Status and Strategy for Green Technology Development in Korea

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1 Status and Strategy for Green Technology Development in Korea Jin Gyu Jang, Ph.D. Science and Technology Policy Institute

2 Contents I II III Introduction Status of GT development in Korea Strategies for GT development in Korea 1. Increase of government R&D investment in GT development and establishment of GT R&D coordination system 2. Promoting GT transfer and commercialization 3. Strengthening incentive schemes for inducing private investment in GT development 4. Promoting the international cooperation for GT development IV Policy suggestions 1

3 I. Introduction 2 2

4 Reasons to cope with climate change Impact of climate change in year 2100 (IPCC fourth report, 07) temperature: increase by max 6.4 degree, sea level: going up by max 59cm Cost to decrease GHG to ease climate change (Stern Review, 06) Early measure : incurring cost of about 1% of GDP by 2050 Delayed measure : incurring cost of about 5%~20% of GDP by 2050 Impact on the corporate management CC nominated as a crisis to the company by 70% of CEOs of world 500 companies (Financial Times) CC chosen as a priority agenda by 38% of CEOs attending Davos Forum in

5 Rationale of implementing low-carbon green growth in Korea Energy issues Dependency on overseas energy sources: 97% Petroleum import: ranked 4th in the world CO 2 emission: 6th among OECD countries and 1st in terms of growth rate Environmental issues ESI (Environmental Sustainability Index): ranked 122th in the world (2005) Identifying new growth engines and creating jobs Continuous decline of potential growth rate Decrease in jobs for youth 4

6 National Strategy for Green Growth Declaration on Low Carbon, Green Growth At the 60 th anniversary of the founding of the Republic of Korea on August 15, 2008, President Lee Myung-bak proclaimed Low Carbon, Green Growth as Korea s new national vision. Low Carbon, Green Growth aims to simultaneously pursue three objectives by creating a synergistic relationship between economic growth and environmental protection: 1) to promote eco-friendly new growth engines for the national economy Conclusion 2) to enhance the quality of life for the members of the society 3) to contribute to the international efforts to fight climate change To implement the national vision of green growth more effectively, the National Strategy for Green Growth was adopted along with the Five-Year Plan (2009~2013) for Green Growth. 5

7 3 Objectives / 10 Policy Directions 10 policy directions to achieve 3 objectives The National Strategy is divided into ten specific policy directions to achieve three objectives. STEPI played a leading role in making strategy for Green Technology Development. Adaptation to climate change & energy independence 1. Effective mitigation of greenhouse gas emissions 2. Reduction of the use of fossil fuels and the enhancement of energy independence 3. Strengthening the capacity to adapt to climate change Conclusion Creating new engines for economic growth 4. Development of green technologies 5. The greening of existing industries and promotion of new industries 6. Advancement of industrial structure 7. Engineering a structural basis for the green economy Improvement in quality of life 8. Greening the land, water and building the green transportation infrastructure 9. Bringing green revolution into our daily lives 10. Becoming a role-model for the international community as a green growth leader 6

8 Green Growth Investment Plans Fiscal expenditure on Green Growth The envisaged fiscal spending as contained in the Five-Year Plan for Green Growth is 107 trillion KRW for 2009 ~ The fiscal budget will be mainly spent on R&D in green technology, restoration of the four major rivers and green transportation. Roughly 2% Strategy of the nation s annual GDP is allocated to green investment which is twice the amount recommended by the Green Economy Initiative advocated by the UNEP (1% of GDP). Key category Total 1) ~ ~13 Adaptation to climate change & energy independence Total Conclusion (trillion KRW) Creating new engines for economic growth Improvement in quality of life and enhanced international standing 1) The total amount eliminated overlaps among allocations to projects under the 10 policy directions. 7

9 II. Status of GT development in Korea 8 8

10 Green Technology (GT) and Green Growth GT plays a strategic role in achieving green growth by contributing to the establishment of low carbon-green industry. As the industrial structure changes according to the environmental protection trend, GT becomes the critical technologies among others to achieve a virtuous circle between environmental protection and economic growth. <GT and Economic Growth> GT Low carbon Green industry Environmental protection Economic growth Green growth = virtuous circle between EP &EG source: SERI(2008) 9

Development of Green Technology Targets Korea will work on developing technologies that will significantly contribute to reducing greenhouse

