Introduction.

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1 Save Energy Save Earth 388 Poeundaero, Suji-Gu, Yongin-Si, Gyeonggi-Do, Republic of Korea (Zip code: ) Tel Introduction 01

2 Korea Energy Management Corporation Contents Introduction Introduction Introduction of KEMCO 06 A Message from the President 08 Overview, History 09 Major Programs 10 Vision & Mission 11 Organization Korea s Energy Overview 12 Energy-Supply Overview 12 Energy Efficiency 13 Greenhouse Gas Emissions by Sector 14 Status of New and Renewable Energy Supply Energy Trend and Climate Change Policies 15 National Strategy for Green Growth and the Framework Act on Green Growth 17 Energy Efficiency and Conservation Policy 19 New and Renewable Energy Policy Energy Efficiency and Conservation Imrpovements Climate Change Mitigation & GHG Emission Reduction New and Renewable Energy Promotion

3 Save Energy Save Earth Korea Energy Management Corporation Korea Energy Management Corporation is a public institution that carries out the national task of reducing greenhouse gases by operating various programs regarding energy conservation, energy efficiency improvement, new and renewable energy diffusion, and climate change mitigation.

4 A Message from the President Korea Energy Management Corporation Korea Energy Management Corporation (KEMCO) is a public institution in charge of As little drops of water make a mighty ocean, the leap to an advanced green country mitigating greenhouse gas emissions by expanding and deploying new and renewable starts with small steps and daily actions in our lives. This report not only gives the details energy (NRE) technology and improving energy efficiency. of the progress made by KEMCO in that direction, but offers opportunities of moving forward for both KEMCO and you. KEMCO will continue to take the lead in making Energy has become essential to civilized life and has enriched our lives. However, most a low-carbon society by coming up with energy saving and climate change mitigation of our energy supply is imported from abroad, imposing a huge burden on the Korean actions applicable to our daily lives. economy. Meanwhile, our use of coal or oil causes various environmental problems such as air pollution and global warming. Now it has become very important how we use energy and how to deal with problems caused by energy consumption. The recent green trend reflects current concerns about reducing greenhouse gas emissions to overcome global warming, while at the same time, maintaining sustainable economic growth. KEMCO has worked to achieve the vision of Creating a Smart & Green Lifestyle with its management goal of becoming a leader in green growth and, with the people of Korea, creating a low- carbon society. Through such efforts KEMCO has established the basis for low-carbon use and green growth, including the introduction of greenhouse gas and energy target management systems, the distribution of one million green homes, and the overseas expansion of CDM (Clean Development Mechanism) projects. We have also cooperated with various international organizations to provide developing countries with KEMCO s knowledge and experience in order that they can develop their own energy efficiency programs and climate change mitigation efforts. Jeung-Soo Huh President, Korea Energ y Mana gement Corpora tion 6 7

5 Introduction Korea Energy Management Corporation 8 9 Introduction of KEMCO Overview President Major Programs Overseas Project Team +82-(0) Huh, Jeung-Soo Date of establishment July 4, 1980 Legal basis Article 45 of the Energy Use Rationalization Act Expanding the NRE deployment Deploying one million green homes Facilitating the NRE industry and exports Developing and promoting NRE policies Establishing the climate change response system Registration of GHG emissions reduction projects Establishment of the GHG emissions Characteristic Quasi-governmental institution (consignment basis) Facilitating the application and use of NRE mitigation system Promotion of a green lifestyle Major function and role Analysis of energy management and provision of technical advice Investigation, research, promotion and education of energy management Efficiency improvement and safety management of energy consuming equipment Support for the investments in energy saving facilities Deployment of NRE and promotion of green industry Establishment of the basis to respond to UNFCCC Support for the GHG mitigation activities in the industry Number of employees 477 Operating budget * USD 1 KRW 1,000 KRW 68,231 million (USD 62 million) Reducing energy consumption and strengthening the basis Strengthening demand management in industrial, building and transportation sectors Operating GHG and energy target management systems Analyzing energy use and technical map Improving efficiency and safety management of energy consuming equipment Providing financial support to promote investment into energy saving facilities Creating green culture Early education program for energy saving: SESE NARA Education and Training on energy saving Public participation campaign for saving energy: Green Energy Family Green energy (NRE) exhibitions and energy saving experience centers Promotion of energy saving and GHG emissions reduction through mass media Head office 388 Poeundaero, Suji-gu, Yongin-si, Gyeonggi-do, Republic of Korea History The Energy Use Rationalization Act was enacted and promulgated. KEMCO was established The Alternative Energy Development Promotion Act was promulgated NRE Center (affiliate) was established KEMCO was designated as a CDM (Clean Development Mechanism) DOE (Designated Operational Entity) KEMCO was designated as a COSD (Cooperating Organization for Standards Development) KEMCO was designated as a Green Education Institution Dec Jul Dec FEB NOV JUL MAR. 2010

6 Introduction Korea Energy Management Corporation Vision Creating a Smart & Green Lifestyle Organization President Creating This expresses the strong will of KEMCO to create a highly efficient, low carbon energy society that can sustain low carbon, green growth Standing Auditor Audit & Inspection Dept. Smart Lifestyle High Energy Efficiency & Saving Establishing a sound energy-consumption culture which enables high energy efficiency and deployment of very clean energy, advanced environments and culture for rational energy use which lays the foundation for comfortable lifestyle External Cooperation Dept. Corporate Strategy & Management HQs Planning & Coordination Dept. Policy & IT Dept. Green Lifestyle Low Carbon Emission Minimizing greenhouse gas emission caused by energy consumption by clean energy use and energy saving, to create a culture that actively responds to climate change Public Relations Dept. Management Support Dept. Security & Emergency Division KEMCO s Building Construction Division Mission Leading green growth and creating a low carbon energy society Energy Technology HQs Industry Energy Management Dept. Target Management Dept. Highly efficient, low carbon energy society Highly efficient, very clean and high value-added society where people can lead comfortable lives with minimal energy use and carbon emission, thanks to the high efficiency of energy use and use of clean energy Green Building & Transportation Center Energy Efficiency Standardization & Certification Center Green Growth Sustainable growth realized by increasing the use of green technologies and clean energy, thereby reducing greenhouse gas emission to respond to climate change and enhance economic efficiency so that a new driving force for growth can be created Energy Business Support HQs Climate Change Cooperation Dept. Global Energy Education Center Leading Organization Promoting a sound energy consumption culture and leading the nation s energy policy through successful implementation of rational energy utilization measures which are the core factors that claim the largest share in low carbon, green growth Energy Audit & Consultancy Dept. Financial Support Dept. New & Renewable Energy Center (NREC) NRE Policy Dept. NRE Promotion Dept. Core Values & Management Policies Core Values Management Policies NRE Dissemination Dept. Renewable Portfolio Standard Dept. Responsibility Ethics Harmony Change and Challenge Win-win and Cohesion Energy Cooperation HQs Regional Cooperation Dept. 12 Regional Headquarters Trust and Communication GHG Certification Office

7 Introduction Korea Energy Management Corporation Korea s Energy Overview Energy-Supply Overview Policy & IT Department +82-(0) Korea depends on import from abroad for 96% of its domestic energy supply. Energy imports in 2011 reached about billion dollars, exceeding exports of major items from Korea, such as semi-conductors and cars. Moreover, Korea s energy security is especially vulnerable to environmental changes and However, the energy intensity of major products is equivalent to or lower than that of developed countries. In other words, energy efficiency of the manufacturing industry is relatively high. - Steel industry energy intensity index (2008): Korea 100, Japan 102, US Cement industry energy intensity index (2007): Korea 100, Japan 96.8, Australia changes stemming from the international energy crisis, due to the country s high dependence Exports items billion $ on foreign imports as well as and the low ratio of renewable energy in the domestic energy mix (2.4%). Imports energy billion $ Key Indicators of Domestic Energy Supply % % % 23.6% 15.6% Imported Energy (USD bil.) Growth rate(%) 4.3%p Energy/Total imports (Percentage of total imported energy, %) Growth rate(%) 4.3%p Greenhouse Gas Emissions by Sector Korea emitted million tons of CO 2 in 2009, up by 0.9% compared to 2008 (602.3 million). The amount has increased by an average of 1.9% every year since The energy sector was responsible for 84.9% of domestic CO 2 emissions, and industrial processes for about 9.3%. As for CO 2 emissions from fuel combustion, power generation (44.3%), industrial (27.3%) and transportation (16%) sectors accounted for the major portions. Korea s CO 2 emissions by sector Energy Industrial process Agriculture, waste (Mt CO 2) Energy Efficiency Korea s energy intensity is higher than that of other major countries because energy-intensive industries such as petrochemical, steel, and cement industries make up for a large share of Power generation 44.3% the industrial fabric. The transformation of industrial infrastructure and improvement of energy intensity are important to enhance Korea s energy efficiency. 80.7% 84.6% 84.9% Industry 27.3% - Ratio of energy intensive industries (2009): Korea 28.1%, Japan 17.6%, US 12.3% - Ratio of raw materials (ex. Naphtha) (2009): Korea 23.6%, Japan 10.7%, US 5.8% 11.3% 9.7% 9.3% Transport 16.0% Domestic Energy Intensity Level Energy Intensity Int l Comparison(2009) Energy Intensity Trend 8.0% % % 2009 Residential / Commercial 11.2% Etc 1.2% Japan Germany USA Korea Total energy intensity ( 00 fixed) Total energy intensity (PPP) (toe / 1,000$) Korea 0.19 USA 0.18 OECD Germany Japan

8 Introduction Korea Energy Management Corporation Status of New and Renewable Energy Supply As of the end of 2010, NRE(New and Renewable Energy) supply totals 6,856 thousand TOE, which equals 2.61%of total primary energy consumption of 262,609 thousand TOE. Of the total supply of NRE, waste energy contributed the largest proportion at 70.92%, followed by hydropower % and bio-energy 11.01%. Other types of energy, such as photovoltaic, contributed 6.52%. Current status of NRE % 2.37% 5,225 5, , ,454 Primary energy NRE Energy Trend and Climate Change Policies National Strategy for Green Growth and the Framework Act on Green Growth Policy & IT Department +82-(0) At the 60th anniversary of the Republic of Korea s liberation on August 15, 2008, President Lee, Myung Bak proclaimed Low Carbon, Green Growth as Korea s national vision. In the following year, the Korean government built a solid platform for Green Growth by enacting the Framework Act, On Low Carbon Green Growth setting a national reduction target for greenhouse gas emissions and adopting the National Strategy for Green Growth along with the Five-Year Plan for Green Growth. The scheme of the Framework Act on Low Carbon Green Growth, an institutional basis for Low Carbon and Green Growth, was finalized by the government in February 2009 and submitted to the National Assembly in April. The bill was passed by the National Assembly on December 29, 2009 and signed by the President on January 13, Main contents of the Framework Act are as follows % 5, ,752 The Nature of the Act (Article 8) % 6, ,311 Establishment & Implementation of the National Strategy for Green Growth (Article 9) Promoting & Supporting Green Economy and Green Industries (Article 22) % 6, ,609 Tax System Operation (Article 30) Establishment & Implementation of the Basic Plans for Tackling Climate Change & the National Basic Ratio by source (2010) Energy Plan (Article 38, 39) Establishment and Management of Mid and Long-term Targets (Article 42) Waste 70.92% etc. 6.52% Wind 2.56% Establishment and Operation of the GHG Emissions Reporting System & Integrated Information Management System (Articles 44, 45) Introduction of Cap and Trade System (Article 46) PV % Hydro 11.56% Bio 11.01% Fuel cell 0.62% Geothemal 0.49% Solarthemal 0.43% The National Strategy for Green Growth and the Five-Year Plan, which covers the mid and long-term policy goals, strategies and priority tasks, was established at the 4th Presidential Commission on Green Growth, presided over by President Lee on July 6, They were established to fulfill the national vision of Low Carbon Green Growth through pangovernment collaboration. NRE power generation has increased rapidly thanks to the introduction of the FIT system. NRE generation accounted for 1.24% (5,890 GWh) of total electricity generated in 2010 (474,660,205 GWh). In terms of PV, power generation rose nearly 55 times to 772,801 MWh in 2010, up from 31,022 MWh of Wind power generation more than tripled to 816,950 MWh from 238,911 MWh of 2006.

