Friday, March 22, 2019
Intensive Investment Given to Nine Growth Engines
The government plans to invest trillion won in nine green energy sectors for the coming five years to reach US$300 billion in output before 2030
Intensive Investment Given to Nine Growth Engines
  • By matthew
  • October 5, 2011, 14:25
Share articles

The Korean government has recently chosen nine green energy segments in order to turn them into the country’s future growth engines: photovoltaic; wind power; light emitting diode (LED); power IT; hydrogen fuel cell; coal-to-liquids (CTL) and gas-to-liquids (GTL); carbon capture and storage (CCS); energy storage; and integrated gasification combined cycle (IGCC). The government will invest a total of three trillion won until 2012 to raise the fields’ technological competitiveness to global levels.

If the plan goes well, the green energy industry of Korea will attain a gross output of US$17 billion and US$ 300 billion in 2012 and 2030, respectively. Employment figures for the industry are estimated at 105,000 and 1.54 million people, respectively, during the same period.

The Ministry of Knowledge Economy reported the above mentioned roadmap to President Lee Myung-bak on September 11 under the title “Development Strategy for Green Energy Industry.” It is the first set of action plans to look at the cause of low-carbon green growth, which was brought up in 2008 by the President during his National Liberation Day speech. The roadmap was co-designed by various government arms, including the Knowledge Economy Ministry, Environment Ministry, and Korea Forest Service.

During the debriefing session, the Knowledge Economy Ministry defined the green energy industry as a field based on innovative technologies designed to substantially reduce greenhouse gas emissions, and divided it into new and renewable energy, fossil fuel purification and energy efficiency improvement segments.

According to a report, Korea will adopt a strategy of selection and concentration in order to catch up with global green energy powerhouses, while also establishing a comprehensive support network for exports and R&D backup. To that end, it will develop market-oriented technologies, help create markets and build relevant infrastructure.

Intensive Investment Given to Nine Future Growth Engines

In the future, emphasis will be placed on the nine fields mentioned above, and chosen in consideration of such factors as marketability and technological availability. Of the nine, four, including solar and wind power, will be first turned into national growth drivers, allowing for the speed at which the global market is growing and the extent to which the domestic sector has developed. Following these are the remaining five segments of high market potential, including hydrogen fuel cells and clean fuel, and in which major countries around the world are scrambling to gain a technological advantage.

Development of Market-oriented Technologies to Commence

Over the next five years, the government will spend 1.7 trillion won on the nine fields, with the private sector investing 1.3 trillion to strengthen technological strength in order to allow them be on par with developed countries. For this purpose, technological development targets and strategies will be established in March next year.

For example, the photovoltaic sector is planning to attain the same level of economic feasibility as its fossil fuel counterpart before 2020, while preparations to manufacture kilowatt-grade hydrogen fuel cells for home use are scheduled to be completed by 2015. During these processes, the most efficient way to acquire technology will be pursued, whether through self-development, joint research and partnership, or technological transfer and foreign investment.

Self-development will be employed in areas that Korea is faring well in and inter-industrial cooperation is easier (e.g., between display and thin film solar cells companies) or where it is hard to expect any technological transfer from advanced nations (e.g., home-use hydrogen fuel cells). Technological tie-ups and joint research will be applied to fields such as offshore wind power generation, where Korea’s competitiveness is second to none, and thus methods can result in synergy effects.

In regards to IGCC and megawatt-level energy storage, Korea will import source technologies, while aiming for commercialization on its own, since technological disparity takes a very long period of time to deal with. In these sectors, foreign investment will be utilized for the procurement of key component and material technologies. Demonstration research and technological development will be in line with each other for the early commercialization of all R&D results.

Market Creation Led by Public Sector

In the meantime, the public sector will take the lead in demand creation so that the private sector can be motivated about making investments.

In this vein, the current Renewable Portfolio Agreement (RPA), which can be defined as voluntary investment in renewable energy, will be switched into Renewable Portfolio Standard (RPS). It means that companies will be required to supply a certain portion of the gross generation in the form of alternative energy. This ratio will rise to 3% by 2012 and to over 10% by 2020.

Furthermore, the current system of voluntary biodiesel mix will be replaced by the Renewable Fuel Standard (RFS), making allowance for the material supply. The obligatory mixing ratio will be raised to 3% and 7%, respectively during this period.

Alternative energy is also going to be incorporated into the design and building of new towns. For example, in the multifunctional administrative city of Sejong, for instance, new and renewable energy has already been allocated to account for 10% of total energy.

At present, at least 5% of the total construction cost of a public-purpose building is supposed to be invested in renewable energy facilities. However, in 2012, this regulation will be changed so that 5% or more of the total energy loads will be handled by alternative energy. At the same time, a renewable energy certification program will be adopted for private buildings so that the same effect can be achieved during construction and housing development. Incentives such as a preferential rate are also scheduled for the program.

Meanwhile, diverse new energy sour-ces will continue to be under development. Until 2012, photovoltaic power generation and the supply of wind power will be expanded to 400MW and 1Gw, respectively. The unit cost of photovoltaic power generation is going to be lowered through technological innovation and mass production, while the spatial limitation of wind farms will be addressed by means of offshore facilities.

Korea is surrounded by the sea on three sides and its tidal range is wide. To make use of such abundant maritime energy resources, the government is planning to build the world’s biggest, 254MW-capacity tidal plant in the Shihwa Lake area next year, and embark on the construction of a 520MW-capacity Garolim Bay Plant earlier than scheduled, as well as prepare compensatory measures for residents in those regions. Regarding tidal power generation, the Uldolmok Demonstration Power Plant, with the capacity of 1MW, will be established later this year near Jindo Island, with a 90MW commercial power station scheduled for 2013.

Infrastructure Establishment

Meanwhile, the Ministry of Kno-wledge Economy has formed a national committee with leading economic organizations in order to better cooperate with them regarding the building of industrial infrastructure. Furthermore, the ministry will run a government-level policy council and submit reports on major relevant issues to the National Energy Committee.

For funding and lending purposes, it will put in place a joint financing scheme next year in tandem with the banking sector. A green energy investment fund for small and mid-sized enterprises (SMEs) will also be created.

Furthermore, until next year, departments will be opened at various colleges in order to nurture 15,000 or so green energy experts with masters and doctoral degrees, while labs at graduate schools will benefit from the support policy. Meanwhile, joint R&D between industry and academia will also be expanded. The Regulatory Reform Committee will also do its part by eliminating restrictions hindering the popularization of new and renewable energy.

The Knowledge Economy Ministry is expecting the measures described above will make the green energy industry Korea’s tool for future industrial prosperity, while spurring the commercialization of alternative energy. According to the ministry, the sector’s exports and global market share are forecasted to reach US $210 billion and 13%, respectively until 2030.