The recent Fukushima disaster has raised questions regarding whether nuclear power generation is really safe, while many nations are delaying or reconsidering of nuclear powerhouse construction plans. With concerns over nuclear power generation deepening, new and renewable energy sources are surfacing as viable alternatives. BusinessKorea sat down with Kim Jung-gwan, Deputy Minister and head of Energy and Resources Office at Ministry of Knowledge Economy, to hear about the government position on new and renewable energy as well as nuclear energy. Following are the excerpts from the interview.
The 1st National Energy Basic Plan for Low-carbon Green Growth was finalized on August 27, 2008. What is the nub of it?
It is a long-range plan, covering 2008 to 2030, to cope with the post-fossil fuel era and buttress the new national development paradigm in the energy sector. With concerns over power generation deepening around the world, new and renewable energy sources are surfacing as viable alternatives.
According to it, Korea’s consumption of conventional fuels is curtailed down the road so that its energy efficiency can be raised to be on par with advanced nations’. Our improvement target is 46% by 2030. In doing so, we are aiming to turn Korea into an energy-saving society. During the period, new and renewable energy and nuclear power will take bigger roles and our dependence upon oil, coal and gas will decline.
To that end, we will keep sharpening our energy-related technological competitiveness, which is at some 60% level of developed economies’ now. Also, we will heighten our energy self-development ratio from 2006’s 4.2% to over 40% by 2030 with green energy industries being fostered as future growth drivers.
Energy autonomy, one of the government’s three goals for green growth, seems to have encountered a major roadblock due to the recent quake and radiation leak in Japan. What is the administration planning to deal with it?
The public has been increasingly concerned about atomic power and its safety since the calamity broke out on March 12. Some have gone so far as to say we should discontinue nuclear power generation right away and spur the development of new and renewable energy dramatically.
However, we can easily know that the time is not yet ripe if we allow for atomic power generation’s stability, economic feasibility, effect in CO2 emissions reduction, etc. In a sense, nuclear power may be our best option for the time being.
Korea is not home to a vast territory. It has natural and technological constraints hindering the development of new and renewable energy. In a word, we are in a relatively disadvantageous position compared with clean energy leaders like Germany. Well aware of that, the government is not planning to shift its focus away from atomic power in a snap. Nevertheless, by making much of safety, it will minimize the risk and danger of the electricity generation method.
Of course, I am not saying it is going to be lax in its efforts for the commercialization and popularization of clean energy. The Korean government will continue its endeavor via, e.g., the Renewable Portfolio Standard (RPS) to make the supply of new and renewable energy compulsory. The energy’s supply ratio will be stepped up from 2010's 2.5% to 11% by 2030.
At the same time, overseas resources development will get a boost, too. It will help improve our nation's energy self-development capability and make ourselves stronger in terms of energy security.
These days, new and renewable energy is really a buzzword. However, on the other side of the spectrum, some are pointing out, at least in the short run, thermal power generation will become the de facto replacement of its atomic counterpart. If so, more greenhouse gas is likely to be emitted with increasing carbon demands driving up the carbon price. What is the current administration’s countermeasure?
It is true that, after the quake in Japan, the carbon credit price rose to some degree in regions like Europe, due mainly to the forecast that the fossil fuel demands can surge temporarily. As not a part of the Emission Trading yet, Korea has nothing to do with it for now.
Nonetheless, we need to assume the situation in which the construction of new atomic powerhouses is postponed and aged ones are shut down the world over. In that case, thermal power generation will take the place and the emissions will mount up, which, in turn, can boost the demands for emission rights in various regions including the eurozone. Then, the price will probably show a continuous upward trend.
The administration will keep a close eye on such conditions while working on detailed action plans regarding the Emission Trading.
Would you tell our readers where Korea’s new and renewable energy industry, its R&D activities and the government’s promotion policy are standing?
The global clean energy market reached US$243 billion in size in 2010, doubled in just four years. The growth is seen to be more explosive from now on. It is expected to break the US$400 billion mark in 2015 and get to US$1 trillion by 2020.
