SEOUL ESTH UPDATE - JUNE-JULY 2009

UNCLAS SECTION 01 OF 06 SEOUL 001254 SIPDIS STATE FOR OES/IHB, OES/SAT, OES/PCI AND OES/EGC STATE FOR EAP/K, ISN/NESS AND STAS STATE PASS TO EPA FOR INTERNATIONAL PROGRAMS WHITE HOUSE FOR OSTP AND CEQ DOE FOR INTERNATIONAL, NE, FE, AND EERE USDOC FOR 4400/MAC/EAP/OPB/ITA/TA USDOC FOR NIST HHS FOR OGHA HHS PASS TO NIH FOR FIC STATE PASS TO NSF FOR INTL PROGRAMS STATE PASS TO NRC FOR INTL PROGRAMS E.O. 12958: N/A TAGS: SENV ELTN ENRG PREL TBIO TPHY TRGY KGHG KFLU KS SUBJECT: SEOUL ESTH UPDATE - JUNE-JULY 2009 In this Issue: - United States, Korea Sign Statement of Intent to Collaborate in "Smart Electricity Grid" Technology - Korean State-Run Energy Companies to Invest USD 2.4 Billion in Renewable Energy - Hyundai Launches First Hybrid Vehicle for Domestic Market - Korean Hybrid Vehicle Battery Makers Boost Investment - New National Research Foundation to Consolidate National Scientific R&D Efforts - H1N1 Virus Spreads Domestically within Korea - Residents near Asbestos Mines Suffer Respiratory Problems - Korea to Launch Major Effort in Brain Research - Aging Society Pushes Health Care Spending to Record High -------------- ENVIRONMENT -------------- United States, Korea Sign Statement of Intent to Collaborate in "Smart Electricity Grid" Technology -------------- ¶1. In conjunction with South Korean President Lee Myung-bak's summit with President Obama in Washington DC in mid-June, Energy Secretary Steven Chu and Korean Minister of Knowledge Economy (MKE) Lee Yoon-ho signed a Statement of Intent on June 16 to begin cooperation on research and development in the area of "smart power grid" technology. Secretary Chu and Minister Lee discussed a number of other opportunities to expand energy cooperation, including eco-friendly vehicles and new clean energy technologies such as gas hydrates. On July 8, following the signing of the Statement of Intent, the U.S. smart grid organization GridWise(r) Alliance and the Korea Smart Grid Association entered an agreement to share information on smart grid technologies and modernizing electrical systems. GridWise(r) Alliance represents a broad range of the U.S. private sector energy supply chain from utilities to large tech companies to academia to venture capitalists to emerging tech companies. ¶2. Separately, when the U.S.-led Major Economies Forum on Energy and Climate (MEF) met in L'Aquila, Italy, in conjunction with the G-8 Summit on July 9, Korea and Italy were selected as the lead countries to accelerate deployment of smart grids, one of eight technologies identified by MEF countries as a key "transformational low-carbon technologies." The lead countries will prepare Technology Action Plans on how to drive innovation, remove barriers, and create incentives for the development and deployment of the technologies into the global market. ¶3. A smart grid is comprised of many components using modern technologies in an integrated electricity generation and delivery system. Electricity generation, power consumption, and usage costs can be monitored in real time. Solar and wind generating equipment can connect and feed into the grid from multiple points, allowing electricity consumers to also become power producers. Established technologies, such as motion detectors for automatic lighting switches, can be integrated into the system along with new innovations, such as satellite tracking of weather conditions that can affect solar and wind power generation. ¶4. The Korean government plans to spend 255 billion won (USD 202 million) through 2012 to develop "smart grid" technologies and systems. MKE recently decided to build a "smart power grid" pilot SEOUL 00001254 002 OF 006 complex on Jeju Island to be completed by 2011. The pilot complex will incorporate two 10MW substation transformers and four power distribution lines located near an area with 3,000 households, commercial districts and green energy facilities that include a wind farm. In early June, South Korea announced its intention to implement a nationwide grid by 2030. According to MKE, the smart power grid would reduce overall electricity use by 3 percent and costs by roughly 10 percent in Korea while lowering the country's carbon dioxide emissions by 40 million tons annually. Korean State-Run Energy Companies to Invest USD 2.4 Billion in Renewable Energy -------------- ¶5. The Ministry of Knowledge Economy (MEST) said on July 10 that the nine state-run companies under its supervision - Korea Electric Power Corporation (KEPCO),KEPCO's six power generation subsidiaries, Korea Water Resources Corporation, and Korea District Heating Corporation - signed an agreement to invest three trillion won (USD 2.4 billion) over the next three years to develop solar, wind, and