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Download CASE STUDY Republic of Korea’s investment plan for low carbon green growth
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Low Carbon Green Growth Roadmap for Asia and the Pacific CASE STUDY Republic of Korea’s investment plan for low carbon green growth There was a need for financing… When the Korean Government announced its National Strategy for Green Growth and Five-Year Plan in 2008, it needed to include a well-conceived plan for expenditures on concrete policy initiatives towards achieving green growth. What was done? The Government extended the Green New Deal programme, which was a stimulus package initially adopted to tackle the financial crisis after 2008 but with emphasis on greening the economy as a way of stimulating new growth. The Green New Deal was expanded into a five-year development plan, with a committed budget equal to 2 per cent of the annual GDP – all through Government investment. Two public enterprises contributed 8.5 trillion won (0.8 per cent of GDP). The allocated budget covered large construction projects, including land, water and building development as well as green transport infrastructure.1 The Government’s investment in low carbon green growth is all the more significant in terms of its proportion within the Republic of Korea's annual GDP. Allocating 2 per cent of the annual GDP is beyond the recommendation of the international community.2 The United Nations Environment Programme policy brief suggests that an investment of 1 per cent of global GDP can contribute to reducing carbon dependency and lead to the greening of the global economy.3 The Stern Review on the Economics of Climate Change reported that investing 2–3 per cent of global GDP per annum enables the stabilization of greenhouse gas concentrations in the atmosphere.4 Expected results Through the investment plan, positive economic and social impacts are expected, such as production increases, value addition and job creation:5 1) Production should increase in value, from 182 trillion won to 206 trillion won from 2009 to 2013, which would translate into an annual sum of 36–41 trillion won, or about 3.5–4 per cent of the annual GDP. 2) The value-added effect is estimated at 75–95 trillion won, from 2009 to 2013, and annually 15–19 trillion won, which amounts to 1.5–1.8 per cent of the annual GDP. 3) Job creation in green industries is estimated at 1.18–1.47 million people, from 2009 to 2013. Overall job creation is estimated at 1.56–1.81 million, with an annual average of 0.31–0.36 million jobs for both skilled and unskilled labourers. 1 Randall S. Jones and Byungseo Yoo, Korea’s Green Growth Strategy: Mitigating Climate Change and Developing New Growth Engines, (Paris, OECD, 2011). Available from www.oecdilibrary.org/docserver/download/fulltext/5kmbhk4gh1ns.pdf?expires=1327649323&id=id&accname=guest&checksum=98298B5F649C09F4A 12957D2A70A00A7 (accessed 28 February 2012). 2 Meeyoung Cho, “South Korea to Spend $85 billion on Green Industries”, Reuters, 6 July 2009. Available from www.reuters.com/article/2009/07/06/us-korea-greengrowth-idUSTRE5651Y720090706 (accessed 10 November 2011). 3 United Nations Environment Programme, Overview of the Republic of Korea’s National Strategy for Green Growth (Geneva, 2010). Available from www.unep.org/PDF/PressReleases/201004_unep_national_strategy.pdf (accessed 10 November 2011). 4 Nicholas Stern, The Economics of Climate Change: The Stern Review (Cambridge, Cambridge University Press, 2006). 5 Republic of Korea, Road to Our Future: Green Growth (Seoul, Presidential Commission on Green Growth, 2009). Low Carbon Green Growth Roadmap for Asia and the Pacific : Case Study - Republic of Korea's investment plan for low carbon green growth Considerations for replicating A well-designed national strategy alone will not lead to successful policy implementation. It must be presented alongside a comprehensive portfolio of policy measures that includes dedicated public investment. The Korean Government’s budgeting of 2 per cent of its annual GDP on the green growth projects provided the necessary guarantee to the private sector and consumers that the vision and strategy were not mere ambitions but true changes the Republic of Korea was committed to make.
