It has been three months since the Ministry of Knowledge Economy made public the national strategy for growth of the green energy industry. According to the plan, Korea is aiming to expand its global green energy market share to 18%, and reaching 328 trillion won in exports by 2030. BusinessKorea interviewed Byun Jong-rip, the ministry’s Director General of Energy Policy, and discussed what had been accomplished, what is in progress and where the green energy initiative of Korea is headed.
Green Energy Investment on the Rise
In 2010, total global investment in eco-friendly energy amounted to US$243 billion, a 30% increase from the year earlier. Korea is also boosting its investment in an attempt to create new growth drivers and better tackle climate change. The amount of fresh funds in its new and renewable energy sector has almost quadrupled since President Lee Myung-bak took office three years ago. The average annual rate of increase is no less than 57%.
Between 2007 and 2010, the government budget to this end grew from 422.6 billion to 809.1 billion won, while private-sector investment skyrocketed from 0.72 trillion won to 3.56 trillion. “In this time, the number of green energy companies and their employees have more than doubled and tripled, respectively, while their sales and exports soared 650% and 590%, respectively,” said the director general, adding, “From those figures, we can tell that the alternative energy industry has positioned itself as a key driving force in realizing the vision of low-carbon green growth.”
Green Energy Strategy Roadmap 2011 Allowing for Change in Global Conditions
To keep abreast of global trends, the Knowledge Economy Ministry released its Green Energy Strategy Roadmap 2011 back in June. It is its second version, following of the first in 2009. The new scheme is different in many aspects from its predecessor. “The 2011 version takes changed conditions into account, e.g., increases in energy demands and oil prices, and its strategic directions and items also differ from those of the previous model,” he commented.
The strategic directions of the 2011 roadmap newly include the nurturing of world-class small and mid-sized enterprises (SMEs), more efforts for convergence between technological fields and a strengthened role for the public sector. Furthermore, the number of core items and source technologies to be developed in the 15 green energy segments for the next 20 years rose to 88 and 288, respectively, up from 56 and 203. These 15 segments include photovoltaic and wind power generation, fuel cell research, integrated gasification combined cycle (IGCC), clean and bio fuels, and carbon capture and storage (CCS).
R&D projects are currently underway for 105 of 288 key technologies, led mostly by SMEs. The purpose is to turn these into world-leading companies or hidden champions. Examples of the 105 tech items include building integrated photovoltaics (BIPV), high-efficiency drive motors for green cars, solid catalyst-based biodiesel production, and compact yet highly efficient heat exchangers. What is noteworthy is that technologies related to nuclear safety improvement have been put on the list, with the international community demanding higher stability in the wake of the Fukushima disaster.
Greenhouse Gas Reduction Road-map to Be Unveiled
Nevertheless, the scheme is not yet perfect. There are some remaining parts that need to take better shape. One such example is a strategic roadmap to reduce greenhouse gas emissions.
According to experts, a milestone in R&D is urgently needed if the country is to meet the national greenhouse gas emissions reduction target announced in November 2009. In this context, the ministry selected 30 top priority R&D tasks after analyzing each energy technology’s contribution.
15 of these will be developed into future growth engines in the framework of the 2011 roadmap. Additional plans will be drawn up for another 15, including a petrochemical process and innovative steelmaking technologies, non-CO2 processing, next-generation drying technology, high-efficiency dyeing and geothermal technology. “Subcommittees are working on specific plans for the latter group, and these will be available in October this year,” said the director general.
Resource War Heating up
Ultimately, the ministry’s efforts are to secure a competitive advantage in the worldwide competition for natural resources, which is showing signs of overheating. Therefo-re, how is the government planning to get hold of more overseas resour-ces?
Back in 2008, the government set the development of overseas natural resourc-es as one of its most important agendas. Since then, it has framed policies and moved ahead with relevant projects. During this period, the public and private sectors have competed with each other, making massive investments and accomplishing many things. The oil and gas self-development rate increased from 4.2% to 10.8% between 2007 and 2010. The figure for strategic minerals like bituminous coal, uranium, iron ore, copper, zinc and nickel went up from 18.5% to 27%, while that of new strategic minerals including lithium and rare earth metals is now at 8.5%, considered an overachievement.
Not content with this accomplishment, the government is intending to further expand projects with a long-range view. For instance, it is in pursuit of comprehensive cooperation with all resource-rich nations, grouping various collaboration agendas together and utilizing these as a tool to secure foreign resources.
Efforts for the enlargement and specialization of state-run petroleum and mineral developers are also progressing well. At the same time, it is reconsidering delayed projects or those regarded as less promising, while also taking all necessary action, like sell-offs and closures in order to raise the soundness of such projects.
Its continuous endeavor to support relevant companies also cannot go unmentioned. To attract more investment and share business risks, the government and national financial institutions are offering various financial backups. One of the most typical examples is the success repayable loan system. Though it has been applied only to public enterprises, private-sector players will be able to exclusively benefit from it from 2012. The size of loans via the Export-Import Bank of Korea will reach 3.8 trillion won this year and five trillion in 2013. Meanwhile, dividend income tax exemption is in place to invigorate resource development funds. Those putting their money in such funds can be protected by the government from investment risks.
“The incumbent administration has provided a systemic and well-organized backup to train engineers, assist them in development activities and invite foreign experts, and these efforts are bearing some fruit in the form of business capabilities covering the entire value chain of resource development,” he added.
Trained Experts, Prerequisite of Overseas Resource Development
According to the director general, well-trained manpower is the key to successful overseas projects. It is in this vein that each country’s major corporations, including state-owned oil giants, are committed to scouting professionals, with the shortage of such personnel intensifying. “It is trained experts that make or break resource exploitation projects, rather than an organization’s facilities or assets, because they analyze the economic feasibility of large-scale undertakings, address technical problems during the course and steer projects in the right direction,” he remarked.
“Korea is actually a late starter in terms of overseas resource development and it still needs more manpower to fare better down the road, yet the supply is far less than demand at the moment,” said the director general, adding, “To cope with the situation, the government launched a personnel training project in 2009.”
In that project, 10 colleges were provided subsidies to create better teaching and learning environments. The colleges, specializing in natural resources development, are going to supply professionals armed with advanced degrees, theoretical knowledge and practical expertise.
A graduate course in negotiation science was newly established this year, while measures are under way to make better use of the employees of the companies acquired by the Korea National Oil Corporation. If deemed necessary, foreign experts may also be scouted or hired directly by the government.