Assessment and recommendations1

The Assessment and Recommendations present the main findings of the Environmental Performance Review of Korea and set forth 45 recommendations to help Korea make further progress towards its environmental policy objectives and international commitments. The OECD Working Party on Environmental Performance reviewed and approved the Assessment and Recommendations at its meeting on 8 November 2016. Actions taken to implement selected recommendations from the 2006 OECD Environmental Performance Review are summarised in the annex to the Assessment and Recommendations.

  

1. Environmental performance: trends and recent developments

Korea, the eighth largest OECD economy, has few natural resources. It has been one of the fastest growing OECD economies over the past decade, although its traditional growth model, based on manufactured exports produced by large firms affiliated with chaebols (conglomerates), has become less effective (OECD, 2016a). However, growth has come with high pollution and resource consumption. Population density is the highest in the OECD, exacerbating environmental challenges. Labour productivity is low, even though Korea has excellent levels of education and skills. Moreover, it lies below the OECD average in terms of work-life balance and health.

Transition to a low-carbon and energy-efficient economy

Korea is the fifth largest greenhouse gas (GHG) emitter in the OECD. It is also one of the few member countries that is a net exporter of CO₂ emissions, due to its carbon-intensive, export-oriented economy (OECD, 2015a). While it has experienced the second highest growth in GHG emissions among OECD countries since 2000, emissions have been relatively decoupled from economic growth (Figure 1). Although Korea’s target to reduce GHG emissions by 37%2 below business-as-usual (BAU) levels by 2030 is demanding in terms of reducing emission intensity, it implies a modest decline in emissions by international comparison (Climate Action Tracker, 2015; BNEF, 2015). Moreover, it represents a postponement of the 2020 target (30% below BAU levels) Korea had previously set. Even so, Korea’s current policy mix is unlikely to be sufficient to achieve its target (PBL, 2015); tightening the new Emissions Trading Scheme, reforming energy taxation and electricity pricing, developing renewable energy sources and strengthening energy demand management will be essential to change the emission trajectory to reach Korea’s climate goal. Korea is more vulnerable to climate change than many OECD countries (University of Notre Dame, 2014). The country therefore needs to continue pursuing adaptation measures in parallel with GHG emission reductions to face expected challenges such as rising precipitation and sea levels, more frequent extreme weather and declining agricultural production.

Figure 1. Selected environmental performance indicators

 https://doi.org/10.1787/888933448886

Korea’s energy mix is dominated by fossil fuels, which accounted for 82% of the total primary energy supply (TPES) in 2015, just above the OECD average. As the country is highly dependent on imports, energy security is a constant concern. Although oil is still the largest contributor to energy supply, there has been a shift to natural gas and coal, which have benefited from favourable prices and government subsidies. Unfortunately, current energy plans do not foresee a substantial change in the share of coal in the energy mix, and as energy demand continues to rise, so will the number of coal-fired power plants. While new plants have high efficiency and meet stringent air emission standards, and existing plants are being retrofitted, ongoing large-scale carbon capture and storage demonstration projects should be encouraged to curb GHG emissions. The share of nuclear power in TPES has remained broadly stable at around 16%, with plans to increase this share scaled back due to a public confidence crisis following the Fukushima accident in Japan in 2011 and unresolved domestic storage issues (Figure 1).

Korea’s share of renewables in the energy mix remains the lowest in the OECD and the country has fallen short of its intermediate renewables targets. With its mountainous topography, contested and militarised waters and high population density, it may face greater challenges to renewable energy development than other countries, yet there remain opportunities to exploit. The government is pushing for wind and solar photovoltaic power to become core pillars of Korea’s new and renewable energy mix, and is also promoting strong growth in solar thermal and geothermal energy (Invest Korea, 2015). However, efforts in both support for renewables and energy demand management need to be significantly scaled up if the country is to meet its long-term target of 11% renewables in TPES by 2035, already pushed back from 2030 (Figure 1).

Korea recently shifted the focus of its energy policy from augmenting supply to curbing demand, a welcome move which will be essential to tackle rising air pollution and GHG emissions. Total final energy consumption increased by 34% over 2000-14. Nevertheless, energy intensity, which is above the OECD average per unit of GDP and per capita, is declining. Unlike in most OECD countries, industry is the largest energy consumer, followed by transport, which is dominated by roads (IEA, 2016a).

Air pollution is a major health concern, with exposure to fine particulate matter (PM_2.5) and ground level ozone being particularly severe. It is estimated that the number of premature deaths caused by air pollution rose by 29% between 2005 and 2013, and the number is projected to almost triple by 2060, due partly to an increasing and ageing population and to urbanisation (IHME, 2015; OECD, 2016b). This places Korea among the countries most affected by air pollution (Figure 1). In a welcome move, the government recently made the issue a national priority and announced a KRW 5 trillion (USD 4.4 billion) dedicated budget. Industry is the largest emitter of many pollutants and the sector’s PM₁₀ emissions have nearly quadrupled since 2000 due to extensive use of fossil fuels for industrial processes and combustion. Road transport is the largest source of NO_x and CO emissions (OECD, 2016c). Transboundary particles exacerbate Korea’s PM concentrations, especially fine particulates from China’s industrial sites and yellow dust from deserts in China and Mongolia, although the share of imported air pollution is not precisely known. Korea actively participates in regional dialogue and co-operation to monitor and mitigate these pollutants.

Korea’s efforts to tackle air pollution have borne fruit: emissions of all major air pollutants but PM₁₀ have been decoupled from economic growth (OECD, 2016c). PM₁₀ and lead concentration levels have decreased whereas ground level ozone pollution has increased. Planning has been strengthened through the first and second Comprehensive Plans for Air Quality Improvement (2006-15 and 2016-24) at national level and the first and second Seoul Metropolitan Air Quality Improvement Plans (2005-14 and 2015-24), even though emission reduction objectives for NO_x and VOCs were not achieved. Emission standards for fuel and vehicles have been tightened, bringing them into line with US standards for petrol and EU standards for diesel. In response to studies showing the real-world NO_x emission performance of Euro 5 and 6 vehicles to be far poorer than test-cycle measurements (Carslaw et al., 2011; Franco et al., 2014), in 2016 Korea introduced real-driving emission standards on top of existing in-laboratory standards (MOE, 2016a). An innovative air pollutant emission cap management system introduced in the Seoul Metropolitan Area in 2008 has reduced NO_x and SO_x emissions. Successful “transit mall districts” have been introduced in some major city centres, which only give access to public transport, bicycles and pedestrians, but stakeholder opposition has hindered the development of low emission zones.

Transition to efficient resource management

Korea is a resource-intensive economy due to the predominance of heavy industry (electronics, automotive, shipbuilding, chemical, iron and steel, cement) and a dynamic construction sector. Nonetheless, domestic material consumption has been relatively decoupled from economic growth, meaning that material productivity has improved. Korea is almost entirely dependent on imports for fossil fuels, metals and wood, while construction minerals are available domestically.

Total waste generation has been closely linked with economic growth, driven by the construction sector, while municipal waste generation remained relatively flat over the review period. Municipal waste management has shifted markedly away from landfill. Materials recovery rose from 41% in 2000 to 59% in 2014 (compared with the OECD average of 34%), thanks in part to Korea’s volume-based waste fee system, which imposes charges that are proportional to the amount of non-recyclable waste generated (OECD, 2016c).

Korea’s farming model is highly intensive, with negative ramifications for biodiversity and pollution. Despite a decrease in the surface area dedicated to agriculture, total production remained stable over the review period, with livestock production growing. The intensity of commercial fertiliser and pesticide use is among the highest in the OECD, and livestock density is the second highest after the Netherlands. Nevertheless, the nitrogen and phosphorus balances have decreased since 2000 (FAO, 2016). Organic farming represented 1.5% of agricultural land in 2012, compared with the OECD average of 2.2%.

Management of natural assets

Korea is among the few OECD countries under medium-high water stress. However, information on freshwater resources and abstractions is fragmented and infrequently updated. The concentration of the rainy season from June to September, with large variation by year and by region, poses a major challenge for water management. Steep topography and rapid urbanisation exacerbate the consequences of frequent flooding and drought caused by rainfall patterns. The country comes close to meeting its water quality target for river sections but additional efforts are needed to achieve its targets for lakes (MOE, 2016a). Many Korean lakes are artificially created by dam construction and are used as agricultural reservoirs, leaving them highly vulnerable to eutrophication as they have a lower self-purification capacity than rivers and nutrients can easily accumulate. The predominant type of water pollution has shifted from point-source to diffuse pollution, as the share of treated wastewater has improved and livestock production has increased substantially (MOE, 2015).

Korea possesses a wide variety of terrestrial, coastal, marine and island ecosystems due to its climate, with four distinct seasons, and topography characterised by mountains, forests, long coastlines and islands. However, rapid urbanisation and industrialisation are putting considerable pressure on biodiversity and ecosystems, destroying and fragmenting habitats. Built-up areas have expanded by 51% since 2002, far above the population growth rate of 6% (Figure 1), reflecting government efforts to reduce the concentration in the Seoul Metropolitan Area, home to nearly half the nation’s population. The government is proposing a law to allow greater tourism infrastructure development in some mountain conservation areas, which will increase the pressure on biodiversity. Although natural parks, wetland protected areas and ecologically sensitive areas are excluded in the proposed law, stringent impact assessment of development projects should be ensured to minimise environmental impact and prevent biodiversity loss.

Korea has invested considerable effort into strengthening and streamlining its legal and planning framework dedicated to managing biodiversity. These efforts have borne fruit: for example, by 2015 Korea had successfully restored over 60 endangered species, including the Asiatic black bear and the Sobaeskan red fox. Following a wave of laws and plans for areas such as forests, wildlife reserves, natural parks and marine ecosystems, the 2012 Act on the Conservation and Use of Biodiversity was established to streamline and better organise biodiversity management. Korea has also strengthened its institutional and information network by establishing research institutes, such as the National Institute of Biological Resources in 2007 and the National Institute of Ecology in 2013, to build a more comprehensive understanding of its biodiversity and to strengthen human capacity in this field. However, the proliferation of institutions can come with co-ordination and coherency challenges that should be borne in mind as the government chooses between creating new institutions and strengthening or integrating existing ones. Korea has expanded its terrestrial and marine protected areas, most recently through the designation of the Mudeungsan (2014) and Taebaeksan (2016) national parks, but has not yet reached international targets for protected areas as a proportion of total land and marine area (Figure 1).

Recommendations on climate change, air management and environmental information

Climate change

• Formulate a sector-by-sector roadmap with emission reduction goals and detailed measures to implement the 2030 GHG emission reduction target. Set intermediate steps to track progress towards the targeted path and adjust measures if necessary.

• Revise energy plans to ensure they are consistent with fulfilment of international climate change commitments.

Air quality management

• Consider introducing air pollutant emission cap management systems in areas with large industrial complexes outside the Seoul Metropolitan Area; continue tightening SO_x and NO_x emissions caps in the Seoul Metropolitan Area.

• Strengthen vehicle emission standards, narrowing the gap between testing conditions and on-road results.

• Pursue efforts to introduce low emission zones in areas affected by severe air pollution.

• Pursue regional co-operation to tackle transboundary air pollution.

Environmental information

• Strengthen efforts to establish a comprehensive and coherent water information system to better support national water policy; update information on freshwater resources and abstractions at national level more regularly.

• Improve knowledge of air pollution sources (domestic vs. transboundary) and of the impact of each upon health.

