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In 2000, 83% of total greenhouse gas emissions came from the energy sector (e.g. fuel consumption and fugitive emissions). Hence, recognizing that the reduction of greenhouse gas emissions in the energy sector is of the utmost importance for devising countermeasures for the UNFCCC, profound and diverse policies and measures are being developed and promoted. In the energy sector, for instance, policies are being devised for energy supply & demand, buildings and transportation fuel.
A. Energy Demand
Collaborative energy conservation and improvement in energy efficiency have been selected as the two major promotional strategies in curving energy demand, forming the foundation for various policies.
■ 3-Year Plan for Energy Audit
A total of 10,387 cases of energy audits were performed on businesses (10,010 cases) and buildings (377 cases) between 1980 and 2001. The audits have been estimated to have had the energy reduction effect of 2,448,000 TOE each year.
<Table 4-4> 3-Year Plan for Energy Audit (Unit: Sites)
Classification | 2002 | 2003 | 2004 | Total |
Close Audit
(Charged) | Public Audit | 90 | 130 | 170 | 390 |
ESCO Audit | 50 | 80 | 110 | 240 |
Basic Audit (Free) | 380 | 430 | 479 | 1,289 |
Total | 520 | 640 | 759 | 1,9191 |
Source: Inter-Ministerial Committee on UNFCCC (2002)
Currently, Korea is implementing a 3-year Plan for Energy Audit (2002 ~2004) to inspect a total of 2,096 businesses and buildings that consume over 2,000 TOE a year. Expansion of the energy audit program is being promoted each year. Furthermore, close audits are being performed on 1,052 businesses that consume over 5,000 TOE and basic audits are being performed on 350 small and medium businesses that consume less than 2,000 TOE each year.
To implement the required improvements indicated by the energy audit, companies being audited will be provided with low-interest loans from a fund named the Fund for the Rational Use of Energy. For large companies, the loan is provided only when facility improvements are completed. However, if a large company is selected more than twice as an excellent energy conserving company or has concluded the Voluntary Agreement, benefits may include support for the installment of new energy-efficient facilities or expansion of existing facilities.
■ Expansion of Voluntary Agreement
The Voluntary Agreement (VA) was adopted in 1998 with 15 companies who joined the pilot VA program in the first year. By 2001, the number of participants entering into the agreement (duration of agreement: 5 years) with the government to reduce energy consumption and greenhouse gases increased to 374 companies. The VA participants in 2000 used 51,526,000 TOE annually, which is 53.2% of total energy consumption.
<Table 4-5> Results of Voluntary Agreement
Classification | 1998 | 1999 | 2000 | 2001 | Total |
No. of Businesses | 15 | 52 | 145 | 162 | 374 |
Source: Korea Energy Management Corporation (2003)
Korea plans to continuously increase the number of participants in the VA program. Support provided to participants will be further expanded and strengthened from current incentives such as financial assistance from the Fund for Rational Use of Energy, relief of restrictions on fuel use, and discounts on audit expenses to induce voluntary greenhouse gas reduction efforts. About 660 companies, accounting for 75% of all target companies, are expected to join the agreement by the end of 2003.
Furthermore, based on the outcome of research conducted on parties to the agreement, goals and duration of the agreement and incentives, the government plans to expand the VA program to 1,300 companies each consuming over 2,000 TOE per year from the second agreement period beginning in 2004.
■ Energy Service Companies (ESCO)
The Korean Energy Service Companies (ESCO) project started with three registered companies in 1992. The number of registered companies increased to 159 by 2001. Recently, stepping away from their initial implementation stage focussing on high efficiency lighting, the major operations of the companies have been expanded in scope to high quality businesses such as process improvement, cooling and heating facilities, waste heat utilization and cogeneration.
<Table 4-6> Status of ESCO Registrations
Year | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | Total |
No. of Registered Companies | 4 | 1 | 2 | -1 | 3 | 7 | 11 | 27 | 48 | 57 | 159 |
Source: Korea Energy Management Corporation (2003)
<Table 4-7> Status of Financial Support for ESCO (Unit: 100 million won, withdrawal standard)
Classification | 1993~1998 | 1999 | 2000 | 2001 | Total |
Cases | 197 | 244 | 519 | 548 | 1,508 |
Loan | 480 | 648 | 856 | 751 | 2,735 |
Source : Korea Energy Management Corporation (2003)
Korea is fostering ESCO as UNFCCC-specialized companies to tackle mid- to long-term UNFCCC-related issues. The Korean government provides low interest loan investment and the level of investments has steadily increased. There are various forms of financial support for ESCO such as the working capital loan for small and medium-sized ESCOs as well as credit loans and factoring program to lighten the debt burden of ESCO. In 2001, the financial support for ESCO reached 273.5 billion won.
