Korea, the Greening Country Giulia Agostinucci Klara Kasperkovics Gottfried Mitterer Prof. John A.Mathews. Fall semester 2010/11.

Korea, the Greening Country

Giulia Agostinucci

Klara Kasperkovics

Gottfried Mitterer

Prof. John A.Mathews. Fall semester 2010/11

South Korea’s environmental status quo

Korea was 16th in global ranking of greenhouse gas emission in 2005

43.3 billion tons (CO2) worldwide Korea’s share: 594 million tons

Per capita emission: 11.1 tons

Increasing trend of CO2 emission over the years (almost doubled between 1990 and 2005)

Big dependence on fossil fuels Korea has to import 97% Greenhouse gas emissions by sector in 2005

Source: World Resources Institute , 2009

PROBLEM: Energy dependency, environment, economic crisis

SOLUTION: Comprehensive transformation into green economy

Green Growth as new model

Green growth is Korea’s new guiding economic principle

Perceived as strategic advantage rather than a burden

Strong industrial and environmental policies at national level

Strong commitment and leadership at international level

Collaboration with int. org. (UNEP etc.) to support green economy in developing countries

“The underlying objective of the Low Carbon Green Growth strategy is to promote sustainable development, by putting in place a positive cycle in which the environment revives the economy and the economy preserves

the environment.”

Lee Myung-bak, President of South Korea

Ok, great! Good idea, nice words!But how do they actually want to do it?

"A dictatorship would be a heck of a lot easier, there's no question about it„

President George W. Bush

Source: Bloomberg Businessweek, July 30, 2001

Sorry George, the feasibility issues, you know ...

Ok, how could it work then?There have been examples of hugely successful economic change in Asia…

TAIWAN (1965-1988) Systemic development of semiconductor and computer industry National Science Council as driving force behind industry creation Creation of public sector infrastructure: Hsinchu Science-Based Industrial Park Industrial Technological Research Institute (ITRI, 1973) Creation of favorable industrial environment Close cooperation of public, private, academic R&D consortia (with CRADAs) to speed up knowledge generation SOUTH KOREA (1960-1990) - Strong industrial conglomerates (“chaebol”) - Financial system that channels foreign capital to the chaebol (“policy loans”) - Strong “pilot agencies” that lead and define targets and performance standards Learning at the center of industrial development State intervention with subsidies and investments Early technology acquisition via apprenticeship and imitation

Sources: Mathews, JA (1998): Fashoning a new Korean model out of the crisis: the rebuilding of institutional capabilitiesMathews,A JA (1997):A Siclicon Valley of the East – Creating Taiwan’s Semiconductor Industry

Mathews, JA ( 2002): The Origins and Dynamics of Taiwan’s R&D ConsortiaAmsden, AH (1989): Asia’s Next Giant – South Korea and Late Industrialization

What specifically did they have in common?

Underdeveloped countries relative to industrialized nations Economies based primarily on cheap labor Lack of relevant technical know-how Economic backwardness and potential for catch-up strategies

Strong governments with far-reaching powers More communitarian than individualistic societies Key industries defined by government Strategic technology procurement Central steering of overall industry by government Strategic long-term plans with short-term targets and regular updates Creation of favorable industrial environment Creation of infrastructure for knowledge generation and transfer Strong cooperation of public, private and academic institutions Economic incentives for private firms (tax holidays, investment tax credits etc.)

Presidential Committee on Green Growth

August 2008: PCGG was established by President Lee Myung-bak

November 2008: Organization of preparatory task force to integrate individual committees

December 2008: Preparatory task force is assembled

February 2009: First meeting of PCGG

July 2009: PCGG finalizes the National 5 Year Plan

PCGG as central coordinating institution Strong political commitment from the top levels of government down all levels Active involvement of and sponsorship by Prime Minister Kim Hwang-sik Top-down approach, combined with bottom-up initiatives Ambitious environmental and economic goals Integrated, comprehensive plan for green industrial development Affecting all relevant areas of life: industry, agriculture, energy, traffic etc. 5-year action plan as strategic guideline

Vision of PCGG

• To be the World’s 7th Green Power by 2020• To be the World’s 5th Green Power by 2050

3 main Objectives to reach this Goal Mitigation of climate change & Energy independence

Effective mitigation of greenhouse gas emission Reduction of fossil fuels use & enhancement of energy independence Strengthen capacity to adapt to climate change

Creation of new engines for economic growth Development of green technologies Greening of existing industries, promotion of green industry Advancement of industrial structure Development of structural foundation of green economy

Improvement in quality of life & enhancement of international standing Greening the land and water, creation of green transport infrastructure Bringing the green revolution into daily life Becoming an international green growth role model

Five Year Action Plan

Organization of PCGGOrganization of PCGG

Co-Chairmen

(Prime Minister + Private sector)

35 Comissioners nominated by President 13 Comissioners designated by law Admisintrative Comissioner: Minister of Prime Minister’s Office

Green Growth & Industry Subcommittee (10)

Climate Change & Energy Subcommittee (10)