2. Environmental governance and management

Institutional framework

Korea has a centralised system of environmental governance, with the Ministry of Environment (MOE) playing the leading role; its budget and capacity have increased significantly over the last decade. There are national-level bodies for inter-agency co‐ordination on specific issues – climate change, chemicals accident prevention, water management – as well as for cross-sector policy making on sustainable development and green growth. Their effectiveness could be substantially improved, particularly in the area of water.

Provincial and city governments play an important role in several environmental policy areas, including waste and water management. They also administer environmental permits and enforce environmental law as statutory delegates of the MOE. While many environmental responsibilities have been transferred to subnational governments over the last decade, the devolution and delegation of powers have not always been accompanied by adequate allocation of financial resources, hampering provincial and municipal governments’ capacity for these tasks. In addition, the political emphasis of local authorities on economic growth, sometimes at the expense of environmental protection, contributes to a policy implementation gap at the provincial and municipal levels.

Regulatory framework

Korea has introduced rigorous requirements for ex ante assessment of its draft laws and regulations, including environment-related ones. However, this regulatory impact analysis applies mostly to regulatory proposals developed by the executive branch and has so far been mostly qualitative (OECD, 2015b). Ex post evaluation of the impact of environmental legislation is exercised through various regulatory improvement programmes.

Korea has strengthened its regulation of stationary pollution sources. Since 2006, industry-specific air emission standards have been made more stringent, and an air pollutant emission cap system has been introduced in the Seoul Metropolitan Area (Section 1). Significant progress has also been achieved in water quality management with the increased number and stringency of water quality and effluent standards and the introduction of the Total Water Pollution Load Management System for river basins. Korea has also adopted new standards for motor vehicle emissions and is implementing management programmes for diffuse water pollution.

Korea has broadened its systems of environmental impact assessment (EIA) and strategic environmental assessment (SEA), which now cover a more extensive and expanding range of projects and plans. However, both remain largely focused on infrastructure. Industrial facilities are subject to EIA based on the size of their site rather than environmental impact, and SEA does not cover sector policies or a significant share of local land use plans. Furthermore, there are concerns about the easing of land use regulations, with more development being allowed in environmentally sensitive areas in mountainous regions, as well as the fact that several development promotion laws allow certain projects to bypass regular territorial planning (Lim, 2014).

The environmental permitting system is undergoing important reforms in line with international best practices. The gradual introduction starting in 2017 of integrated permits for 19 industrial sectors will significantly streamline the permitting process. It will allow the competent authorities to consider economically viable technical solutions and local environmental conditions in setting customised requirements for major polluters. The introduction of integrated permitting will necessitate substantial capacity building at the MOE and its regional offices, which are to assume responsibility for issuing permits. However, the reforms will not affect industrial activities with low environmental impact – chiefly small and medium-sized enterprises (SMEs) currently subject to complex medium-specific standards.

Compliance assurance

Korea has made progress in building compliance monitoring and enforcement capacity at the national and local levels. Both the central and local governments have improved detection of non-compliance, although random inspections put a strain on local governments’ resources, which could be avoided by focusing site visits on higher-risk facilities. The national government promotes compliance and adoption of green business practices through voluntary agreements on the reduction of key air pollutants, environmental recognition awards and regulatory incentives for adoption of environmental management systems. While the MOE continues efforts to build enforcement capacity (e.g. by creating a central environmental crime investigation team), administrative monetary penalties are too low to deter violations, and despite the high maximum applicable criminal fines, criminal enforcement is often hampered by public prosecutors’ limited willingness to pursue environmental cases.

Recommendations on environmental governance and management

• Support a whole-of-government approach to water resource management by building on the existing collaboration platforms for policy dialogue between all relevant government stakeholders and adopting a Framework Act on Water Management; strengthen co‐ordination between ministries on other key environmental issues, including climate change, chemicals safety and biodiversity.

• Build provincial and local governments’ capacity to carry out their statutory environmental responsibilities and tasks delegated to them by the central government; provide the necessary financial resources to ensure effective enforcement of national environmental regulations; strengthen the system of environmental performance indicators for all levels of government.

• Reinforce ex ante assessment of environmental policies and regulations through wider application of cost-benefit analysis, and expand ex post evaluation of their implementation.

• Continue to expand the coverage of the EIA and SEA systems by making hazardous industrial facilities subject to EIA independently of their size and requiring SEA for a wide range of government policies and programmes with potential impact on the environment, including all local land use plans. Ensure appropriate use of these instruments to prevent uncontrolled development in environmentally sensitive areas; pursue closer co-ordination between land use and nature conservation plans.

• Ensure coherent introduction of integrated environmental permitting reform for major industrial polluters on the basis of best available techniques, accompanied by capacity building for competent authorities and broad stakeholder involvement; consider replacing single-medium permits for low-risk installations with sector-specific general binding rules.

• Increase the efficiency of compliance monitoring through better targeting of inspections based on the level of environmental risk of individual facilities; strengthen administrative enforcement tools and build the capacity of public prosecutors and the courts in applying penalties for criminal offences.

3. Towards green growth

Korea has created a strong institutional framework for green growth and climate change with the National Green Growth Strategy, the Framework Act on Low Carbon, Green Growth, the first and second Five-year Plans for Green Growth, and detailed expenditure plans aiming to dedicate 2% of GDP to green growth activities each year. The country has also made a considerable effort to expand its international engagements on green growth, hosting the Green Climate Fund, establishing the Global Green Growth Institute and championing green growth at the OECD. Korea has applied the OECD measurement framework for developing a set of green growth indicators (Statistics Korea, 2012). This useful tool should continue to be used to track progress towards policy objectives.

However, Korea has not fully translated its green growth leadership and vision into action. Although a second plan was adopted in 2014 and relevant measures were implemented under different names (e.g. “climate change response”), green growth is no longer the top political priority, with the paradigm shifting to “creative economy”. The Presidential Committee on Green Growth has been moved to the prime minister’s office. The Government Performance Evaluation Committee ceased to evaluate green growth policies in 2013, though it still evaluates related policy areas. Several examples of policy inconsistency remain: GHG emissions continue to rise, coal is set to remain a core part of the energy mix (MOTIE, 2015, 2014) and road transport continues to be supported as the dominant form of mobility (MOLIT, 2016a).

Greening the system of taxes and charges

While Korea currently enjoys a fiscal surplus and low public debt, it will need to increase tax revenue to finance rising social expenditure over the long run (OECD, 2016a). Raising environmental taxes provides an opportunity to do so, while making it possible to lower other taxes that may be a brake on growth, e.g. taxes on corporate and labour income and capital gains. Korea’s environment-related tax revenue as a share of GDP has fallen since 2000, yet remains above the OECD average.

Korea’s energy taxes do not sufficiently consider the environmental and other external costs of energy production and use across sector activities. For instance, in terms of both energy content and carbon content, the gap between the taxation of transport fuels and that of non-transport fuels is above the OECD average (OECD, 2013a). Payment for energy also varies by user group, with tax rates highest for households, followed by industry, and agriculture enjoying exemptions, raising equity issues. As in many OECD countries, petrol is taxed more heavily than diesel. The excise tax gap between the two narrowed markedly between 2000 and 2008, but no further progress has been made since then. In fact, the real taxation level for both fuels has been declining since 2009, representing forgone revenue, reducing the incentive to save energy and frustrating efforts to shift to greener transport modes (IEA, 2016c).

Government policy to keep electricity prices low to support industrial competitiveness and affordability for households has spurred a rapid increase in electricity demand, putting supply under serious strain and contributing to GHG emission growth (OECD, 2012a). Low electricity prices also act as a barrier to renewables and energy efficiency measures. The government’s steps to make electricity prices better reflect system costs include progressively raising the rate since 2010, applying seasonally/hourly tiered pricing and adopting pricing by voltage (MOTIE, 2014; KEPCO, 2013). These measures have led to an improvement in the cost recovery rate. However, further reforms are needed to reduce peak demand, ensure prices reflect costs of power generation, transmission and distribution, and remove cross-sector subsidies (Ecofys, 2015; Pittman, 2014). Another area of improvement is the introduction of a tax on bituminous coal used for electricity generation in 2014, though its rate is modest. It is essential for the government to redouble its efforts to pursue such reforms, and to go beyond the goal of reflecting system costs so that prices also reflect the environmental and social costs of electricity production and use.

Korea launched the world’s second largest emission trading scheme (ETS) in January 2015 as the centrepiece of its climate policy. The ETS covers about two-thirds of the country’s GHG emissions. Concerns about industry competitiveness led to a very high share of permits being allocated for free (from 100% in the first phase [2015-17] to 90% in the third phase [2021-25], higher than in the European Union ETS), depriving the government of revenue that could be used, for example, for lowering income taxes or increasing investment in profitable areas such as green research and development (R&D). Korea could learn from the experience of the EU ETS, where free allocation of permits resulted in windfall profits to industry. OECD work has found that industry concerns about loss of competitiveness due to carbon pricing measures are often overstated (Arlinghaus, 2015).

In 2015, actual emissions slightly exceeded allocations (by 0.5%). However, all companies but one have complied with their obligations thanks to the use of flexible mechanisms such as offset credits. As with the EU ETS in the beginning, trade in allowances has been extremely low, as companies hold on to them for future use or to sell at higher prices. Most trade has been in credits and offsets obtained from abatement outside the system. Responding to the lack of liquidity, the government is raising the ceiling for borrowing allowances from the following year from 10% to 20%, providing additional allocations to reward early reduction and selling government reserves. The experience of the EU ETS offers a cautionary tale, however, where allocation above actual emissions lowered perceived investment incentives for clean technology adoption (Venmans, 2016) and increased emissions (Brouwers et al., 2016).

Changes in governance and GHG objectives have made implementation of the Korean ETS more complex; for example, ETS supervision has shifted from the MOE to the Ministry of Strategy and Finance, and the 2030 GHG emission target has postponed the 2020 one, leaving industry uncertain of emission reduction quantities and timelines. Improved transparency, stability and long-term visibility will be key factors for smooth adoption of the ETS. To make the ETS an environmentally and economically effective tool for reducing GHG emissions, the government will need to adjust the system, drawing on lessons learned in its first year of operation and experience from other such systems. Ministries will also need to work closely with the sectors concerned to help them make the transition.

The ETS was preceded by the Target Management Scheme (TMS), which caps the annual GHG emissions of individual firms and is still applied to smaller firms with emissions under a certain threshold. The TMS provides a stepping stone for some enterprises to learn monitoring, reporting and verification practices before transitioning to the ETS. However, as the firm-specific caps are set bilaterally in consultation with the government, the implicit carbon price varies between firms. A more efficient way to price carbon would be to introduce a carbon tax for all sectors and firms not covered by the ETS and then phase out the TMS (OECD, 2012a).

Korea needs to review transport-related taxes and charges in the face of rising economic, environmental and health costs in the sector. Exemptions weaken the diesel vehicle component of the environment improvement tax, and a plan to tax highly polluting vehicles has been pushed back five years. As the congestion charge on Namsan Tunnels 1 and 3 in Seoul has not been raised in several years, its impact on limiting congestion has been declining, and the use of congestion charges has not been extended as originally planned. In 2014, the traffic generation charge, which had remained unchanged for over 20 years, was raised. Following the example of Seoul, cities could differentiate the charge rate according to facility location, not just floor area.

