Korea Market Study

Environment & Water Technologies Korea Market Study

JUNE 2020

The information and views set out in this study are those of the author(s) and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein. The contents of this publication are the sole responsibility of EU Gateway | Business Avenues and can in no way be taken to reflect the views of the European Union. The purpose of this report is to give European companies selected for participation in the EU Gateway | Business Avenues Programme an introductory understanding of the target markets countries and support them in defining their strategy towards those markets. For more information, visit www.eu-gateway.eu.

EU GATEWAY to KOREA

Central Management Unit

Korea Market Study

June 2020

Submitted to the European Commission on 23 June 2020

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Table of contents

LIST OF FIGURES ...... 6

LIST OF TABLES ...... 6

LIST OF ACRONYMS ...... 7

1 EXECUTIVE SUMMARY ...... 9

2 WHAT ARE THE CHARACTERISTICS OF KOREA? ...... 12 2.1 GEOGRAPHIC KEY DATA ...... 12 2.2 FINANCIAL AND ECONOMIC KEY DATA ...... 12 2.3 KOREAN ENVIRONMENT & WATER TECHNOLOGIES MARKET ...... 15 2.4 KOREAN MARKET ENTRY STRATEGY ...... 18

3 MARKET OVERVIEW AND EU ENTRY OPPORTUNITY ...... 20 3.1 WASTEWATER TREATMENT ...... 20 3.1.1 Market Overview ...... 20 3.1.2 EU Entry Opportunities ...... 24 3.2 FRESH WATER SUPPLY, WATER SOLUTIONS AND SOIL PREVENTION ...... 26 3.2.1 Fresh Water Supply, Water Solutions: Market Overview ...... 26 3.2.2 Soil Prevention (remediation & purification) Market Overview ...... 33 3.2.3 EU Entry Opportunities ...... 37 3.3 AIR POLLUTION CONTROL ...... 39 3.3.1 Market Overview ...... 39 3.3.2 EU Entry Opportunities ...... 45 3.4 WASTE MANAGEMENT ...... 48 3.4.1 Market Overview ...... 48 3.4.2 EU Entry Opportunities ...... 52 3.5 RECYCLING ...... 54 3.5.1 Market Overview ...... 54 3.5.2 EU Entry Opportunities ...... 58 3.6 NOISE PREVENTION ...... 60 3.6.1 Market Overview ...... 60 3.6.2 EU Entry Opportunities ...... 63

4 REGULATIONS & SUPERVISION ...... 64 4.1 WASTES CONTROL ACT ...... 65 4.2 SOIL ENVIRONMENT CONSERVATION ACT ...... 66

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4.3 NOISE AND VIBRATION CONTROL ACT ...... 66 4.4 FRAMEWORK ACT ON THE CONSTRUCTION INDUSTRY ...... 67 4.5 APPROVED EXPORTER STATUS UNDER THE EU-KOREA FTA ...... 68 4.6 IMPORT REGULATIONS ...... 70

5 ANNEXES ...... 73 5.1 REFERENCES ...... 73

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List of figures

Figure 1. Map of Republic of Korea ...... 12 Figure 2. KRW/EUR Exchange Rate ...... 14 Figure 3. Busan Eco-Delta City water management technologies used for the restoration of natural water cycle in the city (rainfall→ stream→ treatment→ waste water→ reuse) and to develop a water waterfront city ...... 30

List of Tables

Table 1. Economic & Demographic Data 2015 to 2020 ...... 14 Table 2. Korean environmental market (2015-2018) ...... 16 Table 3. Population connected to sewage treatment in 2015 & 2017...... 20 Table 4. Sewage and wastewater management market in 2017 and 2018 ...... 21 Table 5. Fresh Water Supply, Water Solutions and Soil Prevention in 2017 and 2018 ...... 26 Table 6. Monitoring on soil quality by source of pollution in 2018 ...... 34 Table 7. Air pollution control market in 2017 and 2018 ...... 41 Table 8. Waste management market in 2017 and 2018 ...... 49 Table 9. Recycling market in 2017 and 2018 ...... 55 Table 10. Noise prevention market in 2017 and 2018 ...... 61