The Korean government is also striving to further stimulate the industry via diverse inducements. Currently, an increasing number of local enterprises are joining it and expanding their investments in the sector. Specifically, the number of relevant manufacturers has more than doubled from 100 to 215 between 2007 and 2010. During the same period, the sector's total exports have risen from US$780 million to US$4.58 billion and the private investments from 1.03 trillion won to 3.6 trillion.
In particular, the country has set up all-in-one photovoltaic manufacturing systems, covering polysilicon and ingots to wafers, cells and modules, and entered the era of gigawatt-level production. In 2009, Korean companies took up 14.4% of the global polysilicon market by producing 16,600 tons of it. In that year, their ingot and wafer market share amounted to 7.1%, the cell market share to 4.1% and the module market share to 4.2%. The production of ingots and wafers skyrocketed over 10-fold from 95 megawatt to 1,190 between 2007 and 2009. That of photovoltaic cells soared from 36 to 901 megawatt and that of photovoltaic modules jumped from 173 to 1,010 megawatt.
Building on such feats, Korea has succeeded in narrowing its gap of technological competitiveness with advanced nations. Its photovoltaic and wind power generation segments are 87% and 81% as competitive as developed countries’, respectively.
In the meantime, the Lee Myung-bak administration announced its renewable energy industry master plan in October last year. According to it, a total of 40 trillion won is injected into the industry for five years - 33 trillion by the private sector and the rest by the government. The plan’s ultimate aim is to take up 15% of the world's photovoltaic and wind power markets to become one of the global top five by recording US$36.2 billion in exports. Then, the industry is expected to employ over 110,000 people.
For the purpose, the administration spends three trillion won of national budget in the development of 10 key original technologies and eight core components, materials and equipment. The idea is to make the photovoltaic industry into a flagship of the nation following semiconductor and shipbuilding.
There are opinions that, for the sake of green growth in the truest meaning of words, energy-intensive sectors like steelmaking and petrochemical should pace themselves and further open up overseas markets while using less energy domestically. What is the government’s stance on it?
Korea is ranked 10th worldwide in energy consumption. It uses 2.27 million TOE (ton of oil equivalent) annually while importing 97% of the natural resources it uses. The level is quite high even when statistical figures like GDP are taken into consideration.
Furthermore, the ratio of energy-intensive and manufacturing industries, including steelmaking, petrochemical, cement and paper manufacturing, is pretty high compared with advanced countries. For example, the ratio of manufacturing industrial output to GDP was 13% for the US, 19% for Japan and 23% for Germany as of 2008. The figure was 31% for Korea last year.
However, if we allow for our export-oriented and manufacturing-centered industrial structure, excessive regulations of those sectors and the subsequent transfer of production bases are not deemed desirable.
For the time being, the manufacturing industry’s ratio vis-à-vis the national GDP is thought to maintain itself over 30%. If immoderate restrictions are put in a short period of time for the causes of energy efficiency and CO2 reduction, side effects like carbon leakage might be entailed.
The political unr est in the Middle East is not going away, blocking oil prices from dropping. What does the government have in store to cushion the damage?
In addition to the political instability, the BRICs nations’ economic growth is pushing up oil demands, which signals the high oil prices can last for long. Under the circumstances, the Ministry of Knowledge Economy has drawn up and refined its mid- to long-term policy measures.
A task force staffed by government officials and private-sector experts has been in operation since January this year. It has come up with various measures to help stabilize the prices from within, such as stimulation of competition among market participants and enhancement of internal supervision. The government has launched nationwide energy conservation policy to cut oil demands across society, too.
More fundamentally, it is trying to reduce the country’s reliance on fossil fuels in the long term and better prepare itself for the post-petroleum era. In 2006, the ratio of fossil to non-fossil was 82 to 18. It is going to be adjusted to 61 to 39 by 2030.
Policy for improving energy efficiency will be going on to make our industrial structure less energy-consuming and less dependent upon fossil fuels. Also, energy costs like electricity bill will be rearranged gradually by means of price mechanisms, inducing energy conservation.