Environmental tax and charge rates on air pollution, water pollution and use, and land development are too low to cover environmental and social externalities or to encourage pollution reduction and efficient resource use. Furthermore, despite the fact that NO_x emissions from industry are increasing, they are not subject to the air pollution tax. Although this would not be justified in the Seoul Metropolitan Area, where an emission cap management system is in place (Sections 1 and 2), it would be desirable in other areas where NO_x emissions are not priced. Korea’s water supply and sanitation charges are the lowest in the OECD, and do not encourage efficient water use. Moreover there are socially motivated reductions and exemptions, which should be replaced with separate aid decoupled from water use to maintain the price signal for all. Charges related to water resource management are uniform across the country and so do not signal regional differences in water availability and risk. The low collection rates on certain taxes and charges, particularly related to water quality, suggest imperfect enforcement, which further weakens incentives for pollution reduction and efficient use.

Environmentally harmful subsidies, direct and indirect, distort incentives by encouraging increased resource use and pollution. While the government has been working to phase out some direct subsidies, such as support for coal briquette production and use, others have been extended. For example, the motor fuel subsidy, paid to buses, trucks and LPG taxis since 2000, was extended in 2015 to diesel taxis meeting Euro 6 standards. Korea also remains one of the largest providers of producer support for agriculture in the OECD (OECD, 2016d). The agriculture sector does not pay energy taxes and only partially pays water charges (OECD, 2010a), and energy-intensive industries such as cement and steel are exempt from the bituminous coal tax. In a global context of low coal and oil prices, the current environment would be favourable to phasing out these harmful subsidies and tax exemptions.

Investing in the environment to promote green growth

Following the 2008 economic and financial crisis, Korea introduced one of the world’s most significant green stimulus packages, reaching 4.5% of its 2008 GDP (OECD, 2011). Korea’s green new deal was then rolled into its first Five-year Plan for Green Growth (2009-13), which achieved its public spending target of 2% of GDP per year on green growth projects. Over half of expenditure went to water and green transport infrastructure (e.g. high-speed rail), providing a short-term boost to activity and employment. However, the green credentials of some expenditure under this plan, such as for the Four Rivers Restoration Project, have been questioned. Ex post evaluations found that while the number of large floods decreased, more water resources were secured and certain water quality indicators improved,3 slowed river flow caused the population of some aquatic species to decline and contributed to algae blooms in some areas, and dredging and construction of riverside eco-parks affected some habitats and species (Four River Restoration Project Investigation Evaluation Committee, 2014; Board of Audit and Inspection of Korea, 2013). Continued monitoring is needed to evaluate long-term changes in aquatic ecosystems and riverbeds.

Environmental protection4 expenditure as a share of GDP increased steadily to reach 2.1% in 2009, driven by spending on wastewater infrastructure and, to a lesser extent, air pollution abatement and biodiversity protection. Since then, it has returned to its early 2000s level of 1.8% due to reduced public expenditure on waste management and stabilised business spending on air pollution control (OECD, 2016c). As in most OECD countries, wastewater and waste management account for the bulk of environmental protection expenditure (about 60% in 2013), which is mostly incurred by municipalities. Combatting air pollution is the next highest area of expenditure (about 20%). The stabilisation of business investment in this domain suggests some room for tightening the air pollutant emission cap management system and revising air pollution taxes to better reflect environmental and other externalities.

Public expenditure on water supply and sanitation increased steadily over 2006-14 (MOE, 2016b, 2016c), resulting in connection rates above 90% and stunning improvements in the level of wastewater treatment. However, ageing infrastructure and declining cost recovery rates for both services are threatening the financial sustainability of the sector. To bridge the financing gap, the government plans to raise water supply and sewerage charges, amalgamate multiple small water services to benefit from economies of scale, and encourage increased private sector participation. As for water quality, more attention is needed to combat the pressures posed by diffuse pollution and climate change.

Investment in renewable energy sources increased steadily over 2007-11 (MOE, 2016a; IEA, 2016b), spurred by higher oil prices and a raft of measures including a feed-in tariff (FIT) programme, R&D support, preferential loans and tax incentives for producers and installers, and subsidies for households. Investment then crashed along with the global renewables market in 2012 and government support fell (MOTIE, 2014; Invest Korea, 2015). In 2012, the FIT programme was replaced by a renewable portfolio standard (RPS) to ease the budget burden. Under the RPS, producers are given certificates based on renewables-based electricity produced, with different weightings applied depending on the technology used. Certificates can be traded between producers to allow them to meet their quota obligations. While installed capacity of renewables has accelerated, appropriately weighting certificates will require continued monitoring of technological developments.

Korea has made great strides in developing renewables technology (see below) but in global markets it faces strong price competition from China and cutting-edge technology competition from advanced economies (GGGI, 2015). One factor hindering export development is that the domestic renewables market has not yet taken off. This is due to lack of competition in the electricity market, regulated low electricity prices and the fact that the government is not prioritising renewables. Planned annual investment in coal over 2015-19 is 70% higher than the public budget for renewables5 combined with private investment in 2014 (MOE, 2016a; MOTIE, 2015). The seventh Basic Electricity Plan (2015-29) maintains coal as the dominant energy source and increases the share of renewables in the mix by only 0.1% compared with the sixth plan (MOTIE, 2015). The domestic market is further challenged by local regulations and low public acceptance (MOTIE, 2014). The latter is a barrier shared by many OECD countries.

Korea is a leader in energy storage technology (see below), recently becoming home to the world’s largest battery energy storage system for frequency regulation. The system will reduce the need for KEPCO, the country’s largest power utility, to turn to power plants to provide regulation services and will therefore save fuel (Runyon, 2016). The government plans to build on this system and its industrial energy management system to create demand management markets rewarding providers of electricity capacity and energy efficiency measures (also known as white certificate markets). In designing these markets, Korea could draw upon lessons learned from similar markets in parts of Europe, Australia and the United States. While white certificate programmes have proved efficient and effective, experience in Italy and France has shown that care should be taken in minimising their administrative burden and maximising their transparency, that ex post evaluations are useful to determine the real energy savings achieved, and that careful analysis of their interaction with other instruments, such as the ETS and subsidies for energy efficiency measures, is desirable (OECD, 2013b; OECD, 2016e).

Road transport consistently accounts for over half of investment in transport infrastructure and remains the country’s dominant transport mode. While the share of rail in total public investment in transport infrastructure increased from 16% in 2006 to 33% in 2015 (MOLIT, 2006, 2015), this has not led to a modal shift in freight and passenger transport from road to rail, mainly due to inaccessibility of stations and lack of integration with other transport modes (MOLIT, 2016b; OECD/ITF, 2012). Road transport is a significant factor driving air pollution and GHG emissions, and the economic cost of congestion6 is high and rising, representing 2.2% of GDP in 2012 (Cho, 2014). Through numerous tax incentives and subsidies, the bus fleet was switched from diesel to natural gas and the number of electric and hybrid cars purchased was increased, though their uptake has been slower than targeted: their share remains marginal (1%) while the share of diesel cars is rising. Clean vehicle uptake could be further stimulated by broadening incentives to target their use, not just their purchase.

Promoting eco-innovation

Korea is the world’s most R&D-intensive country and also ranks first in business R&D (OECD, 2016f). Its highly developed innovation system and increasingly stringent environmental policy have driven progress in eco-innovation. In 2014, the government of Korea was the fourth largest provider of funds for R&D on energy and the environment in the OECD, and ranked first relative to GDP (Figure 2). Since 2000, related spending has increased from 0.05% of GDP to 0.14%. This reflects both the general effort on R&D and the increased priority given to energy, which accounted for 9% of the total government R&D budget in 2014, more than twice the OECD average.

Figure 2. Korea has the OECD’s highest level of public R&D expenditure on energy as a share of GDP

 https://doi.org/10.1787/888933448899

The first Five-year Plan for Green Growth clearly identified green technology as a new engine for growth and prompted increased public R&D investment in 27 key technology areas, such as intelligent transport systems, light-emitting diodes, batteries, green information and communication technology (ICT), nuclear energy, climate modelling, solar cells, green cars and CO₂ capture and storage. The government has been channelling finance to green businesses through grants, loans, credit guarantees, venture capital investment and generous generic and specific tax incentives for R&D. However, market-based financing has not taken off; adding carry-over provisions to tax breaks could further stimulate innovation in SMEs. Such a system would allow young and small firms, that typically lose money in the early years of an R&D project, to save an unused deduction for later use.

High levels of investment within a broad range of supply and demand instruments have made Korea one of the world’s most innovative countries in climate change mitigation technology. In 2010-12, such technology accounted for 10% of overall patent applications7 associated with inventors located in Korea, up from 4% in the early 2000s. The country developed a comparative advantage8 in several such fields (e.g. solar photovoltaic, batteries and fuel cells, energy-efficient lighting, electric vehicles) and Korean manufacturers became key players in related global markets.

However, high R&D inputs have not delivered intended outcomes in terms of renewables development and GHG emission reduction, making the case for stronger carbon price signals. Support to energy- and climate-related innovation may have crowded out innovation in other important environmental domains, suggesting potential to better focus support on Korea’s strengths and future needs. Eco-innovation and general innovation face similar barriers: public R&D investment has mainly focused on experimental development of green technology and promotion of green manufacturing industry, while basic research, the service sector and non-technological innovation have been given less attention. In addition, innovation is hampered by weak industry-university links and a low level of international collaboration (OECD, 2014). Compared with other OECD countries, Korea has one of the lowest co-invention rates with foreign partners in environment-related technologies. The second green growth plan aims at tackling these challenges by promoting fundamental research on carbon capture and storage and nuclear energy; by commercialising energy demand management technology and developing new ICT-based business models; by promoting resource-cycling industrial development; and by supporting clean production by SMEs.

Expanding environment-related markets and employment

The environmental goods and services (EGS) sector has grown far faster than the general economy; both sales and the number of employees almost tripled over 2006-14 (MOE, 2016a). Growth has been faster in resource management activities than in pollution control activities, spurred by a strong recycling sector and the development of heat and energy saving and waste-to-energy sectors. The government has established plans and instruments to facilitate growth in green jobs and training. However, economy-wide assessments need to be performed to evaluate the overall labour market impact and skills needs associated with transitioning to a greener economy.

Korea’s well-established green public procurement (GPP) system is recognised as an example of best practice among OECD countries (OECD, 2015c). GPP is strengthened by Korea’s long-standing eco-labelling system, and by the 2005 Act on Promotion of Purchase of Green Products, which made GPP obligatory. While GPP has helped drive substantial growth in the number of environmentally certified products and jobs in the EGS sector, the green share of total public procurement stands at 8%, or 42% for categories that have green product options available (MOE, 2015), indicating room for further growth. To increase GPP, the scope, number and quality of green products available need to be expanded to better meet the needs of all public institutions. Harmonising GPP and other procurement regulations and designating and training GPP officials in each public institution could also facilitate growth in GPP.

While multiple environmental labels provide information on products’ environmental and energy performance, recognition of them remains around 50% and a gap between label recognition and the actual purchase of certified products persists (KEITI, 2014). Consumers are discouraged by the higher prices and lack of variety of green products, insufficient product information, quality issues and perceptions of misleading labelling and advertising. To tackle the price gap, the government introduced a “carbon point” economic incentive programme that rewards electricity, water and gas savings and a “carbon cashbag” system for the purchase of energy-efficient products. These were integrated in 2011 with the flagship “green credit card” system, which is attracting a growing number of participants and international attention.

Environment, trade and development

Korea’s target of increasing environment-related bilateral official development assistance (ODA) to 30% of total bilateral ODA by 2020 appears hard to achieve on current trends (OECD, 2016g). The country makes extensive use of concessional loans in its environment-related ODA, which may be appropriate for middle-income countries but is less so for low-income countries, which have less capacity to repay them. The Korea International Cooperation Agency has increased efforts to mainstream environmental considerations into its activities by developing guidelines and appointing a staff member in each department to be in charge of monitoring and evaluating environmental mainstreaming. Korea engages extensively in regional co-operation on green growth and environmental challenges, as a donor providing finance and know-how, as a partner finding solutions to common environmental challenges, and as an exporter of environmental technology.

