Korea’s Experience: National Mitigation Opportunities and Sustainable Development

Koreas Experience: National Mitigation Opportunities and Sustainable DevelopmentPrepared for the 1st Extended Regional Workshopon Capacity Development for the Clean Development Mechanism(AIT, UENP RISOE, IGES)24-26 March, 2004Siem Reap, Cambodia

Jin-Gyu [email protected] Energy Economics Institute

ContentsI. Energy and CO2 emissions in KoreaII. Energy policies for sustainable development in KoreaIII. CDM opportunities- District Heating and CDM

I. Korea at a GlanceLand Area:99,392 (S.Korea)Population:47.0 mil persons (25th)GDP (00):US$ 459 billion (11th)US$ 9,768 per capita

Energy Use (00):192.9 million TOE(10th)97.2 % importedEnergy import bill: US$ 37.6 billionCO2 119 mil TCKorea ranksNo. 3 in oil importsNo. 2 in coal and LNG imports

I. Energy, CO2 Emissions

Chart1

207021.527.5

48402815

9462298.5

181111356

Energy

CO2

Manufacturing

Agriculture, Forestry and Fishing

(mil. TOE, mil TC)

(%)

Sheet1

702021.527.5

8048402815

909462298.5

99181111356

EnergyCO2ManufacturingAgriculture, Forestry and Fishing

Sheet1

Energy

CO2

Manufacturing

Agriculture, Forestry and Fishing

(mil. TOE, mil TC)

(%)

Industry Structure, Energy Consumption, CO2 Emissions

Sheet2

Sheet3


Table 1 Energy/Economy/Environment Indicators: Past

1981

1990

1995

1999

AAGR(%)

81-90

91-99

81-99

Primary Energy

(Mil TOE)

45.7

93.2

150.4

181.4

8.2

7.7

8.0

GDP

(95 Tril Won)

122.4

263.4

377.4

436.8

8.9

5.8

7.3

CO2

(Mil TC )

37.1

65.2

101.2

111.3

6.5

6.1

6.3

Per Capita CO2 (TC)

0.96

1.52

2.24

2.38

5.3

5.1

5.2

Population(Mil)

38.7

42.9

45.1

46.9

1.2

1.0

1.1


Table 2 CO2 Emissions by Sector: Past

1981

1990

1999

AAGR(%)

81-90

91-99

81-99

Industry

33%

37%

36%

7.8

6

6.9

Transport

8%

18%

21%

15.9

8.1

12.0

Resid.Commer

35%

27%

16%

3.5

0.4

1.9

Public

4%

3%

1%

3.4

-5.3

-0.9

Elec,City gas

20%

16%

26%

3.6

12

7.7

Total (1000 TC)

37

65

111

6.5

6.1

6.3


Table 3 Future Energy/Economy/Environment Indicators

1999

2010

2020

AAGR(%)

99-10

11-20

99-20

Primary Energy

(Mil TOE)

181.4

275.1

334.2

3.9

2.0

3.0

GDP

(95 Tril Won)

436.8

794.2

1,198.4

5.6

4.2

4.9

CO2

(Mil TC )

111.3

170.6

205.3

4.0

1.9

3.0

Per Capita CO2 (TC)

2.38

3.37

3.92

3.2

1.5

2.4

Population(Mil)

46.9

50.6

52.4

0.7

0.3

0.5


Table 4 Future CO2 Emissions by Sector

1999

2010

2020

AAGR(%)

99-10

11-20

99-20

Industry

36%

30%

28%

2.2

1.4

1.8

Transport

21%

23%

23%

4.7

2.2

3.5

Resid.Comm

16%

15%

15%

3.2

1.5

2.4

Public

1%

1%

1%

2

0.3

1.2

Elec,City gas

26%

32%

33%

6

2.3

4.2

Total (Mil TC)