other types of renewable energy. The firms had collectively invested only one fifth as much - 600 billion won (USD 500 million) - in renewable energy in the past three years. ¶6. The announcement is in line with the government's draft Basic Law on Climate Change, still before the National Assembly, which contains a Renewable Portfolio Standard provision obligating utility companies to obtain 10 percent of their electricity supply from renewable sources by 2020. Focusing on solar energy, MKE said it plans to create a solar energy market in Korea through policies that facilitate solar power usage, by signing solar energy supply contracts, and through the construction of a million "green homes" with built-in solar panels. Hyundai Launches First Hybrid Vehicle for Domestic Market -------------- -------------- ¶7. Hyundai Motors announced in a July 9 press statement that it had begun retail sales of a hybrid electric vehicle for the nascent domestic Korean market, which has been dominated so far by Japanese rivals Toyota and Honda. Hyundai expects to sell 7,500 units over the next 12 months of the Avante LPI, a hybrid version of its best-selling Avante compact model (sold overseas as the Elantra). The Avante LPI is the world's first hybrid vehicle to be powered by liquefied petroleum gas (LPG) and the first to use advanced lithium polymer batteries. (Conventional hybrid electric vehicles, such as Toyota's Prius and Honda's Insight, use gasoline and a nickel metal hydride battery pack.) The batteries will be supplied by Korea's LG Chem, a leading producer of lithium polymer batteries. The Avante LPI produces 90 percent fewer emissions than an equivalent standard gasoline-powered Elantra. ¶8. Since LPG-powered cars are rare in other countries, Hyundai's move to sell the LPG-electric hybrid appears to be part of a strategy to better compete with rival Japanese hybrid electric vehicles in Korea where LPG-powered cars are relatively common. The Avante LPI's 1600 cc 4-cylinder engine, 15kW electric motor, and continuously variable transmission obtain 17.8 kilometer per liter of LPG - less than the equivalent fuel efficiency of the Toyota or Honda models using gasoline; however, because the cost of LPG is half the cost of gasoline in Korea, fuel costs for the Avante LPI will be significantly less than for the Toyota or Hyundai competitors. Pricing for the Avante LPI starts at 20.5 million won SEOUL 00001254 003 OF 006 (USD 15,700). Hyundai has no current plans to export the LPG-electric hybrid, but Australia and China, which have LPG distribution infrastructures, are likely targets for future exports. ¶9. Kia Motors Corporation plans to begin retail sales of its hybrid electric vehicle in late August or early September. The Kia Forte LPI also will be powered by LPG and lithium polymer batteries supplied by LG Chem. It obtains 17.2 km/liter of LPG. Kia plans to introduce a hydrogen fuel cell-powered vehicle into the retail market in 2012. Korean Hybrid Vehicle Battery Makers Boost Investment -------------- -------------- ¶10. With Hyundai Motor Company's first domestic sales of hybrid electric vehicles in July, Korean makers of batteries for hybrid electric vehicles are rushing to increase capital spending in an effort to secure a spot in the industry's rapidly growing global market. According to local news reports, LG Chem - the world's fourth largest rechargeable battery producer - plans to spend one trillion won (USD 850 million) to build a hybrid electric vehicle battery plant to be completed by 2013. A groundbreaking ceremony was held at the site in North Chungcheong Province in June. The company also plans to build a plant in the United States to provide batteries to U.S. automaker General Motors Corporation. Earlier this year, GM chose LG Chem as its sole supplier for lithium-ion batteries to be used in its plug-in hybrid electric car the Chevrolet Volt beginning from November 2010. ¶11. Separately, Korea's Samsung SDI, the world's third largest producer of rechargeable batteries, recently signed a deal with Germany's Bosch Corp., the world's largest supplier of automobile components, to set up a 50-50 joint venture called SB LiMotive. The company is scheduled to start commercial production of hybrid electric vehicle batteries in 2010. Korea's top oil refiner, SK Energy, also has been increasing its investment in hybrid electric vehicle battery development. It broke ground in January for a 159-billion won (US$ 124 million) plant to produce lithium-ion battery separators, a key battery component, expected to begin production by June 2010. ¶12. Nickel hydride batteries comprise about 95 percent of hybrid electric vehicle batteries in use today, but industry experts say that lithium-ion