9 Introduction Korea Energy Management Corporation Visions for Green Growth and Policy Directions Vision The World s Top 7 Green Leaders by 2020, The World s Top 5 Green Leaders by 2050 Energy Efficiency and Conservation Policy 2030 Energy Vision ( ) In August 2008, Korea has announced a long-term energy goal that will determine the direction of its national energy policy by Its long-term energy goal is to improve energy efficiency by 46% by 2030 in order to achieve sustainable economic growth while coping with high oil prices and climate change. Three Goals Green Society: Low carbon emissions and high energy efficiency Green Economy: Led by green technology Green Korea: Global green growth leader Three Strategies and Ten Policy Directions The 4 th Basic Plan for Rational Energy Utilization ( ) As a mid-term action plan to support the long-term energy vision, the 4th basic plan for rational energy utilization was launched on December 12, This plan is targeted to improve Korea s energy efficiency by 11.3 % by 2012, and by 46% by It is also expected to cut energy consumption by 34.2 million TOE in The government will invest USD 18.3 billion by Mid-tem and long-term targets of TPES Climate Change Adaptation & Energy Independence Creating New Growth Engines Improving Quality of Life and Enhancing International Standing million toe (toe/1,000$) Expected demand maintaining energy intensity of 2007 Efficient reduction of GHG emissions Decreasing the use of oil and strengthening energy independence Strengthening climate change adaptation capacity Developing green technology Greening existing industries and promoting green industries Advancing industrial structure Laying the foundation for green economy Greening the land & building green transportation infrastructure Bringing the green revolution into daily lives Becoming a role model as the world s green growth leader (0.367) (0.335) 11.3% (0.297) (0.256) (0.233) (0.185) 46% Targeted demand Main policy indicators and goals on national strategy for green growth Energy intensity (TOE/USD 1,000) Energy independence (%) Use of new and renewable energy (%) Recycling of resources (%) Use of public transportation (%) The priority strategies of this action plan fall into four categories: energy efficiency R&D, demand management innovation by sector, market creation, and the establishment of low carbon high efficiency energy infrastructure. A variety of measures, such as incentives and regulations, energy efficiency programs, have been implemented to meet the targets

10 Introduction Korea Energy Management Corporation Policy directions for energy efficiency and conservation Energy efficiency R&D Developing advanced technology in 7 core areas: BEMS Power efficiency improvement Energy storage Green vehicles LEDs Energy-intensive consumer appliances 6 green home appliances New and Renewable Energy Policy The 3 rd Basic Plan for Technology Development, Application and Deployment of New & Renewable Energy The plan was established in December It outlines Korea s mid and long-term targets for NRE development, application and deployment and provides basic strategies and action plans to achieve them. The 3 rd Basic Plan aims at facilitating the NRE industry to create a new growth engine for the Korean economy. The fundamental directions of the plan are: Demand management innovation Industry Mandatory audits for energy-intensive industries Promoting negotiated agreements and energy management systems Increasing financial support and tax incentives To classify renewable energy sources into a deployment focused group (wind, bioenergy, waste and geothermal) and an R&D focused group (PV, hydrogen and fuel cells) To respond to the climate change and the depletion of fossil fuels Transport Strengthening fuel-efficiency standards Deploying low-carbon, high efficiency vehicles (Reinforcing public traffic system and modal shift measures) (Intelligent Transport System, Light Rail Transit, etc.) To provide mid and long-term NRE deployment plans. NRE Application and Deployment Targets Building Stringent building codes Energy-efficient building certifications Smart meters Community energy systems According to Korea s BAU scenario, the NRE share of primary energy supply is expected to account for 3.6% in 2015, 4.2% in 2020 and 5.7% in Under the 3rd Basic Plan, we intend to increase the NRE share of primary energy mix to 4.3% in 2015, 6.1% in 2020 and 11.0% in Market creation and transformation Energy efficiency standards and labeling Rebates for EE products Future efficiency standards and MEPS Phasing-out inefficient appliances (e.g. incandescent lights) Establishing a Sustainable Energy System based on New & Renewable Energy Establish NRE-based Sustainable Energy System Low-carbon high efficiency infrastructure Rationalization of energy price structure Energy saving PR Early education Public-private partnerships Strategies Targets Gools 1. Increase the ratio of NRE in the primary energy mix to 11% by Promote NRE as a green growth engine Facilitate industrialization Suggest Technical Road- Map (TRM) / Product Road-Map (PRM) Build a pilot complex Reinforce the NRE certification system, Foster the export industry Increase NRE Application and Use Deploy 1 million Green Homes Reinforce NRE design for buildings & new towns Enhance the roles of local authorities Develop integrated technology Expand infrastructure Establish industry codes Create an NRE fund Reduce regulatory barriers Create a sophisticated statistical system Introduce market tools RPS/RFS Integrated NRE policy Green pricing Renewable energy credits (RECs)

11 Save Energy Save Earth 388 Poeundaero, Suji-Gu, Yongin-Si, Gyeonggi-Do, Republic of Korea (Zip code: ) Tel Energy Efficiency & Conservation Annual Improvements Report 02

12 Contents Introduction Energy Efficiency and Conservation Imrpovements Industrial Sector 06 GHG and Energy Target Management Scheme 07 Energy Management System (EnMS) Korea Energy Management Corporation 10 Promotion of Energy Service Company (ESCO) 11 Energy Audit Program Building Sector 14 Building Energy Efficiency Certification program 15 Building Codes in Korea - Building Design Criteria for Energy Saving 16 Performance Evaluation of Eco-friendly Houses Energy Efficiency and Conservation Imrpovements 16 Building Energy Target Setting 17 Energy saving in public institutions Transportation Sector 18 Fuel Economy and Labeling Program of Vehicles 18 Average Fuel Economy (AFE) Program 19 Tire Efficiency Standards and Labeling Program 20 Green & Smart Transportation Partnership Appliance & Equipment Sector 20 Energy Standards and Labeling Program 21 High-efficiency Appliances Certification Program 22 e-standby Program 23 Rebate & Incentive Programs for High-efficiency Products Infrastructure for Low Energy Consuming Society 24 Energy Utility Demand Side Management Investment Plan 25 Promotion of Integrated Energy Supply 28 The Consultation for Energy Use Plan 31 Energy Use Reporting System 32 Financial Assistance toward Energy Efficiency Investment 33 Public Relations on Energy Saving and Climate Change 37 Training and Education Climate Change Mitigation & GHG Emission Reduction New and Renewable Energy Promotion

13 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation 4 5 GHG and Energy Target Management 577 million ton CO 2 7,348 thousand TJ in industry & power generation sector in 2012 Average Fuel Economy Standard Fuel Efficiency Labeling 17km/l 140g/km(CO 2 ) ESCO Energy Saving Tire Efficiency Standards Labeling energy audit 83 agencies 469 Energy audits 438,800 toe /year KRW 285,390 mil Average standby power 3.66W 2.01W % decreas Energy consumption of refrigerators(annual kwh/l) kwh/l -59% * USD 1 KRW 1,100 Number of appliances % increse kwh/l Building Codes for Energy Saving 395,887 households Energy Efficiency Grade Label High-efficiency Equipment Label Energy Saving Label Standby Warning Label

14 Energy Efficiency and Conservation Improvements Korea Energy Management Corporation 6 7 Industrial Sector GHG and Energy Target Management Scheme Target Management Department +82-(0) The GHG Energy Target Management Scheme ( Target Management Scheme ) was introduced in January 2011 with the enactment of the Framework Act on Low Carbon Green Growth in order to achieve the national reduction target of reducing GHG emissions by 30% against the BAU scenario by Energy Management System (EnMS) Energy Efficiency Standardization and Certification Center +82-(0) As part of the energy management programs under the 4th Basic Plan of Rational Energy Utilization, KEMCO has been supporting the implementation of Energy Management Systems (EnMS) for industrial energy users and commercial buildings, especially for energy intensive industries, since 2007 with the Ministry of Knowledge Economy. If successfully implemented within the context of national policy frameworks, the Energy Management System (EnMS), an energy-management standard, is expected to increase energy efficiency, 366 entities in the industry and power generation sector in million ton CO 2 GHG emission allowances in the industrial and power generation sector in 2012 Firstly, enterprises which emit GHG and consume energy above the standard levels are subjects to the government s Target Management Scheme. Under the Scheme, the government and Controlled entities set targets for GHG emissions reduction and energy conservation together. Finally the government can impose a penalty if the subject enterprise failed to achieve its target. The total number of Controlled entities is 481(as of Mar 16, 2012): 382 from the industrial and power generation sector, 51 the building and transportation sector, 27 from the farming, livestock, and food sector and 21 from the wastes sector. Criteria for designating subject entities EnMS An energy-management standard to increase energy efficiency, reduce costs and improve energy performance reduce costs and improve energy performance, while continuously and systematically reducing GHG emissions for the industrial and building sectors. ISO and an equivalent national standard The Korean national standard for EnMS, KS A 4000:2007 was made in December It was replaced with KS A ISO 50001:2011 in October 2011 following the adoption of the international standard ISO 50001:2011 in June The national standards were developed by Korean Agency for Technology and Standards (KATS) with support from KEMCO and technical experts. ISO 50001, the new international standard, or an equivalent energy management standard covers energy management activities, practices and processes based on the PDCA(Plan-Do-Check-Act) cycle. 7,348 thousand TJ by Dec from Jan from Jan Operators Installations Operators Installations Operators Installations energy use allowances in the industrial and power generation sector in 2012 GHG (tco 2 ) 125,000 25,000 87,500 20,000 50,000 15,000 Energy (TJ) * Art.29 of Enforcement Decree of Framework Act on Low Carbon, Green Growth ( ) / 1TJ (Terajoule) = TOE The PDCA cycle had its origin in Dr. W. Edwards Deming s lecture in Japan in In a more general sense, the PDCA cycle and the Model for Improvement have their roots in the scientific method and the philosophy of science that have evolved for more than 400 years. Existing ISO standards such as ISO 9001 and ISO are based on the PDCA principle as well. In September 2011, KEMCO negotiated targets with the 366 Controlled entities of the industrial and power generation sector, which were first ones to be designated in The 2012 targets of this sector are: 577 million ton of CO 2 emission allowances and 7,348,000 Scope of energy management TJ of energy use allowances. Result of 2012 target setting in industry and power generation sector GHG (Million ton CO 2 ) Energy (Thousand TJ) Facilities Equipment Personnel Systems Processes GHG reduction 8.3(1.42%) ,454 Energy saving (1.43%) Estimation Target 577 Allowance Estimation Target 7,348 Allowance

15 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation 8 9 Training courses and technical information KEMCO has developed two types of EnMS training courses with private sector partners. One training course is designed for EnMS auditors, and the other is for company s working-level staff. It has been providing those two training courses since 2008 as per its yearly training schedule. The main contents of the EnMS training courses deals with certification audit processes including EnMS requirements and standards; how to conduct an energy review and target setting; methods of managing energy efficiency for facilities; data reliability and measuring systems; ISO management system; and GHG emissions calculation and auditing skills for certification. The EnMS website ( kemco.or.kr/ EMS) provides information about related seminars and instructional materials for the public. Future plans International Collaboration KEMCO plans to actively participate in international collaboration through Global Superior Energy Performance Partnership (GSEP), UNIDO, and other international programs, in order to develop sound certification schemes and technical tools that support Energy Management Systems (EnMS). Through such international collaboration, it will complete the M&V protocol, program criteria, energy performance level requirements and benchmark energy efficiency. It will also continuously provide supportive tools and training courses to industrial energy users and commercial building users. Pilot EnMS certification program KEMCO has completed an EnMS pilot certification program which ran from 2008 to Twenty businesses, including Samsung Corning Precision Materials, LG Electronics, Hyundai Motors and Incheon International Airport, and three commercial buildings have joined this pilot program. By 2011, 13 of the participants were certified by KEMCO and the program was completed in early The audit process was developed and operated on the basis of ISO/IEC The auditing team consists of experts in the following major fields: energy assessment, ISO management system, and monitoring & measuring system. The Primary enabling policy for EnMS in Korea will be GSEP. GSEP is one of the 11 ongoing Clean Energy Ministerial (CEM) initiatives. Its objective is to significantly cut global energy use by: Promoting continuous energy improvements in energy efficiency of industrial facilities and commercial buildings Promoting public-private partnerships (PPP) for specific technologies or energyintensive sectors Timeline of EnMS pilot certification program ~2011 Pilot Certification Project ~ Implementation of Certification Scheme Among six working groups within GSEP, the Energy Management Working Group (EMWG) for EnMS has the mission to facilitate international dialogue to share strategies and best practices to: help participating governments shape energy policies; increase consistency of certification programs among participating nations; and leverage resources to continuously spread energy management and improve energy performance of industries and buildings. Development of Supporting Tools Establishment of EnMS infrastructure Participants of EMWG KS A 4000 : 2007 (Korean Standard) Benchmarking Keeping pace with the ISO and international mutual certification scheme(gsep) Australia Canada Denmark European Commission India Japan Korea Mexico South Africa Sweden United States