■ High Efficient Equipment Certification Program
Since December 1996, Korea has been implementing the High Efficient Equipment Certification Program, which is an efficiency assurance system. This program certifies products that satisfies certain energy efficiency standards in order to encourage more widespread use of high efficiency energy equipment & supplies, such as the high efficiency induction motor.
Between 1996 and 2001, 22 subject items of high efficiency equipment were certified, and 135 companies and 759 models in total were certified under this program. Financial support and tax benefits are provided for products that have been certified as high efficiency equipment. Products are also conferred the right to use an "e" mark to certify the validity of the high efficiency equipment.
<Table 4-8> Status and Expansion Plan for Subject Items of High Efficient Equipment Certification Program
Classification | 2000 | 2001 | 2002 | 2003 | 2004 | 2005~2009 |
Expansion Items | 5 | 3 | 1 | 5 | 3 | 10 |
Total Subject Items | 19 | 22 | 23 | 28 | 31 | 41 |
Source: Korea Energy Management Corporation (2003)
To further induce the reduction of energy consumption and greenhouse gas emissions, the government is planning to expand items qualified for certification from 22 in 2001 to 31 by 2004 and 41 by 2009. Meanwhile, an expanded rebate program will be applied to all high efficiency equipment items, in which financial support and tax benefits will be granted to energy efficient companies, and regulations mandating the use of high efficiency equipment will be expanded to cover construction standards to attain improved energy efficiency. In addition, the overall proliferation of high efficiency equipment will be expanded by first encouraging public institutions to purchase and install energy efficient equipment.
■ Energy Efficiency Standards & Labeling Program
Since 1992, efficiency standards (grades 1 ~ 5) and labels indicating the level of energy efficiency have been marked on products to encourage consumers to purchase high efficiency products that reduce energy consumption as well as greenhouse gases. Initially, the program was implemented on 5 items including refrigerators and automobiles in 1992. By 2001, 5,294 models of 11 items were classified and registered, among which 3,849 models were evaluated as high efficiency products, registered as grade 1 and grade 2, and occupied 73% of the total number of models.
The government plans to examine the potential of the distribution progress, national technology standard and energy conservation to increase 1~2 items subject to efficiency classification labeling each year. In 2002, 'kimchi' refrigerators and rice cookers were designated as subject items. In 2003, compact fluorescent lamps will be designated. Subject items will increase to a total of 20 by 2010. Furthermore, an exemplification program will be implemented for companies producing relevant items. The Minimum Energy Performance Standard, which restrains the distribution of low efficiency products and promotes the technical development of manufacturers by setting up and controlling the minimum required efficiency standard, will be continuously implemented. The products registered as grade 1 and grade 2 that occupy over 90% of the market and difficult to differentiate between grades will be converted as subject items for the Minimum Energy Performance Standard program. Currently, refrigerators, air-conditioners and domestic gas boilers are included as subject items of the Minimum Energy Performance Standard.
B. Energy Supply
Various policies are being promoted for the energy supply sector through the establishment of renewable energy and cleaner energy distribution as promotional strategies to reduce greenhouse gas.
■ Formation of a Market Demand for Renewable Energy & Improvement in Its Economics
To foster the renewable energy industry, raising the level of confidence in renewable energy technology and a guarantee of price competitiveness compared with the current fossil fuel energy is necessary. Hence, the standard price for each power generating source should be announced for electricity generated at renewable energy facilities based on the amended Promotion Act for New & Renewable Energy Development, Utilization & Dissemination. The economic benefits as compared to the price of electricity are expected to enhance the competitiveness of using renewable energy as the source of generating power and promote the development of renewable energy businesses.
Korea is forming a market base to efficiently distribute renewable energy technology which is focusing its development on Photovoltaic (PV), wind power and fuel cell. Through the amendment of the Promotion Act for New & Renewable Energy Development, Utilization & Dissemination in February 2002 and Energy Conservation Guideline for Public Institutions in April 2002, public institutions including government institutions, local authorities and government invested companies were first targets to mandatorily install renewable energy facilities. Furthermore, the New & Renewable Energy Equipment Certification Program Promotion will be developed and implemented to increase reliability and promote the spread of renewable energy facilities.
Meanwhile, the Performance Evaluation Center for New & Renewable Energy is being designated and operated to implement the standardization of each technology and performance tests of developed technology. To improve the durability and reliability of products and to secure engineering technology, a simulation research complex has been established and is being operated. The complex conducts simulation research to verify the economic feasibility and reliability of the production of such energy.