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List of Acronyms

AD Anaerobic Digestion BOOT Build Own Operate Transfer CCS Carbon Capture and Storage CDM Consolidated baseline and monitoring methodology CNG Compressed Natural Gas DMS Dioxin Monitoring System DWTP Drinking Water Treatment Plant E&C Engineering and Construction EPC Environmental Power Concepts EPR Extended Producer Responsibility ETMS Energy Target Management System ETS Emissions Trading System FO Forward Osmosis GA Groundwater Act GHG Greenhouse Gas HAP Hazardous Air Pollutants KECO Korea Environment Corporation KFTC Korea Fair Trade Commission LFG Landfill Gas MBR Membrane Bio Reactor MBT Mechanical Biological Treatment MOE Ministry of Environment MOLIT Ministry of Land, Infrastructure and Transport MRF Material Recovery Facility NDC Nationally Determined Contribution

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NIR Near Infrared RDF Refuse Derived Fuel RO Reverse Osmosis RPF Refuse Plastic Fuel RPS Renewable Portfolio Standard SCR Selective Catalytic Reduction SECA Soil Environment Act SLR Sustainable Land Fill Reclamation SWG Smart Water Grid SWTP Sewage Water Treatment Plants TMS Temperature Measurement System TPLMS Total Water Pollution Load Management System VBWF Volume Based Waste Fee VOC Volatile Organic Compounds

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1 Executive Summary

The Korean economy has grown impressively since the Korean War (1950 to 1953) and Korea has transformed from one of the poorest countries into a leading industrial nation. Nowadays, Korea ranks 12th in the world by nominal GDP and 33th by purchasing power parity (PPP-based GNI per capita), and is the 6th largest exporter and 9th largest importer in the world.1 Korea’s economy is highly trade dependent primarily due to the fact that Korea has a lack of natural resources.

Korea's air quality ranks among the worst of OECD countries, with some of the highest levels of fine dust pollution. Whereas in 2009 the environmental market – which includes the sub-segments resources recycling management, water management, environmental restoration and recovery, climate change response, air quality management, environmental safety and health, sustainable environment and resources, environmental knowledge, information and monitoring – share was about 3.7% of Korean GDP, it reached 6.3% in 2014 and was about 5.3% in 2018, reflecting the growing importance of the environmental market in the Korean economy.2

Korea’s water treatment system is exhaustive. 93% of the population is connected to a sewage treatment area. The sewage and wastewater management sector has increased in 2018 (+2% compared to 2017). As part of an initiative to further accelerate blockchain technology and applications, the Korean Ministry of Science and ICT is planning various initiatives to provide innovative public services by utilising blockchain technology. One of the pilot projects is a blockchain based water supply quality management system establishment in Busan City, which offers opportunities to EU companies involved in blockchain technologies that can be applied for smart water system and water management.

The fresh water supply, water solutions and soil prevention markets in 2018 increased by 1.1% compared to 2017. The government continues to implement advanced treatment processes for drinking water plants nationally and also invests heavily in desalination technology. The Busan

1 www.visualcapitalist.com 2 http://www.index.go.kr/potal/main/EachDtlPageDetail.do?idx_cd=4089

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smart city project known as the Eco-Delta City – located in the city of Busan, in the south eastern part of Korea – is investing in a smart water management system. The Korean government has also set up the water industry cluster in the Daegu Industrial Complex so that technological development into water supply and sewage systems is combined with ICT. Both the Busan Eco- Delta Smart City and the Daegu water industry cluster offer opportunities to EU companies. As of 2018, 781 businesses are registered in the Soil and Groundwater Information System. They contributed 1.3% to the environmental market share in Korea. Companies with high-level soil remedial technologies mostly access the market as a consortium with major companies. Due to stricter soil pollution regulations, the demand for purification is increasing and it is expected that the demand for the purification business will grow.

In 2018, Korea ranked 119th out of 180 countries in terms of air quality.3 The OECD forecasts that Korea will suffer a 0.62% loss of GDP by 2060 because of the air pollution. Therefore, tackling the air pollution is becoming of strategic importance for the country and the Korean government announced in November 2019 that the country will shut down up to a quarter of its coal- fired generators4 for three months during the winter while the remainder would be operating at a maximum 80% capacity.5 In March 2020, the country announced it would stop up to 28 of its coal- fired power plants, scaling up the country’s ongoing efforts to curb air pollution.6 The air pollution control market was of KRW 5.67 trillion (EUR 4.5 billion) in 2018. 7 The challenge that the country is facing in controlling the air pollution in Korea offers opportunities to European companies. Power generation and coal-fired power plants especially are responsible for a large part of the air pollution in Korea. There are opportunities for advanced abatement technologies as the country’s plan is to continue to optimise its fossil fuel fleet8 and attempting to meet its emissions reduction and climate change targets.

