1. Korea’s ‘Green Growth’ as a New Economic Paradigm And Its International Implications Prepared as background material for a lecture at the Graduate School of International Studies at the Hankook University of Foreign Studies November 19, 2009 By Soogil Young, Ph.D. Chairman Korea National Committee for Pacific Economic Cooperation

2. 2/23 Ⅰ. Korea Launches the Green Growth Ⅱ. Korea’s Green Growth Pursues 3 Objectives with 3 Strategies Ⅲ. Institutional Set-up for Implementation of Green Growth Ⅳ. Five Policy Instruments for Green Growth Ⅴ. Ten Policy Agenda Ⅵ. President Lee’s Action Plan on Green Growth: the 5-Year Plan Ⅶ. Green Growth Offers Korea Opportunities for a Global Role Ⅷ. Three Drivers of Korea’s Shift to Green Growth Ⅸ. Green Growth Promises a New Sustainable Growth Paradigm Ⅹ. Green Growth Facilitates Ecological Modernization ♦ Prospects and Challenges for Korea’s Green Growth Contents

3. 3/23 ▪ On August 15, 2008, celebrating the 60th anniversary of the Republic of Korea, President Lee Myung-bak declared ‘low carbon green growth’ as Korea’s new vision for development for the next 60 years. - “Green growth is sustainable growth which reduces greenhouse gas emission and environmental pollution.” - “It is a new national development paradigm in which green technologies and clean energies create new growth engines and jobs.” ▪ The UNESCAP-sponsored 5th Ministerial Conference on Environment and Development held in Seoul in March 2005 launched the ‘Seoul Initiative on Environmentally Sustainable Economic Growth (Green Growth)’ as a regional cooperation framework for green growth. ▪ The Meeting of the OECD Council at Ministerial Level held on June 24-25, 2009, issued ‘Declaration on Green Growth’, asking the OECD to develop a Green Growth Strategy. Ⅰ. Korea Launches the Green Growth

4. 4/23 ▪ Three Objectives: 1. Promote a synergistic relationship between economic growth and environmental protection. 2. Improve people’s quality of life and bring green revolution in their lifestyles. 3. Contribute to the international efforts to fight climate change and other environmental threats. ▪ Three Strategies: 1. Act on Climate Change and Secure Energy Independence 2. Create New Growth Engines from Green Activities 3. Enhance Quality of Life and International Contribution Korea’s Green Growth Pursues 3 Objectives with 3 Strategies Ⅱ. Korea’s Green Growth Pursues 3 Objectives with 3 Strategies

5. 5/23 Ⅲ. Institutional Set-up for Implementation of Green Growth ▪ Presidential Committee on Green Growth was created in February 2009 for inter- Ministrial coordination and public-private consultation - PCGG operates four private-sector consultative bodies: industrial, science and technology, green living, and green finance. - PCGG is assisted by an inter-Ministrial Secretariat and 12 Task Forces of officials and private experts. ▪ PCGG has prepared a Green New Deal (2019~2012), followed by a National Green Growth Strategy (2009~2050) and a Five-Year Plan for Green Growth (2009~2013). - PCGG also prepares various sectoral and issue-specific plans, roadmaps and initiatives. - PCGG holds public hearings and seminars on many of those draft documents. ▪ PCGG coordinates with local Green Growth Committee created by local autonomous governments. ▪ The Framework Law for Green Growth bill is expected to pass the National Assembly this fall.

6. 6/23 Ⅳ. Five Policy Instruments for Green Growth ▪ Public investment in infrastructures and R&D - Improve mass transit, water quality, green homes, etc. - R&D in low emission vehicles ▪ Regulations and incentives to give signals to the market - Renewable Energy Portfolio Standard, vehicle GHG emission, energy efficiency labeling, etc. - Eco-friendly tax reform, feed-in tariffs, etc. ▪ Market-correction measures to internalize the externalities - Environment tax, pollution charges, subsidies, emission rights trading, etc. ▪ Moral suasion through education and mass media campaign

7. 7/23 Strategies National GHG info Management System - set emissions reduction goal - enhance carbon visibility Encourage Carbon-3R Activities Inter-Korea Cooperation for the Green Korean Peninsula Indicative target 1. Low Carbon Society 19.8% (’50) (’20) (’09) 17.6% 17% Reduce GHGs Carbon-3R Rates Ⅴ. Ten Policy Agenda

8. 8/23 2. Energy Security Enhance Energy Independence Strategies Energy Conserving Society Expand Clean Energy Development & Deployment Expand Safe Nuclear Energy Expand off-shore Energy Source Development Indicative target 100% (’50) (’20) (’09) 50% 32%

9. 9/23 3. Strengthen Climate Actions Strategies Improve monitoring& early warning system Improve climate adaptation & address related health risks Improve food security Improve water resources management Indicative target 22.2billion ㎥ (’50) (’20) (’09) 21.4billion ㎥ 18.6billion ㎥ 수질개선 수자원확보 Secure Water Resources

10. 10/23 4. Develop Green Tech Strategies Strategic Promotion of Green tech innovation Strategic Investment in Green R&D Core Green technologies - LED, CCS, Clean Cars, Renewables Indicative target Invest in Green tech R&D 30% (’50) (’20) (’09) 25% 16%

11. 11/23 Export in Green Products 35% (’50) (’20) (’09) 22% 10% 5. Fostering Green Industries Strategies Resource-circulating economy & society Green conversion of industries Foster green SMEs Build green clusters Indicative target