Korea has provided substantial funding for fossil fuels overseas. Almost two-thirds of its other official flows over 2007-14 supported industry, mining and construction, including activities such as coal, gas and chemical production facilities and oil exploitation (OECD, 2016c). The value of export credits that Korea provided to coal- and oil/diesel-fired electricity generation projects substantially exceeded that of all other OECD countries over 2003-13 (OECD, 2015e). Korea will need to plan how to phase out these investments following the OECD agreement in November 2015 restricting the circumstances under which coal-fired power plants can be financed.

In 2013, the Export-Import Bank of Korea became the first non-multilateral bank to issue green bonds and the first institution in Asia to issue green bonds in US dollars. Proceeds are used to extend loans to low carbon projects, which are independently verified.

Korea has recently signed many free trade agreements with key trading partners and, as a member of Asia-Pacific Economic Cooperation, is committed to reducing its applied import tariffs to 5% or less (on an ad valorem basis) on a standard list of goods, including many pertaining to renewable energy and energy efficiency. These developments have facilitated a decline in Korea’s import tariffs on environmental goods. Korea is one of 17 economies negotiating a plurilateral Environmental Goods Agreement that would phase out import tariffs in this sector. However non-tariff barriers remain, such as high product market regulation (OECD, 2015f).

Recommendations on green growth

• Strengthen political commitment to green growth. Provide political and institutional stability in terms of roles and responsibilities in designing, monitoring and implementing the framework.

• Green the energy sector to help meet Korea’s GHG gas and air pollution reduction and energy security goals:

  • Progressively raise electricity prices to reflect system costs (i.e. of production and distribution), providing targeted support decoupled from energy use to vulnerable households where needed; remove cross-sector subsidies.

  • Raise taxes on fuels used for electricity generation, particularly coal, to reflect environmental and health costs.

  • Redouble efforts in energy demand management.

  • Increase public investment in renewables development and deployment; review the outcomes and cost-effectiveness of existing instruments and adjust the measures based on the results; provide a stable and transparent policy framework; monitor changing technology costs and adjust support measures and weightings applied to different renewable energy sources under the RPS accordingly.

• Strengthen the effectiveness and efficiency of the ETS to help Korea meet its GHG emission reduction target:

  • Steadily increase the share of permits auctioned and the stringency of the total emission cap.

  • Increase the transparency, stability and long-term visibility of the ETS to allow businesses to better adapt and make the long-term investments necessary to reduce their emissions. This would include providing public information on current and future permit allocation at the sector level.

  • Phase in a carbon tax for firms and sectors not covered by the ETS; phase out the TMS.

• Adjust taxes, charges and subsidies to better reflect environmental externalities:

  • Adjust the rates of pollution- and natural resource-related taxes and charges to reflect environmental and social costs and to encourage reduced pollution and natural resource use. For example, raise water supply and sewerage charges and the water effluent tax. Strengthen the enforcement of these taxes and charges, in particular of those related to water quality, for which the collection rates are very low. Extend the air pollution charge to cover NO_x emissions in areas not covered by an air pollutant emission cap management system.

  • Progressively phase out domestic fossil fuel subsidies, such as those for the agriculture and fishing sectors, fuel subsidies for buses, trucks and taxis, and subsidies for producers of coal briquettes used by low-income households. Progressively phase out export credits and other official flows supporting fossil fuel extraction and use.

  • Reorient agriculture production subsidies away from direct producer and price support and towards support encouraging, or conditional on, provision of environmental services (e.g. water management, flood buffering, biodiversity protection) and efficient resource and input use. Remove water charge exemptions for agriculture, with the long-term objective of full cost pricing.

  • Establish an institutional mechanism, such as a green tax commission, to review the environmental effects of fiscal instruments, identify environmentally harmful subsidies and prioritise which to phase out first, and improve the effectiveness and efficiency of economic instruments.

• Strengthen measures to reduce transport-related GHG emissions, air pollution and congestion:

  • Raise the excise tax on diesel to at least match that on petrol, and index the tax on both fuels to inflation to avoid erosion of its value in real terms.

  • Implement measures that encourage not only the purchase but also the use of clean vehicles, such as dedicated lanes, lower parking tariffs and tolls, and more charging stations for electric vehicles.

  • Further increase investment in rail and other public transport; better link transport modes and integrate public transport planning with land use planning.

  • Expand the use of congestion charges; update the rate of the Namsan tunnels congestion charge; continue to raise the traffic generation charge and encourage cities to differentiate its rate according to facility location.

• Secure the long-term sustainability of financing for water supply and sanitation infrastructure:

  • Gradually raise water supply and sewerage charges to improve the cost recovery ratio of providing these services.

  • Pursue the amalgamation of water supply services to enhance their efficiency.

• Pursue efforts to foster and disseminate green innovation:

  • Rebalance public spending in energy- and environment-related R&D from technology development and demonstration to fundamental and applied research; promote greater involvement from universities and strengthen links with industry and government research institutes; continue to strengthen international co-operation in energy- and environment-related R&D.

  • Regularly assess the consistency between instruments used in environmental and innovation policies and the outcomes of eco-innovation policies against Korea’s strengths and future needs; scale up development and deployment of carbon capture and storage; promote innovation in a circular economy.

• Increase green public procurement and green purchasing by consumers:

  • Improve government engagement with the private sector concerning public sector product needs and the green standards these products would need to meet to be eligible for purchase, in order to expand the range of green products available.

  • Harmonise GPP regulations with the many other procurement requirements and streamline environmental labelling and certification schemes, to reduce complexity for public procurers and consumers.

  • Tighten the application and monitoring of eco-labels to ensure that products are of high quality and that labels are not applied falsely.

• Significantly scale up green bilateral ODA to meet the 2020 target of 30% of total bilateral ODA. Ensure that the use of grants or concessional loans is adapted to recipient countries’ economic context, financial position, governance, preferences and needs.

4. Waste, materials management and circular economy

Korea’s fast development, dependence on external markets and high share of SMEs in the industrial base, combined with high population density, little landfill space and cheap public services, create particular challenges for waste, materials management and a circular economy.

Korea can build on a very good track record in integrated waste management since 2006. It has further consolidated and strengthened its policies. It has progressed on all recommendations of the 2006 Environmental Performance Review (EPR) and is taking steps to move from a waste- and pollution-oriented strategy towards an integrated “circular economy” approach that contributes to raw materials and energy supply security. The related Framework Act on Resource Circulation was adopted in May 2016. The overall performance level remains high, with some of the best results among OECD countries. But progress is increasingly difficult, and in some areas improvement in recent years has been marginal.

Policy framework

Korea has a well-developed policy framework, with quantitative targets and a good mix of policy instruments. It has one of the world’s most advanced food waste policies. Korea is also among the early adopters of extended producer responsibility and has considerably broadened the scope of that system since 2006. The government emphasises the economic value of waste as a resource, with the double aim of reducing amounts going to final disposal and increasing amounts of valuable materials being recovered for the economy. In recent years, the policy focus has been shifting from material recycling to energy recovery through production of solid refuse fuels and incineration (waste to energy policy) as part of a broader effort to increase the country’s energy autonomy. This has been accompanied by significant investment in waste treatment and recycling facilities, whose construction benefits from government subsidies, tax credits and long-term low-interest loans. Korea exports its waste management know-how through bilateral and multilateral co-operation, including technical agreements that open up new markets for its industry.

Applying the polluter-pays principle to waste and materials management

The use of economic instruments in line with the polluter-pays principle is well established and was extended over the review period. Taxes and charges are used in combination with financial support and targets to create incentives for waste reduction and recycling. Korea is one of the few countries where manufacturers and importers have to pay a waste product charge to internalise the waste management costs of products that are hard to recycle or contain hazardous substances. The volume-based waste fee (VBWF) system for collection of mixed household waste has been extended to the whole country, except small settlements and remote areas; since 2010 it has also applied to food waste. Associated with free separate collection of recyclable waste, it has been instrumental in reducing waste going to final disposal. Despite these very positive developments, the polluter-pays principle is not yet fully applied: the VBWF levels are very low, with revenue covering only one-third of the management costs. In the business sector, government support appears to be the key driver of action.

Promoting recycling and waste reduction

The amounts of waste recovered are growing and recycling rates are higher than in many other OECD countries; more than 80% of the waste generated is recovered (Figure 3). Rates are highest for construction and demolition waste, food waste and tyres, followed by packaging materials, large and medium-sized waste electrical and electronic equipment, vehicles and municipal waste. Recycling has been accompanied by an increase in the amounts of recycled products and secondary raw materials available on the market. The materials intensity of the economy has been reduced, though not as much as in other OECD countries. Municipal waste management has successfully moved away from landfilling to materials and energy recovery; the amounts generated per capita are stable and below the OECD average, and generation remains decoupled from final private consumption. Korea has recently succeeded in curbing the upward trend in food waste generation, which had been of concern for many years. Food waste is now almost entirely recycled into feed, compost, and energy via electricity production.

Figure 3. Waste recovery has further progressed

 https://doi.org/10.1787/888933448900

At the same time, waste generation remains closely linked to economic growth, and the objective in the second national waste management plan of reducing total waste generation between 2002 and 2011 was not achieved. Since 2006, the total amount of waste recovered has increased in line with total waste generation, leaving the overall recovery rate almost unchanged. Though on the rise, the recovery rates for products such as small consumer electronics remain low compared with sales and stocks in use. It is estimated that half the waste still sent to final disposal (i.e. about 8% of the amount generated) contains materials that could be recovered.

Further progress will require not only more effective collection systems for certain types of recyclable waste, but also more advanced and innovative recycling technology and measures to achieve non-toxic material cycles. Korea has a large informal recycling sector, composed of very small family-type firms that have traditionally been involved in scrap collecting and recycling. A certain amount of waste electrical and electronic equipment escapes the official system through this sector, which can pose a risk of pollution and illegal exports. Given the importance of the informal sector, Korea would benefit from its progressive integration into the formal system of extended producer responsibility, e.g. by creating local networks in which informal recyclers would register as entrepreneurs applying minimum recycling standards and receiving training and support. A useful first step would be to study the sector to better understand its functioning in terms of the number of establishments and people involved, the type of waste collected and the pathways used.

Promoting recycling markets

Markets for recycled products are encouraged by the GPP system, which has been extended to all government institutions, and by an online trading system for recycled and recyclable materials and products, which is open to businesses, waste operators and households. Recycling markets, however, remain weak. They suffer from general mistrust of the quality of recycled materials and reused products. In recent years, low oil and raw materials prices have undermined their effectiveness, making it difficult for recycled products to compete with new ones. Strengthening recycling markets to make them more resilient against commodity price volatility and stimulating demand for recycled goods beyond the public sector will be essential. To achieve this, the government will need to strengthen its action at several levels. First, restoring trust in recycled goods, e.g. through well-targeted information campaigns and expanded use of quality labels for recycled goods. Second, guaranteeing high quality of recycled goods by better informing recyclers about the materials content of recovered products, developing minimum quality standards and creating incentives to upcycle waste into high-value products. Third, continuing to develop external markets and strengthening bilateral and multilateral co-operation on resource circulation and the reduce-reuse-recycle hierarchy (the 3Rs).

