MOCIE Turns to Expansion
of New, Renewable Energy

Commercialization of bio-diesel has been made for 1st time in Asia

The government strives to promote a supply of new and renewable energy sources like hydrogen, fuel cell, photovoltaic, wind power, and bio-diesel with the goal of raising the percentage of new and renewable energy supply from 2.2 percent in 2005 to 5.0 percent in 2011. Kim Shin-jong, assistant minister of Energy & Resources Policy Office at the Ministry of Commerce, Industry and Energy (MOCIE), said.
Assistant Minister Kim elaborated his ministry's energy policies during an interview with NewsWorld. The following are the excerpts of his interview.
Question: I understand that with the Energy Basic Act that came into effect this past September, the National Energy Committee in which civilians participate is expected to be convened. What is the role and purpose of the committee?
Answer: The Energy Basic Act, designed to proactively cope with changes in the volatile international energy market, and regulations on its implementation were effective on September 4th. The act stipulates the objectives and basic principles of energy polices, including ones designed to ensure a stable energy supply and raise the equilibrium of energy use. It aims at developing a system for implementing energy polices, with the committee taking the initiative.
The National Energy Committee deliberates and coordinates major energy polices and energy-related plans, including the establishment and change of the national energy master plan, energy welfare policies and nuclear power development policies. Following the activation of the committee, the government's energy policies will be implemented on the basis of a national integrated system instead of the jurisdiction of MOCIE. The President's direct control over energy policies is expected to elevate their standing and accelerate the execution of energy policies. Besides, civic bodies and outside exports'participation in the establishment and execution of policies will likely promote transparency and fairness.
Q: Energy security has become a global widely talked-about subject and resource nationalism developments like the nationalization of natural resources have been mounting. What steps are in store to secure a stable supply of energy resources?
A: As international oil prices have increased since January 2004, competition to secure energy resources has been mounting in the global community. Korea has accelerated government policies to secure energy resources.
The government attaches top policy priority on stabilizing energy supply with a view to promoting national economic development and stabilizing people's lives. To this end, the government has overhauled counter-measures designed to promote energy security as the Energy Basic Act, calling for the establishment of the National Energy Committee, was promulgated this past March.
Under mid- and long-term plans to secure a stable supply of energy, the government has expanded cooperation with resources-rich nations, including Russia, Algiers and Kazakhstan, while aggressively exploring energy resources abroad by creating 20 million won worth of energy development funds. It strives to promote a supply of new and renewable energy sources like hydrogen, fuel cells, photovoltaic, wind power, and bio-diesel with the goal of raising the percentage of new and renewable energy supply from 2.2 percent in 2005 to 5.0 percent in 2011. The government is seeking to take such steps as purchasing stockpiles of petroleum, storing natural gas, constructing petroleum/gas storage facilities and expanding joint petroleum stockpile projects with countries like Norway, Kuwait and Algiers.
Q: Bio-diesel is in a full-fledged supply. Some people demand that the supply of bio-diesel be raised. Will you tell our readers about policy plans to disseminate bio-diesel?
A: On July 1st of this year, the government allowed the supply of BD5, a diesel fuel with less than 5 percent content of bio-diesel. Commercialization of BD, the first of its kind in Asia, has been made the first energy source substituting for petroleum in Korea.
As part of its efforts to lessen Korea's dependence on petroleum and improve air environment, the government plans to spread the supply of bio-diesel on a gradual basis. The Bio-Diesel Quality and Supply Committee, comprising of refining oil companies, BD producers and related organizations, will determine the supply amounts and content of bio-diesel, while the government will decide upon ways of supporting the smooth supply of bio-diesel, including tax reductions and R&D support for improving quality. The government plans to consider raising the quality of BD100, a 100 percent bio-diesel, to an equivalent of bio-diesel with EN14214 specification in Europe as part of its efforts to increase the content of bio-diesel.
The government is also seeking to study a plan to relax the conditions on the use of bio-diesel to disseminate BD20, whose use is limited only to some business operations. The relaxation needs to be cautious since the chance are high that gas filling stations might be engaged in illegal practices like blending of BD20 and BD5 due to a wide price difference and cheating BD20 into diesel.
Q: Fake petroleum products are expected to make their debut in the wake of the emergence of alternative energy sources. What steps do you take to crack down on counterfeit petroleum products?
A: An increasing number of unauthorized petroleum products, mixed with such fake bio-diesel products like soybean oil, for instance, which is made available at cheaper prices, are likely to be put on the market in the wake of the commercialization and wider use of bio-diesel as well as diesel price hikes. Diesel is sold at a price of 1,300 won, lower than 830 won for BD100, but soybean oil is priced at as low as 560 won.
Accordingly, MOCIE, in cooperation with local autonomous bodies and National Police Agency, plans to beef up crackdowns against fake petroleum producers and marketers. In particular, a quality examination into bio-diesel makers will be conducted more than once per month, and quality checks into gas filling stations, frequented by freight trucks and large-size diesel consumers will be strengthened. Covert inspection teams with non-nozzle inspection cars posing as passenger vehicles will be increased, while a reward system for reporting fake petroleum products will be commissioned.
The government plans to revise an act governing petroleum and petroleum substitute business, which would stipulate regulations on punishing fake petroleum consumes and imposing heavier penalties for counterfeit petroleum makers and marketers. The government is considering allowing the executives and staff members of petroleum quality inspection agencies to have an authority to crack down on the circulating fake petroleum products.
Q: Will you elaborate on the overseas presence of the Korean electricity industry, and what's your assessment of our industry's competitive edge in terms of electricity technology?
