[Green Growth:Korea`s New Strategy (39)] Tackling energy and environmental problems

The following is the 39th in a series of articles focusing on the Korean government`s "green growth" strategy. The series will also introduce the increasing efforts of major advanced countries of the world to promote a green economy. -- Ed.







Scientists and engineers stress the need to find appropriate solutions to the 10 leading problems facing humankind in the 21st Century: energy, the environment, water, food, poverty, terrorism, disease, education, democracy and population.

It appears that the most serious among these are energy -- the depletion of oil resources -- and environment -- global warming. What`s more, the problem of climate change stems from energy. <**1>

It is expected that the world`s total energy demand will increase by more than 60 percent by 2030 due to economic growth and an increase in the global population. Most likely, more than 80 percent of the increase in energy demand will come from China and India, non-OECD countries. However, supply is expected to remain unstable due to an increase in oil exploration expense, OPEC`s unwillingness to increase production and the brisk consumption by non-OPEC countries. The increase in greenhouse gases commensurate with the increase in energy demand has caused a rise in temperature, along with other climatic changes, thus deepening the concern for the state of the environment worldwide.



Other nations` positions



Concerning the energy/environment crisis, countries around the world are vying to secure relevant technologies and gain an advantageous position. In January 2006, the U.S. government announced the Advanced Energy Initiative, stating that it would replace 75 percent of its oil imports from the Middle East with renewable energy by 2025. In May 2007, Prime Minister Abe Shintaro said that Japan would halve its carbon dioxide emissions by 2050 to eventually reverse global warming through "Cool Earth 50." In November 2007, the European Union set up the Strategic Energy Technology Plan to reduce greenhouse gases and bring about new energy innovations.

Notably, China recently released a white paper on its energy status, saying that it would develop the energy/environmental industrial sector by focusing on energy efficiency. China hopes to cope with climatic changes and reinforce its cooperation with other countries in energy-related matters, a turnabout from its past priority on economic development and increased energy production.



Our reality and problems



What efforts is Korea making, compared more advanced countries? It appears that it is taking insufficient steps to turn the resource and climate changes crises into an opportunity.

The amount of energy imported in 2007 was $94.5 billion, about 10 percent of the GDP. That`s 27 percent of the total imports. The country ranks fifth worldwide in oil consumption and first in Asia without per-capita GNI taken into account. The country`s rate of independent crude oil or gas development is 4.2 percent, meager compared to France (95 percent), Italy (54 percent), China (14 percent) and Japan (9.8 percent). Its renewable energy usage rate stands at 2.2 percent of the country`s total energy requirements, which ranks 25th among the 30 OECD countries.

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Korea`s carbon dioxide emissions amount to 600 million tons, the 10th largest worldwide. In 2004, Korea recorded a 105 percent increase in its carbon dioxide emissions when compared to the 1990s; a rate second only to China`s. Korea and Mexico are the only OECD countries that have no obligation to reduce their carbon dioxide emissions. However, pressure on these countries is mounting because of their amount of emissions and the sizes of their economies.

Under such circumstances, it is high time that we seriously thought about the energy/environmental problems. The very sustainability of our national economy could depend on it.



The era of diversified energy



Daniel Yergin, chairman of the Cambridge Energy Research Associate in the United States, predicted that "If oil prices go beyond $120/bbl, the world will go for a multiple energy system, with brisk efforts made against the use of petroleum under this breakpoint scenario." Experts say that oil prices will remain high, although they have fallen temporarily due to the worldwide economic troubles. They point to the possibility that the monopolistic position of petroleum will eventually weaken due to innovations in both energy source and demand, bringing about a long-term shift into a multiple-energy system.

This era will provide non-oil producing countries with a new opportunity for growth. Among such nations, Germany ranks first worldwide in photovoltaic and wind power generation, and Spain second in wind power generation, setting an example for other non-oil producing countries like Korea to follow.

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Our choice



Now is the time for Korea to usher in plans for coping with changes in the energy/environmental paradigm. Such plans must focus on alternative sources of energy and strategic approaches/implementations. While the discovery of new oilfields is on the wane, the demand for energy continues to increase. Ways to bridge this gap will include: 1) diversification of energy sources from a supply perspective, 2) improvement of energy efficiency from a consumption perspective, and 3) reduction of carbon dioxide emissions to cope with climate change. Our efforts towards solving the energy/environmental problems should be simultaneous and involve reducing our dependence on petroleum and greenhouse gas emissions.