Improving the environmental effectiveness of waste and materials management

Measures to minimise the environmental impact of waste and materials management show mixed results. Waste disposal methods have improved with the closure or upgrading of substandard landfills, regular monitoring and inspection of small incinerators, a ban on direct landfilling of food waste and a ban on dumping organic waste at sea. Medical waste is tracked through a mandatory radio frequency identification system. However, not all waste is managed in an efficient and environmentally sound manner. Direct landfilling still exists, and very small incinerators, which are inspected less frequently (every three years), raise concerns. Illegal dumping and other inappropriate disposal by households and businesses, though reduced, remain an issue. Waste reduction at source and the reduction of hazardous substances in products, though encouraged through the producer responsibility system and an advance disposal fee, have not yet shown full results. Efforts need to be strengthened as regards electrical and electronic equipment and vehicles, and be expanded to other products. In this context, synergies with chemical policies and with the Korean Chemical Information Platform could be explored. It will also be important to provide businesses with incentives and improved guidance on design for environment.

Encouraging waste prevention and resource productivity in the business sector

Businesses are subject to mandatory waste reduction targets and are encouraged to voluntarily reduce waste going to final disposal. The focus is on big enterprises that generate large amounts of waste and on waste containing hazardous substances. Results have been satisfactory, though there is little control over smaller facilities. SMEs are exempt from many waste reduction measures and obligations, but receive training and support. Regulations and targets are often perceived as a burden rather than an opportunity, and many developments in the business sector are dependent on government support. All this indicates there is still room for efficiency gains in the sector and further progress can be made with resource productivity, waste reduction at source, design for environment and performance management. One area to consider in particular is further development of circular business models that achieve greater resource efficiency and fully integrate waste as a resource into the production cycle, e.g. by using the concept of industrial symbiosis and strengthening the network of eco-energy towns and eco-industrial parks.

There are important synergies between policies that encourage eco-innovation, clean production, R&D, eco-friendly businesses, remanufacturing and energy efficiency, and policies that encourage sustainable materials management and a circular economy. Although co-operation exists, these synergies could be better exploited if all ministries concerned worked together to produce a consolidated overview of support measures in place, and if there were mechanisms to co-ordinate programmes and assess their costs and benefits. Synergies also exist between policies that aim at reducing toxic chemicals, those that aim at reducing toxic product contents, and extended producer responsibility. More effective integration of these policies would be useful.

Producing reliable information on waste and materials

Korea has a well-developed monitoring and information system for waste generation and treatment, with mandatory reporting by businesses and local authorities. Movements of waste, their management and treatment processes are monitored in real time thanks to an online information system called Allbaro. The data are used to produce statistical reports and to track waste reduction efforts in the business sector. Materials flow analysis is carried out at macro level and for selected metals, but the results are not integrated with waste statistics or used for national waste and materials management policies. It is thus not easy to get a complete picture of materials flows through the economy and how they relate to waste streams and recycling efforts. Korea could make much better use of the wealth of data produced if they were better integrated and more closely linked to policy objectives. The data could in particular be better used to elaborate policies and set targets, to evaluate policy performance and to inform the public about the results. Industry should be encouraged to use materials flow and waste information to monitor resource productivity and to combine it with accounting data to implement materials flow cost accounts. This would be a powerful tool to analyse the environmental and financial consequences of materials and energy use and identify opportunities for efficiency gains. Industry should also be encouraged to integrate such information in corporate reporting, integrated performance assessments and financial statements.

Performance outlook

Korea’s overall good performance in waste management means that “low-hanging fruit” has been harvested. In the years ahead, it will be important to focus efforts on the transition to a circular economy and on areas where efficiency gains can be obtained. This will require additional efforts to encourage the 3Rs (particularly as regards industrial and hazardous waste and selected consumer products), greater attention to waste prevention measures further upstream in the value chain, and the use of circular business models. More effective alignment of policy measures and objectives across policy domains and ministries can also improve both environmental effectiveness and economic efficiency.

Recommendations on waste, materials management and circular economy

• Further improve the efficiency of recycling and recycling systems:

  • Study the informal recycling sector and consider formalising it through the creation of recyclers’ networks.

  • Conduct a competition assessment of the extended producer responsibility system to identify how market forces can be further strengthened in it without compromising environmental standards.

  • Improve separate collection rates for waste electrical and electronic equipment and industrial waste.

  • Facilitate the development of new and innovative recycling technology and introduce “end of waste” criteria for recyclable materials, taking into account their environmental impact.

• Consolidate and strengthen markets for secondary raw materials and recycled goods:

  • Provide economic incentives to properly value recycled products on the markets and stimulate upcycling of waste into high-value products. Further develop the online exchange market and link it to the Allbaro system.

  • Stimulate demand for recycled goods by informing users about their quality and their economic and environmental benefits, and by further strengthening bilateral and multilateral co-operation on resource circulation and the 3Rs.

• Further promote waste prevention, along with circular business models and resource productivity in industry, by considering the whole life cycle of materials and products and their value chains:

  • Foster awareness among businesses of the economic and environmental benefits of a circular economy, design for environment and resource-efficient production.

  • Encourage industry to use waste and materials flow information in combination with accounting data to establish materials flow cost accounts to better understand the environmental and financial consequences of materials and energy use practices, and to identifying opportunities for efficiency improvements.

  • Continue to support SMEs and develop specific guidance for them on waste prevention.

  • Exploit the synergies between policies and support measures on clean production, eco-innovation, eco-friendly businesses, recycling businesses and waste prevention and recycling in industry by establishing effective mechanisms for co-ordinating the actions of all ministries involved and preparing a consolidated review of the measures in place.

• Further increase the economic efficiency of sustainable materials management by reducing costs and better using economic instruments in line with the producer-pays principle:

  • Ensure greater cost recovery of municipal waste management by further reducing management costs, improving the collection rate for recyclable waste in less densely populated areas and progressively increasing the VBWF.

  • Introduce a tax on landfilling and incineration by local authorities and businesses to fill the cost gap between recycling and final disposal.

  • Progressively reduce government support to industry by introducing a performance management system and by using performance targets and indicators to determine the level of support.

• Continue to improve the environmental effectiveness of waste recovery and disposal:

  • Abandon landfilling of recyclable waste, along with incineration without energy recovery. Monitor very small incinerators and shut down those that underperform.

  • Expand efforts, especially early in the value chain, to ensure that recovered materials are as free as possible of hazardous substances. Provide improved guidance to businesses on design for environment.

• Better use existing data on waste and materials to support decision making, evaluate policy effectiveness and inform the public:

  • Integrate information from Allbaro with data from materials flow analysis to monitor the circulation of waste and materials in the economy and assess the performance of resource circulation policies. Regularly produce materials flow accounts and expand their scope to cover recyclable materials and raw materials embodied in trade. Use this information to set and monitor targets for materials productivity and resource circulation, and to inform stakeholders about the results obtained.

  • Continue to work with industry to integrate data on resource productivity, and on the environmental impact and cost of materials resource use, in corporate reporting, integrated performance assessments and financial statements.

5. Environmental justice

Environmental justice is a flexible concept: it can include fair treatment in terms of access to natural resources, environmental services and benefits, as well as environmental risk exposure (distributive justice); accountability and remediation for environmental harm (corrective justice); and access to environmental information, judicial and administrative proceedings and participation in environmental decision making (procedural justice).

Korea’s framework environmental laws and policy documents demonstrate Korea’s intent to promote environmental justice. They acknowledge distributive justice issues, and recent progress has been made in corrective justice in particular. However, as in most OECD countries, environmental justice policy remains piecemeal and at a relatively early stage. Korea does not yet have a clearly articulated definition or dedicated set of objectives for environmental justice in its laws or policies. Social aims, such as the right of all citizens – including future generations – to a healthy and pleasant environment, vary across instruments and are not underpinned by coherent or comprehensive implementing measures to achieve these objectives. The MOE intends to prioritise environmental justice matters in environmental and other relevant policies, including as part of efforts to better manage environmental health risks. This section aims to support further development and implementation of environmental justice policy in Korea.

Environmental justice and broader equity challenges

As social inequality and environmental challenges can be mutually reinforcing, broader social conditions merit consideration in environmental justice policy development and implementation (Crifo and Laurent, 2013). Korea’s income inequality and relative poverty have declined in recent years, but remain high. Strong segmentation in the labour market between regular and non-regular workers is a major contributor on both fronts (OECD, 2016a). The rate of relative poverty among the elderly is the highest in the OECD. Public social spending is less than half the OECD average on a GDP basis and has a weak redistributive impact. Well-being varies widely between regions, particularly regarding safety, education and health status (Figure 4) (OECD, 2016h, 2016i).

Figure 4. Regions vary widely on well-being indicators

 https://doi.org/10.1787/888933449268

Fair treatment of current citizens

Access to, payment for and the quality of environmental goods and services vary significantly between regions, between cities, and between urban and rural areas in Korea. Water supply and wastewater services are a prominent example. The 2006 EPR recommended strengthening policies for balanced regional development to address disparity in access to water-related services on the basis of equity, efficiency and financing criteria, and the government has taken a number of measures to do so. Access to green space, including for vulnerable groups, also remains an area for which policy information and solutions should continue to develop.

While significant government investment has led to an impressive increase in access to water supply and wastewater services (Section 3), in particular in rural areas, a rural-urban divide remains in terms of both access and quality. The average rural water leakage rate is around six times the urban rate, and a significant proportion of samples from wells in rural areas not served by the national public supply network fails to meet certain government water quality requirements. The government is committed to expanding the national water supply network and the wastewater and sewerage network to reach 80% of the rural population by 2017 and 2025, respectively. As the cost of building pipelines to remote rural areas is high, small-scale, independent facilities may be more cost-effective beyond a certain threshold. Such facilities currently bridge the service gap in areas the national networks have not yet reached. The government is attempting to address service quality issues through infrastructure upgrades, more stringent reporting requirements and other quality assurance measures.

Similarly, water supply and sewerage charges vary significantly between regions and between rural and urban areas. The divide reflects differences in production costs but also policy choices to subsidise investment in rural areas. Tariff variation is justified when reflecting local conditions and service provision costs. Lower cost recovery targets have been set for rural areas due to regional equity concerns, for instance. Nonetheless, tariffs should also reflect similar efforts to recover costs and to deliver services of similar quality and efficiency. Cost recovery rates have been generally low and declining, threatening the financial sustainability of the sector. This benefits users who could afford to spend more, and deprives water service operators of revenue to extend and improve services to poor and remote communities (OECD, 2012b). Raising water charges to reflect the costs of service provision, combined with targeted support for vulnerable households that is decoupled from water use, would be less regressive and would encourage rational water consumption. In a welcome step, the government plans to increase cost recovery for water supply to 95%, and for sewerage services to 80%, by 2025. This is all the more justified as water prices in Korea are significantly lower than in other OECD countries (OECD, 2010b).

Korea ranks below the OECD average on the well-being indicators of environmental quality and health status (OECD, 2016h), a fact linked to its rapid growth, large manufacturing and industrial sector and dependence on fossil fuels (Section 1). The 2006 EPR recommended expanding analysis of environmental health issues (e.g. monitoring, epidemiological studies, economic analysis), especially for large cities and industrial complexes and near contaminated sites; and strengthening management of indoor air quality and occupational health. The government has taken some measures to carry out these recommendations. The Korean National Environmental Health Survey, conducted in three-year stages since 2009, monitors levels of environmental chemicals in a representative sample of residents nationwide. Results from the first two surveys show high levels of exposure to metals and pesticides, among other substances. The government has also been conducting health impact surveys for “vulnerable areas”, including industrial complexes and abandoned mines, since 2011. These have revealed some instances of elevated levels of pollutants with environmental health implications. The government is planning a project to assess causation between exposure to environmental risks and incidence of disease in infants. It is pursuing environmental monitoring of schools, nursery facilities and playgrounds to improve the environmental safety of children, and since 2015 has implemented a product labelling system to reduce child exposure to hazardous materials.