Korea has elaborated and implemented a very comprehensive waste management policy during the early 1990s and has adopted a comprehensive waste management plan with ambitious targets

3 https://epi.envirocenter.yale.edu/sites/default/files/2018-kor.pdf 4 According to KEPCO, there are 58 publicly owned coal-fired generators in Korea which generate 46% of the country's energy. 5 https://edition.cnn.com/2019/11/29/asia/south-korea-coal-plants-pollution-intl-hnk/index.html 6 https://www.reuters.com/article/us-southkorea-coal-power/south-korea-to-close-up-to-28-coal-fired-power-plants-in-march-idUSKBN20O182 7 www.me.go.kr/ 8 http://www.reuters.com/article/us-southkorea-coal-idUSKCN0ZM06A

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for disposal and recycling. The waste management market is slowing down in Korea except for the construction of facilities related to waste management. This segment offers opportunities for European companies since new facilities have to give attention to air/soil pollution and climate risks.

In an effort to substantially reduce the waste generation and promote waste recycling, the Extended Producer Responsibility (EPR) system has been implemented in Korea since 2003. It established a waste management system that is recycling-focused and increases the overall rate of recycling. The recycling sector was stable in 2018 compared to 2017 with a slight growth of 0.01%. In 2018, China’s ban on imports of almost all recycled waste including plastic and paper led to a “trash crisis” in Korea.9 Since, the Korean government has enforced regulations banning the usage of plastic materials difficult to recycle, such as PVC and coloured PET bottles for the packaging of food and beverages. This is part of the country’s objectives to reduce its plastic waste production by 50%, as well as increasing the recycling rate from 34% to 70% by 2030.10 It will offer opportunities to European companies focusing on plastic recycling.

Noise barriers have been installed to reduce the road traffic-generated noise and these have been developed in a way of changing soundproof materials. In Korea, the noise/vibrations prevention market was KRW 5.85 trillion (EUR 4.7 billion) in 2018, decreasing by 4% compared to 2017.11 Noise barriers are nowadays being revamped with multiple new functions, including anti-fine dust particle and solar energy production features and research and development for noise barrier technology is mostly being conducted by a limited number of specialised firms and individuals, rather than major companies, as the industry itself is relatively small. EU companies providing innovative noise barrier technologies will have opportunities in Korea.

9 In May 2018, following the China’s ban on the importation of 24 kinds of solid waste, 48 private recycling companies in Seoul and the surrounding area refused to collect recyclable plastic bags, bottles and plastic foam https://www.koreatimes.co.kr/www/nation/2018/04/371_246607.html 10 http://www.me.go.kr/ 11 www.me.go.kr/

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2 What are the characteristics of Korea?

2.1 Geographic Key Data The Republic of Korea, also known as South Korea, has a population of 51.47 million people and covers an area of 100,284km2. The density per km2 is with 503, one of the highest in the world.

Figure 1. Map of Republic of Korea

The capital of the Republic of Korea is Seoul; Seoul is not only the political centre but also the business and economic hub. Seoul has on its own already a population of about 10 million; together with the nearby cities, the agglomeration reaches a population of 25.6 million. The second population cluster is in the south of the Korean peninsula where the cities of Busan (3.5 million), Daegu (2.5 million) and Ulsan (1.2 million) are located.

2.2 Financial and Economic Key Data The Korean economy has grown impressively since the Korean War (1950 to 1953); during this period, the GDP per capita was only USD 79. Korea had one of the world's fastest growing economies from the early 1960s to the late 1990s. It has transformed from one of the poorest countries into a leading industrial nation. The GDP expanded by an average of more than 8% per

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year from USD 2.7 billion (1962) to USD 230 billion (1989). Nowadays, Korea, with a GDP of USD 1,619 billion, ranks 12th in the world by nominal GDP and 33rd by purchasing power parity (PPP-based GNI per capita),12 and is the 6th largest exporter and 9th largest importer in the world.13 The GDP growth has slowed down to a level of around 4% in the first decade of this century and is expected to hover around 2-3% in the current decade.14

Korea’s economy is highly trade dependent primarily due to the fact that Korea has a lack of natural resources. Thus, energy and food resources are predominantly imported. Korea is a mountainous country with only 30% arable land areas.

