## S. Korea Announces Energy Efficiency Initiative; 16.5% Increase in New Vehicle Fuel Economy by 2012

##### 28 December 2008

The South Korean government has allocated 18.3 trillion won (about US$14.2 billion) for an energy efficiency initiative that will run until 2012 and save 34.2 million tonnes of oil equivalent (toe). The goal is an 11.3% improvement in energy efficiency by 2012, compared with the level seen in 2007. Among the steps are a 16.5% increase in new vehicle average fuel economy by 2012. In 2004, South Korea replaced its voluntary, unenforced standard with a mandatory program—the Average Fuel Economy (AFE) system—that started in 2006 for domestic vehicles and will start in 2009 for imports. (Earlier post.) The current standards are 12.4 km/l (29.2 mpg US) for vehicles with engine displacements of 1.5 liters or less and 9.6 km/l (22.6 mpg US) for vehicles with engine displacements of more than 1.5 liters. Credits can be earned to offset shortfalls. Vehicles are evaluated for compliance with the AFE standard using the US EPA City test cycle. Because the market share of vehicles with larger engine size has been gradually increasing while the standards remained static, the fleet average fuel economy in South Korea was projected to decline over time. In December 2007, Korea’s Ministry of Commerce, Industry and Energy said that it would tighten fuel economy standards for cars by 15% by 2012 compared to 2004, based on an agreement made with the auto industry in late 2005. (Earlier post.) A 16.5% increase would thus put the standards at about 14.44 km/l (33.9 mpg US) for the smaller displacement category and 11.18 km/l (26.3 mpg US) for the larger. The 2012 plan. To meet its 2012 targets, the government will also provide incentives for companies that invest in energy efficiency, begin phasing out incandescent lamps by 2013, and implement a program modeled after the Japanese Top Runner Program that will complement the current Energy Efficiency Label and Standard Program. Other actions include: • The government will invest 1.2 trillion won (about US$930 million) in seven core technologies-building energy management systems, electric power IT, energy storage, green vehicles, LEDs, technologies to improve the energy efficiency of the most energy-intensive appliances, and green home appliances.

• For buildings with the highest level of energy efficiency (grade 1), the government will increase the maximum floor area ratio by 6%.

• When purchasing appliances for use in government buildings, the government will give preference to those models with the grade 1 energy efficiency label and to products that deliver less than 1 watt of standby power.

• To encourage businesses to improve energy efficiency, the government will divide businesses into four categories depending on how much energy they consume. Specific measures such as negotiated and voluntary agreements will be made for each category.

The “Green Growth” Plan. The 2012 initiative is part a long-term energy plan, announced earlier in 2008, targeted to deliver a 46% improvement in energy efficiency by 2030.

As part of that “Green Growth” plan, the government said that S. Korea will improve the fuel efficiency of automobiles; establish a low-carbon, highly energy-efficient public transportation system; and implement a plan that will allow Korea to emerge as one of the top four producers of green cars in the world.

By 2030, Korea is targeting a reduction in its energy intensity level to 0.185 toe/US$1,000 from the current level of 0.341 toe/US$1,000, a difference of 46%. It will also cut energy consumption by 42 million toe.

By 2030, fossil fuels are to account for 61% of total energy consumption, down from the current 83%, while the use of renewable energy is to increase to 11% from 2.4% in 2007 and the use of nuclear power is to increase to 27.8% from 14.9% in 2007.

In the renewable energy sector, the government plans a 44-fold increase in the use of photovoltaic energy, compared with the levels seen in 2007. The use of wind power will jump 37-fold, biofuels 19-fold, and geothermal power 51-fold. The government intends to achieve these milestones by:

• Stimulating domestic demand for wind power, tidal power and biofuels. Steps will include introduction of the Renewable Portfolio Standards, and the enforcing increased use of renewable energy in public buildings.

• Supporting the development of core technologies in the fields of photovoltaic energy, wind power and hydrogen fuel cells. These include thin-film solar cells and large wind turbines.

In the nuclear energy sector, nuclear power plants will account for 41% of the nation’s power generation facilities from 26% in 2007. The government will facilitate and encourage open discussion and a democratic, transparent decision-making process concerning the establishment of new nuclear power plants and the management of spent fuel.

The government said that it will invest 11.5 trillion won (about US$11 billion up to 2030) in research and development into green technologies. It will also establish a large-scale integrated test bed for green technologies and encourage energy-related national corporations to purchase green technologies. New power generation investment. The government just announced that it plans to spend 37 trillion won (US$28.5 billion) to build 12 more nuclear-powered plants, 7 coal-fired plants and 11 fueled by liquefied natural gas by 2022.

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