which amounts to a 4 per cent decrease from the 2005 emissions level. Considering that Korea’s emissions have almost doubled in the last 15 years and that the EU urges developing countries to reduce emissions by 15-30 per cent relative to the BAU scenario, his remarks, ‘Ours is epochal,’ appear as mere hype.
Korea’s plan is estimated to cost 0.49 per cent of GDP or around US$ 200 per household per year. On a national-consensus building process to finalize its target, the Korean government faces strong opposition from the business sector, particularly Korea’s leading industries such as cement, steel, automobile, shipbuilding, and petrochemicals which depend heavily on energy. Worried about its impact on these industries, especially about losing competitiveness to China, even a Minister of the current cabinet openly calls it ‘a hasty measure.’ Many environmentalists downgrade the plan pointing at huge increase in investment on nuclear energy, on which Korea already highly depends.
Recall that Korea, however, being a member of the OECD, insisted on being classified a developing country to avoid being listed among the Annex I countries facing mandatory emissions targets. It is clear that Korea is moving away from its defensive stance on international climate change talks towards a more aggressive one. This change stems from Korea’s metamorphic efforts from the traditional ‘growth-at-any-cost model’ to a ‘low carbon green growth model.’ Korea has already transformed itself from an international aid recipient to a donor country. Regarding climate change, Korea has pledged US$ 200 million by 2012 to the East Asia Climate Partnership Program to support climate change adaptation and technology transfer in the region.
It is also no small achievement of international climate change talks to have induced the world’s ninth-largest carbon emitter to bell the cat. It helps the UN secretary general, Ban Ki-Moon, face-saved by his home country, Korea, who sets an example in reducing carbon emissions as he has urged, raise his voice in asking the world to act boldly on climate change. It might be natural to expect a ‘domino-effect’ on middle income countries including Mexico, Brazil and Argentina.
Korea’s ambition goes beyond that. The world is supposed to thrash out a replacement of the Kyoto Protocol soon. Until now, it is apparent that poor countries will not face any explicit burden of reducing global carbon emissions without ample financial and technological support from rich countries, not to mention big emission reductions by them. It wishes to be a mediator between developed and developing countries in climate change negotiations.
To bring developing countries into the system, President Lee at the UN Summit called for the establishment of a registry of Nationally Appropriate Mitigation Actions, or NAMAs, of developing countries. If the registered credits from the NAMAs are purchased and applied to rich countries’ targets, they will constitute irresistible financial compensation for poor countries for reducing their carbon emissions and will be an indispensable vehicle for rich countries to commit to deeper cuts as well. Thus, the NAMAs approach can be a win-win solution if one can avoid inundation with cheap carbon credits by having a proper measuring, reporting, and verifying mechanism.
Korea hopes to play a leading role again by chairing the G20 Summit scheduled for 2010 in Korea. That will be the first major encounter between key developing and key developed countries post-Copenhagen. Korea seems to be on the right track. Having committed to share the burden, voluntarily or not, increased global participation will be better for the Korean economy, especially for Korea’s trade exposed energy intensive industries. Otherwise they may lose market share to strong competitors like China which is reluctant to commit.
But questions remain. What if the global economic downturn is over soon? Or what if Korea has a strong demand shock from China? What if oil price doubles? There are so many risks and uncertain economic-environmental-social factors that will threaten Korea’s commitment. The importance for Korea to provide an exit or a safety-valve to manage commitment costs within the confinement of its capacity cannot be over-emphasised.
Dr Kihoon Lee is a Visiting fellow at the Centre for Applied Macroeconomic Analysis at the Australian National University and is a Professor of Economics at Chungnam National University, Korea.