In February 2020, the overall unemployment rate was about 3.3%.15 Unfortunately, the picture looks different in the age bracket from 15 to 29 where the unemployment was at 9.9%. The Korean government and the Bank of Korea’s target is to keep inflation within a corridor of 2% to 4% – a target that has been achieved recently; similar to other developed countries, the consumer price index is below that lower limit primarily due to decreased energy prices.

Korea’s population is expected to slightly increase in the coming years, and peaking around 2040 before decreasing. People aged 65 years and older account for 14.9% of the total population in 2019; this value is expected to increase to 39.8% by 2050.16

Consumer spending per capita was USD 12,822 in 2018 (+2.6% compared to 2017).17

12 http://www.businesskorea.co.kr/news/articleView.html?idxno=33654 13 www.visualcapitalist.com 14 http://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD/KOR 15 https://tradingeconomics.com/south-korea/unemployment-rate 16 https://en.yna.co.kr/view/AEN20190927005500320 17 https://www.macrotrends.net/countries/KOR/south-korea/consumer-spending

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Economic & Demographic Data 2013 to 2019 Data type 2016 2017 2018 2019 2020 (estimation) Total population (million) 50.6 50.8 51.0 51.1 51.5 51.5 Population in working ages 37.0 37.0 37.0 37.6 37.6 37.4 % Population aged 65+ 13.1% 13.5% 13.9% 14.3% 14.9% 15.7% % Population aged 50 to 64 21.5% 22.0% 22.5% 23.0% 23.6% 23.9% % Population aged 25 to 49 38.4% 37.9% 37.5% 37.7% 37.3% 36.9% % Population aged 15 to 24 13.2% 13.0% 12.6% 12.2% 11.8% 11.3% % Population aged 0-14 14.0% 13.7% 13.6% 12.8% 12.4% 12.2% Fertility rate 1.239 1.172 1.052 0.977 0.920 na GDP per capita (USD)18 27,105.0 27538.8 29,806.2 31,363 na na Household expenditure per 11,295 11,116 14,301 14,935 na na capita (USD)19 Table 1. Economic & Demographic Data 2015 to 202020 Korea’s currency, the Korean Won (KRW), has been quite volatile in the recent past. In October 2011, the exchange rate to the EUR was around 1,600 to 1. For the last 5 years, the KRW/EUR kept moving between 1,159 and 1,407 KRW/EUR. The exchange rate on March 22, 2020 was 1,348.21 KRW / EUR.

Figure 2. KRW/EUR Exchange Rate 21 The latest statistical indicators can be found on the Statistics Korea (KOSTAT) website: http://kostat.go.kr/portal/eng/index.action

18 https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&locations=KR-GH-JP&start=1960&view=chart 19 https://www.ceicdata.com/en/indicator/korea/annual-household-expenditure-per-capita 20 KOSIS Korean Statistical Information Service kosis.kr/eng/ 21 https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eurofxref-graph-krw.en.html

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2.3 Korean Environment & Water Technologies Market Korea has a high population density with 51.47 million people in a 100,000 km2 surface. The territory is mainly made of mountains – 64% of the national territory – and only a limited portion of the land is for residence. The country has the monsoon climate with 1,307.7 mm of annual precipitation but 50% to 60% of the rainfall is concentrated during the summer season. This induces a high risk of water stress. As ecological policy was not in focus during the rapid economic growth period in the 1960s and 1970s, population growth, urbanisation and industrialisation have increased air and water pollution, along with wastes and leading to destruction of ecosystems. Now, Korea has come up with a wide variety of policy measures to improve environmental quality across the country and reverse the environmental degradation that accompanied the rapid industrialisation.

The launch of a nationwide emissions trading system (ETS) in 2015 is a key step to fulfilling Korea’s commitment at COP21 to reduce GHG emissions by 37% by 2030 compared to a business-as- usual level. All allowances were allocated freely in Phase I (2015-2017). In Phase II (2018-2020), auctioning will only take place for 3% of permits and for 10% in Phase III (2021-2025). In 2019, Korea's air quality was the worst of OECD countries. Korea had an average ultrafine dust or PM2.5 concentration of 24.8g/m3, overtaking Chile with 22.6g/m3 from a year earlier22.