While socio-economic criteria form part of the EIA process when selecting sites for polluting facilities, there is no government information on the incidence of polluting facilities in rural vs. urban areas beyond the siting of basic waste disposal facilities, nor on where polluting facilities are situated in relation to vulnerable households. However, Korea’s first environmental justice forum in 1999 noted a tendency to situate polluting facilities in rural regions, and a UN special rapporteur on human rights and hazardous substances expressed concern that some industrial and power facilities were affecting elderly and socio-economically disadvantaged residents (Bell, 2014; UN OHCHR, 2015). Energy infrastructure such as coal and nuclear plants and high voltage transmission lines also tend to be situated in rural areas, but produces electricity that primarily serves urban areas, meaning that the economic, social and environmental costs and benefits of this infrastructure are unequally distributed (Lee, 2009; CMEJ, 2016). Further corrective measures are necessary to better protect vulnerable households from unintended negative impacts of these facilities.

The government has strengthened chemical safety in response to a steep increase in significant pollution incidents in the chemical sector over the past decade. The Act on the Registration and Evaluation of Chemicals (Korea REACH, in force since 2015) imposes reporting and registration requirements on chemical manufacturers, importers or sellers, to enable risk assessment, classification and in some instances prohibition by government. A 2015 amendment to the Chemicals Control Act, due to enter into force 2017, expands the number of workplaces required to report to government on types and quantities of chemicals treated, and reduces the reporting cycle from four to two years. Hazard management requirements are also imposed on operators of certain chemical facilities.

Like many OECD countries, Korea lacks processes to systematically assess and address the potential distributive impact of environmental policy reform and decision making on households. While the government has taken some measures to try to lessen the impact of environmental policies on vulnerable households, they could be better tailored to address distributional concerns. For example, it is unclear whether the government has assessed the economic, environmental and social impact of its water tariff policy. Under EIA guidelines, project operators must visit residents and note their views and concerns, but are not required to take active measures to assess and address any potential distributional impact on socially disadvantaged groups specifically (e.g. the elderly or single-parent households).

Fair treatment of future citizens

The Framework Act on Environmental Policy declares that the right of future generations to enjoy the same environmental benefits as the current population is a fundamental policy priority. It has proved challenging, however, to translate this commitment into policy that respects critical environmental thresholds and limits on the use of natural capital to ensure that future generations’ needs and interests can continue to be met. The institutional framework created for green growth demonstrated intent to reduce pollution, GHG emissions, biodiversity loss and resource use intensity, with obvious potential benefits for inter-generational justice. Implementation efforts need to be substantially accelerated, however (Section 3).

Beyond the basic building block of sound and ambitious environmental policy, more targeted measures can help attune government decision makers and broader economic actors to the interests of future generations. Examples include taking an anticipatory and adaptive approach to environmental management, implementing policies to encourage efficient resource use and preservation of the natural asset base, and advocating for future generations’ environmental interests in relation to administrative and judicial decision making. Further policy development in this area is needed. The fourth Comprehensive National Environmental Plan (2016-35) flags the need to develop policies that ensure environmental rights, including across generations, as an unresolved area of the third plan, but does not include advancing environmental equality among its strategic objectives.

Environmental liability

Korea has made remarkable progress in strengthening its liability regime for compensating environmental damage to health, property and welfare, as the 2006 EPR recommended. This was spurred by a dramatic increase in the number of chemical accidents over 2004-13. In 2014, the government adopted a law establishing strict liability9 for compensating victims of such damage and mandating insurance coverage for environmentally hazardous facilities, with a view to facilitating victims’ claims. The Asbestos Injury Relief Act, which came into effect in 2011, aims to provide fair, prompt relief to victims and their families and represents a further step forward for the effective compensation of pollution victims. The liability regime for soil contamination is also robust and targeted at environmental remediation. However, there is no strict liability regime to assign responsibility for past damage to water bodies and ecosystems. While significant efforts have been undertaken to restore abandoned mines, Korea lacks a programme supported by adequate funding for remediation of old contaminated sites.

Environmental democracy

Korea recognised the procedural rights of access to information, public participation in decision making and access to justice in Principle 10 of the 1992 Rio Declaration on Environment and Development. The 2006 EPR recommended that the country further strengthen mechanisms for preventing and resolving environmental conflicts, and that it strengthen and broaden public participation, particularly in preparing development projects and assessing their environmental impact. This remains work in progress. While non-government organisations (NGOs) are involved in strategic policy planning, there is no public participation in environmental permitting, and public engagement in most EIA cases remains limited to local residents. Controversy over a number of high-profile development projects, including the Four Rivers Restoration Project and high voltage transmission lines in Milang, demonstrates there is significant potential to better engage the public in environmental decision making (Yun, 2014; CMEJ, 2016).

Access to information is enshrined in the Constitution, and further laws require public authorities to disclose information. Websites allow the public to obtain information on the general environment, environmental and industrial technology, GHG emissions, air quality, water quality and chemical safety management. The rate of disclosure of environmental information is growing, including under the 2015 acts on Chemicals Control and on Integrated Management of Environmentally Polluting Facilities. However, some information remains classified to protect private economic interests, and civil society groups face challenges in obtaining information about government-sponsored projects.

Korea should take a broader approach to access to justice, and implementation would need to be strengthened. The long-standing alternative dispute resolution (ADR) system has been successful at addressing individual disputes but is not well designed to address major environmental conflicts. NGOs have no independent right of access to either the courts or ADR. Considerable progress has been made in promoting compensation and relief for damage to human life, health and property, but there has not been corresponding progress on complementary remedies. The judiciary appears to play a limited role in promoting environmental justice.

Frameworks and forums are available which could help provide Korea with a structure to strengthen its procedural environmental democracy. One is the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, which is the only legally binding international instrument to implement Principle 10 of the Rio Declaration. It applies to members of the Economic Commission for Europe, but other UN countries can accede. Another instrument is the Bali Guidelines for the Development of National Legislation on Access to Information, Public Participation and Access to Justice in Environmental Matters. While not legally binding, they are internationally recognised good practice principles intended to help governments interpret and translate Principle 10 into national law.

Recommendations on environmental justice

Policy framework

• Clarify environmental justice objectives in relevant legal or policy texts, and ensure consistency across documents, to clarify policy priorities, responsibilities across ministries and environmental justice rights of the public. Implement environmental justice objectives through appropriate laws and policies.

Environmental justice and broader equity challenges

• Reduce social inequality to improve the effectiveness of environmental policy and reduce environmental inequalities; strengthen the social safety net through increased public social spending.

Fair treatment of current citizens

• Assess the economic efficiency of further expanding wide area/municipal waterworks beyond certain threshold levels compared with measures to improve the quality of small-scale and village waterworks (e.g. supply of drinking wells, improved reporting requirements). Ensure effective measures to encourage independent water service providers to secure continued improvements in efficiency, cost reduction, cost recovery and environmental performance.

• Evaluate the economic, environmental and distributional impact of water supply and sanitation service pricing policies with a view to ensuring the financial sustainability of the sector and equitable access to these services.

• Prioritise information gathering on access of vulnerable populations to green space in metropolitan areas to promote more green space in areas identified as priorities. Encourage full consideration of green space issues in urban planning.

• Continue to expand analysis of environmental health issues associated with large cities, industrial complexes and contaminated sites, including through economic analysis, and ensure effective follow-up to manage identified risk.

• Improve data collection on exposure to environmental risk in rural vs. urban areas and with respect to vulnerable households.

• Take distributive impact into account as part of site selection and policy formulation to help promote distributive justice in the face of ongoing development pressures.

Fair treatment of future citizens

• Make sure the environmental interests of future generations are considered in policy and decision making, for example by reinvigorating green growth and sustainable development policies.

Environmental liability

• Introduce a strict liability regime to assign responsibility for past damage to water bodies and ecosystems, following the example of the liability system for soil contamination. Continue to update a register of all abandoned contaminated industrial sites and develop a financing mechanism for their gradual decontamination.

Environmental democracy

• Strengthen expression of the core procedural rights of access to information, public participation in environmental decision making and access to justice in law and policy to better marshal public support in effective environmental stewardship, including of development projects, and to constructively address and resolve environmental conflicts.

• Improve public participation in environmental decision making by introducing mechanisms for public involvement in the development of environmental permitting decisions, and by opening the EIA process to input from the general public (beyond local residents) and NGOs.

• Enhance access to environmental information by broadening disclosure of records on environmental behaviour of economic entities, including permit applications, regular self-monitoring reports and inspection reports, and data on air pollutants.

• Strengthen access to justice on environmental matters:

  • Facilitate access to review procedures for information requests and decisions relating to public participation, and broadening legal standing rights in environmental proceedings, including for environmental NGOs.

  • Ensure effective access to remedies beyond compensation (e.g. those geared to prevention or remediation), including as part of the ADR system. Consider capacity-building programmes for judicial officers and other legal professionals to promote their role in facilitating access to justice.

  • Make systematic efforts to ensure that Rio Principle 10 is codified in Korean law, using the internationally agreed 2010 Bali Guidelines as a benchmark. Consider acceding to the Aarhus Convention to signal commitment to facilitating public participation in environmental decision making and provide impetus to strengthen implementation of these rights in law.

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Actions taken to implement the recommendations of the 2006 Environmental Performance Review of Korea