batteries will replace nickel-hydride batteries in the near future. Lithium ion batteries have significant advantages, such as higher energy density, lower manufacturing costs, more resistance to physical damage, and longer charge-discharge cycles before storage capacity begins to degrade. JP Morgan has said that it expects the global lithium-ion battery market to grow from its current USD 180 million annual value to about USD 16 billion by ¶2020. -------------- Science and Technology -------------- New National Research Foundation to Consolidate Scientific R&D Efforts -------------- ¶13. On June 26, the Ministry of Education, Science and Technology (MEST) established the National Research Foundation of Korea (NRF) SEOUL 00001254 004 OF 006 by merging three existing organizations - the Korea Science and Engineering Foundation (KOSEF),the Korea Research Foundation (KRF), and the Korea Foundation for International Cooperation of Science and Technology (KICOS). Dr. Park Chan-mo, Science Advisor to President Lee Myung-bak was appointed as first NRC chairman. Dr. Park previously had served as the President of the Pohang University of Science and Technology (POSTECH). He earned a PhD degree in computer science from the University of Maryland in 1969. ¶14. MEST said in its press statement that the creation of the NRF was meant to standardize and streamline administrative procedures, enhance management efficiency in the government's scientific R&D programs, and reduce redundancy of functions and activities. The NRF also will serve as the focal point for international cooperative scientific research activities. Dr. Cora Marrett, Deputy Director of US National Science Foundation, attended the International Symposium held from June 24 to 27 that launched the NRF. This year's initial operating budget for the NRF was set at 2.7 trillion won (USD 2.5 billion). -------------- Health -------------- H1N1 Virus Spreads Domestically within Korea -------------- -------------- ¶15. Until recently, the stringent control measures implemented by the Ministry of Health, Welfare, and Family Affairs had been largely successful in containing the spread of the H1N1 virus within Korea. Quarantine officers monitored all arriving international passengers at all of the country's ports of entry; anyone with a fever or who displayed flu-like symptoms were tested at the airport using rapid antigen tests; follow-up testing was performed on suspected cases; and those who tested positive (and in many cases those with whom they had close contact) were quarantined and treated with oseltamivir. The Ministry even hired more than 50 individuals to make follow-up phone calls within five days to all incoming travelers who provided a contact number on the health questionnaire required of all arriving international passengers to remind them to be tested if they developed fever or flu-like symptoms since their arrival. Through the end of June, all 204 confirmed cases of H1N1 influenza detected in Korea were cases of travelers arriving from affected countries or Koreans who had known contact with infected incoming travelers. ¶16. But in July, the virus began spreading domestically from person to person within Korea and among persons with no known contact with recent international travelers. With more than 120,000 Korean students studying in the United States, many of whom returned to Korea for the summer holidays, with 6000 to 6500 other travelers entering Korea every day on direct flights from the United States, and with many more travelers entering Korea every day from other affected countries, domestic establishment of the virus was inevitable. By the end of July, more than 1400 cases of H1N1 had been detected in Korea, and the majority of them had been contracted locally. The good news is that there have been no H1N1-associated deaths in Korea, and nearly every case has displayed only minor symptoms. ¶17. In response to the rapid spread of H1N1 in Korea, the Ministry of Health of Health, Welfare and Family Affairs (MHWFA) said on July 21 that it had upgraded the risk level of H1N1 influenza A from SEOUL 00001254 005 OF 006 "yellow (precaution)" to "orange (alert)." Raising the warning level means shifting from a strategy of containment towards one of damage control. For patients confirmed to be infected with H1N1, the general policy of isolation and treatment at designated hospitals will be maintained for the time being. However, if the attending physician judges the case as "not severe," the patient may be allowed to be treated at home. In addition, monitoring for fever and questionnaires of arriving passengers at the nation's airports will continue, but only for travelers arriving on flights from the eleven countries