16 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Promotion of Energy Service Company (ESCO) Financial Support Department +82-(0) /8 ESCO (Energy Service Company) 235 The number of registered ESCOs in 2011 The ESCO program was introduced to Korea in order to extend energy conservation polices and measures led by the government to the private sector. Major project areas of ESCOs include energy-efficient facility investment, maintenance services and energy management monitoring for such facilities. The ESCO program started with registration of 4 companies in 1992, but the number of registered ESCOs amounted to 235 as of ESCOs focus mainly on high efficiency lighting, waste heat recovery, heating and cooling systems, and process improvement. Combining the advantages of the Shared Savings Model with those of the Guaranteed Savings Model is New Shared Savings Model. It was introduced as a new contract model in February KRW 29,571 million 139 cases Amount of investment & the number of cases in ESCO * USD 1 KRW 1,100 KRW 285,390 million 202 cases Investment During the introduction stage of the ESCO program from 1993 to 1997, the average annual investment amounted to KRW 3,687 million. Thanks to vigorous support from the government, annual investment has been increasing since In 1998, investment reached KRW 29,571 million over 139 cases. By 2011, the investment had risen to KRW 285,390 million for 202 cases. Investment of ESCOs had been limited to Combined Heat and Power (CHP) facilities and high efficiency lighting systems until 1997, but from 1998 it diversified to include such areas as waste heat recovery facilities; cooling and heating systems; and process improvement. Government The government s provision of low interest loans has produced a steady increase in ESCO investment. In an attempt to ease the burden of ESCOs, the government also introduced the The shared savings model financial support programs such as mortgages or factoring systems and provides tax credits for energy users who install energy-saving facilities under the Restriction of Special Taxation Energy users 1.Shared savings contract 4. Requesting loans ESCOS Financial institutions 5. Loans 2. Requesting recommendations 3. Publishing recommendations KEMCO Energy Audit Program Indusry Energy Management Department +82-(0) Over 2,000 TOE less than 1,000 TOE Act. Korea s Energy Audit Policy Energy-intensive companies whose annual energy consumption is over 2,000 TOE are required to submit energy audits report to KEMCO pursuant to the Article 32 of the Rational Energy Utilization Act. Small businesses consuming less than 10,000 TOE of energy annually are subsidized for 90% of the energy audit fees by the government.

17 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Energy Audit Benefits of Energy Audit Energy audit is an essential tool in the effective control of energy costs. Energy audit includes detailed evaluations of a firm s energy efficiency, technical and economical analyses of its energy facilities, and recommendations for energy conservation measures that include changes in operating practices or equipment in order to reduce energy bills. Financial benefits from reducing operating costs and increasing profits Efficient management of facilities and buildings; and improvement of productivity and safety Easing of the environmental pollution burden, by reducing CO 2 emissions Workflow of the energy audit Energy Audit by Energy Audit Companies EIC 1. Notice 2. Application 3. Audit contract & Notice schedule MKE EAC EIC: Energy-Intensive Company EAC: Energy Audit Company MKE: Ministry of Knowledge Economy KEMCO: Korea Energy Management Corporation There are 83 agencies operating in Korea, including KEMCO, which are qualified to conduct energy audits. Each of them has energy professionals and/or engineers with rich expertise and experience. 4. Field Audit Energy Audit Activities in Post-audit Activities KEMCO The energy audit agencies carried out audits on 469 entities in The results demonstrated an energy-saving potential of 438,800 TOE/year (4.7% of total energy Report Report 5. Documentation and Report 27.3 times Cost-effectiveness of energy audits (Energy Saving Potential / Audit Fee) consumption). While energy audit fees paid to energy auditors were about USD 9,585,000 in 2011, the energy savings potential amounted to about USD 261,745,000 or 27.3 times the audit fees. The estimated total investment costs required for improvements are USD 558,170,000 with a 2.1 year payback period. As the CO 2 reduction potential was 1,080,153 STEP 1 l Notice KEMCO notifies energy-intensive companies that are subject to energy audits of the requirements for application by the end of August prior to the year when the audit is undertaken. 2.1year A payback period of energy audits tco 2 /year, the national energy audit program is expected to help Korea to comply the stipulations of the UNFCCC. STEP 2 l Application A company subject to an energy audit must file for audit to an energy audit company, three months before the end of its audit period. Key indicators Total Energy Consumption of EIC in 2010 ( TOE/yr) 9,372,395 Total Energy Savings Potential ( TOE/yr) 438,800 STEP 3 l Audit Contract & Notice of Schedule The audit company notifies the applicant company of the audit schedule, scope of work and the audit contract one week prior to the commencement of the inspections. Savings Rate (%) 4.7 Saving Cost Potential (KRW mil./yr) 261,745 Investment Cost (KRW mil.) 558,170 STEP 4 l Field Audit The audit company inspects the facilities, processes, and operating conditions of the company to determine energy-loss factors and areas for improvement. Payback Period (yr) 2.1 CO 2 Reduction Potential (tco 2 /yr) 1,080,153 No. of improvements (Case) 4,072 STEP 5 l Documentation and Report The audit company submits a report on areas for improvement, and a feasibility study to the company. * USD 1= KRW 1, The number of energy audit agencies 469 The number of carried out audits in 2011 STEP 6 l Post-Audit Activities The audit company provides the applicant company with technical advice and support to implement proposals. 438,800 Enengy saving potential of total energy consumption

18 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Results by Industry The chemical engineering industry demonstrated the largest energy saving potential, at 148,128 TOE/yr. The second largest potential was presented by the metalworking industry at 118,489 TOE/yr. Potential energy saving & CO 2 reduction Potential Energy Saving(TOE/yr) 175,000 Potential Energy Saving(toe/y)Total Potential CO 2 Reduction(ton2/y) 417, , , , , , , , , , , ,000 75, , ,000 50,000 35,233 43,993 44, , , ,188 25,000 58, ,344 50,000 11,778 24,046 8,927 18, Building Metal Misc Fiber Food Ceramic Paper Chemical Potential CO 2 Reduction(tCO 2 /yr) Building Codes in Korea - Building Design Criteria for Energy Saving Building Codes The Ministry of Land, Transport and Maritime Affairs (MLTM) developed the building energy codes. Local government building officials execute the codes as part of the building permit process for new buildings. In order to obtain a building permit, the property owner must fill out an energy-saving worksheet and submit it to the local government office. The worksheet should be signed by three licensed professionals: an architect, a mechanical engineer and an electrical engineer. The energy-saving worksheet will be reviewed by KEMCO at the request of the permit authority. Building design criteria for energy saving Apartment / condominium buildings Public bathhouses / swimming pools Hotels / motels / hospitals / dormitories m2 and larger 2,000 m2 and larger Building Sector Education / research / office buildings 3,000 m2 and larger Building Energy Efficiency Certification Program Green Building and Transportation Center +82-(0) The Building Energy Efficiency Certification program encourages energy efficiency in new apartments and office buildings. This program was launched for new apartments in 2011 and has since been expanded to include new office buildings. A total of 541 apartment complexes and 395,887 households and 201 office buildings were certified as highly energy efficient buildings between 2001 and The government offers incentives for certified buildings, such as easing building regulations and reducing acquisition and property taxes. Summary of building energy efficiency certification program 105,982 47,785 No. of households 42,977 98,702 72,852 APT 395,887 The design standards divide into four main sections: Construction Design, Machinery Design, Electric Facility Design and Renewable Energy Facility Design. Each section defines mandatory items and recommended items. Each building must satisfy all mandatory items and get at least 60 points for the recommended items (74 points for public buildings). Wholesale / retail stores (e.g. department stores) Theaters / concert halls / town halls and religious buildings 3,000 m2 and larger 10,000 m2 and larger No. of Apt complex No. of Office bldgs Total (2001~2011)

19 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Performance Evaluation of Eco-friendly Houses The Performance Evaluation of Eco-friendly Houses was developed by the MLTM. This is a mandatory regulation for the construction of eco-friendly houses. The property owner who intends to build a residential housing complex with more than 20 units must observe this standard. This tightens up the criteria of side walls, exterior walls and windows. Also, it contains eight mandatory elements including: airtight windows and doors, high efficiency equipment (1st grade energy efficiency appliance), automatic standby power cutoff they must submit specific plans for achieving energy-saving and GHG emissions reduction targets. Under this program, building owners set their own targets and try to achieve them. The government will assist subject entities efforts to achieve their targets by providing incentives and imposing penalties. apparatus and etc. Criteria for designating subject entities Less than 60m 2 Performance Standard Over 15% reduction of total energy consumption Over 60m 2 Performance Standard Over 20% reduction of total energy consumption Section by Dec from Jan from Jan entity work place entity work place entity work place GHG (tco 2 ) 125,000 25,000 87,500 20,000 50,000 15,000 Energy (TJ) Art.29 of Enforcement Decree of Framework Act on Low Carbon, Green Growth (Apr.13, 2010) / 1TJ (Terajoule) = 23.88TOE Construction Standard Enhance U-value of windows over 19% and wall over 17% Standards and Performance of Eco-friendly Houses Construction Standard Enhance U-value of windows over 33% and wall over 17% Energy Saving in Public Institutions Although energy consumption of the public sector is relatively low (2.3%), public institutions have taken the lead in efforts to save energy nationwide. Energy consumption by sector in 2010 (Million TOE, %) This standard has been enforced since KEMCO reviews whether the standard has been applied. It has reviewed a total of 654 apartment complexes and 311,035 households from 2009 to , ,428 58,503 No. of households , Building 36.9 (19.1%) Transportation 37.3 (19.2%) Total Public, etc 4.5 (2.3%) Industry (59.4%) According to the Guideline of rational energy use in public institutions, all institutions should No. of apartment complexes Total promote energy saving by means of: Energy target management in the public sector Mandatory participation in the building energy efficiency certification program Building Energy Target Setting MLTM manages the Building Energy Target Setting (BETS), a joint program between the government and building owners. Mandatory acquisition of the eco-friendly building standard certification Mandatory energy audit (10,000 m2 or larger) Reinforcing reference temperatures in air conditioned zones The purpose of BETS is to reduce energy consumption and to mitigate greenhouse gas emissions. Forty entities were designated as subject entities. Buildings that emit GHG or consume energy more than a certain level are mandated to participate, and (Heating: or below, Cooling or higher) KEMCO and the government conduct a joint inspection of energy consumption on public institutions twice a year.