Recommendations	Measures taken
Chapter 1. Environmental performance: Trends and recent developments
Further reduce energy, material and pollution intensities performance indicators. Further improve energy efficiency so as to reduce energy dependency, air pollution and greenhouse gas emissions; bolster current efforts to expand the use of renewable energy sources; continue efforts to ensure that energy prices reflect environmental costs.	Energy and material intensities further declined. Emissions of all major air pollutants but PM10 have been decoupled from economic growth. The second Energy Master Plan (2014-35) outlines the transition to demand management and more sustainable energy policy, including the response to climate change, as two of its six major tasks. Measures taken to improve energy efficiency include compulsory energy audits for energy-intensive companies; developing energy management systems in buildings and industry; public R&D investment in energy storage systems; tightening fuel efficiency standards for vehicles; promoting energy efficient smart appliances through standards, labelling, certification and standby requirements and public procurement policies (e.g. on LED lights); and introducing energy efficiency building codes (Chapter 3). The fourth National Basic Plan for New and Renewable Energy (2014-35) aims to increase the share of new and renewable sources in TPES to 11% by 2035. Investment in renewable energy increased steadily over 2007-11, spurred by higher oil prices, a feed-in tariff (FIT) scheme, R&D support, preferential loans and tax incentives for producers and installers, and subsidies for households. In 2012 the FIT was replaced with a Renewable Portfolio Standard. Korea’s share of renewables in the energy mix remains the lowest in the OECD. Energy prices do not sufficiently reflect environmental costs (Chapter 3).
Set out in the next national plan on climate change specific objectives and precise measures to be taken over the next few years to reduce the rate of growth of greenhouse gas emissions in order to participate actively in the UNFCCC process.	In 2009, Korea set itself the mid-term goal of reducing GHG emissions to 30% below business as usual (BAU) levels by 2020. The government established emission reduction targets by sector in 2011, and detailed how sector-based reductions would be achieved with the Roadmap to Achieve Greenhouse Gas Reduction Goals in 2014. In 2015, the government committed to reduce GHG emissions by 37% below BAU by 2030 which represents a postponement of the 2020 target.
Complete and firmly implement the comprehensive air management plan for the Seoul Metropolitan Area. Formulate and implement comprehensive air quality plans (including cost-benefit analyses) for the major cities and industrial complexes outside the Seoul metropolitan area. Strengthen the management of hazardous air pollutants: monitor their concentration, analyse their health effects and reduce their emissions (e.g. from existing coal-fired power plants); take further measures to reduce emissions of VOCs. Ensure that efforts to manage air quality are commensurate with the magnitude of the problem, including the damage to public health, by: further integrating air pollution and sectoral policies (e.g. energy, industry, transport and urban planning); building capacity in local government; and expanding awareness of the health effects of air pollution and their economic burden.	The first and second Comprehensive Plans for Air Quality Improvement (2006-15 and 2016-24) were adopted at national level. The second Seoul Metropolitan Air Quality Improvement Plan (2015-24), covering Seoul, Incheon and Gyeonggi province, was adopted in 2013. Measures implemented include strengthening vehicle emission and fuel efficiency standards, establishing an air pollutant cap management system in the Seoul Metropolitan Area, strengthening air quality standards and introducing standards for benzene (2010) and PM2.5 (2015). In 2016, the government made fine particulate matter pollution a national priority and announced a KRW 5 trillion (USD 4.4 billion) dedicated budget. In 2014, the CleanSYS smokestack tele-monitoring system monitored seven air pollutants (dust, SO2, NOx, NH3, HCl, HF, CO) emitted by 577 major facilities. Regulations on VOCs in paints were tightened and limits applied nationwide. Installation of petrol vapour recovery systems at petrol stations was made mandatory in air quality regulated areas and special countermeasure areas. From 2017, the obligation will be extended to cities of more than 500 000 inhabitants. The share of rail in total public investment in transport infrastructure increased from 16% in 2006 to 33% in 2015. Cycling infrastructure has been improved and extended. However, road transport remains the dominant transport mode, mainly due to inaccessibility of stations and lack of integration with other transport modes (Chapter 3). Direct and indirect subsidies are provided for buses and garbage trucks to switch from diesel to natural gas, and for individuals to purchase hybrid and electric vehicles. Some metropolitan governments (e.g. Daegu, Busan, Seoul) have introduced “transit mall districts”, which are only accessible to public transport, bicycles and pedestrians.
Enable ongoing multi-national planning, modelling and monitoring programmes on critical regional problems of acid rain, dust and sandstorm pollution, and fisheries management to move into the operational problem-solving phase at an early date.	Korea contributes financially to the Acid Deposition Monitoring Network in East Asia, which examines long-range transboundary air pollution. Korea, China and Japan formed a joint response system to dust- and sandstorms (DSS) in 2007 and a yellow dust joint research team in 2008. Korea and China signed a memorandum of understanding (MOU) in 2014 to strengthen co-operation on air pollution, DSS and environmental industry and technology. The MOU established a joint research group to develop forecasting models and share air quality monitoring data. Korea and Mongolia signed an MOU in 2009 to co-operate on DSS through, for example, ecological surveys and vegetation projects.
Speed up measures to control non-point sources of water pollution, notably from agriculture, and further reduce point discharges from livestock enterprises, including through greater utilisation of manure.	The second Four Rivers Non-point Pollution Source Management Comprehensive Measure Plan (2012-20) designates and manages regions at risk of or suffering from such pollution. Manure is managed according to the 2006 Livestock Excretion Management and Use Act and public treatment facilities have been built. Dumping into the sea was banned in 2012. Diffuse pollution from livestock production continues to increase.
Increase the actual protection of designated protected areas; streamline the management of these areas by the relevant authorities; minimise the impact of recreational and tourist facilities.	Korea has increased the number of protected areas, which by national definition covered 15.5% of land and inland waters and 2.0% of the Exclusive Economic Zone in 2016. Korea introduced a management effectiveness evaluation in 60% of protected areas, and established an Ecotourism Vitalisation Promotion Plan. Damaged areas are designated as special protection zones and access is restricted to facilitate environmental recovery. A pending bill aims at allowing greater tourism infrastructure development in mountain conservation areas.
Strengthen species protection, including through habitat protection, sanctions for illegal hunting and trading, recovery programmes and measures against invasive species; ensure consistency in the actions taken by different authorities.	Korea has developed a Red List of endangered species, and promulgated the Act of Wildlife Protection and Management in 2005 and the Act on Marine Ecosystem Conservation and Management in 2007. Conservation measures include a ban on the consumption and hunting of certain wild animals; the control of overpopulated and invasive species; restrictions on trade and exploitation of wild fauna and flora; and the establishment of wildlife rescue and management centres. The 2012 Act on the Conservation and Use of Biodiversity was established to streamline and better organise biodiversity management and promote international instruments such as the Convention on Biological Diversity and Nagoya Protocol.
Further strengthen scientific knowledge of Korea’s natural resources and biodiversity (e.g. through surveys in the Demilitarised Zone and other valuable areas) to support policy decisions; prepare biotope maps at the local level to support the protection of valuable areas; raise awareness of the ecological and economic value of nature, landscape and biodiversity.	The National Institute of Biological Resources was created in 2007. The National Biological Resources Integrated Management System database was launched in 2012. The National Institute of Ecology and the Marine Biology Institute (established in 2013 and 2014, respectively) as well as other regional institutions conduct research and education programmes. Studies have been conducted on the DMZ ecosystem. In 2015, 101 municipalities had completed biotope maps to be used in urban planning.
Develop and use environmental indicators to support environmental management at strategic, planning and programming levels; continue to expand the scope of and access to the pollutant release and transfer register.	30 green growth indicators were developed to monitor implementation of the first five-year green growth plan and are updated every two years. The water information system, fragmented between several ministries, is not comprehensive and coherent enough to inform policy development and evaluation. The key indicator on the intensity of use of freshwater resources dates back to 2007. National environmental master plans and basic plans for sustainable development include indicators to track progress.
Chapter 2. Environmental governance and management
Review and revise, as needed, national, regional and local inspection and enforcement regimes. Increase inspection and enforcement capacity at the local level and strengthen the mechanisms of supervision and evaluation at the national level to ensure effective and efficient implementation.	Despite the falling frequency of site visits, the detection rate of local authorities has been increasing. The MOE encourages local authorities to conduct more frequent random inspections, but many do not have sufficient resources to do so. The MOE’s regional and river basin environmental offices are staffed with special environmental police who supervise and complement local authorities’ compliance monitoring activities. In 2013, the Central Environmental Controls Task Force, dedicated to compliance monitoring of the largest polluters or those provoking frequent citizen complaints, was established under the MOE.
Introduce a periodic permit renewal system, and consider introducing integrated pollution prevention and control permits for large stationary sources at the national and regional levels.	Korea is in the process of a major environmental permitting reform, moving from issue-specific to integrated permitting for large industrial installations. The Act on Integrated Management of Environmentally Polluting Facilities was adopted in November 2015 and will go into force in 2017. The new system will be applied to 19 industry sectors once the regulatory framework is complete.
Further integrate environmental concerns (i.e. pollution, natural resources, nature concerns) at all levels of land-use planning, and implement such land-use plans. Further use environmental impact assessment (EIA) for projects and expand the range of administrative plans subject to prior environmental review. Strengthen institutional mechanisms to foster integration of environmental concerns in sectoral policy planning (strategic environmental assessment) and in large projects, under the guidance of the Presidential Commission on Sustainable Development.	Korea introduced strategic environmental assessment (SEA) in 2006 and has improved its systems of EIA and SEA, which now cover a more extensive range of projects and plans. SEA targets 17 types of policy plans in 8 policy areas, but not sector development policies, and 95 types of development master plans in 17 areas, but not covering all 250 county and city spatial management plans. Korea is pursuing “national land-environment plan concurrency” which envisages closer co-operation between the two types of plans in their early stages of development.
Give higher priority to nature conservation and biodiversity protection; protect ecologically valuable areas in urban, peri-urban and coastal areas, e.g. by use of land-use planning, prior environmental review and environmental impact assessment; increase attention to landscape values.	The National Land Plan (2006-20), modified in 2011, lays out a vision of “global green national land”. The Forest Master Plan (2008-17) calls for the “establishment of a balanced mountainous district management system” and the expansion of green urban spaces. SEA of a development master plan takes into account the impact on natural landscape and biodiversity. A natural landscape deliberation system was introduced in 2006, with the adoption of guidelines on evaluating landscape impact of development projects as part of SEA.
Pursue integration of transport, housing and land-use policies in the context of sustainable development.	The third Seoul Metropolitan Area Readjustment Plan (2006-20) and the Sejong Urban Master Plan (2015-30) integrate sustainable mobility considerations.
Strengthen public-private partnerships and industry-driven environmental progress, including for small and medium-sized subcontractors of large firms.	The MOE has established a number of national and regional voluntary agreements with companies to improve their environmental performance (reduce emissions of carcinogens and other air pollutants from stationary and mobile sources), and encourages good performance through environment-related business certification programmes (e.g. Green Enterprise) and awards.
Strengthen limits on industrial effluent discharges and increase rates of pollution charges.	The number of industrial effluent standards has increased significantly since 2006, and many standards have been made more stringent (e.g. for total nitrogen and total phosphorus discharges from public wastewater treatment plants). However, water effluent tax rates are too low to incentivise pollution reduction and the rate of the “excess” part of the tax has not been increased since its inception. The collection rate of the water effluent tax is extremely low (11% in 2015) (Chapter 3).
Adopt and implement biological water quality standards for surface waters.	Water quality targets are set for major rivers and lakes throughout the country. Criteria for these targets include biological water quality standards.
Consider combining the policy functions for water quantity and quality. Consider how current water supply, sewerage, stormwater and waste water treatment policies can be harmonised in urban areas to achieve an integrated urban water management.	Water quantity and quality continue to be managed separately by several ministries. In 2015, a Water Management Consultative Committee was created that brings together representatives of the Environment, the Agriculture, and the Land, Infrastructure and Transport ministries and other stakeholders to establish interagency collaboration. The fragmentation of responsibilities and lack of co-ordination and collaboration still results in a multitude of management plans whose interconnections are difficult to understand.
Further raise public awareness of environmental issues and promote sustainable consumption patterns and land use.	The Environmental Education Promotion Act (2008) laid the basis for measures to promote environmental education, many of which were envisaged in the Environmental Education Master Plan (2011-15). The Environmental Education Promotion Committee was created in 2010, and the Environmental Education Development Council in 2013. A network of national environmental education centres has been functioning since 2012. An environmental education internet portal has been operating since 2008 to share education materials and other information. The Green Credit Card system was introduced in 2011 to reward eco-friendly consumption (Chapter 3).
Chapter 3. Towards green growth
Continue to increase the use of economic instruments (e.g. environmental charges, trading mechanisms) to further internalise environmental externalities.	Korea introduced a tax on bituminous coal used for power generation in 2014, and emission trading in 2015. The water use charge has been gradually increased, and there are plans to gradually raise the traffic congestion charge. However, the energy and transport taxes and environmental tax and charge rates on air pollution, water pollution and use, and land development are generally too low to cover environmental and social externalities or encourage behavioural change.
Develop economic analysis capacity within the Ministry of Environment.	The MOE updates Environmental Protection Expenditure Accounts annually. Statistics Korea updates National Accounting Matrices, including Environmental Accounts for air emissions, annually.
Establish an institutional mechanism, such as a green tax commission, to review the environmental effects of fiscal instruments, identify environmentally harmful subsidies, and improve the use of economic instruments.	There is no such mechanism in place.
Reduce the differential in energy prices (electricity, natural gas) between households and industry, with a view to fostering demand-driven energy planning policy.	Since 2000, electricity demand has risen rapidly, spurred by low prices. Electricity prices have been progressively raised and the price differential between households and industry has been reduced (although households still pay more). Further reforms are needed for prices to reflect system costs.
Continue efforts to strengthen emission and fuel efficiency standards for vehicles, as well as to improve fuel quality; continue efforts to review various policies to internalise externalities related to transport and the environment. Give higher priority to transport demand management, e.g. through road and road fuel pricing; streamline the current economic and fiscal incentives to enhance environmentally sustainable transport. Move towards a more environmentally sustainable modal share of freight traffic. Pursue efforts to facilitate public transportation in urban areas, e.g. through further expansion of bus-only lanes and integrated fare systems.	In 2009, Korea adopted California’s Non-Methane Organic Gases Fleet Average System for petrol-fuelled vehicles. Since 2014, diesel vehicle emissions have been regulated under Euro 6 limit values. Korea introduced real-driving emission standards, on top of existing in-laboratory standards, in 2016. Since 2012, diesel fuel supplied throughout the country must have a sulphur content at or below 0.1% (Chapter 2). Fuel tax rates (the Transportation-Energy-Environment Tax) have not been adjusted for inflation, and diesel is taxed more lightly than petrol despite its heavier environmental impact. The rate of the congestion charge in the Namsan tunnels has not been raised in several years. In 2014, the traffic generation charge, which had remained unchanged for over 20 years, was raised. Korea adopted a law on sustainable development of transport logistics and a plan to ensure that transport policy considers climate change, energy and environmental protection. The government provides subsidies and tax incentives to encourage the purchase of clean vehicles. Despite increased investment in rail infrastructure, the share of total inland freight transported by rail fell from 28% in 2006 to 7% in 2013. The bus rapid transit system of the Seoul Metropolitan Area has been extended. It includes rapid transit lanes and a public transport card that can be used on all forms of public transport nationwide. Transit “malls” that only public transport, bicycles and pedestrians can use have been introduced in Daegu, Busan and Seoul.
Further strengthen water demand management policies and consistently apply the user pays principle to all categories of users. Review and improve water supply management on the basis of equity, efficiency and financing criteria.	The Comprehensive Plan on National Water Demand Management (2007-16) has led to the implementation of local plans and investment in water saving infrastructure (e.g. replacing old pipes and reusing treated wastewater). Water supply and sewerage charges do not allow full cost recovery and are low by OECD standards. Agriculture only partially pays water charges. No assessment has been reported. Investment in water supply facilities in agricultural and fishing villages and on islands totalled KRW 4.4 trillion over 1994-2014. Investment of KRW 2.2 trillion to expand the national water supply network to reach 80% of the rural population by 2017 is planned.
Strengthen funding and human resources for nature protection; increase the purchase of land by central and local government for nature protection; develop the use of economic instruments (e.g. ecosystem conservation charge); encourage stakeholder participation in policy planning. Further integrate nature and biodiversity considerations into sectoral policies and practices (e.g. agriculture, forestry and fisheries).	Public expenditure on biodiversity more than tripled over 2001-13. Several institutes were created to increase knowledge, understanding and human capacity in the field (Chapter 1). Central and local governments purchased 10.3 km2 of private land with high protection value within national parks over 2006-14. While non-government organisations are involved in strategic policy planning, there is no public participation in environmental permitting, and public engagement in most EIA cases remains limited to local residents (Chapter 2). The introduction of Strategic Environmental Assessment helps biodiversity to be better taken into account in land use planning. Korea has introduced plans for managing and preserving marine biodiversity, forest biodiversity and agricultural biological resources (Chapter 2). However, environmentally harmful subsidies exist in the agriculture and fishing sectors: fossil fuel tax exemptions, low electricity prices, exemptions from water charges and high producer support encouraging increased natural resource and input use.
Continue to strengthen and build on Korea’s recent expansion of international engagement, co-operation and leadership in regional and global environmental problems.	Korea established the Global Green Growth Institute, championed green growth at the OECD, hosts the Green Climate Fund, championed the principle of Nationally Appropriate Mitigation Actions in the context of the United Nations Framework Convention for Climate Change, and has hosted many major environment-related international events, such as the 12th conference of the parties to the Convention on Biological Diversity.
Continue to expand support to developing countries through public and private bilateral institutions and programmes as well as through financial and in-kind support for regional and multilateral banks and programmes, while seeking to increase the environmental dimension of Korea’s official development assistance.	Net official development assistance (ODA) disbursements have almost quadrupled since 2006, with multilateral disbursements increasing almost twice as fast as bilateral ones. However, Korea did not meet its target of giving 0.25% of its gross national income as ODA by 2015. Green ODA as a share of total ODA declined from 18% on average in 2007-08 to 14% in 2013-14. Korea ran and funded the East Asia Climate Partnership from 2008 to 2012, investing USD 200 million in 20 bilateral and nine multilateral projects. It collaborates with the UN Economic and Social Commission for Asia and the Pacific to run the Seoul Initiative on Green Growth, which assists countries to transition to a green economy through green technology transfer and environmental co-operation projects.
Chapter 4. Waste, materials management and circular economy
Further reduce the material intensities of the Korean economy through efficient waste reduction, reuse and recycling.	Material intensity further declined but total waste generation remained closely linked to economic growth. The volume-based waste fee system and free collection of recyclable waste have helped reduce mixed residual household waste and increase recycling and reuse of municipal waste.
Strengthen measures to reduce industrial waste generation (e.g. promoting cleaner production, broadening the scope of the extended producer responsibility system, increasing the rate of the waste treatment fee).	Financial incentives are provided to companies with good waste reduction performance, and poor performers are supported with technical assessment, guidance and information measures. The MOE supports R&D investment in waste reduction and reuse technology, and MOTIE supports environmental small and medium enterprises in developing and commercialising cleaner production technology. The scope of the extended producer responsibility system has been broadened. Since 2014, it has covered a wider range of electrical and electronic products associated with special target management systems, as well as fluorescent lamps and styrofoam float and packaging materials. Product waste charges imposed on products that are difficult to recycle or manage have increased. Waste treatment fees have slightly increased. For large businesses covered by the long-running Business Waste Reduction Program, more than 90% of waste generated is recovered for reuse and recycling.
Further reduce municipal waste generation (e.g. increased cost recovery from the volume-based waste fee).	Municipal waste generation has been decoupled from private final consumption. The volume-based waste fee system for collection of mixed household waste has been extended to the whole country, except small settlements and remote areas; since 2010 it has also applied to food waste.
Encourage the development of markets for recycled products, including by further extending green government procurement.	The recyclable resources market (web-based stock exchange and second-hand shop), introduced in 2013, has been fully operational since 2015. Mandatory green procurement has been extended to all public institutions. Eco-label certification for recycled products has been expanded.
Promote more efficient waste disposal by municipalities and industry (e.g. improved management or closure of substandard landfills and incinerators; prevention of illegal dumping of industrial waste through the waste manifest system; reducing dumping at sea of wastes such as sewage sludge and dredged spoils; close monitoring of hazardous waste management).	All landfills are controlled; substandard landfills have been upgraded or closed. Incinerators are regularly monitored and substandard installations have been closed. The Allbaro online system for waste management has been expanded. Dumping at sea of livestock manure and sewage sludge was banned in 2012; the ban was extended in 2013 to all excreta and sludge, and in 2014 to industrial wastewater and sludge. Monitoring and safety requirements for hazardous waste have been improved, in particular for medical waste. Illegal dumping has been reduced.
Foster public awareness of waste issues (e.g. reducing waste generation, preventing illegal dumping, acceptance of waste infrastructure.	There are regular awareness-raising campaigns to reduce food waste and promote recycling, including in schools. MOUs have been signed with business to reduce excessive packaging and disposable items. Training has been introduced for workers in industry.
Chapter 5. Environmental justice
Further strengthen mechanisms for preventing and resolving environmental conflicts; strengthen and broaden public participation, especially in preparing and implementing development projects and assessing their environmental impact; strengthen the liability legislation in order to better compensate for damage to the environment in line with the polluter pays principle.	Korea has a long-standing alternative dispute resolution system, overseen by the National Environment Dispute Resolution Commission. Since 2007, a broader range of experts has been allowed to participate. The number of environmental dispute resolution fields has been expanded. The system focuses on compensation rather than damage avoidance. In 2015, Korea introduced an arbitration system based on mutual consent between the parties concerned. It is expected to swiftly resolve disputed and reduce costs of lawsuits. While non-government organisations are involved in strategic policy planning, there is no public participation in environmental permitting, and public engagement in most EIA cases remains limited to local residents. In 2014 the government adopted a law establishing strict liability for compensating victims of environmental damage and mandating insurance coverage for environmentally hazardous facilities, with a view to facilitating victims’ claims. The Asbestos Injury Relief Act came into effect in 2011 and aims to provide fair, prompt relief to victims and their families. Korea has a robust liability regime for soil contamination, targeted at environmental remediation, but lacks a strict liability regime to assign responsibility for past damage to water bodies and ecosystems. Significant efforts have been undertaken to restore abandoned mines, yet Korea lacks a programme for remediation of old contaminated sites supported by adequate funding.
Expand analysis of environmental health issues (including monitoring, epidemiological studies, economic analyses), especially for large cities and industrial complexes near contaminated soils; ensure implementation of the ten-year National Environmental Health Action Plan; monitor its implementation with appropriate indicators; strengthen management of indoor air quality and occupational health.	The government conducts community health impact surveys for vulnerable areas, including industrial complexes and abandoned metal mines. It has identified 56 industrial complexes for priority assessment based on pollution emission levels and the populations affected. It has assessed three to four small and medium-sized complexes per year since 2011 (16 in total by 2015), and 108 abandoned metal mines since 2013. The National Environmental Health Survey monitors exposure levels to 21 pollutants in a representative sample of residents nationwide. The first two surveys (2009-11 and 2012-14) were limited to people over 19 while the third (2015-17) is also assessing children aged 3 and up. According to the Indoor Air Quality Control in Public-use Facilities Act, indoor air quality limits (maintenance limits for PM10, CO2, formaldehyde, total airborne bacteria, CO; recommended limits for NO2, radon, total volatile organic compounds, asbestos, and O3) are set in 21 groups of public facilities (e.g. subway stations, underground road shopping districts, medical institutions, steam rooms, large shops, theatres).
Country submission.

