Experiences with Low Emission Development Strategies in South Korea

Asia Clean Energy Forum 6 June 2012 Manila, Philippines

Koreas Green Growth Policy Framework

In August 2008, President Lee Myung-bak proclaimed low-carbon green growth a new national vision and paradigm for the countrys future economic development
At the end of 2008, the Korean government drafted the Framework Act on Low Carbon, Green Growth which in 7 chapters and 64 articles comprehensively linked policies and laws and sets out principles, policy directions and institutional framework to achieve green growth The Framework Act mandates the government to lay out plans for climate change, energy and sustainable development in coordination with the National Policy for Green Growth including a Five-Year Green Growth Plan The Act promotes green technology and green industries as new engines for growth and mandates the government to substantially increase energy independence and gradually reduce GHG emissions. The Decree enacting the Act took effect in April 2010 and stipulates the goal to reduce GHG emissions by 30 percent below BAU by 2020
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Five-Year Green Growth Plan

The Five-Year Green Growth Plan (2009-2013) is a detailed implementation plan based on the National Strategy
The Plan identified three sub-strategies and ten key policy agenda items as core success factors To support the Plan the government earmarked USD 97 bn (KRW 107 trillion) of public investment from 2009 to 2013 about 2 percent of annual GDP more than twice the figure recommended by UNEP in A Global Green New Deal

In January 2009, Korea drew up a Comprehensive Plan for the Research and Development of Green Technologies which identifies 75 potential technologies of which 27 were deemed core technologies
One of goals is to ensure that Korea will become the worlds 7th largest green economic power by 2020 and the 5th largest in the world by 2050

The Presidential Commission on Green Growth

The Framework Act also established institutions to foster low carbon, green growth such as the Presidential Commission on Green Growth
The PCGG is responsible for deliberating on matters concerning Koreas green growth policy including

Basic policy direction on low carbon green growth

Establishment, revision and enforcement of the National Strategy for Green Growth Management of targets on the promotion of low carbon green growth Adjustment of and support for appropriate central administrative agencies Legal system related to low carbon green growth Direction on distribution of resources and efficient use of these resources International negotiations and cooperation, education and training Resolution of problems faced by business and corrective actions

Sources: GGGI and Republic of Korea (2010) Framework Act for Low Carbon, Green Growth

Government R&D expenditure related to green growth

Government R&D related to green growth rose from 6.5% of total R&D in 2002 to 17.5% in 2010 Green growth R&D is expected to increase for the foreseeable future

Share of Renewable Energy

Korea has more than doubled the share of renewable energy from 1.1% in 2000 to 2.6% in 2010, slightly below the 2.98% government target Korea aims to increase the share of renewable energy to 3.78% in 2013, 6.08% in 2020 and 11% in 2030.

Feed-in Tariff and RPS

Korea operated a Feed-in Tariff (FIT) System from 2002 to 2011 which was then be replaced by the Renewable Portfolio System (RPS) in 2012. Subsidies based on FIT amounted to USD 243.1 million for 1,503 Giga-watt hour of electricity generation in 2009. Under the Renewable Portfolio System (RPS), companies with capacity over 500MW are required to generate 2% of energy from renewable sources.

RPS Obligatory Targets 2012 - 2022 Year RE % 2012 2.0 2013 2.5 2014 3.0 2015 3.5 2016 4.0 2017 5.0 2018 6.0 2019 7.0 2020 8.0 2021 9.0 2022 10.0

Source: Korea New and Renewable Energy Corporation, http://www.knrec.or.kr/knrec/12/KNREC120700_02.asp

Target Management System (TMS)

Coverage of regulated companies
Steps

2011: factories emitting more than 25,000 tCO2e 2012: > 20,000 tCO2e 2014: > 15,000 tCO2e
Designated companies report the amount of emissions and energy use of past 3 years to the government The government negotiates with companies to set the target which then becomes mandatory Companies make a plan for meeting this target and submit it. Companies seek to reducing emissions and energy use, and submit the result report Financial assistance 90% of energy auditing expenses are provided to small and medium sized companies Loans and tax exemptions are provided for the installation of energy efficient and low carbon facilities Fine of KRW 10 m (USD 9,000)

Incentives

Penalties

Sources: OECD (2012) Korea's Low-Carbon Green Growth Strategy, Working Paper No. 310, OECD Development Centre HSBC (2012) Korea at the Green Growth Crossroads, 16 March 2012

Emissions Trading System (ETS)

Trading Periods Phase 1: 2015-2017 Phase 2: 2018-2020 Phase 3: 2021-2026

Scope

Cover all facilities that annually emit more than 25,000 tons of CO2e in all industrial sectors (approximately 60% of Koreas CO2 emissions)

Allowance Allocation and Early Action Credits

The government will allocate 95% of the allowances for free, and auction the allowances in phase 3.

Non-compliance penalty

Not more than 3 times the average market price of an allowance in a given year and not more than KRW 100,000 (USD 88) per ton.

Estimated Market Size

Around 450 Mt in 2015 and decline to around 350 Mt in 2020 (Western Climate Initiative: 452 Mt in 2015)

Source: Point Carbon (2012) Korea Leading the Carbon Way, 14 May 2012 8

Contact details

Darius Nassiry Global Green Growth Institute 15-5 Jeong-dong Jung-gu Seoul 100-784 Republic of Korea
Tel: +82-2-9530-9919

Email: darius.nassiry@gggi.org
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