The amount of water taken from ground or surface water sources in Korea, as a share of renewable resources, is very high and suggests high risks of water shortages.23 In 2018, the Korean Ministry of Environment unveiled a long-term plan for the water industry with the enforcement decree of an act on water management technology development and water industry promotion.24 Under the decree, water industry products whose performances have been verified will be designated as excellent products eligible for commercialisation support from the government. With the decree, the government aimed to expand water industry revenues to USD 45.2 billion and jobs in the sector to 200,000 by 2030.25 In 2018, 72% of Korean water enterprises were small businesses

22 https://surfacingmagazine.net/korea-has-worst-air-pollution-in-oecd/ 23 www.oecd.org/eco/surveys/economic-survey-korea.htm 24 Global Water Intelligence - http://www.koreaherald.com/view.php?ud=20181204000766 25 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3056511

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with less than 10 employees. Whereas in 2009 the environmental market – which includes the sub-segments resources recycling management, water management, environmental restoration and recovery, climate change response, air quality management, environmental safety and health, sustainable environment and resources, environmental knowledge, in formation and monitoring – share was about 3.7% of Korean GDP, it reached 6.3% in 2014 and was about 5.3% in 2018, reflecting the growing importance of environment market in the Korean economy.

2015 2016 2017 2018 Amount Amount Amount Amount (EUR billion) (EUR billion) (EUR billion) (EUR billion) TOTAL Environmental Industry 79.41 78.45 79.06 79.76 Resources Recycling Management 24.51 23.56 23.65 23.59 Water management 19.50 19.81 20.34 20.75 Environmental restoration and 0.77 0.80 0.80 0.80 recovery Climate Change Response 2.53 2.56 2.64 2.65 Air Quality Management 4.74 4.29 4.41 4.54 Environmental safety and health 6.23 6.32 6.25 6.48 Sustainable environment and 15.21 15.52 15.31 15.21 resources Environmental knowledge, 5.92 5.60 5.64 5.74 information, monitoring Table 2. Korean environmental market (2015-2018)26

Korean Engineering and Construction players

All major Korean Engineering and Construction (E&C) companies are involved in the Environment sector.

DOHWA Engineering Co., Ltd.27, established in 1957, is Korea’s No. 1 general engineering consulting company specialised in planning, validity survey, engineering, analysis, testing, supervision, test drive, evaluation, advising and instructions in every field of engineering, including water/sewer, water resource development, urban planning, road/traffic, structure, port, railroad, and environment. In the environmental field, the company is specialised in general environmental plants and new renewable energy facilities, including water/sewer, water resources, landfill sites,

26 http://www.index.go.kr/potal/main/EachDtlPageDetail.do?idx_cd=4089 27 www.dohwa.co.kr

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incineration facilities, recycling sorting facilities, Mechanical Biological Treatment (MBT) facilities, landfill gas processing and power generation facilities, solar power generation, wind power generation, biomass power generation, and hydro-power generation.

Doosan Heavy Industries & Construction28 is Korea’s leading power equipment maker and has played an instrumental role in the development of Korea’s national economic development for the past 50 years by supplying various power generation equipment and water plants to more than 30 countries. Doosan Heavy Industries & Construction is a global player in seawater desalination plant and is gaining a reputation as a global Environmental Power Concept (EPC) player.

Since its foundation in 1969, GS E&C29 has grown in construction expertise on the strength of a business portfolio that includes industrial plants, power generation and environmental, civil engineering, construction and housing projects. GS E&C is leading projects in the areas of advanced wastewater and sewage treatment, waste to energy and other environmental facilities.

Established in 1999, Halla Energy & Environment30 is Korea’s largest environmental plant specialist, including waste treatment, Refuse Derived Fuel (RDF) power plants, waste heat recovery, and biogas; thermal power plants’ atmospheric pollution preventive facilities and auxiliary facilities; water treatment for sewage/wastewater/water purification; civil engineering and construction for riverbed filtration and road construction; and consignment services for domestic waste incinerators and sewage/wastewater treatment plants.

Established in 2001, Hansol EME31 has grown as a plant engineering specialist, especially for papermaking plants. Its activities in the Environment & Water Technologies sector are sludge incinerators and water treatment plants.