Green life & Sustainable Development Subcommittee (9)

Organization of PCGGOrganization of PCGG

Joint Secretaries-General

Policy Planning & Coordination Team

Energy Policy Team

Climate Change Policy Team

Green Technology & Industry Team

Green Life & Sustainable Dev. Team

International Cooperation Team

Targets by 2020

Effective mitigation of GHG emissions

• GHC emission reduction• Carbon absorption by forests: 1,854 Mt CO2• Afforestation areas in North Korea: 4,000 km2

Reduction of fossil fuels use & enhancement of energy independence

• Reduction of energy intensity: 0,233 toe/1000 USD• Share of new and renewable energy use: 6,08 %• Share of nuclear energy use: 32 %

Strengthen capacity to adopt to climate change

• Environment-friendly agricultural products: 18 %• National forest resources: 1,087 million m3

Development of green technologies

• Korea’s market share in global green tech market: 10%• Number of foreign specialists in green tech: 250

Greening of existing industries, promotion of green industry

• Resource recycling rate: 10 %• Share of green goods export in major industries: 250• Number of enterprises in green partnerships: 2900• Number of green industrial complexes: 20

Advancement of industrial structure

• Number of foreign patients treated in Korea: 350,000• Broadcasting&telcom convergence industry exp: 240 Bln USD

Targets by 2020 (2)

Development of structural foundation of green economy

• Volume of trade in domestic carbon emissions

trading market: 2 trillion KRW• Public credit guarantee fro green tech & Industry: 8tril KRW• Percentage of energy-poor households: 3.5 %• Number of green Social Enterprises: 500

Greening the land and water, creation of green transport infrastructure

• Nature reserve areas: 1,500 km2• Share of passengers transported by rail: 26 %• share of bicycle transportation: 10 %

Bringing the green revolution into daily life

• Number of green households : 1,5 million• Number of categories of goods for carbon footprint

labeling:1000• Amount of procurement of low carbon green goods:

10 trillion KRW• Number of green village center: 500

Becoming an international green growth role mode

• Proportion of green ODA: 30 %• Number of “World Friends Korea” Volunteers: 4200+

Sub-policies

• Greenhouse Gas Reduction Target

• Green Technology

• Renewable Energy

• Smart Grid

• Green Car

• Green Home

• International Cooperation through GGGI

Critical point of view of the IEA

According to International Energy Agency:

•Carbon emission of Korea will remain well above the average of OECD countries

•Under reference scenario: 35%(OECD countries: less than 5%)

•Under low-emission scenario: 25%(OECD countries: less than 15%)

Urgent and challenging to reduce GHG emission

Source: World Resources Institute

Headquartered in Korea and founded in June 2010, GGGI is a new international organization that helps developing and emerging countries pioneer a new «Green Growth Paradigm» that is economic growth with climatic and environmental sustainability.

Born in Korea With the Purpose of Getting More and More International

A New kind of International OrganizationInterdisciplinaryMulti-stakeholder Driven by emerging and developing countries

18 Nationalities Among Board and Staff

GGGI’s Three-Year Plan

Strategic Goals

practitioners and scholars

developed and developing countries

public and private sectors

GGGI Seeks to serve as a bridge between…

1) Support in green growth economic development plans

2) Facilitating public-private cooperation

3GF or GGGF Forum which explored public-private cooperation in the field of green growth.-Initiative by the Danish government-supported by the Korean government -developed in association with the GGGI

Linking companies to developing country governments that are seeking private sector finance, technology and

expertise to accelerate implementation of their green growth

economic development plans

Building intra- and cross-industry programs of cooperation, and linking them to relevant intergovernmental

processes, to expand markets for resource-efficient products, services

and industrial processes.

Aim is to scale resource efficient investment,

innovation and management best practice within the

private sector.

3) Conducting Research

The Institute’s research portfolio is under development and will include :•Macroeconomic modeling of a full-scale transition to green growth;•Employment and poverty reduction potential of green growth strategies;•Country and industry best practice;•Trade and technology policy

GGGI's Research program promotes the development of a new green growth paradigm by conducting research into various aspects of green growth theory and practice.

An open global laboratory: Will support experimentation and collective learning by countries seeking to leapfrog the resource-intensive and environmentally unsustainable model of industrial development pioneered by advanced economies in an earlier era.

Policy brief summarizing the outcomes of the first workshop of its kind to focus on the social dimensions of climate change regarding water, energy, and green employment

The book includes details on implementing a policy to tackle challenges

Korea as model for economic transformation

Most recent developments:

Mexico decided to emulate the Korean economic transformation model to become the “Green Growth Leader” in Latin America and has signed a memorandum of understanding with the GGGI to establish an organization formed after the GGGI.- Sharing of green growth practices- Mutual training and capacity building in technical areas

Denmark entered into a strategic business partnership on green growth with Korea- US$ 15 million over 3 years for the GGGI from Denmark- Fast-start financing in energy and transportation sector

Germany and France form strategic cooperations with Korea on green development