11 Development of Green Technology Targets Korea will work on developing technologies that will significantly contribute to reducing greenhouse gas emissions. By doing so, it will secure new engines for future economic growth and gain a competitive edge in the global market. Conclusion 10

12 Overall Status of GT Development in Korea Government GT R&D investment was 1.9 trillion won as of 2009, which was only 16% of total R&D expenditure. - too small in absolute size compared to those of major advanced countries such as US, Japan and EU. GT level is only 50-70% of that of advanced countries. Number of citations of Korean GT patents are less than 10% of those of major advanced countries, which means lower quality. Much too oriented to applied and development researches (proportion of basic research is only about 17%) Insufficient GT R&D coordination among Ministries 11 11

13 Short-term Stimulus package by MOSF Green New Deal projects to create jobs and stimulate investment ( ) Investments (Billion $) Jobs to be created Revive 4 rivers ,960 Green transport n/w ,067 Rain discharge facility, dams ,132 Green cars/ clean energy ,348 Waste recycle ,196 Forestation ,702 Green home/school ,630 Eco-river ,789 Nation information system 0.3 3,120 Total ,

14 Main Contents of GT R&D Master Plan by NSTC Direction for Investment into GT Development Increase of GT R&D Investment - Double R&D expenditure by 12 - Increase of Basic R&D to 35% 27 GTs for focused development Selection of Key GTs based on growth and green impacts Strategy for GT Development Convergence GreenTech Increase of Basic R&D Make existing Industries green Enlarging GT R&D Infra Source: GT R&D Master Plan,

15 27 Green technologies for focused development Forecasting technology (2) Higher efficiency Technology (9) Energy source Technology (9) Post-treatment Technology (6) Pollution free industrial Economy (1) - Climate change forecasting and modeling development - Technologies to analyze the impact of climate change and to apply the analysis results - Integrated coal gasification combined cycle (IGGC) - High efficiency low pollution vehicle technology - Intelligent transportation/logistics technology - Building eco-space and urban recycling technology - Environmentally-friendly low energy architectural technology - Green process technology considering environmental load and energy - Lighting LED and green IT technology - Technology to improve electricity IT and efficiency of electronic appliances - High efficiency secondary cell technology - High efficiency low cost silicon-based solar cell technology - Mass production of non-silicon-based solar cell and core originative technology - Bio-energy production element technology and system - Renovated light water reactor design and construction - Environmentally friendly nuclear nonproliferation fast reactor and nuclear cycling system development - Fusion reactor design and construction technology - High efficiency hydrogen production and storage technology - Next generation high efficiency fuel cell technology - Environmentally-friendly plant growth catalyst technology - Carbon capture/storage/treatment technology -Non-CO2 treatment technology - Water system quality evaluation and management technology - Technology to secure alternative water resources - Technology to reduce and recycle wastes and convert them into energy - Toxic materials monitoring and environmental cleaning technology - Virtual technology Source: National Science and Technology Council (2009) 14

16 New Growth Engines Projects by PMO Green technology industry (6) : it lays the foundation for future growth, not just energy reduction and has high potential to tackle climate change and lack of resources High tech convergence industry (6) : large world market size, there is high technology capability in Korea. Capable to create new industry and advance the existing industries through convergence High value added industry (5) : huge potential of job creation. Capable to create high value added by complementing service industry Green technology industry High tech convergence industry High value added industry 1. New renewable energy 2. Low carbon energy 3. Advanced water treatment 4. LED applications 5. Green transportation system 6. High-tech green city Conclusion 7. Broadcasting telecommunication convergence industry 8. IT convergence system 9. Robot applications 10. New material Nano convergence 11. Bio medical medical devices 12. High value added food industry 13. Global health care 14. Global education service 15. Green financing 16. Contents Software 17. MICE Tourism 15

17 Samsung Electronics Co. Vision of Creating New Value through Eco- Innovation : July 20, 2009 Key Contents Total investment for green innovation: Billion Won 5,400 ( ) 50% reduction of GHG per sales unit and 40% increase of energy efficiency by 2013 : Total reduction volume = GHG 84 million ton 100% of Good Eco-Product by 2013 Green innovation partnerships with cooperative companies 16

