Biofuels Business - February 2011 - 14

CHINA

NORTH KOREA

COUNTRYFOCUS
SOUTH KOREA

Focus on South Korea
Nation adopts aggressive renewable energy plan that includes biofuels
by Susan Reidy

Key Facts
Capital: Seoul Demography: Population 48.636 million, 0.258% growth rate (2010). Languages: Korean, English widely taught in junior high and high school. Religions: Christian 26.3% (Protestant 19.7%, Roman Catholic 6.6%), Buddhist 23.2%, other or unknown 1.3%, none 49.3% (1995 census). Geography: Eastern Asia, southern half of the Korean Peninsula bordering the Sea of Japan and the Yellow Sea. Government: Republic. Chief of state: President Lee Myung-bak (since Feb. 25, 2008). Head of government: Prime Minister Kim Hwang-sik (since Oct. 1, 2010). Official agricultural agencies: Ministry of Food, Agriculture, Forestry and Fisheries. Economy: Since the 1960s, South Korea has achieved an incredible record of growth and global integration to become a high-tech industrialized economy. Four decades ago, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. Currently, South Korea is among the world’s 15 largest economies. Initially, a system of close government and business ties, including directed credit and import restrictions, made this success possible. The government promoted the import of raw materials and technology at the expense of consumer goods, and encouraged savings and investment over consumption. The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South Korea’s development model including high debt/equity ratios and massive short-term foreign borrowing. GDP plunged by 6.9% in 1998 and then recovered by 9% in 1999-2000. Korea adopted numerous economic reforms following the crisis, including greater openness to foreign investment and imports. Growth moderated to about 4% to 5% annually between 2003 and 2007. With the global economic downturn in late 2008, South Korean GDP growth slowed to 2.2% in 2008 and declined 0.2% in 2009. In the third quarter of 2009, the economy began to recover, in large part due to export growth, low interest rates, and an expansionary fiscal policy. GDP per capita: $28,100 (2009 est.), 0.2% growth rate (2009), 2.8% inflation (2009 est.), 3.7% unemployment (2009). Currency: South Korean won (KRW); exchange rate (Dec. 6, 2010) 1 U.S. dollar = 1,134.15 KRW. Exports: $373.6 billion (2009); semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel, ships, and petrochemicals. Imports: $317.5 billion (2009); machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics. Major crops/agricultural products: Rice, root crops, barley, vegetables, fruit; cattle, pigs, chickens, milk, eggs and fish. Transportation: 103,029 km total roadways; 3,381 km total railways. Ports include Inch’on, P’ohang, Pusan, Ulsan and Yosu. Internet: Country code, *.kr; 291,329 hosts (2009); 37.476 million users (2008).
Source: CIA World Factbook

As the fourth largest energy consumer, most of which is imported, South Korea is aggressively pushing for renewable energy including biofuels for transportation. The nation has outlined a 60-year plan for renewable energy production and use, and is planning on spending billions of dollars to implement it. Part of the plan includes extensive research, such as developing new feedstocks for biodiesel and ethanol production. Biodiesel production and usage is further along than ethanol, mostly due to the price of grain relative to oil. Eventually, the country plans to implement an ethanol blend pilot program and already calls for a 2% blend ratio for biodiesel. ECONOMIC GROWTH In the last several decades, South Korea has had signiﬁcant economic growth, making it the 15th largest economy in the world. The economy has moved away from a centrally planned, government-directed investment model toward a market-oriented one. Extensive reforms helped restore stability after the 1997-98 Asian Financial Crisis. Those reforms helped the country return to growth rates of 10% in 1999 and 9% in 2000. The global ﬁnancial economic crisis in the third quarter of 2008 slowed gross domestic product (GDP) to 2.3% that year and 0.2% in 2009. Compared to the rest of the nation’s economy, agriculture has little export focus and has heavy protection from the government. Its share of the GDP has steadily declined to 3% as agriculture land and the rural population has decreased. This trend is expected to continue in the future as people leave rural areas due to a lack of jobs, income, educational opportunities, medical support and modern housing. The nation does not have enough cropland to support direct human food use and animal feeding. A new round of negotiations between the U.S. and South Korea concluded in December 2010 and are expected to result in a long-sought trade agreement. Implementation of the agreement would result in nearly two-thirds of U.S. farm product exports to the nation becoming duty-free immediately including wheat, corn (maize), soybeans for crushing, corn gluten feed and meal, whey for feed use, cotton, hides, skins and other agricultural products. South Korea also would recognize the equivalent
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