June 19, 2008
South Korea to Invest $85 billion in Green New Deal
By Johanna Peace, Breakthrough Fellow
This week, South Korea has upped the ante for green public investment as it continues to make swift progress toward becoming a clean-tech economy. Already, a staggering 80% of South Korea's $38 billion stimulus package has been earmarked for green investments.
And today, the South Korean government announced that it will invest $85 billion more over 5 years to encourage the growth of green industries and technologies. That's more than doubling South Korea's recent promise to invest $40 billion over five years in a "Green New Deal," and the equivalent of 2% of the East Asian nation's total GDP. If the United States were to invest a comparable share of it's national wealth in clean energy technology, the sum would total over $275 billion annually.
As part of the investment plan, South Korea will raise $1.6 billion from the private sector to help green industry, using a suite of financial supports and incentives. According to Reuters:
"From the public sector, the state-run Korea Development Bank (KDB) and state-run pension funds plan to set up a 500 billion won ($395 million) private equity fund in the second half of the year, officials said.
The KDB also aims to set up a 300 billion won ($237 million) fund for research and development (R&D) for the industries. The government will increase a fund for smaller firms in the industries to 1.1 trillion won ($868 million) by 2013 from a 60 billion won ($47 million) this year.
South Korea plans to raise fiscal support for R&D in the industries to 2.8 trillion won ($2.2 billion) by 2013 from 2.0 trillion won ($1.57 billion) this year.
The government will increase credit guarantee support for such companies and projects to 7.0 trillion won ($5.52 billion) by 2013 from 2.8 trillion won ($2.2 billion) this year and triple export financing.
On Thursday, the government said it would help launch a 5 trillion won ($3.95 billion) fund aimed at providing financial support for investments by companies as part of plans to encourage corporate spending."
By expanding R&D funding for technologies such as LEDs, solar batteries, and hybrid cars, South Korea aims to raise its international market share of clean tech products to 8%.
South Korea knows that investing in clean tech industries creates an unstoppable growth engine for broader economic prosperity. Yet the US, a self-proclaimed leader in the drive toward a carbon-free global economy, has invested a paltry 12% of its own stimulus package in creating a clean energy economy at home. Not to mention the feeble climate bill that just passed the House, which totally misses the opportunity to harness revenues from the sale of emission allowances and direct them toward green industry stimulus measures like South Korea's.
Until the US government makes clean energy investment a national priority, America will have no answer to the clean tech challenges coming from Asia's emerging green economies.