20 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Transportation Sector Fuel Economy and Labeling Program of Vehicles Green Building and Transportation Center +82-(0) ~4 The Fuel Economy and Labeling Program promotes development of fuel economy vehicles and encourages consumers to purchase them. KEMCO is conducting market research, managing the manufacturers and importers, and providing consumers with information about such vehicles. The program covers light-duty vehicles, vans carrying 15 passengers or less, subcompact cars and small trucks which use gasoline, LPG and diesel. Vehicle manufacturers 13.4 km/l The average fuel efficiency of passenger cars sold in km/l, 140g/km (CO 2 ) 100% of sold vehicles The average fuel economy of passenger cars sold in 2011 was 13.4 km/l, up by 4.1% compared to It was due to the increased sales of sub-compact cars and compact cars, resulting from oil prices increases and continuous technological advancements. Annual Fuel Efficiency 13.4km/l 12.87km/l 12.27km/l 11.47km/l 11.04km/l 10.50km/l 10.69km/l 10.76km/l attach labels to vehicles with information about fuel economy and mileage on the back or side window, so that consumers can be informed about efficient vehicles. Furthermore, % of sold vehicles Grade 1 The most efficient vehicles Grade 5 The least efficient vehicles manufacturers are required to indicate the vehicle s specifications and fuel economy and grade when they advertise the vehicles in newspapers, magazines and websites. On the label is the energy efficiency grade and fuel economy. Since 2012, fuel economy of both city mode and highway mode has been indicated. The fuel economy grade system has applied uniform criteria regardless of the size of a car. The most efficient vehicles are given Grade1 and the least efficient vehicles Grade5. CO 2 emissions (g/km) level is also indicated so that consumers can consider both economic feasibility and the environmental effects when they buy a vehicle. Fuel efficiency ;abels AFE Target by % of sold vehicles 30% of sold vehicles Tire Efficiency Standards and Labeling Program The Ministry of Knowledge Economy (MKE) and KEMCO established new criteria for fuel economy and greenhouse gas emissions. And phase in the new standard of fuel economy (17km/l), CO 2 emissions (140g/km) is planned to phase in from 2012 to Tire accounts for 4% to 7% of automotive fuel consumption. Therefore, energy efficiency standard and measures for tires are necessary to effectively reduce energy consumption in the transportation sector. KEMCO plans to implement the Tire Efficiency Standards and Labeling Program so that it can promote development, sales, and purchase of low-rolling resistance tires. Under this program, tire manufacturers are required to indicate the efficiency of their tires. KEMCO is also conducting market research and providing consumers with information about tire Average Fuel Economy (AFE) Program The Average Fuel Economy Program requires vehicle manufacturers to comply with the standard fuel economy set by the Korean government. (Standard fuel economy = Total fuel economy/ No. of cars sold). If the manufacturers fail to meet the AFE standard, the Korean efficiency. As of now, tire manufacturers and importers indicate the grade of tire efficiency voluntarily but they will be required to indicate a tire-efficiency grade starting from the second half of government can issue an enforcement notice to the manufacturers to improve their fuel From 2013, the program will be expanded to cover tires on small trucks as well. economy. The AFE standard is shown below. AFE standard Below 1,600cc Above 1,600cc 12.4 km/l 9.6 km/l 17 km/l, 140g/km (CO 2 ) 9.6 km/l 17 km/l, 140g/km (CO 2 )

21 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Green & Smart Transportation Partnership Recently, the Korean government has put a high priority on energy efficiency and greenhouse-gas emissions reduction for freight transportation. Keeping up with the government s efforts, KEMCO is implementing Green & Smart Transportation Partnership through voluntary agreements with participants such as freight shippers, carriers Energy efficiency grade label Energy efficiency rating Energy efficiency grade and logistics companies. This partnership is to promote exchange of information and Monthly arerage energy consumption per(kwh/mon) technologies between participants, to identify energy-saving measures, and to support the implementation of those measures in the freight transportation sector. Annual Energy Expense CO 2 emissions(g/h) Appliance & Equipment Sector Energy Standards and Labeling Program Energy Efficiency Standardization & Certification Center +82-(0) Since 2010, KEMCO and 24 companies from various industries have signed the MOUs and carried out pilot programs for the Green & Smart Transportation Partnership. Over the last three years, participating companies assessed their current freight operations; calculated fuel consumption and GHG emissions; and identified technologies and strategies to improve fuel efficiency and reduce carbon emissions based on MRV methodology. Based on the pilot projects, KEMCO is doing its best to develop advanced MRV methodologies and discover energy-saving measures, reflecting the opinions of the industry. KEMCO also plans to include more companies in order to expand the scope of collaboration and exchange of information about energy-saving technology and verification methods. Korea s Energy Efficiency Programs for the promotion of energy-efficient products consist of the Energy Standards and Labeling Program, the High-efficiency Appliances Certification Program, and the e-standby Program. Under the mandatory Energy Standards and Labeling Program, manufacturers and importers report the energy efficiency of target products to KEMCO and attach an Energy Efficiency Grade Label (indicating grade from 1 to 5) on their products. Additionally, products that fail High-efficiency Appliances Certification Program 30 Items to meet required Minimum Energy Performance Standards (MEPS) cannot be sold in Korea. KEMCO applies the Energy Efficiency Grade Label to 20 items and the Energy Efficiency 36 Items Label to 10 items, including ballasts for fluorescent lamps, three-phase induction motors, High-efficiency adapters & chargers, transformers, electric fan heaters, electric stoves, electric pads, Equipment CertificationProgram Energy Standards & Labeling Program electrically heated water mats, electric heating boards, electric beds, and electric radiators. Improving the Energy efficiency grade label program and indicating CO 2 emissions & annual energy expenses KEMCO developed new labels in 2007 to satisfy consumers needs and integrate temporary labels and they were adopted in The new labels are designed to be more aesthetically pleasing as well as more consumer-friendly. An energy-efficiency grade label not only indicates energy consumption and energy efficiency levels, but also will contribute to raising the energy efficiency of households and industrial equipment. In particular, it will pave the way for the government to establish policy guidelines and strategies as it joins the international efforts such as GHG emission trading. The High-efficiency Appliances Certification Program certifies products for industry and buildings as high-efficiency appliances, where the energy efficiency and quality test results are above the certification standards set by the government. 36 items, including pumps, sensor lighting equipment, LED lamps, etc, have been certified as high-efficiency appliances. It is a voluntary scheme operated by MKE and KEMCO under the Rational Energy Utilization Act and the Regulation on Promotion and Dissemination of High-efficiency Appliances. For example, the energy efficiency improvement of refrigerators is a success story. As shown in the table below, refrigerators annual energy consumption decreased from 1,750 kwh/ L(1996) to 0.719kWh/L (2010), over 59% in 14 years. The purpose of the High Efficiency Appliances Certification Program is to sort out the products that perform above certain standards. Certified products may bear the Highefficiency Equipment Label after acquiring high-efficiency appliances certifications issued by KEMCO.

22 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation e-standby Program 22 Items The e-standby Program aims to promote the widespread use of energy saving products that reduce standby power consumption. The products that meet the energy saving standards presented by the government are entitled to bear the Energy Saving Label ( Energy Boy ). This program is intended for 22 office appliances and home electronic appliances. Standby power 1W policy tools Policy Tools MEPS Warning label 1st Grade label Programs Energy Standards and Labeling Program (EPS only) e-standby Program Energy Standards and Labeling Program e-satandby Program Introduction of mandatory standby power warning labels Labels or Three stages The e-standby Program is managed according to the long-term roadmap called Standby Korea 2010, which includes three stages of the 1W initiative to reduce standby power Standards 0.5W (No load mode) 1W (Off or passive standby mode) 1W (Off or passive standby mode) Voluntary 1W Policy usage to below 1W by The first stage is the Voluntary 1W Policy spanning from 2005 to 2007, under which manufacturers were encouraged to adopt the standards voluntarily. The second stage is the Preparation for the Transition to Mandatory 1W Policy from 2008 The total annual standby power decreased 25% (1,130 GWh/year). The total standby power decreased from 4,600GWh/year in 2003 to 3,470GWh/year in Preparation for Transition to a Mandatory 1W Policy Mandatory 1W Policy to 2009, when manufacturers were obliged to prepare to adopt the standards. In 2010, the Mandatory 1W Policy was implemented as the final stage. Under Standby Korea 2010, the Standby Power Warning Label became a part of the e-standby Program on August 28, Every domestic manufacturer and importer of subject products of the Standby Warning Label Program must report their products standby Rebate & Incentive Programs for High-efficiency Products In order to facilitate the market of high-efficiency electric products, KEMCO and KEPCO offer four kinds of incentives to end-users. These programs cover high-efficiency electric lighting, inverters electric transformers and coolers. Registration and application for the incentives can be made at power usage to KEMCO after product testing and attach the Standby Power Warning Label on products that fail to meet the standards. High-efficiency Lighting: KEPCO provides subsidies to those who install high-efficiency lighting and saved power by 1 kilowatt or more. The High-efficiency Certification Program for Lighting has been carried out since 1993 with strict inspections and measurements by certification institutes (e.g., the Korean Institute of Lighting Technology). High-efficiency Inverters: This program is designed to improve the energy efficiency of motors, which account for 60 % of total power consumption. End-users can save electricity costs by using an inverter which controls the motor speed by changing frequency and voltage. (High efficiency inverters can save an average of 34% of electricity.) Standby Power Warning Label Energy Saving Label: Energy Boy Label High-efficiency Electric Transformers: KEPCO provides subsidies to those who install 3-phase electric transformers (100kVA to 3,000kVA). High-efficiency Coolers: KEPCO provides subsidies to those who installed high-efficiency electric coolers (centrifugal screw water coolers).

23 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Infrastructure for Low Energy Consuming Society Energy Utility Demand Side Management Investment Plan Indusry Energy Management Department +82-(0) Under the Rational Energy Utilization Act, energy suppliers designated by the presidential decree* shall establish and implement annual demand-side management investment plans to increase energy efficiency in production, transformation, transportation, storage and usage of energy and to reduce demand and greenhouse gas emissions. Energy utilities shall submit the demand-side management investment plans to the Ministry of Knowledge Economy as well as modifications of the plans. Energy suppliers designated by the presidential decree: Korea Electric Power Corporation, Korea Gas KEMCO, which assists in the administration of energy utility DSM, evaluates the report of plans and results of energy utility DSM, and organizes DSM committee. KEMCO makes continuous efforts to promote investment of energy utilities into DSM programs. Structure of energy suppliers DSM program Ministry of Knowledge Economy KEMCO(Project Managemnt, Evaluation, etc) Corporation, Korea District Heat Corporation History of energy utilities DSM Date Changes Electricity Gas Heat Third party KEPCO KOGAS KDHC Jan Energy Utility DSM investment plan was newly established. (Rational Energy Utilization Act) - KEPCO (electricity),kogas (gas), KDHC (heat) were appointed to establish DSM investment plans Jun.2001 Electricity DSM began to be conducted separately by Electricity Industry Basis Fund Promotion of Integrated Energy Supply Background of Integrated Energy Systems (IES) Industrial Complex Integrated Energy (formerly known as Industrial Complex Combined Heat and Power ) was first introduced to the Ulsan petro-chemical industrial complex in The District Heating and Cooling (DHC) system was first introduced to Korea in 1983 Sep.2002 KEPCO was excluded from DSM investment plans after the privatization in the Mokdong district of Seoul. Mokdong Integrated Energy Supply Facility Aug.2008 KEPCO was re-designated as an entity to establish DSM investment plans Characteristics of IES in Korea: Unlike relatively small DHC projects in other countries, the Mokdong project provides services to a massive residential area, attaining huge economies of scale. DSM investment budget of energy suppliers (KRW 100million) The main focus of the IES project is the public interest rather than profitability. Sum 214, , , , , ,402 1,284,225 After obtaining governmental permission and completing registration, any business can participate as an IES supplier. KDHC 5,721 6,516 4,855 5,605 8,541 8,114 39,352 KOGAS 102,599 88,535 84, , ,567 94, , ,939 KEPCO 105, ,296 84,025 91, , , Total

