstoelectricity/. World Bank Data Bank. “Access to electricity (% of population).” Accessed July 23, 2013. http:// data.worldbank.org/indicator/EG.ELC.ACCS.ZS. World Bank Data Bank. “Electric power transmission and distribution losses (% of output).” Accessed July 21, 2013. http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS.
11
Adapted from:
12
Asia-Pacific Economic Cooperation. “Energy Overview 2012.” Accessed July 23, 2013. http://publications.apec.org/publication-detail.php?pub_id=1432. Energdata. “Energy intensity of GDP at constant purchasing power parities.” Accessed July 21, 2013. http://yearbook.enerdata.net/energy-intensity-GDP-by-region.html. Adapted from:
13
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/. Intergovernmental Panel on Climate Change. “Revised 1996 Intergovernmental Panel on Climate Change’s National Guidelines.” Accessed August 1, 2013. http://www.ipcc-nggip.iges.or.jp/ public/gl/invs1.html. 14
Adapted from:
Energy Market Authority of Singapore. “Singapore Energy Statistics, 2012.” Accessed July 21, 2013. http://www.ema.gov.sg/media/files/publications/EMA_SES_2012_Final.pdf. Maurer, Luiz T., and Luiz A. Barroso. Electricity Auctions: An Overview of Efficient Practices. Washington D.C.: International Bank for Reconstruction and Development/ World Bank, 2011. Accessed July 23, 2013. http://www.ifc.org/wps/wcm/connect/8a92fa004aabaa73977bd79e0dc67fc6/Electricity+and+Demand+Side+Auctions.pdf?MOD=AJPERES. Perusahaan Listrik Negara. “Indonesian Electricity Tariff.” Accessed July 23, 2013. http://www. pln.co.id/eng/?p=534. Lee, Seung-Hoon. “Electricity in Korea.” Asia-Pacific Economic Cooperation, 2011. Accessed July 23, 2013. http://mddb.apec.org/Documents/2011/SOM/SYM/11_som_sym1_009.pdf. Wu, Yanrui, Xunpeng Shi, Fukunari Kimura et al. Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies. Jakarta: Economic Research Institute for ASEAN and Eastern Asia, 2012. Accessed July 23, 2013. http://www.eria.org/RPR-2011-17.pdf.
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Adapted from:
15
Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en. U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www. eia.gov/countries/data.cfm. 16
Adapted from:
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/. Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en. Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en.
17
Standard & Poor’s Rating Services. “Sovereigns Rating List.” Accessed July 21, 2013. http://www. standardandpoors.com/ratings/sovereigns/ratings-list/en/us.
18
World Bank. “Doing Business Economy Rankings.” Accessed July 21, 2013. http://www.doingbusiness.org/rankings.
19
Transparency International. “Corruption Perceptions Index 2011.” Accessed July 21, 2013. http:// www.transparency.org/cpi2011/results.
20
Adapted from:
21
World Bank Data Bank. “Foreign direct investment, net inflows (% of GDP).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS. World Bank Data Bank. “Foreign direct investment, net outflows (% of GDP).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BM.KLT.DINV.GD.ZS. World Bank. “Private Participation in Infrastructure Database - Sector Data Snapshot.” Accessed July 21, 2013. http://ppi.worldbank.org/explore/ppi_exploreSector.aspx?sectorID=2.
22
23
World Bank Data Bank. “Lending interest rate (%).” Accessed July 23, 2013. http://data.worldbank.org/indicator/FR.INR.LEND.
24
World Bank Data Bank. “Interest rate spread (lending rate minus deposit rate, %).” Accessed July 23, 2013. http://data.worldbank.org/indicator/FR.INR.LNDP.
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25
World Bank Data Bank. “Liquid assets to deposits and short term funding (%).” Accessed July 23, 2013. http://data.worldbank.org/indicator/GFDD.SI.06.
26
International Energy Agency. “Share of Total Primary Energy Supply (2009): Republic of Korea.” Accessed September 3, 2013. http://www.iea.org/stats/pdf_graphs/KRTPESPI.pdf.
27
International Energy Agency. “Total primary energy supply (2009): Republic of Korea.” Accessed September 4, 2013. http://www.iea.org/stats/pdf_graphs/KRTPES.pdf.
28
International Energy Agency. “Electricity generation by fuel (2009): Republic of Korea.” Accessed September 4, 2013. http://www.iea.org/stats/pdf_graphs/KRELEC.pdf.
29
Jones, Randall S., and Byungseo Yoo. “Korea’s Green Growth Strategy: Mitigating Climate Change and Developing New Growth Engines.” Organization for Economic Co-operation and Development, 2011. Accessed September 4, 2013. http://www.oecd-ilibrary.org/economics/korea-s-green-growth-strategy_5kmbhk4gh1ns-en.
30
United Nations Framework Convention on Climate Change. “Korea’s Third National Communication under the United Nations Framework Convention on Climate Change.” Accessed September 4, 2013. http://unfccc.int/resource/docs/natc/kornc3.pdf.