18 Hyundai-Kia Motors Investment Plans for Green Innovation: July 22, 2009 Key Contents Total investment for green innovation: Billion Won 4,100 ( ) Establishing mass production system of eco-friendly vehicles, aiming at the 4 th green car company High efficiency & energy-saving engine/transmission and materials Reduction of CO2 emission in production sites 17

19 POSCO Vision of Global Green Growth Leader : July 7, 2009 Green innovation: One among Three Management Philosophy Establishment of Master Plan by October, 2009: Four Committees are under operation Low carbon steel Climate change Renewable energy Green growth 18

20 III. Strategies for GT Development in Korea 19 19

21 Key Strategies for Green Technology(GT) Development in Korea 1 Increase of government R&D investment in GT development and establishment of GT R&D coordination system 2 Promoting GT transfer and commercialization 3 Strengthening incentive schemes for inducing private investment in GT development 4 Promoting the international cooperation for GT development 20

22 1. Increase of government GT R&D investment and establishment of GT R&D coordination system 21 21

23 Increase of Government R&D Investment Double R&D expenditures on green technologies from 1.4 trillion Won (billion $) in 2008 to 2.8 trillion Won in 2012 Identify and select 27 green technologies for focused development Draw up a roadmap for the development of green technologies and commercialization of developed GTs 22 22

24 Status of GT R&D Investment by Ministries Total government GT R&D investment was about 1.9 trillion won in MKE : Green IT, Green energy Technologies - MEST: basic & fundamental GT R&D in universities & GRIs, cultivation of related GT R&D personnel - MLTM : GTs related with formation of eco-system, intelligent transport & logistics - ME : post-treatment technologies to reduce and recycle wastes, etc. Total R&D GT R&D (Trillion KRW) Source: PCGG, National Strategy and 5 Year Plan for Green Growth,

25 R&D investment strategy for 27 GTs Presidential Committee on Green Growth made R&D investment strategy for 27 GTs for focused development related to the strategic roadmap for GT R&D & commercialization, considering R&D size, tech. level, commercialization timing, etc. Type of invest. <Investment strategy by type of investment> # of GTs Annual investment strategy 09~ 12 12~ 20 20~ 30 Short-term intensive 3 30% increase decrease - Mid-term intensive 8 20% increase 30% increase decrease Long-term intensive 13 10% increase 15% increase Steadily decrease Long-term steady 3 5% increase 10% increase 15% increase 24 24

26 Classification of 27 GTs for focused development by type of investment GTs with short-term intensive investment for immediate application: silicon solar cell, LED for lighting, light water reactor (3) GTs with mid-term intensive investment for medium term application: high efficient vehicle, green process, fuel cell, alternative water resources, virtual reality, etc. (8) GTs with long-term intensive investment for future potential application: forecasting climate change, IGCC, CCS, nuclear fusion, eco-friendly building, smart grid, hydrogen, etc. (13) GTs with long-term steady investment for continuous development for future application: non-silicon solar cell, bio energy, intelligent transportation & logistics system (3) 25 25

27 Establishing a GT R&D coordination system Strengthening GT R&D coordination system PCGG NSTC MOSF Directions for allocating green R&D budget (early to mid July) Directions for enlarging green R&D investment Priority setting for GTs Coordination btn related GT R&D programs Role setting btn ministries Directions for allocating public R&D budget (late July) Priority setting among areas & programs Coordination among programs Investment feasibility Role setting btn ministries Drawing up government R&D budget Drawing up government R&D budget reflecting the results of consideration by NSTC Established Green Technology R&D Council to comprehensively coordinate GT R&D with a cooperation between PCGG & NSTC Established efficient supporting system for GT R&D coordination by GT R&D council such as establishment of an effective secretariat Introducing joint R&D performing group to strengthen inter-connection among similar GT R&D projects of various ministries 26 26

28 2. Promoting GT transfer and commercialization 27

29 Promoting GT Transfer and commercialization Strengthening performance management for public GT R&D activities Establishing GT R&D performance management system and supporting follow-up researches for commercial use Enlarging institutional base to promote GT transfer & commercialization Enlarging Green Business Start-up Fund by 100 billion won for promotion of green businesses Nurturing more than 1,000 venture companies by 2013 Introducing GT certification system Based on technological factor, marketability, green effects Establishing supporting measures for GTs with official certificates 28 28