deemed to be "high risk" countries, including the United States. To treat the increased numbers of H1N1 patients, the government allocated 193 billion won (USD 160 million) to increase stocks of oseltamivir. Residents near Asbestos Mines Suffer Respiratory Problems -------------- -------------- ¶18. A number of residents living in towns near asbestos mines have developed respiratory problems, the Ministry of Environment (MOE) confirmed June 13 in a press statement. More than half - 110 out of 215 - of sampled residents in five towns in South Chungcheong Province located near the Hongseong asbestos mine were found to have lung diseases apparently caused by inhaling asbestos fibers. The Ministry said 95 of the 110 people with respiratory problems were tested further using X-rays and computer tomography. Eighty-seven of them were found to have developed thickened pleura associated with asbestosis and 55 were diagnosed with asbestos pneumoconiosis. ¶19. The Hongseong mine was the largest asbestos mine in Asia during the Japanese occupation of Korea (1910-1945) and continued operations until 1983. Residents claim that asbestos particles in the air continue to cause disease. MOE stated that it has detected small amounts of asbestos in the soil up to two miles from the mine, but has not detected amounts in the air beyond the environmental exposure limit of 0.01 fibers/cc of air. The South Chungcheong provincial government has begun collecting medical examination data on 3700 residents in the area; the results could trigger a number of lawsuits, but because symptoms from asbestosis develop gradually over many years, it might be difficult to determine if any given case developed before or after the mine closed. ¶20. The use of asbestos in Korea increased in the 1960s and 1970s as the country industrialized. The major use of asbestos in Korea was in construction materials. In May 1997, some forms of asbestos (crocidolite and amosite) were banned, but it was not until early 2009 that the import and use of all forms of asbestos have been prohibited. The first successful lawsuit against an asbestos producer in Korea occurred only in December 2007 when a Daegu district court awarded 133 million won (USD 110,000) to the family of a woman who died of malignant mesothelioma (a form of cancer caused by asbestos inhalation) 26 years after she had left the company. ¶21. The central government is responsible for the management the 21 closed asbestos mines in the country. MOE said it will test the levels of asbestos in the soil, water, and air within 4 kilometers of all the 21 closed mines nationwide by April next year. It also said it will conduct health checks on residents and former miners and devise a plan in August 2009 outlining how to offer treatment for those suffering from diseases related to asbestos inhalation. Korea to Launch Major Effort in Brain Research -------------- -------------- SEOUL 00001254 006 OF 006 ¶22. As part of its efforts to advance human health and create new knowledge opportunities, the Ministry of Education, Science and Education said on June 8 that it will spend 61 billion won (USD 46 million) over the next eight years to better understand basic brain functions, as well as for research into prevention and treatment of brain diseases and disorders. The investment will include the creation of a National Brain Research Institute and construction of a brain research laboratory that will begin later this year and be completed in 2011. Aging Society Pushes Health Care Spending to Record High -------------- -------------- ¶23. Korea's average household spending on medical and other health care services climbed to an all time high in the first quarter of this year, the National Statistics Office said in a recent report. The average Korean household spent a record high of 135,200 won (USD 107) per month on health care, up 5 percent over the first quarter of 2008 and about 27 percent higher than its health care spending the first quarter of 2005 (in won terms). Health expenditures compiled in the report include outpatient and inpatient examinations, laboratory tests, and services; medicine and pharmacy costs; medical equipment, including eyeglasses and contact lenses; and dental services. A senior economist at the Samsung Economic Research Institute stated that the increasing demand for health care services caused by the ageing of Korean society is the most important factor behind rising household health and medical spending. ¶26. A July report of the Organization for Economic Co-operation and Development (OECD) indicated that South Korea will displace Japan as the oldest OECD country by 2050 when 38.2% of the South Korean population is expected to be 65 years old or older. STEPHENS