111

171

205

4

1.9

3.0

Primary energy by fuel

Chart10

0.5360.210.1420.0930.0080.01

0.4680.1960.1690.1490.0040.014

Petroleum

Coal

Nuclear

LNG

Hydro

Fire Wood

Sheet1

Sheet2

Sheet3

IndustryTransportResid. CommPublicElec, City gas

Percentage36%21%16%1%26%


28%23%15%1%33%

Sheet3

Sheet4

Sheet5

19992020

LNG9.3%14.9%19992020

Fire Wood1.0%1.4%Fire Wood1.0%1.4%

Hydro0.8%0.4%Hydro0.8%0.4%

Nuclear14.2%16.9%

Coal21.0%19.6%19992020

Petroleum53.6%46.8%Hydro0.8%0.4%

Fire Wood1.0%1.4%

LNGFire WoodHydroNuclearCoalPetroleum

19999.3%1.0%0.8%14.2%21.0%53.6%

202014.9%1.4%0.4%16.9%19.6%46.8%

19992020

LNG9.3%14.9%

Fire Wood1.0%1.4%

Hydro0.8%0.4%

Nuclear14.2%16.9%

Coal21.0%19.6%

Petroleum53.6%46.8%

19992020

Petroleum53.6%46.8%

Coal21.0%19.6%

Nuclear14.2%16.9%

LNG9.3%14.9%

Hydro0.8%0.4%

Fire Wood1.0%1.4%

Sheet5

LNG

Fire Wood

Hydro

Nuclear

Coal

Petroleum

Fire Wood

Hydro

Petroleum

Coal

Nuclear

LNG

Hydro

Fire Wood

Hydro

Fire Wood

19992020

Industry40,10758,285

Transport23,16947,668

Residential11,78819,240

Commercial6,41710,658

Public & Others1,1721,506

Conversion28,66067,948

Total111,313205,306

19992020

Industry0.36030831980.2838933105

Transport0.20814280450.2321802578

Residential0.10589958050.0937137736

Commercial0.05764825310.0519127546

Public & Others0.0105288690.007335392

Conversion0.25747217310.3309596407

19992020

Industry36%29%

Transport21%23%

Residential11%9%

Commercial6%5%

Public & Others1%1%

Conversion25%33%

Industry

Transport

Residential

Commercial

Public & Others

Conversion

MBD00070966.xls

MBD00160AC3.xls

Chart11

0.0080.01

0.0040.014

Hydro

Fire Wood

Sheet1

Sheet2

Sheet3




28%23%15%1%33%

Sheet3

Sheet4

Sheet5

19992020

LNG9.3%14.9%19992020


Hydro0.8%0.4%Hydro0.8%0.4%

Nuclear14.2%16.9%

Coal21.0%19.6%19992020

Petroleum53.6%46.8%Hydro0.8%0.4%

Fire Wood1.0%1.4%


19999.3%1.0%0.8%14.2%21.0%53.6%

202014.9%1.4%0.4%16.9%19.6%46.8%

19992020

LNG9.3%14.9%

Fire Wood1.0%1.4%

Hydro0.8%0.4%

Nuclear14.2%16.9%

Coal21.0%19.6%

Petroleum53.6%46.8%

19992020

Petroleum53.6%46.8%

Coal21.0%19.6%

Nuclear14.2%16.9%

LNG9.3%14.9%

Hydro0.8%0.4%

Fire Wood1.0%1.4%

Sheet5

LNG

Fire Wood

Hydro

Nuclear

Coal

Petroleum

Fire Wood

Hydro

Petroleum

Coal

Nuclear

LNG

Hydro

Fire Wood

Hydro

Fire Wood

19992020







Total111,313205,306

19992020

Industry0.36030831980.2838933105

Transport0.20814280450.2321802578

Residential0.10589958050.0937137736

Commercial0.05764825310.0519127546

Public & Others0.0105288690.007335392

Conversion0.25747217310.3309596407

19992020

Industry36%29%

Transport21%23%

Residential11%9%

Commercial6%5%

Public & Others1%1%

Conversion25%33%

Industry

Transport

Residential

Commercial

Public & Others

Conversion

MBD00070966.xls

MBD00160AC3.xls

CO2 Emissions by Sector 1999, 202040,10723,16911,7886,4171,17228,66058,28547,66819,24010,6581,50667,948unit: 1,000TCunit: 1,000TC

