Building the architecture for green growth
In the following one and a half years, the government set up the institutional framework to implement President Lee's declaration of the green growth strategy. It consists of four key pillars:
The Presidential Committee on Green Growth
This is an advisory institution for the president, consisting of 14 ministers and 36 appointed members from the private sector with professional backgrounds relevant to green growth, which is co-chaired by the prime minister and an appointed chairman. It serves as the highest level venue for inter-ministerial coordination of policies, as well as for public-private sector consultation on those policies.
The Green Growth Strategy and the Five-Year Plan
The Strategy, prepared by the Presidential Committee, envisages the Republic of Korea (hereafter, Korea) becoming one of the top seven ranked green economies by 2020 and one of the top five by 2050. It has three parts: first, to reduce greenhouse gas emissions while adapting to climate change; second, to create new growth engines from green technologies; and third, to improve the quality of life by greening lifestyles, while becoming an international role model as a green growth country.
The Strategy should show that Korea's green growth is indeed a new development model. It is far broader in scope than energy or environmental policies, though it does not go far enough to also address social policy goals.
The Five-Year Plan assigns 2% of annual GDP to green investment by the government – double the level recommended to governments by United Nations Environment Programme (UNEP).
As President Lee has indicated, the key to sustained green growth will be a pervasive and continuing process of innovation, in both the technological and the institutional sense. The role of this innovation will be to de-link economic growth and environmental degradation, most crucially by stimulating investment in the de-carbonization of energies, as well as in saving and recycling natural resources.
The National Greenhouse Gas Emissions Reduction Target
Given the country's highly energy-intensive industrial structure, which makes its economy vulnerable to international energy crises and possible carbon regulations, the main focus of green innovation is on cutting down CO2 emissions. The determination to reduce greenhouse gas emissions is the major driver of the green innovation that Korea needs.
In November 2009, after several months of national debate, the government adopted a medium-term emissions reduction target of 30%, relative to 'business-as-usual', by 2020. The following month, at COP15, in Copenhagen, President Lee made this an international political commitment by declaring that Korea would pursue this target unilaterally and voluntarily, in what he called the 'me-first' spirit.
The country's business community expressed a strong objection to this target, considering it overly ambitious and fearing its impact on the competitiveness of industry. However, the Presidential Committee considered an ambitious target necessary in order to stimulate a broad range of clean technology innovation for greater energy efficiency across the economy, as well as for the deployment of renewable energies.
The unilateral adoption of the emissions reduction target has allowed Korea to become an 'early mover' for green growth, without having to wait for others to do the same.
The government has been playing a critical role in triggering, facilitating and sustaining the green innovation process with regulatory and supportive measures, especially in regard to research and development and creating the initial market. Among measures being implemented to achieve the emissions reduction target are the so-called sectoral emissions target management system, and the planned introduction of the emissions rights trading system in 2015.
The Framework Act for Low-Carbon Green Growth
This legislation, enacted in April 2010, permits the government to intervene in the market in order to address market failures in promoting green growth. Among other things, it makes provisions for the emissions rights trading system.
Green business boom
Since the formal launching of green growth policies in Korea in 2008, there has been a green business boom. All major business groups have made green business a high priority for investment in their short and long-term plans. Between 2008 and 2010, the combined total of such investment by the 30 largest business groups recorded an annual growth rate of 75% and amounted to 15.1 trillion won (about US$13bn).
Investment is focused on new and renewable energy equipment, high-efficiency electric equipment, green cars, and climate change adaptation.
Small and medium-size enterprises, too, have been joining in the green rush. For example, some of them are already emerging as champions in the global market for parts and components for solar and wind power systems.
The government itself has been a leading investor in green growth, especially in green infrastructure. Two leading examples are a major construction project to restore four major rivers and a project to create a nationwide network of high-speed railways in order to induce a modal shift of people from road to the rail.
By any measure, green growth policies in Korea have been a success. Businesses are actively exploring opportunities in green growth, and local governments are pursuing visions of green communities. There is enthusiastic support for green lifestyles and green growth among the public.
Secrets of green growth success thus far
The success of Korea's green growth can be attributed to at least three factors, including the visionary leadership of a political leader firmly committed to a new green growth strategy; the 'me-first' approach to carbon emissions reduction and environmental protection; and an effective coordination among all the relevant ministries.
The challenge now is to sustain progress toward the realization of the emissions reduction target and environmental protection goals. This is no small challenge, considering industry's constant concern with its international competitiveness and the political uncertainties, which will heighten as the presidential election of December 2012 approaches.
Towards a global architecture for green growth
One of the objectives of Korea's green growth policies is to promote the adoption of a green growth strategy in all countries, especially the developing ones. A global architecture for green growth will enhance the effectiveness of national green growth policies, offer a foundation for global sustainable development, and facilitate international cooperation for the mitigation of climate change.
To this end, the government has taken a number of international initiatives:
- In 2008, annual work programmes were launched to help developing countries in Asia undertake green growth projects under the East Asian Climate Partnership (EACP) Initiative.
- In 2010, Korea formally acceded to the Organization for Economic Cooperation and Development's Development Assistance Committee and declared that the country would continue to increase its Official Development Assistance (ODA) commitment, with focus on green ODA, including the EACP Initiative, to meet the level of the OECD average ratio of ODA to GNI by 2020.
- In June 2010, the Global Green Growth Institute (GGGI) was launched as an international think tank to advise developing countries on their green growth policies, as well as to help them with specific green growth projects. The GGGI is run by an international board of directors, and draws financial resources from Korea and other advanced partner countries. As of October 2011, eleven countries, including six developing countries, have joined GGGI as partner countries. It also partners with many international organizations and institutions.
- – In 2009, the OECD accepted Korea's proposal to conduct a study of the green growth strategy, and a two-year project was begun. When the final report was released in May 2010, the OECD declared its intention to push the green growth strategy with its member countries, as well as with non-member countries. The OECD has begun to collaborate on green growth with other international organizations and institutions such as UNEP and the World Bank. Korea will continue to work closely with all these institutions to promote global green growth.
- The government is preparing to launch a Green Technology Centre, which will promote international green technology cooperation in general, and for developing countries, in particular.
All these efforts will contribute to the creation of a global architecture for green growth for the benefit of all countries, and help facilitate sustainable development and climate change cooperation.
Dr. Soogil Young is a Korean economist, who has been serving as Chairman of the Presidential Committee on Green Growth since July 2010. He is also the founding Chairman of the Green Investment Korea Forum.
This post originally appeared in "Making It Magazine", the official magazine of the United Nations Industrial Development Organisation.