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Korea’s Experience: National Mitigation Opportunities and Sustainable Development

Korea’s Experience: National Mitigation Opportunities and Sustainable Development Prepared for the 1 st Extended Regional Workshop on “Capacity Development for the Clean Development Mechanism” (AIT, UENP RISOE, IGES) 24-26 March, 2004 Siem Reap, Cambodia Jin-Gyu Oh jgoh@keei.re.kr

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Korea’s Experience: National Mitigation Opportunities and Sustainable Development

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  1. Korea’s Experience: National Mitigation Opportunities and Sustainable Development Prepared for the 1st Extended Regional Workshop on “Capacity Development for the Clean Development Mechanism” (AIT, UENP RISOE, IGES) 24-26 March, 2004 Siem Reap, Cambodia Jin-Gyu Oh jgoh@keei.re.kr Korea Energy Economics Institute

  2. Contents I. Energy and CO2 emissions in Korea II. Energy policies for sustainable development in Korea III. CDM opportunities - District Heating and CDM

  3. I. Korea at a Glance • Energy Use (‘00): • 192.9 million TOE(10th) • 97.2 % imported • Energy import bill: US$ 37.6 billion • CO2 119 mil TC • Korea ranks • No. 3 in oil imports • No. 2 in coal and LNG imports • Land Area: • 99,392㎢ (S.Korea) • Population: • 47.0 mil persons (25th) • GDP (‘00): • US$ 459 billion (11th) • US$ 9,768 per capita

  4. I. Energy, CO2 Emissions

  5. I. Energy, CO2 Emissions

  6. I. Energy, CO2 Emissions

  7. I. Energy, CO2 Emissions

  8. I. Energy, CO2 Emissions

  9. Primary energy by fuel

  10. CO2 Emissions by Sector 1999, 2020 unit: 1,000TC unit: 1,000TC 28,660 67,948 1,172 1,506 6,417 10,658 11,788 19,240 23,169 47,668 40,107 58,285

  11. II. Energy policies for sustainable development in Korea

  12. Sustainable Development: Concept • Sustainable Development: Developmentthat 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)

  13. Sustainable Development: CC, KP • The 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)

  14. Sustainable Development: WSSD • Improve access to reliable and affordable energy services for sustainable development (A. 8, Plan of Implementation, WSSD) • Access to energy facilitates the eradication of poverty • Improve access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services and resources • Modern biomass, fuelwood

  15. Sustainable Development: WSSD • Energy for sustainable development (A. 19, Plan of Implementation, WSSD) • Integrate energy considerations, including energy efficiency, affordability and accessibility, into socio-economic programmes • Major energy consuming sectors: public, transport, agriculture • Develop/disseminate renewable energies • More efficient use of energy • Develop domestic program for energy efficiency • Promote R&D on energy technologies

  16. 1. Voluntary agreement (Industry) • Partnership program between government and industry • Company submits detailed action plan of energy conservation target, GHG reduction target • 8% improvement over 5 years • Incentives: low interest loan, technical support

  17. 1. Voluntary agreement (Industry)

  18. 1. Voluntary agreement (Industry)

  19. 2. Management of energy-intensive factories (Industry) • The second five-year plan: 1997-2001 • 190 factories, 30,000 TOE or more • Plan to save 10% of energy (compared to 1996) with 2.38 bill $ investment

  20. 3. Industrial energy audit (Industry) • Evaluate energy efficiencies of fuel and electricity-using facilities • Present appropriate measures to improve energy efficiency • Provide consulting assistance for efficiency enhancement • Recommend energy efficiency measures • For 1980-2000, fee-based audits(1,491), free (8,146)

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

  22. 5. Promotion of ESCO (Industry) • From government-led energy conservation program to private company-led program with the promotion of Energy Service Company: creativity, voluntary • 3 companies in 1992, 102 in 2000 • Investment limited to co-generation in industrial sector and lighting system in building until 1997. • now diversified to process improvement, waste heat utilization, cooling & heating facilities • 23 mil $ (‘98), 66 mil $ (2000) investment

  23. 5. Promotion of ESCO (Industry) • Government support • provide low interest loan for ESCO investment • 5.5% interest rate, repayment in 5 yr with 5 yr grace period • credit loan based on ‘energy savings’ as mortgage • tax reduction to ESCO and its customers • Energy Mart annually for ESCOs and potential customers

  24. 6. Promotion of high-efficiency equipment • Energy efficiency rating/labeling program • 5 grades to the high energy consuming and widely used products • 8 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

  25. 6. Promotion of high-efficiency equipment • Minimum energy performance standard program • prohibits products that fail to reach ‘Minimum energy performance standard’ from manufacturing, selling • 6 month grace period, and fine • refrigerator, air conditioner, clothes washers, incandescent bulbs, fluorescent lamp, stabilizer for fluorescent lamp, household gas boiler • usually based on lowest value of 5 grade

  26. 6. Promotion of high-efficiency equipment • Certification of high efficiency energy using appliances program • gives certifications to products over standards (1996) • promote the spreading of high efficiency energy equipment • induction 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

  27. 7. Demand-Side Management • Efficient utilization of energy through load management, promotion of efficiency at demand-side • Energy supply companies implement load management program • peak clipping, peak shifting, DSM tariff system • Rebate system for high-efficient appliances

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

  29. 9. Energy technology R&D activities • Ten-year national plan for energy technology development (1997-2006) • energy efficiency technology, new & renewable technology, clean energy technology • goals: reduce 10% of the total national energy consumption in 2006 through technology • supply 2% of total national energy with new & renewable energy in 2006

  30. 10. Policies in the energy supply 1. Expansion of nuclear power plants 2. Expansion of use of natural gas 3. Expansion of use of new/renewable energy

  31. III. District Heating and CDM

  32. 1. District Heating and CDM • Energy 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 energy • Three types of heating • Individual heating: individual residence • Central heating: apartment, residential/commercial complex • District heating: apartment, residential/commercial complex

  33. 1. District Heating and CDM • Two competing projects for providing heat • Baseline project: a project (BAU) • CDM project: a project emitting less GHGs → obtain CER (Certified emissions reductions)

  34. 1. CDM, District Heating with CHP • Baseline project • Central heating • Electricity: thermal power plant • CDM project • District Heating with Combined Heat and Power • HOB (Heat only boiler) • Producing heat and electricity together more efficient than producing heat and electricity separately → Less emissions

  35. 1. CDM, District Heating with CHP • Various types of Baseline project possible • Fuel for Central heating: ①Gas ②Diesel • Fuel for Electricity: ①Coal ②Gas • Various types of CDM projects possible • By Size of CHP: ①Large (900Mw) ②Small (45Mw) • Fuel for CHP: ①Gas ②LSWR • Fuel for HOB: ①LSWR ②LNG

  36. Heat/Elecproduction: Same amount CDM Project CHP DH/HOB Baseline Project CH/Generation Central Heating: Gas/Diesel Generation: Gas/Coal CHP: Heat/Elec(Gas/Coal/LSWR HOB: LSWR Fuel inputs Fuel inputs GHG emissions calculated GHG emissions calculated Difference: CER

  37. 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.

  38. Thank you…

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