Chart8

0.360.210.110.060.010.25

0.290.230.090.050.010.33

Industry

Transport

Residential

Commercial

Public & Others

Conversion

Sheet1

Sheet2

Sheet3




28%23%15%1%33%

Sheet3

0.36

0.21

0.16

0.01

0.26

Sheet4

Sheet5

19992020

LNG9.3%14.9%19992020


Hydro0.8%0.4%Hydro0.8%0.4%

Nuclear14.2%16.9%

Coal21.0%19.6%

Petroleum53.6%46.8%


19999.3%1.0%0.8%14.2%21.0%53.6%

202014.9%1.4%0.4%16.9%19.6%46.8%

Sheet5

LNG

Fire Wood

Hydro

Nuclear

Coal

Petroleum

Fire Wood

Hydro

19992020







Total111,313205,306

19992020

Industry0.36030831980.2838933105

Transport0.20814280450.2321802578

Residential0.10589958050.0937137736

Commercial0.05764825310.0519127546

Public & Others0.0105288690.007335392

Conversion0.25747217310.3309596407

19992020

Industry36%29%

Transport21%23%

Residential11%9%

Commercial6%5%

Public & Others1%1%

Conversion25%33%

Industry

Transport

Residential

Commercial

Public & Others

Conversion

MBD00160AC3.xls

MBD00070966.xls

II. Energy policies for sustainable development in Korea

Sustainable Development: ConceptSustainable Development: Development that meets the needs of present without compromising the ability of future generations to meet their own needs (WCED, 87)The ultimate objective of this Convention is to achieve, stabilization of GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. (Objective of the Climate Convention)

Sustainable Development: CC, KPThe Parties have a right to, and should, promote sustainable development. (A. 3 (Principle) of the Climate Convention)The purpose of the CDM shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention (A. 12, Kyoto Protocol)All Parties, in order to achieve sustainable development, shall: formulate, implement, , national and regional programmes containing measures to mitigate climate change (A. 10, KP)

Sustainable Development: WSSDImprove access to reliable and affordable energy services for sustainable development (A. 8, Plan of Implementation, WSSD)Access to energy facilitates the eradication of povertyImprove access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services and resourcesModern biomass, fuelwood

Sustainable Development: WSSDEnergy for sustainable development (A. 19, Plan of Implementation, WSSD)Integrate energy considerations, including energy efficiency, affordability and accessibility, into socio-economic programmesMajor energy consuming sectors: public, transport, agricultureDevelop/disseminate renewable energiesMore efficient use of energyDevelop domestic program for energy efficiencyPromote R&D on energy technologies

1. Voluntary agreement (Industry)Partnership program between government and industryCompany submits detailed action plan of energy conservation target, GHG reduction target8% improvement over 5 yearsIncentives: low interest loan, technical support

1. Voluntary agreement (Industry)

Table 5 Summary of VA Action Plan (1999-2004)

No. of companies

Energy conservation

(mil TOE)

CO2 Reduction

(mil TC)

Investment

(billion $)

212

4.05

3.36

2.04

Table 6 Energy/CO2 Saving from VA Program in 2000

Number of Items

Energy Saved

(mil TOE/yr)

CO2 Avoided

(mil TC/yr)

$ Saved (Mil $ /yr)

Investment (Mil $)

Payback Period (Year)

Loan

Self Financing

Total

2,353

1.64

1.33

313

64

216

280

0.9

1. Voluntary agreement (Industry)

Table 8 Energy Savings by Options of VA Program in 2000

Energy Saved (1000TOE/yr)

%

Equipment replacement

289

17.7

Heat recovery

194

11.9

Process improvement

333

20.4

Retrofit

160

9.8

O/M improvement

445

27.2

Fuel Substitution

64

3.9

Others

123

7.5

Lighting improvement

13

0.8

Insulation

15

0.9

Total

1,636

100

2. Management of energy-intensive factories (Industry)The second five-year plan: 1997-2001190 factories, 30,000 TOE or morePlan to save 10% of energy (compared to 1996) with 2.38 bill $ investment