Regarding the diversification of energy sources, there was a switch from coal to oil in the 20th Century. It is expected that the 21st Century will bring a rapid switch from high-priced oil to multiple energy sources. It takes considerable time and effort to commercialize a new energy source, so Korea should also jump on the worldwide diversification bandwagon as soon as possible.

In fact, it will be necessary to push forward with the development of energy sources to replace existing ones in 10 to 20 years. Research on the development of renewable energy (clean coal, marine biofuel, photovoltaic cells, marginal fields, frontier resources, GTL, wind power or waste recycling) or, perhaps, nuclear fusion should be initiated.



Regarding improvement in energy efficiency, Korea lags behind more industrialized nations due to its high share of sectors (like iron and steel, plus petrochemistry) which consume a high amount of energy. As for the amount of energy used to produce $1,000 worth of GDP, Korea`s stands at 0.335 TOE, compared to Japan (0.106), the United States (0.213) or the OECD (0.195 on average), which shows that drastic improvement has become necessary.

Thus, improved efforts towards greater energy efficiency are emphasized as countries vie to secure resources, and this seems the most effective way to simultaneously solve the problems of high oil prices and greenhouse gas emissions. Technologies used to improve energy efficiency include fuel cell power generation systems, lithium secondary batteries (Hybrid, Plug-In Hybrid), LED lighting and highly efficient heat insulation materials.

Regarding countermeasures against climate change, such changes have emerged as both a stumbling block to free trade and an opportunity to create new markets. It is urgent that we push ahead with the development of innovative technologies to reduce carbon dioxide emissions and use such steps to join the worldwide efforts. Nations around the world are furiously engaged in developing technologies related to converting carbon dioxide into chemical products; producing paraxylene, the raw material for polyester; or methanol or even composite petroleum. This reflects the expected emergence of a huge market for the greenhouse gas industry amid efforts to switch to a low-carbon industrial structure.



The new growth engine taskforce team



With the inauguration of the Lee Myung-bak administration in 2008, the Ministry of Knowledge Economy launched the New Growth Engine Taskforce Team, headed by KAIST President Suh Nam-pyo, in an effort to pump life into the economy and explore new growth engines. The team has four sections: the Energy/Environmental Industry Section, the New Industry Section, the Core Industry Section and the Knowledge/Service Industry Section. Their main objectives are the policy measures for making new industries into core ones, enhancing the added value of core industries and making the service industry a growth engine.

The Energy/Environmental Industry Section concentrated on: 1) construction of an "energy-independent" country by enhancing the self-supply of energy rate, 2) becoming an environmentally advanced country by taking the proper steps concerning climate change in cooperation with the international community, and 3) exploring a new growth engine in the energy/environmental sectors. This section explored candidate research subjects and focused on supply and demand factors in conventional/unconventional energy areas. Finally, it selected six items as new growth engines for the energy/environmental sectors from among 22 candidate subjects based on criteria such their growth potential, their spillover effects and their possibility of success. Road maps of the candidate subjects are being developed under the guidance of the Ministry of Knowledge Economy.



New Growth Engines selected for the Energy/Environmental Section are:



① Clean coal energy

② Marine bio fuel

③ Photovoltaic cells

④ Recovery of carbon dioxide and its conversion to a resource

⑤ Fuel cell power generation systems

⑥ Nuclear power plants



Introduction of the core subjects selected



Recently, the National Intelligence Council in the United States announced six disruptive technologies expected to impact that country`s competitiveness through 2025. Disruptive technologies refer to those that have the potential to either damage or contribute considerably to national competitiveness in diversified sectors like politics, the economy, the military or society.

Out of 102 candidate items, six (clean coal technology, bio fuel/bio chemistry, energy-storing materials, biological aging process-related technology, service robots and Internet technology) were selected. As you can see, the NIC`s selections coincided with those of the Energy/Environmental Industry Section in several areas.

Regarding clean coal energy, worldwide coal reserves are estimated at around 1 trillion tons, twice the oil reserve (whereas low-quality coal reserves come to 470 billion won, or half of the entire coal reserve). However, the use of coal as a fuel has pollution problems like higher carbon dioxide emissions than natural gas or petroleum, and its low gasification efficiency. Its price is about one-10th of high-quality coal ($10-20/ton) but there is little demand. The development of gasification technology allowing the use of low-quality coal without causing pollution will have a tremendous impact on the world energy market.