30 Support for starting up businesses more easily with R&D results Operating four commercialization support center as of 2010 with the budget of 23.9 million dollar Programs Strategy for cultivating prospective entrepreneurs with new technologies As of 2010, total budget is 43 million dollars and support up to 45 thousand dollars per person Operating New Technology Information System to activate transactions of new technologies As of 2009, total of 918 new technologies were sold Providing newly Conclusion started enterprises with R&D budget As of 2009, total of 45 million dollars was provided Operating more than 10 Business Incubators 29

31 3. Strengthening incentive schemes for inducing private investment in GT development 30 30

32 Strengthening Public Procurement Preparation of inter-ministerial public procurement policy to promote GT development Draw up a road map for public procurement to promote GT development Introduction of obligatory portion of public procurement for green innovative products Provision of a comprehensive guideline to promote green innovation through the life cycle of public procurement 31

33 Improvement of Tax and Financial Incentive Schemes for GT Development Increase of a proportion of tax deduction for GT R&D investment to about 30% Preferential treatment of green technologies and companies for a loan or loan guarantee judgment Increase of investments by venture capital into young green innovative SMEs Increase of national green R&D programs for SMEs 32

34 Improvement of Cultivation System for GT R&D Personnel Preparation of supporting program for the cultivation of high quality GT R&D personnel in the universities Establishment of joint university-gri graduate schools specialized in the GT areas Promoting employment of master or Ph.D. personnel in GT areas by supporting labor cost Introduction of GT consultant program for related SMEs mainly utilizing researchers in GRIs 33

35 4. Promoting the international cooperation for GT development 34

36 Promotion of Strategic Partnership with Foreign Countries for Global GT Development Implementing Global Partnership for Green Technology Development Program in such areas as Smart Grid Designing and implementing Korea-Japan-China GT Cooperative Program Active dissemination of GT into developing countries for solving global issues and creating global markets for green innovative products in relation with Korean ODA programs Promotion of international cooperative researches with foreign research institutes such as LBNL of USA 35

37 Participation in the Establishment of International Governance for GT Cooperation Active participation in activities related to GT of international organizations such as IPCC, OECD Improvement of infra structure for international cooperation for global GT development Establishment of Korean branches of high quality foreign GT research institutes Activities for establishing Global GT standards Establishment of East Asia GT standards council Strengthening activities for GT standards in EU 36

38 IV. Policy suggestions 37 37

39 Policy suggestions Increase of effectiveness of Comprehensive GT R&D Coordination Need for coordination among central ministries as well as central & local governments Clarification of roles among public and private sectors in performing GT R&D Establishment of more effective strategy for GT R&D Investment Establishment of more detailed strategy based on Value Chain Analysis Setting up more realistic GT R&D investment priority Creation and Enlargement of Green Markets Existing market or totally new market for products based on green technologies Using relevant regulations and incentives for creating and enlarging markets Supporting SMEs for Entering into Green Markets Preparing support system for SMEs including supports for GT development Facilitation of GT Certification System Increase of effectiveness of GT certification system by strengthening capability of certifying organizations 38

40 What Korea aims to achieve by 2030 Secure energy independence and reduce GHG From (2006) To (2030) Energy independence 3.2% 40.0% Share of renewable energy 2.2% 11.0% Petroleum dependence 43.6% 33.0% Energy-poor population 7.8% 0.0% Develop GT as new growth engine: G Economy Restructure transportation, urban, and land system to be suitable for green culture Low-carbon life style Green education: diffusion of green culture 39 39

41 What Korea aims to achieve by 2050 in relation to GT development is Related Indicators Target 09 '13 '20 '30 '50 R&D Investment (billion won) 19,500 35,000 80, , ,000 Global market share (%) in GT related sectors 0.5% 8% 10% 13% 18% GT R&D personnel (head count) - 10,000 20,000 30,000 50,000 Amount of reduction of GHG emission (m CO2 ton ) 1( 07)

42 Thank You!! 41 41

Green Growth and Green Innovation: Korean Case Oct. STEPI

Green Growth and Green Innovation: Korean Case 2010. Oct. STEPI 목차 I. Introduction II. What is Green Growth and Green Innovation III. Status and Strategies for GT Development in Korea IV. Conclusion 1.