12. 12/23 6. ‘Greenovate’ Industrial Structure Strategies Foster high tech fusion industry High value added service industry Indicative target (’50) (’20) (’09) Export in contents $50billion $10billion $5.8billion Export in IT fusion industry $349billion $144billion $ 75.5billion

13. 13/23 Domestic Carbon Market 5 trillion won (’50) (’20) (’09) 2 trillion won Getting ready 7. Build Green Economy Basis Strategies Invigorate Carbon Market - Cap & trade, Emissions related business Green Financial Infrastructure - Sustainable banking, Green fund Eco-tax Create green jobs Indicative target

14. 14/23 8. Green Land·Transportation UN Green Model Cities (’50) (’20) (’09) 10 5 0 30% 26% 18% Proportion of railway transportation Strategies Expansion of Green Home & Green Buildings Green cities Expand Eco space Green Public Transportation bicycles & Promote Green Cars Indicative target

15. 15/23 Carbon label certified products 9. Green Life Revolution 4,000 items (’50) (’20) (’09) 1,000 items 50 items 9. Green Life Revolution Strategies Introduce Eco-point system & expand Carbon labeling Promote green consumption & green lifestyle Promote green growth education & public awareness Indicative target

16. 16/23 EPI 51 st 8 th (’50) (’20) (’09) 20 th Green ODA 40% 30% 14% 10. Global Green Leader Strategies Enhance int’l cooperation for green growth and climate action Increase Green ODA & support developing countries Build Green Hub Korea Indicative target

17. 17/23 Ⅵ. President Lee’s Action Plan on Green Growth: the 5-Year Plan ▪ The 5-Year Plan for Green Growth (2009~2013) is the yearly implementation plan for the 10 policy agenda for green growth for the years of the present government’s tenure, specifying investment plans and responsibilities. - Creates the foundation for the long-term green growth. - Proposes to spend 107.4 trillion won (about $84 billion) over the next 5 years, or about 2% of the annual GDP for green growth on the average. - The green investment is to increase at 10.2% p.a., includes green technology development and the Four Major Rivers Restoration Project. ▪ The impacts of such green investment in terms of the annual average are estimated to be: - Production impact: 3.5~4.0% of the estimated 2009 GDP - Job creation effect: 34.4~39.8% of the total unemployment in Q1 2009

18. 18/23 Ⅶ. Green Growth Offers Korea Opportunities for a Global Role ▪ Korea is preparing to contribute to successful Copenhagen deal. - Seeking active participation in discussion at MEF, G20, APEC, etc. - ‘NAMA Registry’: to bridge differences between developed and developing. - Adopted an Aggressive 2020 midterm GHG mitigation target: -30% BAU or –4% of the 2005 emmissions ▪ Contributing to green growth in developing countries - Launched an East Asian Climate Partnership Program. - Will increase ODA, with focus on green investment * Green ODA: 14%(2009) → 20%(2013) ▪ Preparing to emerge as a ‘green hub’: Seoul Initiative Network on Green Growth (UNESCAP), OECD Green Growth Strategy project, an APEC Climate Center, an Asian Forestry Cooperation Organization, etc.

19. 19/23 Ⅷ. Three Drivers of Korea’s Shift to Green Growth ▪ Global warming (‘global weirding’) and its dire consequences - Korea is one of the more vulnerable to climatic changes. - An international GHG regulatory regime is emerging. - Korea’s current emission is not sustainable. * The 9th largest emitter of C02 (590million tons) in 2005. * The 22nd in terms of the cumulative emissions since 1900. ▪ The recurrent and worsening energy crisis - Korea is heavily dependent on imported energy, and on fossil fuel, in particular. - Renewable energies account only for 1.4% of the energy used. - A high proportion of manufacturing are energy-intensive: steel, petro, cement, etc.) ▪ The existing industries have been weakening as growth engines, proving the unsustainability of the old growth paradigm.

20. 20/23 Ⅸ. Green Growth Promises a New Sustainable Growth Paradigm ▪ Green growth proposes to protect environment and preserve the climate while finding new growth engines in those efforts. - It sees a critical competitive edge in energy efficiency and environment- friendliness. - It even seeks to leverage on international environmental regulation to create new growth engines. - It creates a synergistic relationship between industrial development and environmental protection, as well as the potential for sustainable growth. ▪ Green growth promises a new and sustainable growth paradigm, offering an operational solution to sustainable development.

21. 21/23 Ⅹ. Green Growth Facilitates Ecological Modernization ▪ Green growth will promote Korea’s progress beyond industrial modernization to ecological modernization. ▪ Ecological modernization* means: - Possible to enjoy benefits of economic growth, together with enhanced environmental protection; - Environmental concerns produce demands for new products. Even waste become saleable assets; - Companies put environmental issues at the heart of their corporate planning; - Government integrates economic and industrial policies with environmental policies; - Governments work in a partnership with businesses, moderate environmentalists, and scientists in the restructuring of the capitalist political economy. ______________ * See Stephen C. Young, eds. (2000), The Emergence of Ecological Modernizations, Routledge

22. 22/23 Prospects and Challenges for Korea’s Green Growth ▪ Korea’s green growth strategy is a very comprehensive one in its objectives. Whether such strategy can deliver on those objectives is not certain. ▪ A key challenge, among others, will be to charge appropriate prices to externalities, especially, to carbon emission. Successful green growth requires adoption of a compulsory and stringent enough national emission target as well as its appropriate allocation among industries and entities. ▪ Korea alone cannot succeed in green growth. A critical mass of countries should be engaged in the same efforts, in the context of a common international regime for low carbon green growth, including an effective post-2012 climate change regime.

23. 23/23 Thank you!