3. Industrial energy audit (Industry)Evaluate energy efficiencies of fuel and electricity-using facilitiesPresent appropriate measures to improve energy efficiencyProvide consulting assistance for efficiency enhancementRecommend energy efficiency measuresFor 1980-2000, fee-based audits(1,491), free (8,146)

4. Promotion of CHP in industrial complexHeat and power provided to 500 factories in 18 industrial complexefficiency improvement: 38% -> 87%Government exercise mandatory consultation on the feasibility of co-generation plant for new industrial complex

5. Promotion of ESCO (Industry)From government-led energy conservation program to private company-led program with the promotion of Energy Service Company: creativity, voluntary3 companies in 1992, 102 in 2000Investment limited to co-generation in industrial sector and lighting system in building until 1997.now diversified to process improvement, waste heat utilization, cooling & heating facilities23 mil $ (98), 66 mil $ (2000) investment

5. Promotion of ESCO (Industry)Government supportprovide low interest loan for ESCO investment5.5% interest rate, repayment in 5 yr with 5 yr grace periodcredit loan based on energy savings as mortgagetax reduction to ESCO and its customersEnergy Mart annually for ESCOs and potential customers

6. Promotion of high-efficiency equipmentEnergy efficiency rating/labeling program5 grades to the high energy consuming and widely used products8 items: refrigerator, air conditioner, clothes washers, incandescent bulbs, fluorescent lamp, ballast for fluorescent lamp, CFL, household gas boiler sales of grade 1 & 2: refrigerator (93%), air conditioner (99%)incandescent bulbs: mainly 2-3 grade automobile: grades and fuel efficiency

6. Promotion of high-efficiency equipmentMinimum energy performance standard programprohibits products that fail to reach Minimum energy performance standard from manufacturing, selling6 month grace period, and finerefrigerator, air conditioner, clothes washers, incandescent bulbs, fluorescent lamp, stabilizer for fluorescent lamp, household gas boilerusually based on lowest value of 5 grade

6. Promotion of high-efficiency equipmentCertification of high efficiency energy using appliances programgives certifications to products over standards (1996)promote the spreading of high efficiency energy equipmentinduction motor, fluorescent lamp, heat recovery ventilator, industrial gas boiler, household gas boiler, vending machine etc.Incentive: low interest loan for production facility (4 m$), preferential government procurement

7. Demand-Side ManagementEfficient utilization of energy through load management, promotion of efficiency at demand-sideEnergy supply companies implement load management programpeak clipping, peak shifting, DSM tariff systemRebate system for high-efficient appliances

8. Financial assistance to energy efficiency investmentinterest rate 5.5%, repayment in 5-7 yr with 5-7 yr grace period

Table 5 Low interest loan (1999)

(unit: Mil $)

Category

Installation of energy saving facility

114

ESCO

35

District heating

147

CHP in industrial complex

21

New, renewable energy dissemination

26

9. Energy technology R&D activitiesTen-year national plan for energy technology development (1997-2006) energy efficiency technology, new & renewable technology, clean energy technologygoals: reduce 10% of the total national energy consumption in 2006 through technologysupply 2% of total national energy with new & renewable energy in 2006

10. Policies in the energy supply1. Expansion of nuclear power plants2. Expansion of use of natural gas3. Expansion of use of new/renewable energy

III. District Heating and CDM

1. District Heating and CDMEnergy consumption for heating: large (99)76% of residential sector (15.1 mil.TOE)51% of commercial sector (6.2 mil. TOE) 15% of total final energyThree types of heatingIndividual heating: individual residenceCentral heating: apartment, residential/commercial complexDistrict heating: apartment, residential/commercial complex

1. District Heating and CDMTwo competing projects for providing heatBaseline project: a project (BAU)CDM project: a project emitting less GHGs obtain CER (Certified emissions reductions)