24 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Definition of Integrated Energy Supply Business Current Status of Integrated Energy Supply in Korea IES Integrated Energy Supply District Heating & Cooling (DHC) Energy Supply Industrial Complex Integrated Energy Supply An integrated energy supply business is a combined heat and power (CHP) or large-scale heat generation facility equipped with co-generation equipment or pollution-prevention facilities and supplies generated energy (heat or heat/electricity) to multiple users such as apartment buildings, business and commercial facilities and industrial complexes. Classifications Integrated Energy Supply (IES) can be divided into: As of the end of 2011, 23 district heating businesses provided heating services to 2.07 million households in 42 districts, representing approximately 13.7% of total households. This project is different from those in other countries where a small number of suppliers provide services to massive areas. As of the end of 2011, 25 companies supplied heat and power to 26 industrial complexes. Distribution of integrated energy to households Community Energy Systems (CES). Process of Integrated Energy Supply Reviewing integrated energy supply technology & operating committees NO. of Households(Thousand) 2,072 Feasibility Study for integrated energy supply business Review of Business Plans of integrated energy supply Selection of Operating Agent for business Review of Engineering Plans of integrated energy supply Advisory Committee selects districts for IES Technology Advisory Committee *Operated in competition Benefits of Integrated Energy Supply The benefits of IES are as follows: Energy conservation: Compared with existing methods (heat-only boiler, steam power generation), co-generation system reduces energy consumption by improving energy utilization efficiency (by 20% ~ 30%). Air Pollutant (SOx, NOx, dust) and CO 2 emissions reduction: IES improves the environment by reducing fuel and installing anti-pollution facilities. Air Pollutants Reduction 30% CO 2 Reduction 26% Future Prospects With the Integrated Energy Supply Project implemented on a massive scale, the heating and cooling needs of residential areas has been addressed in environmentally friendly way. In addition, manufacturers in industrial complexes have been able to enhance competitiveness by lowering production costs. To promote IES, diverse measures have been taken, including the abolition of fuel regulations for IES, the business diversification by utilizing waste incineration heat, and the expansion of direct electricity sale. SOx; 36,900 SOx; 25,178 CO 2 ; CO 2 ; NOx; 54,729 7,773,122 5,770,712 NOx; 40,248 Dust; 6,007 Dust; 3,069 Existing methods CHP Existing methods CHP Existing methods use the heat-only boiler and steam power generation

25 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation The Consultation for Energy Use Plan The goal of the Consultation of Energy Use Plan is to realize a low-energy consumption society, under the Energy Use Rationalization Act. A private or public superintendent of a project who has a plan to start a high-energy use business or who is currently operating such a business is obliged to establish and implement an energy use plan and consult with the government (Ministry of Knowledge Economy), prior to the business implementation or construction. Main contents of the Consultation for Energy Use Plan Procedure for consultation Complete Plan A project superintendent Submit Plan MKE If necessary Request Modification or Supplementation Energy demand forecast: Predicting energy demand by department and by use for 10 years after the completion of an installation Energy supply plan : Examining feasibility of Integrated Energy Supply Measures for improving energy efficiency and reducing CO 2 emissions: Pre-review and evaluation Request review KEMCO (Evaluation Committee) - Measures for efficient land use and facility management - Energy load leveling measures and resulting effect analysis Notify consultation results - Examining feasibility of introducing high energy efficient equipment - Plans for collecting and utilizing waste heat, including incineration heat - Plans for renewable energy uses and CO 2 emissions reduction Recommendation A private project superintendent Request Public superintendent of project Submit action plan and related document for facility design. MKE Analysis of the effect of energy use and impact on the supply system - Analyzing the effect of energy use and impact on the energy supply system Start construction Start construction Perform post management KEMCO - Analyzing energy intensity for entire business and by department and by use Plans for follow-up energy management Consultation Subject Categories Business: Total of 8 business categories, including urban development, industrial complex development, energy development, railroad construction development, harbor construction development, airport construction development, tourism complex construction development, development facilitation Facility: Buildings and facilities (e.g. plants) over a certain size Achievements of the consultation system Established improvement measures for consultation to increase the fulfillment rates - Expanded the program to include more companies subject to post-management, (2010 to 2011) field inspections for post-management carried out from 2001 to Reinforced the evaluation committee on Energy Use Plan consultation (2011) - Restructuring the evaluation committee to strengthen expertise and evaluation consistency. - Hosting workshops for the evaluation committee and planning agencies and publishing data.

26 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Completed consultation by category (by number) Planned amount of energy use (1,000 toe/year) ,776 1, , Total 22, , Completed consultation (case) Urban Tourism Industry Facility Energy Railroad Harbor Category Urban Tourism Industrial Complexes Energy Development Railroad Construction Harbor Construction Airport Construction Facility Total Planned amount of energy use (1,000 toe/year) Savings potential (1,000 toe/year) ,363 2, , ,914 1, ,743 1, ,362 1, ,952 1, ,583 1, ,495 1, ,304 3, ,315 3,304 Total ,562 18,937 Ratio (%) (30%) 0.2(13%) 886(15.3%) 2, (17.4%) 3,304.2(14.8%) Total 8,044 1,837 3, (32.3%) Energy Use Reporting System Policy & IT Department +82-(0) Facilities, consumers or other entities that consume energy over a standard amount (more than 2,000 TOE) shall submit a report on the amount of energy used by January 31. KEMCO is collecting various data from those reports, such as annual energy consumption, energy conservation status, type of buildings and energy consumption by product. Based on the data, KEMCO takes stock of the current status and develops energy efficiency policies. The number of energy intensive companies has constantly increased and their energy consumption levels are as follows. Energy consumption by sector GHG reduction potential (1,000 tco 2 /year) Achievements of energy use plans Expected savings (%) Savings potential (1,000 toe/year) Planned amount of energy use(1,000 toe/year) Completed consultation (case) ,866 11, ,172 8, ,247(10.4%) ,900 11, ,410 19, ,304 19, Savings potential (1,000 toe/year) /Expected saving effect (%) ,937 19, Steel Chemical etc Ceramic Paper-Wood Food Textile Total( 93~ 11) 0 Apartment Department Store University Common Use Hospital Hotel Laboratory Public etc Telephone Office

27 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Financial Assistance toward Energy Efficiency Investment Financial Support Department +82-(0) /8 Financial Assistance toward Energy Efficiency investment Investment into energy-saving facilities and R&D for energy technologies requires significant amounts of funds and it may not be useful for manufacturers at the moment. Furthermore, small/medium enterprises might lack access to bank credit. Recognizing this, the government provides preferential long-term loans and/or various tax incentives to encourage voluntary participation in energy efficiency and conservation investments. The Korean government has provided long-term and low-interest rate loans from the Rational Energy Utilization Fund (hereinafter referred to as the Fund ), along with tax incentives, for energy efficiency and conservation investments. KEMCO is in charge of the fund s management and monitoring. Types of Projects Eligible for Loans The Fund provides long-term and low-interest rate loans to support various types of projects, which include the replacement of obsolete boilers, investment in heat-pumps, LED lighting systems, waste heat recovery facilities, ESCO for industrial factories and large buildings Rational energy utilization fund assistance (Unit: billion KRW) Project Limit Period Amount Design and construction supervision (including expenses for the introduction of technology) and; Test-runs of facilities. The loans do not cover VATs or expenses for land purchases or construction expenses which do not contain indispensable structures for installing facilities in question. Loan coverage for large enterprises is up to 80% of required funds per application, and up to 100% for small and medium enterprises. Tax Incentives The government provides tax incentives for energy efficiency investments. The following cases of retrofits or installations of facilities and equipment qualified for a 10% income tax credit until December 31, Cases eligible for tax credits: Rational Energy Utilization facilities. - Energy-saving facilities for industry and buildings. - Demand-side management facilities for electric power. - Appliances that are certified as high-efficiency products. Installation of new and renewable energy facilities. 1. Investment into ESCO 30 Repayment over 7 years with a 3-year grace period Other facilities that contribute to reducing energy consumption by 10 percent or more. 2. Investment into GHGs & Energy Target Management 15 USD 1 KRW 1, Installation of energy saving facilities Production line installation 3-2. Investment into DSM facilities 0.5 Repayment over 5 years with a 3-year grace period Total Public Relations on Energy Saving and Climate Change Public Relations Department +82-(0) KEMCO is making efforts to create a high efficiency and low-carbon energy society together with the people, responding to Korea s new paradigm for sustainable development Low Carbon Green Growth. We are also actively engaged in a variety of activities to inform the public about the importance of saving energy and how energy can be conserved in our daily lives. KRW billion Fund for Energy Efficiency Investment The Fund mainly comes from the government s budget called the Special Accounts for Energy & Resources. In recent years, demand for the Fund has been rapidly increasing because of high oil prices and KEMCO provided KRW billion in Coverage of Loans The loans are confined to cover the expenses necessary for: Purchase of facilities and incidental equipment; Installations and retrofits; Energy Saving Exhibition Korea Energy Show (formerly ENCONEX) The Korea Energy Show is a unique exhibition that aims to promote the marketing of energyefficient products and the exchange of the latest energy-saving ideas and technologies. The Korea Energy Show 2011 was held in conjunction with the international renewable energy

28 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation ,000 The number of annual visitors of KEMCO s energy conservation exhibition centers exhibition Renewable Energy Korea The Korean Energy Show 2011 attracted exhibits from 247 energy-related companies and drew about 29,000 visitors. During the exhibition, 265 foreign buyers from 11 countries and 22 foreign companies participated, promoting the export of domestic products through consultation sessions. Energy Conservation Exhibition Center KEMCO established several exhibition centers dedicated to energy saving, climate-change mitigation, and efficient use of energy resources. They feature a variety of exhibits such as highly efficient energy products (appliances), green homes model houses, and miniatures of new and renewable energy systems. The exhibition centers were popular among energy managers, students and local residents for educational purposes. The Energy Conservation Exhibition Center (Green Energy Experience Hall) is located next to KEMCO s head office in Suji-gu, Yongin City, Gyeonggi Province. About 60,000 visit the center every year. Other main exhibition centers are located in Daejeon, Gwangju and Daegu. A total of about 60,000 visit the centers every year. Energy conservation program with NGOs aims to spread the voluntary energy saving movement and form a national consensus about energy saving. This program is intended to spread energy-saving measures and green lifestyle based on citizen participation and private networks, through business competition and financial support. Private organizations, selected by KEMCO after strict inspection, perform various energy-saving events and campaigns. In addition to the above campaign, KEMCO has been operating a portal site about electricity-saving to cope with the electricity supply crisis. The portal site ( or.kr) provides ideas and data related to saving electricity. Also, KEMCO produces and disseminates various energy-saving products and promotional materials to increase the awareness of energy saving and participation of the people. Promotion materials for Energy Conservation Energy Saving Campaign Energy Saving Campaign of KEMCO is not a one-way information delivery program. It is a life-based energy conservation program that allows and encourages businesses, NGOs, public agencies, and the general public to participate directly in energy conservation. All entities related to green living voluntarily participate in energy conservation and practice Low carbon Green living throughout the daily life. Energy (-) Love (+) Energy Minus (-), Love Plus (+) Energy (-), Love (+) is one of the well-known energy saving campaigns in Korea. The campaign has two purposes: one is to lower the peak load in the summer, and the other is to help low-income families who lack sufficient heating fuel in the winter accomplished a reduction of 70,206 MWh of electricity and 31,614 tco 2 of carbon emissions, and the campaign made a donation of KRW 450 million. The money was donated under the name of participants to Bank of Briquette and Children s Foundation to help those in need of heating energy in winter. Posters & Leaflets Energy Saving Competition The Energy Saving Competition is held annually to introduce creative ideas from Korean people. Ideas or works found through the competition will be promoted through various media. Above all, the Energy Saving Competition has great significance in that it naturally encourages people to participate in energy saving.