Notes

← 1. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

← 2. Of this target, 11.3% of the reductions would be met through international markets.

← 3. Biochemical oxygen demand and total phosphorus levels improved.

← 4. Investments and internal current expenditure (excluding payments for environmental protection services) less receipts from by-products (e.g. materials recovered as a result of waste treatment) by public and business sectors, including specialised producers of environmental protection services. Includes expenditure for i) pollution abatement and control covering air protection, waste and wastewater management, protection and remediation of soil and groundwater, and other activities (R&D, administration, education); and ii) biodiversity and landscape protection. Excludes expenditure on water supply.

← 5. For R&D and demonstration and subsidies for deployment.

← 6. Congestion costs have been estimated by the Korea Transport Institute (KOTI) since 1993. While the institute recognises that the traffic congestion cost should reflect environmental and social costs, the method used only reflects economic costs of congestion. KOTI estimates traffic congestion costs by taking the sum of fixed and variable vehicle operating costs and the time value of money.

← 7. Inventions of high potential commercial value for which protection has been sought in at least two jurisdictions.

← 8. As measured by the revealed technology advantage, i.e. Korea’s share of world patents in such technology is higher than its share in all fields.

← 9. Strict liability means liabilitywithout the need for the victim to demonstrate unlawful intent or negligence on the part of the polluter, if the evidence suggests it is highly probable that the polluter’s activities caused the damage.