1. CDM, District Heating with CHPBaseline projectCentral heatingElectricity: thermal power plantCDM projectDistrict Heating with Combined Heat and PowerHOB (Heat only boiler)Producing heat and electricity together more efficient than producing heat and electricity separately Less emissions

1. CDM, District Heating with CHPVarious types of Baseline project possibleFuel for Central heating: Gas DieselFuel for Electricity: Coal GasVarious types of CDM projects possibleBy Size of CHP: Large (900Mw) Small (45Mw)Fuel for CHP: Gas LSWRFuel for HOB: LSWR LNG

Heat/Elec production: Same amountCentral Heating: Gas/DieselGeneration: Gas/CoalCHP: Heat/Elec(Gas/Coal/LSWRHOB: LSWRFuel inputsFuel inputsGHG emissions calculatedGHG emissions calculatedDifference: CERBaseline ProjectCH/GenerationCDM ProjectCHP DH/HOB

Cases for CDM projectsBaseline project: Central heating/Thermal powerCDM project: District heating with CHPLarge(900MW)case 1CH (Gas), Elec (Coal)L. CHP (Gas), HOB (LSWR)case 2CH (Gas), Elec (Gas)L. CHP (Gas), HOB (LSWR)case 3CH (Diesel), Elec (Coal)L. CHP (Gas), HOB (LSWR)case 4CH (Diesel), Elec (Gas)L. CHP (Gas), HOB (LSWR)Small(45MW)case 5CH (Gas), Elec (Coal)S. CHP (LSWR), HOB (LSWR)case 6CH (Gas), Elec (Gas)S. CHP (LSWR), HOB (LSWR)case 7CH (Diesel), Elec (Coal)S. CHP (LSWR), HOB (LSWR)case 8CH (Diesel), Elec (Gas)S. CHP (LSWR), HOB (LSWR)

Effects of CDM versus Central Heating (1)C 1C 2C 3C 4CDMCaseCH (Gas)Elec (Coal)CH (Gas)Elec (Gas)CH (Diesel)Elec (Coal)CH (Diesel)Elec (Gas)L. CHP (Gas)HOB(LSWR)Heat (1000 Gcal)2,222same as"""Elec Production (Gwh)3,685left"""Fuel consumed (1000 TOE)1,1161,1831,1161,183845Fuel saved (1000 TOE)271339271339Fuel saved (%)24.3%28.6%24.3%28.6%CO2 emissions (1000 TC)1,0547551,114815538CO2 reduction (1000 TC)514215574271CO2 reduction (%)48.7%28.4%51.5%33.7%CO2 per Heat (TC/Gcal)0.1960.140 0.207 0.1510.100

Effects of CDM versus Central Heating (2)C 1C 2C 3C 4CDMCaseCH (Gas)Elec (Coal)CH (Gas)Elec (Gas)CH (Diesel)Elec (Coal)CH (Diesel)Elec (Gas)L. CHP (Gas)HOB(LSWR)Fuel costs (bil. Won)158366179387258Reduced Fuel costs (bil. Won)- 99109- 79129Reduced Fuel costs (%)-63%30%- 44%33%Average 'fuel costs reduced' ($)163425- 115396Efficiency effectHighHighHighHighFuel substitution effectVery HighNoVery HighHighCarbon Credit (Bil Won)31133416Ratio with Fuel costs12%5%13%6%

CDM project (900Mw large CHP) vs Baseline project (Central heating + thermal poser)CDM District heating project would cut down fuel use as well we emissions of carbon dioxide, compared to Baseline Central heating project, due to its high level of thermal efficiency of DH.Compared to Case 2 and Case 4, CDM District heating project can save 28.6% of fuel. This is due to efficiency improvement effects.More importantly, CDM District heating project can reduce by 28.4% of carbon dioxide (215 thousand TC) (than Case 2), and 48.7% of carbon dioxide (514 thousand TC) (than Case 1), due to additional effects of fuel substitution.Overall, carbon reduced range from 215,000 574,000 TC (28.4 51.5%), annually. CER created.

Thank you

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Korea’s Experience: National Mitigation Opportunities and Sustainable Development

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