To develop and distribute renewable energy, the Korean government promotes projects that reflect the characteristics of each specific region. For example, plans are underway to construct a Wind Farm (500 MW) by 2010. To develop and distribute energy derived from the ocean, the construction of a 720 MW tidal power plant is expected to be completed by 2011. Furthermore, the potential construction of a tidal current power plant on the southern coast and wave-force power plants on the eastern coast are being examined. Photovoltaic generators (1300 MW) and landfill gas generators (105 MW) are also expected to be built by 2011.
■ Expansion of Integrated Energy Supply Project
It has been evaluated that the integrated energy businesses that supply heat and/or electricity for heating, hot water, and air conditioning have a significant impact on energy conservation and environmental improvement. Service areas are being expanded through the designation of supply location, tax benefits, administrative and loan supports, etc. Meanwhile, as a measure to expand integrated energy supply, the energy generated from waste incineration facilities is being used as a source for heat. Furthermore, the number of businesses using landfill gas and the Community Energy Supply (CES) are being expanded.
■ Stable Supply of Natural Gas
Korea is endeavoring to increase the stable supply of natural gas, a source of cleaner energy with low greenhouse gas emission, and expand the supply infrastructure such as nationwide pipelines and the construction of LNG terminals. The consumption of natural gas in Korea increased by 18.2% annually between 1987 and 2000. The long-term import source which was limited to Asia such as Indonesia has been extended to the Middle East such as the State of Qatar and Oman to strengthen the stable supply of natural gas by 2010. A long-term supply contract for 16.98 million tons will be entered into in order to supply the demand for 17.8 million tons of natural gas by 2002 ~ 2004. Additional demand will be satisfied through mid- and short-term contracts.
Meanwhile, to establish a stable supply infrastructure, natural gas supply is being increased through continuous expansion of supply facilities such as LNG pipelines and storage tanks. The nationwide pipeline business for natural gas was completed by the end of 2002 with the operational length of the pipeline network extending 2,442 km. Furthermore, storage capacity will be expanded to 4.46 billion liters with 35 tanks. Approximately 271.5 billion won will be invested between 2001 and 2004 to expand the stable supply of natural gas. As a result, the natural gas supply rate is expected to increase gradually from 58.7% in 2000 to 67.2% in 2005 and 73.0% in 2010.
■ Stable Supply Level of Nuclear Energy
To satisfy the sharply increasing demand for electricity and to suppress carbon dioxide emissions, continuous promotion for non-greenhouse gas emitting nuclear power generation will be implemented. The occupancy of nuclear power will be maintained in the long-term at an adequate level of the total power generated. It is forecasted that the adequate supply of nuclear power will greatly contribute to the reduction of the greenhouse gas emissions in Korea.
The domestic nuclear power is the largest electricity supply source with the facility capacity of 13,720,000 kw, 27.0% of the total power generated in 2001. The generated quantity was 112.1 billion kwh, 39.3% of the total power generation. Meanwhile, by 2008, radioactive waste treatment facilities will be constructed to transport and dispose the waste currently stored within the nuclear energy generation site. Repair and maintenance as well as safety evaluations will be conducted on all nuclear facilities that have reached the end of its projected lifespan to continually promote the use of nuclear energy. Technological development will also be implemented to increase the output from nuclear power generation.
■ Promotion of Landfill Gas (LFG) Projects
As of 2002, 242 landfill facilities, or 1400 sites when completed or closed landfills are included, handling municipal waste were being operated in Korea. Of the total, 31 operating sites with over one million tons of landfill capacity were selected as targets for the landfill gas utilization. The amount of organic waste in the waste brought to the landfill sites are high in Korea, hence, the generation of methane gas used for energy source is known to be higher than that of developed countries. Therefore, landfill gas utilization, coupled with the development of renewable fuel, will greatly contribute to the nationwide reduction of greenhouse gas emissions.
<Table 4-9> Status of Landfills Operated in Korea (2002)
Classi-
fication | Total | Capacity (1,000 tons) |
Over 15,000 | 5,000 ~ 15,000 | 3,000 ~ 5,000 | 1,000 ~ 3,000 | Under 1,000 |
No. of Sites | 242 | 1 | 4 | 8 | 18 | 211 |
Source: Ministry of Environment (2002)
The current LFG utilization in progress includes the world's largest metropolitan landfill site and some others with the capacity over one million ㎥ which are controlled by the local government. The utilization to process landfill gas into fuel and to use it as an energy source is being promoted. The construction of a power plant (6.5MW) for utilizing LFG generated at the Metropolitan Landfill Site was completed in November 2001. The next step is to construct a 50MW power plant by 2004.