A: Korea has world-class technologies in electricity equipment construction, operation and management, including construction of the 765kV electricity transmission lines, the first of its kind in Asia, the Korea Standard Nuclear Power Plant (KSNP), developed with Korea's own technology, and distribution automation system. Korea is on a par with or excels such advanced countries as the United States, Japan, and France in terms of such overall technology categories as demand factor and power stoppage. Korea's demand factor stands at 77.7 percent, higher than 58.5 percent for Japan, 67.0 percent for France and 59.8 percent for the United States. Korea's power stoppage per household averages 18.6 minutes per year, lower than 19 minutes for Japan, 97 minutes for the United States and 50 minutes for France.
Capitalizing on such advanced technological power, Korean companies are actively participating in such projects as design, construction and operation of thermal power stations and transmission/distribution systems in China, Southeast Asia and the Middle East. KEPCO has been carrying out 10 overseas projects in the Philippines, Lebanon and Nigeria since 1994 when it entered the power generation market in Malay, the Philippines. In particular, KEPCO's successful construction and operation of the Malaya thermal power plant and the Ilijan gas turbine combined cycle plant in the Philippines is rated to be one of the world's success stories, and the Korean utility company has risen to the second largest power producer in the Southeast Asian country. Korean plant contractors like Doosan Heavy Industries and Hyundai Engineering & Construction are striving to strengthen their presence in such regions as the Middle East and Southeast Asia by making the most of their experiences and technology they have acquired through construction of domestic power plants and transmission/distribution facilities. The Korean contractors saw the sales in the overseas power plant field dropping from $2.18 billion in 2001 to $1.49 billion in 2003 but again surging to $2.49 billion in 2005. Korean companies are aggressively exploring overseas electricity markets in Central Asia, North Africa, Cambodia and Myanmar under a strategy linking efforts to secure energy resources and their entry into overseas electricity markets.
Q: The participatory government's diplomatic efforts to secure energy resources abroad have been brisk. Would you sum up the latest achievements for our readers?
A: The participatory government has shifted its diplomatic paradigm on energy from a focus on stable import of energy to a policy of developing energy resources abroad in a more aggressive manner since its inauguration, representing a milestone in the development of energy resources abroad. President Roh Moo-hyun held summit talks with a total of 17 countries, including his May visits to Mongolia, Azerbaijan and United Arab Emirates. Korea has set up a resources cooperation committee with five countries, including Nigeria and Azerbaijan, so far this year, bringing from 8 to a whopping 24 the number of foreign countries with which Korea maintains resources cooperation relations since the inauguration of the participatory government.
These diplomatic efforts have paid off. The participatory government has secured some 8.8 billion barrels of oil reserves, more than the aggregate achieved for the past 20 years. Korea has stocked up heavily with such strategic resources as 700 million tons of iron ore and 10,000 tons of uranium. The private sector's investments into overseas resources development projects have surged from $460 million in 2002 to $770 million in 2004 and $1.1 billion in 2005. The investments amounted to $840 million during the first six months of the year.
Q: 2006 International Mineral Resources Symposium, sponsored by MOCIE and jointly organized by KOTRA and Korea Resources Corporation, is scheduled to be held on November 8th. What's the significance of the symposium?
A: About 150 experts and officials from industry, academic and research circles from Korea and abroad get together to participate in the 1st International Mineral Resources Symposium, to be held at KOTRA on November 8. Government officials and business representatives from seven resources-rich countries will present information about their respective promising new projects and development conditions ― Canada (uranium and zinc), Australia (coal), the Philippines (copper and zinc), Peru (gold, silver and copper), Argentina (copper and zincs), Uzbekistan (uranium) and Kazakhstan (uranium). Foreign and domestic participants are expected to have brisk discussions on ways of promoting mutual cooperation for joint development of foreign mineral resources. The symposium is expected to provide an opportunity for domestic resources development organizations and companies to obtain information on overseas resources development strategies and investments and expedite their overseas resources development in the years to come.
Q: Will you tell the current status of producing new and renewable energy resources in Korea and the plan to disseminate them?
A: New and renewable energy resources have an advantage of raising energy sufficiency by being environmentally-friendly and sustainable energy resources. Besides, the energy markets based on such new technologies as hydrogen/fuel cells and photovoltaic power are emerging as big ones surpassing info-technology and bio-technology, so the new and renewable energy resources need to be nourished as next-generation growth engine industries. Forecasts show that the value of hydrogen/fuel cell, photovoltaic, wind power markets is projected to grow to $100 billion, $36 billion and $34 billion in 2010, respectively.
Korea supplied 4,879,000 TOE of new and renewable energy resources in 2005, accounting for 2.13 percent of its primary energy consumption that lags behind advanced countries ― Denmark (13.6 percent), France (5.9 percent) and Japan (3.2 percent).
The government has established a plan to raise the supply ratio of new and renewable energy resources by 5 percent in 2011. To this end, it has been providing such policy support as R&D, infrastructure support and creation of markets through dissemination. The government spending in the new and renewable energy field rose from 119.3 billion won in 2003 to 196.4 billion won in 2004, 324.2 billion won and 409.5 billion won in 2006. The government has beefed up strategic R&D activities focusing on areas with a high feasibility of commercialization and industrialization. It has designed three core sectors with industrial spillover effects ― hydrogen/fuel cells, solar cells (photovoltaics) and wind power. It offers financial support policies for the construction of 100,000 solar roofs, subsidizing differences in power generation costs and public organizations'mandatory equipment installation as part of efforts to provide support for the development of dissemination programs in each core sector.
The government also supports infrastructure buildup for commercializing new and renewable energy technologies, including common use of parts and increased certification on top of human resources development. nw

Kim Shin-jong, assistant minister of Energy & Resources Policy Office at the Ministry of Commerce, Industry and Energy (MOCIE)

Assistant MOCIE Minister Kim explains about Korea's overseas resources development projects.