31
Green Growth Korea. “National Green Growth Strategy and Five-Year Plan Milestones.” Accessed September 4, 2013. http://www.greengrowth.go.kr/?page_id=42450.
32
United Nations Environment Programme . “Overview of the Republic of Korea’s National Strategy for Green Growth.” Accessed September 4, 2013. http://www.unep.org/PDF/PressReleases/201004_unep_national_strategy.pdf
33
Korea Institute of Energy Technology Evaluation and Planning. “Green Energy Strategic Roadmap 2011.” Accessed September 4, 2013. http://ketep.re.kr/english/publications/view.jsp?str_ page=1&bbs_sid=6819&bbs_cd=publications&flag=1.
34
Asia-Pacific Economic Cooperation. “APEC Energy Overview 2011.” Accessed September 4, 2013. http://publications.apec.org/publication-detail.php?pub_id=1291.
35
KPMG international. “Taxes and incentives for renewable energy 2012.” Accessed September 5, 2013. http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/taxes-incentives-renewable-energy-2012.pdf.
36
Korea Economic Institute and Korea Institute for International Economic Policy. “Korea’s Economy 2011.” Accessed September 5, 2013. http://www.keia.org/sites/default/files/publications/30848_whangjh_sp.pdf.
37
Choung, Young Il. “Quick Look: Renewable Energy Development in South Korea.” Renewable Energy World, 2010. Accessed September 5, 2013. http://www.renewableenergyworld.com/rea/ news/article/2010/12/quick-look-renewable-energy-development-in-south-korea.
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38
Cheongwadae. “Government News.” Accessed September 5, 2013. http://english.president. go.kr/koreain/issue/issue_list.php.
39
REEGLE. “Country Profile: South Korea (2012).” Accessed September 5, 2013. http://www.reegle.info/policy-and-regulatory-overviews/KR.
40
Fuel Cell Today. “0.8 MW of UTC Fuel Cell Power for Seoul’s Lotte World Tower.” Accessed September 5, 2013. http://www.fuelcelltoday.com/news-events/news-archive/2013/january/08-mwof-utc-fuel-cell-power-for-seoul%E2%80%99s-lotte-world-tower.
41
International Energy Agency. “Gas Pricing and Regulation.” Accessed September 27, 2013. http://www.iea.org/publications/freepublications/publication/ChinaGasReport_Final_WEB-1. pdf.
42
Nam, K. The PFI Governance of Public Sectors in Korea. Seoul: Ministry of Strategy and Finance, 2009.
43
Kim, Jay-Hyung. “Basic Plan for Restructuring the Gas Industry.” Public and Private Infrastructure Investment Management Center and Korea Development Institute, 2009. Accessed September 5, 2013. http://www.oecd.org/gov/budgeting/42344441.pdf.
44
Board of Audit and Inspection of the Republic of Korea. “BAI.” Accessed September 5, 2013. http://park.org/Korea/BAI/home-e.html.
45
Tan, Sri Lin See-Yan. “A more competitive South Korea emerges.” The Star, 2010. Accessed September 5, 2013. http://www.thestar.com.my/story.aspx?file=%2f2010%2f3%2f27%2fbusiness%2f5938235&sec=business.
46
Schwab, Klaus. “Global Competitiveness Index.” World Economic Forum, 2012. Accessed July 23, 2013. http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf.
47
United Nations Conference on Trade and Development. “World Investment Report 2012.” Accessed September 5, 2013. http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/ WIR2012_WebFlyer.aspx.
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World Bank Data Bank. “Foreign direct investment, net inflows (BoP, current US$).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD.
49
World Bank. “Public-Private Infrastructure Advisory Facility Country Case Study: Korea.” Accessed September 5, 2013. https://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/6/pdf-version/korea.pdf.
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Hahm, Junglim. “Institutional Framework for PPP.” World Bank, 2010. Accessed September 5, 2013. http://www.ppiaf.org/sites/ppiaf.org/files/documents/4-PPPs-Contract-Management-JunglimHahm.pdf
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World Bank. “Private Participation in Renewable Energy Projects.” Accessed August 1, 2013. http://ppi-re.worldbank.org/.
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World Bank. “Financing Renewable Energy: Options for Developing Financing Instruments Using Public Funds.” Accessed September 5, 2013. https://www.climateinvestmentfunds.org/ cif/sites/climateinvestmentfunds.org/files/SREP_financing_instruments_sk_clean2_FINAL_FOR_ PRINTING.pdf.
53
International Energy Agency. “Review Existing and Proposed Emissions Trading Systems.” Accessed September 5, 2013. http://www.iea.org/publications/freepublications/publication/ name,3935,en.html.
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Ministry of Environment Republic of Korea. “Five Year Action Plans.” Accessed September 5, 2013. http://eng.me.go.kr/content.do?method=moveContent&menuCode=pol_gre_strategies.
