According to the Korea Institute of Construction Technology (KICT), energy consumed by buildings account for 25 percent of all energy consumed in Korea. Industry forecasts indicate that Korea will be consuming 250 percent more energy by 2020 compared to 1990. For a nation that is 97 percent dependent on imported sources of energy, these estimates and forecasts have resulted in the Korean government taking a series of preventative measures to avoid a major energy crisis in the future. Many of these measures involve energy management and energy efficiency investments in new and existing buildings. This research is designed to explain the impact of these efforts and the opportunities they will create for U.S. exporters of equipment and services.
Over the next decades, Korea has major plans to promote green and energy efficient citywide housing developments. Dubbed the Two Million Green Home Initiative, the current President Lee Myung-Bak administration plans to build one million and renovate an additional one million homes to meet stringent environmental and energy consumption standards by 2018. Under the same initiative, by 2025, it will be mandatory for all buildings to be energy self-sufficient by installing systems such as solar thermal, photovoltaic, geothermal, biomass, or wind power systems. The government estimates expenditures to amount to 7 trillion won (approx. USD 6.3 billion) between the years 2008 and 2012 alone to facilitate the initial steps of this process.
Considering the scale of the ultimate goal of supplying two million energy self-sufficient and environmentally friendly houses by 2018, there are numerous business prospects for U.S. companies to explore. The following figure published by the Ministry of Land, Transport and Maritime Affairs (MLTM) displays an example of a green home. The various components of a green home as it has been displayed in the figure demonstrate the potential business prospects to consider.
In addition to the Two Million Green Home Initiative, several ongoing new city development plans have incorporated green and environmentally friendly city developments. The New Songdo City project, which is a multi-billion dollar real-estate development 50 miles west of Seoul, will be designed to be completely LEEDND certified. Energy efficient buildings, recyclable building materials, pollution control, and waste reduction were all taken into careful consideration during the planning stages of the project.
The Two Million Green Home Initiative creates opportunities among several different categories of business. These categories can be further classified into broad industry areas such as new and renewable energy (solar, wind, biomass, geothermal, and etc.), building materials (fenestration systems, finish materials, and etc.), and architectural design and project management (structural design, roof-top and park landscaping).
According to the New and Renewable Energy Center (KNREC), an affiliated institution of the Korea Energy Management Corporation (KEMCO), there are approximately 5,300 small and medium sized companies engaged in the new and renewable energy industry. Due to a continued ROKG emphasis on subsidizing the domestic development of new and renewable energy technology by both the current President Lee Myung-Bak administration as well as the previous administrations, the number of companies in the industry has substantially grown over the years. However, many of these companies lack core technologies and therefore are heavily reliant on imports when it comes to the facilities and equipment needed to build such complete systems.
In terms of market size, the new and renewable energy industry of Korea is relatively small and is in its nacient stages of growth. According to the Construction Economy Research Institute of Korea (CERIK), in the case of the geothermal heat industry, there are approximately 200 companies engaged in a market estimated to be worth USD 85 million. As for the solar thermal industry the same institute estimates that 20 companies including importers are engaged in a market worth USD 45 million.
According to CERIK, the building materials industry of Korea is not only highly competitive but is also technically competent in many different fields. In terms of windows and fenestration systems, major companies such as Hanglass, KCC, LG Hausys, and Eagon Windows & Doors Co., Ltd. constitute a large share of an annual USD 1.7 billion market and continue to provide competitive high quality products. Paints and flooring materials are also considered products in which Korean companies are highly competitive. Approximately 240 companies are engaged in the manufacturing, import, and distribution of paints and flooring materials. Together they constitute a market estimated to be worth USD 1.6 billion.
Architectural design and project management firms have become increasingly conscious of incorporating environmental and green considerations in newly initiated city-wide housing development projects in Korea. One case in point would be that several projects have placed heavy emphasis on the allocation of land for use as green space.
As an example, the Dongtan New City development project, which is a Seoul metropolitan satellite bed-town project covering 30.8 million square meters, has reserved over 28 percent of this land as green space. This is a significant increase compared to another major satellite bed-town known as Bundang in Gyeonggi province, which has reserved only 19.4 percent of land as green space.
By Nathan Huh