C. Buildings
■ Mandatory Standards for Building Insulation & Energy-Efficient Designs
Korea has revised the regulations on Equipment Standards for Buildings. Beginning June 2001, outer walls, roofs, and flooring of new buildings must meet the revised insulation standard requirements which is 20% higher. Furthermore, measures to actively implement the greenhouse gas emissions reduction policy by minimizing energy consumption by buildings through the expansion of mandatory application of new high efficiency equipment for new constructions will be promoted. In addition, for the efficient implementation of the Design Standards for Building Energy Efficiency, expositions are being held and technology administration guides are being issued.
Meanwhile, 8 types of large high-energy consuming buildings, including offices and hospitals, have been mandated to apply a separate Design Standard for Energy Efficiency since June 2001. For these buildings to be approved, efforts must be made to expand the use of high efficiency energy products such as high efficiency gas boilers and refrigerators. As a second step, improvements in the Standards for Building Energy Efficiency and insulation are being promoted to upgrade current prescriptive standard to a performance based standard.
■ Energy Efficiency Labeling Program for Buildings
To increase energy efficiency in the building sector, newly built or repairing multi-dwelling units with more than 18 households will be classified into grades 1~3 depending on the use of energy-conserving facilities and equipment throughout the life cycle of the construction project. Buildings that are above a certain performance standard will be given the Certificate of Building Energy Efficiency and a loan for the construction at a lower interest rate.
The Korean government will annually expand the energy efficiency labeling program by targeting detached houses in 2003 and business buildings in 2004~2010. The expanded implementation of this program is projected to play a significant role in the inducement of voluntary reduction of greenhouse gas emissions through fundamental energy conservation by the building sector which consumes about 23% of the total national energy.
■ Green Building Certification Program
The Green Building Certification Program evaluates the elements affecting the environment throughout the life cycle of the building construction process (production of material, design, construction, maintenance and dismantling of buildings) with the goal to improve the environmental performance of the buildings and reduce greenhouse gas emissions.
Between October 1999 and December 2000, the Ministry of Environment and Ministry of Construction and Transportation implemented the Feasibility Certification Program. In 2001, integrated implementation guidelines for the Green Building Certification Program was provided. In January 2002, promotions targeting multi-dwelling units were implemented. Certification audits will be targeted for existing buildings, but, if the construction contractor desires to be audited from the beginning stage of design, a preliminary certification will be endowed. The terms of validity for the certification is 5 years. Extension may be requested for additional 5 years, but, after 10 years, the regulation requires renewal.
The Korean government will expand, in phases, the subject of certification, which is currently limited to multi-dwelling units, to housing & commercial complexes, business (public, private buildings), commerce (schools, hospitals, etc.), and remodeling buildings. Furthermore, the Life Cycle Assessment (LCA) for material production, design, construction, maintenance and destruction of buildings will be implemented to minimize environmental impact. In addition, a scheme to evaluate greenhouse gas emissions reduction in detail will be also be implemented.
D. Transportation Fuel
■ Compressed Natural Gas (CNG) Buses
In 1999, an amendment was made to the Air Quality Preservation Act to establish a legal basis to convert urban buses to natural gas buses. In December 2002, an amendment was made to the same Act to enforce the use of no or low pollution vehicles and formed a systematic basis to expand natural gas buses. The supply of 5,000 buses by 2003 is planned. By 2007, approximately 20,000 urban buses will be in service nationwide
To promote the substitution and supply of natural gas buses, financial support for the purchase of buses, interest reduction on loans for LPG station installation expenses and tax benefits will be provided. Furthermore, to achieve the support necessary in constructing the infrastructure to supply natural gas, amendments was made to the Construction Law, Urban Planning Law, High Pressure Gas Safety Control Law, and other relevant laws. As a result of the above efforts, 2,746 CNG buses were in service nationwide as of December 2002 with 89 CNG stations in service.
■ Compact Cars
For sound distribution of compact cars, the purchase or utilization of compact cars will lead to such benefits as reduced or waived vehicle tax, discounted expressway tolls & public parking, and other discounts in the use of traffic facilities. As a result of the compact car expansion policy, 713,000 compact cars, or 8.0% of the total, were distributed by the end of 2001. Compact car distribution rate will continue to increase.
■ Development of Diesel Cars
Diesel cars emit approximately 20% less greenhouse gases compared with gasoline-run cars. Hence, to promote the development and distribution of diesel cars, technological development support related to diesel cars are being provided. Through the above project, reduction in greenhouse gas emissions will be achieved to meet the enforcements of the EU Automobile Agreement. Furthermore, diesel engine filters and catalyst technology development will be promoted as part of the technology development business for vehicles of the future.
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