29 Energy Efficiency and Conservation Imrpovements Korea Energy Management Corporation Mass Communication PR To enhance public recognition, KEMCO carries out diverse mass communication PR activities such as feature articles, news and reports for TV, radio and newspapers. The agency also produces seasonal or TV campaigns. PR materials such as posters, stickers and leaflets have been distributed to companies, schools and public institutions. Training and Education Global Energy Education Center +82-(0) ~7 KEMCO offers various training and educational programs for energy managers and others who are interested in energy saving. In particular, KEMCO focuses on training experts in climate change mitigation and early education programs for students who will become the main energy consumers in the near future. Educational and Training Programs Type of Course Description Target Legal Education Course for Energy Managers For energy managers of companies that consume more than 2,000 TOE of energy per year, this course focuses on how to use energy more efficiently. Energy Saving TV Commercial Documentary Between Energy Saving and Blackout Capacity Building Course This course aims at building professional capacity. After the course, certification is issued for operators of small-sized boilers and pressure vessels or gas boilers. The three-day course focuses on various subjects, such as the structure and operation of boilers and pressure vessels, fundamentals of boiler management, and fuel and combustion controls. New Communication Media PR KEMCO is working on promotion not only via traditional media such as TV, newspaper and radio but also Social Network Services (SNS) such as Facebook and Twitter. These new media make it possible to improve two-way communications between the government and public. Education for Regional Energy Planning Officials Education Courses for Industrial Sector The main topics of this program are regional energy planning guidelines and energy-saving policies. Multiple courses are offered, including courses on GHG verifiers, climate change, energy-saving in industry or private buildings for corporate GHG managers, and a course on efficient energy management for energy suppliers. The agency also sends real-time electricity data to electronic displays installed in areas with large floating populations, such as subway platforms, apartment elevators, KTX stations. The displays encourage people to voluntarily participate in energy conservation. Early Education KEMCO offers early education courses for children and teenagers to create a responsible energy culture and help them to understand the seriousness of climate change. As part of these activities, KEMCO organized the Energy Curriculum Research Society which works to get basic energy information included in school textbooks. 388 Some 388 elementary and junior high schools are working with KEMCO in early energy education. Thirty-six schools were designated as Schools for Energy Policy Research and schools involved with KEMCO in early education other 1,060 were designated as SESE Nara In addition to providing financial assistance to these schools, KEMCO offers educational aids, such as books and other related materials, SNS Real-time Electricity supply & demand clock for early education on energy issues. KEMCO also has many programs developed to increase interest in energy among children. The Energy Love Contest is an annual event in which students are invited to submit their creations, such as user-created contents, essays and songs. The Energy Love Camp aims to encourage children to adopt energy-saving attitudes in their everyday lives.

30 Energy Efficiency and Conservation Imrpovements SESE Nara (*Nara means Republic ) 1,060 SESE Nara 17,000 members SESE stands for Save Energy Save Earth. KEMCO organized SESE Nara as a boy- and girl- scouts program, where children and teenagers who are interested in energy saving and climate change can participate in various performances of energy saving. Since last year, more than 1,060 SESE Nara groups with 17,000 members have done a variety of energy-saving practices at home, in schools and in communities. To save the earth with SESE Nara, become a member on the SESE Nara website ( Energy Classes on the Internet KEMCO developed the educational website Energy Classes ( for students who are interested in the subject of energy. It contains numerous educational materials to help students understand energy issues through comics, animations, and computer games. The newly redesigned website holds several regular events, and records more than 100,000 visits each year. Online Energy-Saving Education Last year KEMCO published on-line educational lectures aimed at helping students and adults better understand energy. SESE NARA manual & leaflet Textbooks for energy saving Animation Coco-mong

31 Save Energy Save Earth 388 Poeundaero, Suji-Gu, Yongin-Si, Gyeonggi-Do, Republic of Korea (Zip code: ) Tel Climate Change Mitigation & GHG Emission Reduction 03

32 Korea Energy Management Corporation Climate Change Mitigation & GHG Emission Reduction Contents Introduction Energy Efficiency and Conservation Imrpovements Climate Change Mitigation & GHG Emission Reduction 06 Domestic Emissions Trading Pilot Project 07 GHG Certification Service 09 Korean Voluntary Emission Reduction Program (KVER) 11 International Cooperation Programs 16 Development of GHG Emission Inventory System 16 Constructing and Analyzing Energy and GHG-related Data Base 16 Development of Country-specific (Korea) Emission Factor 17 Carbon Neutral Program 18 Carbon Cashbag New and Renewable Energy Promotion

33 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation million tco 2 GHG Emissions Domestic Emissions Trading Pilot Project 15,000 KRW/ tco 2 Investment in NRE system : 4,451 participants 15,000 KRW/ tco 2 Investment in carbon sink projects : 78 Total participants Carbon Neutral KVER 717 The number of Certified Projects CDM project Linking to investors Capacity Building 50 Validation & Verification of CDM Projects Low-carbon products / shops 12 million tco The number of Registerd Projects

34 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation 6 7 Domestic Emissions Trading Pilot Project Climate change Cooperation Department +82-(0) This pilot project aims to provide Korean industries and power sectors with opportunities to accumulate experience in emissions trading before the implementation of the national emissions trading scheme in In particular, KEMCO provides a web-based trading platform for online simulated trading, using cyber money to minimize the burden of the project participants. Also, KEMCO aims at enhancing the effectiveness of the domestic emissions trading pilot project by rewarding high-performance companies. GHG Certification Service GHG Certification Office +82-(0) CDM Certification Service The Clean Development Mechanism (CDM) was established under Article 12 of the Kyoto Protocol. It allows Annex I countries(mainly developed countries) to invest in GHG reduction projects in non-annex I countries(mainly developing countries) to create Certified Emission Reductions (CERs) which can be used to achieve their compliance obligations under the Kyoto Protocol. CDM offers mutual benefits to both Annex I and non-annex I Parties. Annex I Parties can minimize GHG reduction costs by implementing CDM projects in non- Annex I parties. On the other hand, non-annex I Parties can attract foreign investments 78 Total participants 333 million tco 2 GHG Emissions of the participants Overview of Domestic Emissions Trading Pilot Project Phase I (2011) Participating Companies Total Players GHG Emissions of Total Players (A) GHG Emissions of Industry Sector (B) Ratio (A/B) MtC MtC0 2 78% CDM DOE Since 2005 and technology transfer, gaining tangible support to their efforts to achieve sustainable development. The KEMCO GHG Certification Office is the first to be designated as a CDM DOE (Designated Operational Entity) by the UNFCCC, as an organization of a non-annex 1 country. It was established as an independent body in January 2006 to ensure the reliability and impartiality Pilot Emissions Trading 2011 of its CDM project validation and verification services. With over 30 years of successful energy consultation experience for a wide range of industrial facilities, KEMCO is ready to take an active role in providing certification services to GHG projects around the world such as CDM, VCS, KVER, Inventory, etc. Making the PDD Validation Monitoring project activity Verfication CERs issuance KEMCO-ETS III : Web-based Trading Platform CDM Operational Entity (GHG Certification Office) CDM Operational Entity (GHG Certification Office) To proceed with the CDM project, a Project Design Document (PDD) should be completed in Verification Validation Total 50 accordance with the form and criteria given in the CDM Executive Board (CDM-EB) template. Then, the PDD should be submitted to the DOE (such as KEMCO GHG Certification Office) for validation. If it is confirmed that the project meets the CDM registration requirements, the KEMCO GHG Certification Office can request the CDM Executive Board to proceed with the project registration CDM projects registered by the CDM EB are eligible to request the issuance of CERs by submitting a monitoring report to the KEMCO GHG Certification Office. When the verification process is successfully completed, the KEMCO GHG Certification Office can request the issuance of CERs to the EB. On the left is the number of validation and verification cases conducted by KEMCO.

35 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation KVER validation 73 sites enterprises The number of GHG inventory verification 259 Other Certification Services KVER Validation KVER stands for Korea Voluntary Emission Reduction program. The Korean government has encouraged domestic enterprises to register voluntary GHG emission-reduction projects by providing financial incentives to enterprises that reduce GHG emissions since There are 7 KVER certification organizations in Korea, including the KEMCO GHG Certification Office. GHG Inventory Verification A GHG inventory quantifies the amount of GHG that business activities emit into the atmosphere. A GHG inventory enables enterprises to manage GHG risks and identify Korean Voluntary Emission Reduction Program (KVER) GHG Reduction Registry Department +82-(0) KVER The 1st GHG emissions reduction program among non-annex I countries Background Since the Kyoto Protocol took effect, Korea has made continuous efforts to combat climate change as a Non-Annex I country by integrating its energy-saving efforts with greenhousegas emissions reduction efforts. Recognizing the necessity of taking immediate action on climate change, KEMCO has championed numerous energy-saving initiatives, including the Korea Voluntary Emission Reduction Program (KVER). Launched in October 2005, the KVER is the first GHG emissions reduction program among non-annex I countries. The objective of the KVER is to elicit active participation of Korean companies and to build capacity in tackling climate change. Framework of the Korean Emissions Reduction Registry Program emission reduction measures, and it provides new business opportunities such as KVER and CDM projects. The KEMCO GHG Certification Office started verifying GHG inventories in 2006, with the oil-refining industry and the chemical industry. As a part of win-win growth strategy, the GHG Certification Office has provided free GHG inventory verification services to SMEs since Ministry of Knowledge Economy [MKE] Future Plans Designated Authority Accreditation Committee Based on the accumulated experience and achievements, KEMCO is planning to extend the scope of certification services to cover voluntary carbon markets such as Verified Carbon Standard(VCS) and Gold Standard(GS). Also, KEMCO will keep training regional experts and investment analysts for CDM projects to improve the certification process. Request GHG reduction certification Korea GHG Reduction Registry Center (KEMCO) Approval of registration and certification of projects Designation of Verification entity GHG Verification Entity Submit application & monitoring repcrts Support managment for carbon credits GHG Consulting Firms (if necessary) PDD validation & monitoring report verification Registration Applicant (Project Proponent) Consult project development and PDD Writing Validation on Vietnam CDM project Verification of GHG inventory

36 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation Eligibility Criteria Reduction amount: more than 100 tco 2 GHG emissions annually Incentives The government subsidizes project development. Project start date: should fall within 1 year from the date of registration request Eligible Project : - GHG reduction projects through improved energy efficiency - Renewable energy projects - Other GHG emission-reduction projects approved by the government Bundled projects : total amount of reduction: less than 5,000 tco 100~2,000 tco PDD completion including methodology development: USD 2,500 4,200 per project - Verification cost for SME participants: USD 2,500 per year The government also purchases KCERs (1 KCER = 1 tco 2 reduction) from certified projects to promote companies participation and to voluntary GHG emissions reduction efforts. - Purchase price: variable (About USD 10/tCO 2 in 2012) - After purchasing the KCERs, the ownership of project credits is passed onto the government. Procedures for GHG Emissions Reduction Registration Project Planning Phase Preparation Validation Approval Registration Project Implementation Phase Monitoring Verification Issuance 323 The number of registered projects 717 The number of certified projects Current status of KVER As of December 2011, 323 projects were registered in the program in areas such as energy efficiency improvement, new and renewable energy, and industrial process innovation. Each registered project can create annual carbon credits for 5 years. 717 projects have passed through the annual monitoring and verification processes; have been certified and issued KCERs equal to about 12 million tco 2. MKE Accreditation Committee Assess Validation Register Project Activity Assess Verification Report Issue KCERs 12 million tco 2 The equal amount of GHG reductions from issued KCERs Status of Projects under KVER Year Registered projects Certified projects KCERs 941,307 1,926,752 2,720,353 3,199,545 3,333,095 KEMCO Verification Entity Project Participants Prepare PDD & Reguest Validation Prepare Validation Report Receive PDD & Validation Report Submit PDD & Validation Report Reguest & Manage Registration Receive Monitoring Report Prepare Monitoring Report & Verification Receive Verification Report Conduct Verification & Request Issuance Apply for Government Purchase International Cooperation Programs Overseas Project Team +82-(0) International Cooperation in Energy Efficiency KEMCO takes part in several major international meetings or initiatives that work towards energy efficiency: IEA 4E and DSM; APEC EWG and EGEE&C; and IPEEC. KEMCO is sharing information and experience on energy efficiency by participating actively in international cooperation programs. IEA: 4E & DSM IEA 4E The Implementing Agreement of the International Energy Agency (IEA) for a Cooperating