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Ministry of Environment Republic of Korea. “Framework Act on Low Growth, Green Growth.” Accessed September 5, 2013. http://eng.me.go.kr/board.do?method=view&docSeq=8744&bbsCode=law_law_law.
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Republic of Korea. “Fair Labeling and Advertising Act.” Accessed September 5, 2013. http://siteresources.worldbank.org/INTCOMPLEGALDB/Resources/FairLabelling.pdf.
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Ministry of Environment Republic of Korea. “Eco-labeling & EDP System.” Accessed September 5, 2013. http://eng.me.go.kr/content.do?method=moveContent&menuCode=pol_pol_pro_lab_ introduction.
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Ministry of Environment Republic of Korea. “Enforcing Law on Promoting the Purchase of Environmentally-Friendly Products.” Accessed September 5, 2013. http://eng.me.go.kr/content. do?method=moveContent&menuCode=pol_pol_pro_enforcing.
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Korea Energy Management Corporation. “Energy Audit.” Accessed September 5, 2013. http:// www.kemco.or.kr/new_eng/pg02/pg02060000.asp.
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Korea Energy Management Corporation. “Support in the Form of Funds and Tax Incentives.” Accessed September 6, 2013. http://www.kemco.or.kr/new_eng/pg02/pg02080000.asp.
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Korea Energy Management Corporation. “Program for Promoting NRE (New and Renewable Energy) Deployment.” Accessed September 6, 2013. http://www.kemco.or.kr/new_eng/pg02/ pg02040600.asp.
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Korean Energy Management Corporation. “Feed-in tariffs.” Accessed October 4, 2013. http:// www.kemco.or.kr/new_eng/pg02/pg02040700.asp.
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Lee, Sanghoon. “New Renewable Energy Policy in Republic of Korea.” Sejong University, 2010. Accessed September 6, 2013. http://www.egnret.ewg.apec.org/meetings/egnret34/Korea%20 New%20and%20Renewable%20Energy%20Policy.pdf.
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Korea Energy Management Corporation. “Greenhouse Gas Reduction Registry.” Accessed September 6, 2013. http://kver.kemco.or.kr/INTRO_eng/info_main.htm.
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Green Company. “Green Company Designation Program.” Accessed September 6, 2013. http:// www.ef21.co.kr/english/.
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Ministry of Environment Republic of Korea. “Environmentally-Friendly Enterprises.” Accessed September 6, 2013. http://eng.me.go.kr/content.do?method=moveContent&menuCode=pol_ pol_com_enterprises.
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Hansen, Shirley. ESCOs Around the World: Lessons Learned in 49 Countries. Lilburn: The Fairmont Press, 2009.
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Korea Institute of Environmental Science and Technology. “Eco-Technopia 21 Project.” Accessed September 6, 2013. http://www.kiest.re.kr/eng/business.jsp?MNU2=01.
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Global Green Growth Institute. “Overview.” Accessed September 6, 2013. http://gggi.org/ about-gggi/organizational/organizational-overview/.
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Green Growth Korea. “Why Green Growth.” Accessed September 6, 2013. http://www.greengrowth.go.kr/?page_id=42484.
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Korea Institute of Environmental Science and Technology. “Major Projects.” Accessed September 6, 2013. http://www.keiti.re.kr/eng/action.do?mid=2040000000.
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Korea Energy Management Corporation. “Subject Appliances and Standards.” Accessed September 6, 2013. http://www.kemco.or.kr/new_eng/pg02/pg02100200_2.asp.
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Korea Energy Management Corporation. “Energy Efficiency Grade Label.” Accessed September 6, 2013. http://www.kemco.or.kr/new_eng/pg02/pg02100200_4.asp.
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Ministry of Trade, Industry and Energy Republic of Korea. “MKE Responsibilities.” Accessed September 6, 2013. http://mke.go.kr/language/eng/about/responsibilities.jsp.
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I
n July 2012, the Green Infrastructure Finance Framework Report was published to address the constraints in financing green infrastructure and to develop a new PPP-based approach to accelerate investments in lowemission technologies. The approach calls for assessing the “Green Investment Climate� of a given country in order to develop country-specific recommendations for policy and incentive programs as well as other measures which can be introduced in order to further promote green growth in an economy. This report includes one of the first Green Investment Country Profiles completed for the East Asia and Pacific Region as part of bringing the approach closer to operational status. The initial countries include China, Philippines, Vietnam, Malaysia, Indonesia, Singapore and South Korea. The assessment involves not only the green policy and incentives environment, but also the country’s overall natural resource endowment of fossil and renewable energy, its industrial development strategy in addition to general business indicators and other considerations, such as electricity prices, the capacity of the financial sector to mobilize long-term domestic financing, as well as their overall regulatory and legal capacity to implement PPPs. The country profiles provide a general understanding of the attractiveness, prevailing trends, strengths, and other aspects affecting the ability of the country to leverage its green growth potential.
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