South Korea's Glide to a Green Economy

Call it the green gold rush. Even among business leaders who are skeptical about climate change, there's a realization that there will be government action to push economies toward lower carbon intensity. At the regional forefront is South Korea, which has managed to dart past political lethargy and move forward with government policies that could serve as inspiration for others.

U.S. Commerce Secretary Gary Locke's visit to China highlights one of the most important business themes of the next decade or more – the green economy. Locke, of course, is looking for ways that U.S. companies can tap the China market. But the issue goes much deeper. At stake is who will profit from clean tech, one of the key drivers of global growth in the years ahead.

In China, the government has set a 20 percent target reduction on energy intensity in the current five-year plan. By 2020, China hopes to derive 15 percent of its power from renewable energy sources such as wind, solar, hydropower and nuclear.

Worldwide, developed countries will likely need to cut their greenhouse gas emissions by 80 percent by the year 2050. Of course, this is so far away that today's politicians won't be around, so the exact number could be quite different. Whatever the cuts, the target hints at a staggering scale of change.

The high-carbon coal-and-oil-fuelled model that has powered the world's industrialization for the past 200 years will give way to something else.

For a glimpse into what this world might look like for Asia, take a look at South Korea. Other places – notably Japan, Singapore and Taiwan – have also been moving towards green policies, but none with the speed of Korea. There may be lessons for China in the Korean experience, especially the way in which the government can nudge large business groups to invest in cutting-edge R&D.

In August 2008, South Korean President Lee Myung-bak proclaimed his vision of a green new deal. That was followed by a Presidential Commission on Green Growth, set up in 2009, which sketched a five-year plan for green growth. 

In December 2009, the National Assembly passed the Low Carbon and Green Growth Act. This outlined a framework for green growth. Part of this was good politics – during the depths of the recent recession, Korea put a greater percentage of its stimulus money into green projects than any other country.