37 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation Program on Efficient Electrical End-Use Equipment (4E) was approved by the IEA Governing Board in The 4E Implementing Agreement focuses on equipment that contributes the most to the total end-use electricity consumption, including technologies with fast-growing global or regional market shares and stand-by consumption. Under the 4E framework, a number of research projects were developed. In cooperation with the IEA 4E, the Ministry of Knowledge Economy and KEMCO are participating in the three main Annex projects: Mapping & Benchmarking (M&B), Standby Power and Solid State Lighting (SSL). IEA 4E Projects Annex Leader Participant Countries Mapping & Benchmarking UK USA, Canada, Australia, France, Netherlands, Denmark, Switzerland, Austria, Korea Standby Power Australia Netherlands, Canada, Switzerland, Korea, UK Motor System Switzerland Denmark, Australia, Netherlands, UK, Austria economic, social and environmental enhancement of the APEC community. The EWG has four expert groups, each focusing on a specific energy area. They provide a forum for fostering cooperation between research and technical specialists within APEC economies. The Expert Group on Energy Efficiency & Conservation (EGEE&C) is an expert group within the EWG that promotes energy conservation and the application of energy efficiency practices and technologies through various cooperative activities. APEC ESIS : The EWG has operated the Energy Standards Information System (ESIS) since ESIS provides the latest information about energy standards and regulations for appliances and equipment. The Ministry of Knowledge Economy and KEMCO funded USD10,000 for the ESIS project in 2007 and continues to take an active role in this system. KEMCO and MKE are participating in the APEC EGEE&C actively and held the 38 th APEC EGEE&C meeting in Seoul on November, Solid State Lighting (SSL) France - IPEEC IEA DSM The Demand-Side Management Technologies and Programs of IEA, also known as IEA DSM, was launched in IEA DSM consists of 19 countries and the EC and it develops a variety of strategies for reducing energy demand. Korea has attended the meetings since May 1994 and officially became a member in March IEA DSM has been conducting 24 international joint researches, called TASK, since its establishment. Korea has taken part in 9 tasks and 7 tasks are underway as of IPEEC International Partnership for Energy Efficiency Cooperation The International Partnership for Energy Efficiency Cooperation (IPEEC) is an international partnership for energy efficiency cooperation that includes the G8 (USA, UK, France, Germany, Italy, Canada, Japan, Russia) +6 (China, India, Brazil, Mexico, Korea, Australia) countries. IPEEC aims to improve energy efficiency through international cooperation to share policies on energy efficiency. APEC APEC EGEE&C Under IPEEC, 8 international projects are currently being carried out. Korea is participating in 3 programs, including Sustainable Buildings Network(SBN), Super-efficient Equipment and Appliance Deployment(SEAD) and Global Superior Energy Performance Partnership(GSEP). The Asia-Pacific Economic Cooperation-Energy Working Group (APEC- EWG) is a voluntary, regional forum operating under the APEC umbrella. It helps further APEC goals of facilitating energy trade and investment, and ensures that energy policies and use contribute to the

38 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation KEMCO and the ASEAN Centre for Energy (ACE) are working closely together in the IPEEC Task Task Leading Country ASEAN+3 CDM Cooperation Program. The program was started by the Ministry of Worldwide Energy Efficiency Action through Capacity Building and Training (WEACT) Italy Knowledge Economy as it intended to develop a new cooperation program on CDM Sustainable Buildings Network (SBN) Germany Assessment of EE Financing Mechanisms (AEEFM) India Energy Management Action Network (EMAK) Japan Improving Policies through Energy Efficiency Indicators (IPEEI) France Super-efficient Equipment and Appliance Deployment (SEAD) USA Global Superior Energy Performance Partnership (GSEP) USA, Japan Global Cooperation on Utility Delivery of Energy Efficiency (GCUDEE) UK under the framework of the ASEAN+3 meeting in The program of 2011 consisted of identifying CDM project candidates in ASEAN region, capacity-building workshops on CDM and collaborative feasibility studies and on-site visits to CDM projects. In 2011, CDM Cooperation Bodies (CCBs) were organized in 6 member countries (Indonesia, the Philippines, Vietnam, Malaysia, Cambodia and Thailand) to stimulate activities under the program. CCBs consist mainly of central government officials, local government officials, technicians, local companies and consultants. Their major roles are to conduct surveys and research on CDM projects; to assist and arrange project on-site visits; to provide data on related laws, regulations, and environment; to make reports on the projects; and to provide International Cooperation for Climate Change Mitigation KEMCO delivers several programs to facilitate international cooperative efforts on climate change mitigation. These programs encourage Korean companies to expand their information to Korean investor companies. ASEAN+3 CDM Cooperation Program businesses into international markets. In 2011, KEMCO operated a training course for government officials from China, Mongolia, Kazakhstan and Tajikistan. The courses consisted of lectures on energy efficiency and climate-change mitigation policies in Korea, including the GHG Emissions & Energy Target Management scheme, CDM and KVER. Also included were site visits to the Green Energy Experience Hall of KEMCO, the Sihwa Tidal Plant and the Gas Science Museum. A total of 14 participated in the course (5 from China, 4 from Mongolia, 2 from Kazakhstan and 3 from Tajikistan). Training Courses for Government Officials or DNA Members The Green Business Forum was held in October 2011 to publicize the results of international cooperation programs and to introduce important projects to Korean investors. A total of 285 persons participated and a dozen of major media outlets broadcast the forum. As a result of the forum, 2 MOUs were signed to seek further cooperation or to invest in the projects. Green Business Forum 2011 To deal with climate change mitigation and build infrastructure in Southeast Asia and the CIS region, KEMCO has designated 4 regional expert organizations. As of 2011, the organizations have established networks, developed co-projects, provided training courses, shared technical information and reported on national CDM policies.

39 Climate Change Mitigation & GHG Emission Reduction Korea Energy Management Corporation Development of GHG Emissions Inventory System Policy & IT Department +82-(0) KEMCO has developed the national statistics database (DB) system on energy consumption and GHG emissions. Based on this system, one can understand the main cause of energy consumption and the potential for reductions. KEMCO is providing data analysis results of energy consumption behaviors and GHG emission types on the NETIS (National Emissions Total Information System). Carbon Neutral Program Climate change Cooperation Department +82-(0) To enhance public awareness and promote voluntary participation in GHG mitigation activities, the Carbon Neutral Program was introduced in Companies and individuals who want to mitigate their carbon emissions submit their intent to participate and then perform actions to reduce GHG emissions, such as turning off lights, lowering heating temperatures, and using public transportations etc. Offsets, including forestation and NRE deployment, are also options for carbon mitigation. After Participants completion of activities to reduce GHG emissions, KEMCO confirms that the person or company has successfully participated in the Carbon Neutral Program by issuing a certificate. Constructing and Analyzing Energy and GHG-related Data Base An accurate grasp and analysis of the energy use and GHG emissions are prerequisites for responding to climate change. KEMCO has conducted extensive research on energy consumption, GHG emissions from energy use and industrial processes, and technologies Two types of carbon offsets : emitting or mitigating GHG. As a result, KEMCO has established and analyzed a comprehensive database related to energy, GHG reduction potential and costs for various technologies. 4,451 The number of participants in Caron Neutral Program Investment in NRE system KRW 15,000/ tco 2 Investment in carbon sink projects KRW 15,000 / tco 2 Development of Country-specific (Korea) Emission Factor IPCC published its guideline 2006 for the National Inventory Report (NIR). It recommended developing more precise emission factors for each country, even if they suggest default emission factors in the guideline. 40,885 tco 2 Total amount of Co 2 reductions from Carbon Neutral Program As of 2011, a total of 4,451 firms/individuals have participated in CO 2 mitigation activity equivalent to 40,885,667 kgco 2 since the initiation of the program. In building an accurate, reliable national statistical system, KEMCO has researched and managed country-specific (Korea) emission factors as carbon emission factors for all 17,426,926 kgco 2 combustion processes, and non-co 2 emission factors for energy and industry sectors since No. of Participants Amount of Co 2 reduction 3,895 13,104,848 kgco ,325,277 kgco 2 4,028,666 kgco

40 Climate Change Mitigation & GHG Emission Reduction Carbon Cashbag Objectives The Carbon Cashbag program intends: to raise the public awareness on climate change; to guide consumers to purchase products with low GHG emissions and high efficiency; and to form a national consensus on climate change. Concept When a consumer purchases low-carbon products (e.g. high-efficiency products) or makes a purchase at a low-carbon shop, carbon points will be awarded to the consumer. 1 point is equivalent to 1 KRW, and consumers can use the points to use public transportation, purchase products and for other purposes. Program Procedure - Individual - Companies - Government institutions - Public institutions 1 Purchase low-carbon products 2 Award points 3 Use points Carbon Cashbag Partner Company - Use public transportion - Re-purchase of goods - Energy welfare business

41 Save Energy Save Earth 388 Poeundaero, Suji-Gu, Yongin-Si, Gyeonggi-Do, Republic of Korea (Zip code: ) Tel New & Renewable Energy Promotion 04

42 Korea Energy Management Corporation New and Renewable Energy Promotion Contents Introduction Energy Efficiency and Conservation Imrpovements Climate Change Mitigation & GHG Emission Reduction New and Renewable Energy Promotion 06 NEW & Renewable Energy Standardization Program 07 Certification of NRE systems 08 Renewable Portfolio Standards (RPS) 09 Feed-in Tariffs for NRE 11 Confirmation of NRE Facility Installation Program 11 General Subsidy Program 13 Regional NRE Deployment Program 13 One Million Green Homes Program 15 Financial Assistance for NRE 15 Public Institutions Renewable Obligation 16 International Cooperation

43 New and Renewable Energy Promotion 4 Korea Energy Management Corporation Standardization program RPS (Renewable Portfolio Standard) more than 24 items Solar thermal energy 500MW items 55 photovoltaic in generation capacity items 10 Wind Turbines Requires power producers to supply NRE 4Fuelitems Cell technologies machinery B machinery C 2.0% 2010 General subsidy program RPS Ratio 10.0% 2022 The pilot deployment subsidy Regional NRE Deployment program The general deployment subsidy 1million Green Homes plan International cooperation MOU Counterpart countries 17,400 (2004~2007) Accumulative target 1,024,550 (2013~2020) 5

44 New and Renewable Energy Promotion Korea Energy Management Corporation 6 7 NEW & Renewable Energy Standardization Program The main purpose of NRE Standardization Program is to apply International Standards to Korean Technical Standards and to help Korean NRE companies to compete in international Certification of NRE systems The certification scheme for NRE systems has been designed to guarantee the quality of systems manufactured or imported and enhance their reliability for consumers, thereby New & Renewable Energy Promotion Department +82-(0) market. As Co-operating Organization for Standards Development (COSD), KEMCO is organizing the Technical Committee (TC) and Working Group (WG) to apply IEC/ISO standards to Korean encouraging wider deployment of NRE systems. Its aim is to promote the commercialization of technologies that have been developed and establish the necessary infrastructure for further deployment through performance evaluation and standardization. standards in the fields of solar thermal energy, photovoltaic energy, wind power and fuel cells. 1,047 models the number of certification The certification scheme is currently applied to 26 items in 6 areas, which include solar thermal, PVs, wind power, bio, geothermal and fuel cell. In 2011, 298 models have received certification, and a total of 1,047 models have been certified since Korean Standard (KS) Machinery (B) ISO/TC 180 (Solar Thermal Energy) The New and Renewable Energy Center (NREC) has been accredited as a product Korean Standard (KS) Machinery (C) IEC/TC82 (Photovoltaic energy system) IEC/TC88 (Wind Power) IEC/TC105 (Fuel Cell technologies) certification body by the Korea Accreditation System (KAS) in 2007 and in 2008 as a National Certifying Body (NCB) by the Worldwide System for Conformity Testing and Certification Electro-technical Equipment and Components (IECEE) for photovoltaic parts. KEMCO manages a total of 93 Korean standards in designated fields: (55 photovoltaic energy, 24 solar thermal energy, 10 wind energy, and 4 fuel cells). For the standardization of NRE systems, NREC was designated as a COSD (Co-operating Organization for Standards Development) by KATS (Korea Agency for Technology and Standards) in Certification Procedure for NRE systems Wind Power (IEC/TC88) 55 photovoltaic energy systems (IEC/TC82) 93 The number of Korean standards in NRE 4 Fuel cell technologies (IEC/TC105) 24 Application for Certification General Evaluation (Factory Inspection) Facilities Evaluation (Performance Inspection) Certification Issuance Solar thermal energy (ISO/TC180) Manufacturers Importers Certification Body Performance Inspection Body Certification Body