During the George W. Bush administration, the U.S. launched the Clean Coal Power Initiative to invest a total of $2 billion won in coal-fired power generation and the production of hydrogen through coal gasification for 10 years. Also, the Japanese government generously supported projects for the transfer and commercialization of energy/environmental technologies in cooperation with governments of developing countries in the Asia-Pacific region.

Regarding marine biofuel, the production of biofuel using grains like corn, bean or sugarcane has emerged as a social issue due to food shortages and a rise in food prices. An executive officer at FROST & SULLIVAN said, "The Chinese government made a very wise decision prohibiting the use of grains in bio fuel production. It was the right decision not to use grain in the production of bio ethanol or vegetable oil in the production of bio diesel."

Amid such strong objections to the use of food grains for the production of fuel, it may be worth considering developing technology capable of producing biofuel using marine plants. Japan is carrying out biofuel research in the East Sea under the Apollo & Poseidon Initiative.

It would certainly prove more advantageous to develop biobutanol or biohydrocarbon that could use existing infrastructure than bioethanol that, due to its low-calorific value and high water solubility, is unsuitable for today`s infrastructure. It is expected that the productivity of biofuel may be drastically enhanced through the adoption of the "on-ship plant" development method, which uses the country`s shipbuilding, oil refinery and industrial plant technology for harvesting marine plants and production of biofuel in seaweed farms.

Regarding photovoltaic cells, it is estimated that the total solar energy reaching the Earth every hour is twice that of the total annual energy needs of humankind. However, the low density of solar energy and the shift between day and night makes efficient collection of solar energy difficult. Photovoltaic cells are a sustainable means of securing it. The market for polysilicon-based renewable energy -- the first generation of the photovoltaic cell -- is rapidly growing. However, polysilicon alone is unlikely to get us to grid parity, which makes it necessary to develop thin-film photovoltaic cells or organic photovoltaic cells that can compete with nuclear power generation. We are focusing on the development and commercialization of photovoltaic cell technology and having the cost of installation lowered, with the aim of attaining a 20 percent share of the world market by 2018.

Regarding the recovery of carbon dioxide, now is the time to direct efforts toward developing technology that not only recovers but processes carbon dioxide. It may be converted into a resource that meets the requirements set by worldwide convention on climate change and play a leading role in the new greenhouse gas market. Carbon dioxide can be buried underground or undersea, and also piped to a processing plant for conversion into chemicals. It could also be a useful industrial fuel.

However, carbon dioxide buried underground or undersea might be released in an earthquake or other movement of the Earth`s crust. Additionally, identifying a place to bury it within Korea is proving difficult. The core technology for conversion of carbon dioxide into chemicals was recently developed in Korea. Efforts are continuing to develop the technology to recover carbon dioxide and make it a resource. Should such efforts bear fruit the planet will be a much nicer place to live in.

In fuel cell power generation systems, the need for power generation facilities that befit a new era is pointed out in terms of efficient use of existing energy. Fuel cells are a highly efficient, environmentally friendly power generation source that does not release pollutants. They also make it possible to use existing fossil fuels efficiently, along with diversified energy sources like waste gas or hydrogen. If the technology is developed in time, and the country plays a dominant role in the $60 billion fuel cell market by 2018, the sector is expected to earning 24 trillion won a year.

In terms of nuclear power plants, the country has reached a world-class level in technological reliability and operational know-how. It has also reached a level where economic efficiency is secured through the standardization of building skills. When we no longer depend on certain technologies from other nations, we will be in a more advantageous position to compete in the worldwide nuclear power plant market.

Worldwide demand appears very favorable for Korea, with the United States, China, Russia and India forming huge markets. It is also expected that countries with existing nuclear power plants, including South Africa, Finland, France and Canada, will construct new ones. It is necessary to pay attention to UAE and Saudi Arabia, who have plans to build nuclear power plants to diversify their energy sources.

The IAEA expects that about 309 nuclear power plants, worth $700 billion altogether, will be built worldwide by 2030. The country`s export of nuclear power plants will have tremendous effects, such as inducement of export/employment effects in relevant industrial sectors, reinforcement of economic cooperation with importing countries, and the enhancement of the country`s prestige in the international community.



Government/private sector cooperation



Private businesses can play a leading role in forming the momentum for creating new growth engines on the national level. The government should proactively support for them through 1) diplomacy for securing overseas resources (with countries that have low-quality coal reserves and seaweed farms), 2) developing a domestic market for renewable energy (offering tax or subsidy incentives), and 3) invigorating R&D intended to secure core technologies (like zero pollution coal gasification, seaweed farming and on-ship production).

By Kim Gyeong-won