45 New and Renewable Energy Promotion Korea Energy Management Corporation 8 9 Renewable Portfolio Standards (RPS) Renewable Portfolio Standard Department +82-(0) companies The number of RPS obligators , Overview The RPS (Renewable Portfolio Standard) is a system that requires power producers to supply a certain amount of power from new and renewable energy sources. 13 companies, including the Korea Water Resources Corporation, Korea District Heating Corporation, and power generators who have generation capacity of more than 500 MW (NRE power plants excluded) will be designated as RPS obligators in Annual RPS Rate 2.0% % % 2014 In case of PV, additional quotas will be mandated for 5 years ( ) to promote the scheme in its early stage. 3.5% % % % % % % % 2022 Feed-in Tariffs for NRE The government compensates the difference between the electricity cost of NRE and that of fossil- fuel power generation to promote the production and use of NRE. Such compensation is referred to as a feed-in tariff (FIT). [Standard Prices of Power Source] Power Source Capacity for Application Classification Standard Price (KRW/kWh) Wind Power Over 10kW Hydro power Waste energy (including RDF) Under 5MW Typical Non-typical Over 1MW SMP+15 Under 1MW SMP+20 Over 1MW SMP+5 Under 1MW SMP+10 Under 20MW - - SMP Decremental rate : 2% New (MW) Accumulated (MW) Additional quota for PV RPS Operation Mechanism Obligators must implement the scheme by installing renewable power plants or purchasing Renewable Energy Certificates (RECs) from renewable power producers. If obligators underperform the RPS targets, they have to pay the penalty which will be less than 150/100 of the average REC price. Bio energy LFG Biogas Under 50MW Under 50MW Over 20MW SMP+ 5 Under 20MW SMP+10 Over 150MW SMP+10 Under 150MW SMP+15 Biomass Under 50MW Ligneous bio SMP+ 5 fossil fuel use: Under 30% The government is encouraging the electricity sellers to adjust the electric charges to deal with the additional costs to implement the RPS. Electricity Seller (KEPCO, KPX) 3Sell electricity 4Confirm generation 2Confirm installation 5Request REC Issuance Power Producer KEMCO (RPS Dept.) 1Impose RPS targets 6Issue REC 7Sell REC 8Calculate REC Price 9Verify dutyperformance Obligators Ocean energy Fuel Cell Tidal Power Over 50MW Over 200kW Tidal range is over 8.5m Tidal range is under 8.5m SMP: System Marginal Price (2011 average: KRW/kWh). Embankment No Embankment Embankment No Embankment using Biogas using other fuels If a government subsidy equals more than 30 percent of the total price paid, then the FIT program cannot be accessed. The decremental rates will be applied to wind power from 2009, to fuel cell energy from 2008, starting Oct. 11 every year. Decremental rate : 3%

46 New and Renewable Energy Promotion Korea Energy Management Corporation Confirmation of NRE Facility Installation Program New & Renewable Energy Promotion Department +82-(0) Overview The Registered NRE Installer program was introduced to nurture NRE Installation companies to certain levels, facilitate NRE deployment through them and meet the renewable energy deployment target of 11% by The applicant installers submit the application to KEMCO NRE Center online. After reviewing the application, NRE Center issues the certificate to applicant installers online. Registration Criteria Field 1. Solar Capital & Personnel Qualification Machinery, Electric, Architecture FIT has played a significant role to boost renewable energy market since its inception. FIT offered a great opportunity for NRE investors. Conspicuous performances were achieved in the fields of PV and wind power. For example, the annual total volume of PV dissemination had been just over 200 kw before However, after the FIT system was announced and recognized by investors, PV installation has increased dramatically, reaching approximately 500 MW by the end of FIT will be replaced by RPS program from But the guaranteed tariff for installed NRE system under previous FIT program will be paid continuously until the end of the guaranteed period. Standard Prices of PV Power Source Year Site Typical Roof type Typical Roof type Guaranteed year Under 30kW 30kW-Under 200kW 200kW-Under 1MW 1MW-Under 3MW (KRW/kWh) Over 3MW General Subsidy Program New & Renewable Energy Dissemination Department +82-(0) Up to 80% The pilot deployment subsidy Up to 50% The general deployment subsidy KRW 176 biliion Total subsidy from 1993 to Wind 3. Geothermal 4. Others (Fuel cell, Hydrogen, Bio, Waste, Water Power, Ocean energy, LGCC) 1 hundred million+ Machinery, Metal, Chemical, Ceramic, Architecture, Energy, Environment Machinery, Electric, Civil engineering, Architecture, Energy, Environment Machinery, Metal, Chemical, Ceramic, Electric, Civil engineering, Architecture, Energy, Environment More than 2 technical qualified people The Korean government provides subsidy programs to accelerate NRE deployment. Subsidy programs aim to create the initial market for new technologies and systems developed domestically, to establish and accelerate the deployment infrastructure for commercial technologies and equipment. These subsidies can be classified into two categories: pilot deployment subsidy and general deployment subsidy. The pilot deployment subsidy has been designed to help developed technologies and systems that have been verified through demonstration to penetrate the initial market, and to strengthen their competitiveness. Those who want to install NRE systems could receive subsidies up to 80% of installation costs through the review process. The general deployment subsidy program seeks to activate the market for NRE systems that have already been commercialized. The government provides a subsidy of up to 50% of installation costs for these systems. The government plans to focus its support on solar PVs, wind power and fuel cells. Since these fields will drive future growth, the government plans to increase the NRE supply level to 11% of the total primary energy supply by The government also plans to continue financial support in market-friendly areas such as solar thermal and geothermal energy.

47 New and Renewable Energy Promotion Korea Energy Management Corporation Status of Installed NRE Systems in 2011 Regional NRE Deployment Program Subsidy Program for Regional Deployment In an effort to improve the condition of energy supply and to facilitate the development of regional economies by supplying region-specific NRE systems, the government has been ,819 KRW miliion 19,947 13,990 13,930 26,639 36,446 64,867 PV power system 1,433kW 75 Solar thermal heating system 13,416m PV Power System in Gosung s Rest Area Geothermal system 8,509kW 20 Total capacity No. of Systems Solar thermal heating / air conditioning system 1,938m 2 3 Bio system 2,693kW 3 Fuel cells 16 4 promoting its Regional Deployment Subsidy Program, which supports various projects of local governments. Begun in 1996, this program supported both new and renewable energy sources and energy-saving areas until However, these two areas were divided in 2005 in accordance with The Act on the Promotion of Development, Utilization, and Dissemination of New and Renewable Energy. Depending on the support of the government subsidy and the nature of project, subsidies can be categorized as 1) for building infrastructure, or 2) for installing NRE systems. Government Subsidy for Regional Deployment (KRW/kWh) Government subsidy 178, ,630 71,766 70,000 69, Total( 96~ 11) Solar Thermal Heating System in Iksan One Million Green Homes Program In an effort to encourage NRE deployment, the government launched programs to provide subsidies for the installation of NRE systems in residential sector.. The government plans to deploy 100,000 NRE systems in residential houses by Status of 1 Million Green Homes Program The number of PV houses / Capacity (kw) No. of PV houses Capacity (kw) 26,360 22,425 31,043 19,066 95,938 85,207 Subsidy (KRW million) KRW million 58,996 59,997 48,997 48,942 49, ,914 14,895 13,511 9,245 9,142 10,496 7, Total Total

48 New and Renewable Energy Promotion Korea Energy Management Corporation The basic plan for the deployment program is to develop a 3kW system for residential houses, using domestically produced, low-cost solar cells with high efficiency, and fostering the NRE industry in the long run. The government provides support for a certain portion of total installation costs. Until 2009, the main target was houses equipped with PVs. However, the 1 million green homes plan will focus on a variety of sources such as PVs, solar thermal, geo-thermal, and small wind. Residential Houses with 3kW Solar Roofs Financial Assistance for NRE The government provides long-term and low-interest loans for consumers and/or manufacturers of commercialized NRE systems. The objective of the program is to expand NRE system deployment as well as to promote the commercialization of large-scale facilities. Status of provided Loans (KRW/kWh) 179, , , ,906 85,685 Installation Loans 5,894 5,301 5,655 1,227,590 Operation Loans 738 1, ,340 26,905 Total 121, ,340 91, ,800 1,254, Total( 83~ 11) Deployment Plan of 1 million Green Homes Target No. of Green Homes Accumulative Target Investment (KRW 100mil.) 913,000 1,024, ,530 Up to 90% Installation / operation loans Installation loans are provided when customers install NRE systems, while operation loans are provided to the manufacturer of NRE facilities or to operators and managers of such facilities. Loans are provided for up to 90% of the total cost (up to 50% for large corporations). Starting from 2011, about 10% of total investment in the installation of NRE systems can be deducted from income tax or corporate income tax. Public Institutions Renewable Obligation The Public Institutions Renewable Obligation program aims to create new markets in the public sector for new and renewable energy. It requires public institutions to invest more than 10% of the total construction cost in new and renewable energy facilities in case that they 94, ,550 build new buildings with floor space of larger than 3,000m 2. 17,400 17,400 2,280 13,300 10% Required NRE investment ratio of the total construction cost for new buildings larger than 3,000m 2 Until 2010, the renewable obligation ratio was 5% and it has been strengthened to 10% from This program has led to KRW 743 billion worth of investment in 1,300 projects from 2004 to Most of the investment has been in geothermal, photovoltaic and solar thermal energy. Since September 2008, the target building has been expanded to include 2004~ ~ ~2020 school buildings. And since March 2009, its scope has been expanded to include building renovation.

49 New and Renewable Energy Promotion Korea Energy Management Corporation International Cooperation New & Renewable Energy Policy Department +82-(0) New and Renewable Energy is currently considered as an effective means of climate protection as well as a major driving force for sustainable economic growth. Recognizing its significance, the Korean government has been involved in a variety of international cooperative activities with international organizations and overseas counterparts. With IEA, Korea has joined 6 agreements on Geothermal, Hydrogen, PVPS, Wind, Bioenergy and SolarPACES which are being operated under REWP. NREC has played the important role of gathering valuable policy and technology information and sharing it with key stakeholders, including policy makers, industries and universities. Multilateral cooperation KEMCO NREC has actively taken part in the international community s effort to expand new and renewable energy use worldwide. NREC has carried out activities with international organizations as follows: IEA/REWP : International Energy Agency/Renewable Energy Working Group - SolarPACES, PVPS, Bioenergy, Wind, HIA, Geo-thermal - Korea Institute of Geoscience and Mineral Resources (KIGAM) has been participating in Geo-thermal IA as an alternative member of Korea IPHE : International Partnership for Hydrogen and Fuel Cells Economy APEC EGNRET : Asia-Pacific Economic Cooperation/Expert Group on New and Renewable Energy Technology IRENA : International Renewable Energy Agency Also, NREC has participated in various cooperation activities in partnership with APEC and IPHE by pursuing technical breakthroughs and developing countermeasures to curb greenhouse gas emissions within the Asia Pacific region. As demand grows for promoting renewable energy worldwide, IRENA was founded in 2009 as a crucial agency in renewable energy field. While making a valuable contribution to IRENA, the Korean government has been taking on key roles since its foundation for renewable energy adaption on a global scale. Korea has been making an all-out effort to improve its international reputation in the field of renewable energy. NREC has been Korea s technical focal point for IRENA since 2009 and played a key role in the development of work programs and other issues. IRENA 1st Assembly & Preparatory Commission ( Abu Dhabi) IRENA 3rd Assembly ( Abu Dhabi)

50 New and Renewable Energy Promotion Bilateral cooperation NREC has maintained close relations with its counterpart organizations overseas to exchange information and develop collaborative programs. In order to promote its programs, NREC organize joint seminars, business matchmaking, cooperative agreements and intergovernmental collaboration committees, and carry out joint research projects. Its counterpart countries are mainly the Netherlands, Spain, UAE, Algeria, Malaysia and Chile. A joint seminar with the Netherlands, Algeria, Morocco, Spain and Chile has been in progress to build relations with those countries by exchanging current key policies and technological information in various areas such as PV, solar thermal, and wind energy. NREC signed an MOU with energy agencies from Spain, Denmark, Malaysia and Chile. Follow-up actions with these partners, this would be a good opportunity for both nation s parties to identify mutually beneficial areas in NRE. Korea-Netherlands off-shore wind forum ( , Netherlands) Korea-Spain (IDEA) NRE Cooperation Forum and Business Matchmaking ( Spain) Korea-Chile (CER) MOU Signing Ceremony ( Chile) Korea-Algeria the 1st NRE Cooperation Forum and Business Matchmaking ( Algeria)