Hyundai Engineering Co., Ltd.32 was established in 1974 and provides general engineering solutions in chemical engineering, power generation, energy, industrial plant, infrastructure, environment and new renewable energy industries. Hyundai Engineering has developed the

28 www.doosanheavy.com 29 www.gsconst.co.kr 30 www.hallasanup.com 31 www.hansoleme.com 32 eng.hec.co.kr

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HANT (Hyundai Advanced Nutrients Treatment Process), a sewage/wastewater treatment technology that applies MBR (Membrane Bio Reactor) using a membrane. It can remove the germs without a separate disinfection system and recycle the entire treated water as reusable water. As it takes significantly less space compared to the other processes, it saves cost of land purchase and civil works by about 40%. By automating facilities, it reduces maintenance needs and sludge generation. The company has also developed the HSC (Hyundai Sludge Composer) method which is a sewage sludge composting process facility that includes dry, compost, and second compost systems. Sludge is mixed with process product returned from pre-treatment (reduction of water content) and biodegradable organics are decomposed in aerobic conditions to reduce and stabilise sludge for composting. Sewage sludge that generates secondary environmental pollution is reduced by about 80% using this technology to generate odourless and easy-to-handle compost for environmentally-friendly recycling.

Established in 1960, Kolon Global Corporation33 is a general construction company that has successfully performed various construction projects in civil construction such as subways, expressways, and bridges; architectural construction of various business/commercial spaces; housing construction; environmental construction for wastewater treatment plants, water supply facilities, and waste incinerators; and general industrial plants, in Korea and abroad.

POSCO E&C34, established in December 1994, is a construction company which includes in its environmental portfolio sewage/wastewater treatment plants that can remove both organic matters and nutritive salts, seawater desalination and water purification facilities and waste treatment facilities.

2.4 Korean Market Entry Strategy Direct Sales from EU

The simplest market entry option is for EU companies to sell or license their products or technologies directly to Korean end-users. The main downside of a direct sales approach is the

33 www.kolonglobal.com 34 www.poscoenc.com

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lack of local language and time-zone support, as Korean customers tend to be particularly demanding of their suppliers. This can be mitigated by using a local agent or business development consultancy.

Finding a Local Partner/Distributor

A more common way to approach the market is to seek a partnership with an established local company with has a similar products portfolio, experience in the target sector and can help navigate the legal environment. A local channel partner can provide services such as certification, registration, pre-sales, sales, consulting, installation, technical training, service maintenance and technical support in the Korean market.

Establishing a Local Presence

There are broadly three ways of establishing a local presence:

◼ a liaison office: setting up a liaison office is a simple process; but a liaison office can only perform non-profit generating activities in Korea such as market surveys, research and development and quality assurance

◼ a branch office: setting up a branch office can be a complicated process that requires documentation to be translated, but it allows for sales activities and the exchange of revenues with the head office.

◼ a local corporation through foreign direct investment (FDI): the most common process for an overseas company to open a branch office in Korea is through FDI, where an initial investment of approximately USD 100,000 is made by the head office, which in return owns stock in the branch. The local corporation leads independent activities and is authorised to perform direct transactions.

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3 Market Overview and EU Entry Opportunity

3.1 Wastewater Treatment 3.1.1 Market Overview The Korean water treatment system is exhaustive. 99% of the population have access to clean water and sanitation, and the population connected to sewage treatment continued to increase over the past years reaching 93% of the population connected to a sewage treatment area in 2017.

Total Population connected to sewage Year Population out of sewage treatment area population treatment area Non- Sewage Sewage Wastewater Septic Tank Total Total process Treatment treatment treatment Population Population Population 2015 52,672,425 48,925,049 48,570,502 354,547 3,747,376 436,191 1,062,600 2,248,585

2017 52,950,219 49,546,391 49,171,331 182,656 3,403,828 266,372 1,217,409 1,920,047

Table 3. Population connected to sewage treatment in 2015 & 2017.35 The Korean government usually prefer build-own-operate-transfer (BOOT) contracts and the private sector is a major player in the supply of public water systems. Private companies account for the largest share of wastewater management, followed by local governments and by the Korea Water Resources Corporation (K-water).

It is the duty of a local government to construct and manage the public sewage system to appropriately treat the sewage produced within its jurisdiction, while the Ministry of Environment supports the budget and establishes the related management standards. The existing Sewage Water Treatment Plants (STWP) are being improved by installing the advanced treatment processes and increasing the efficiency of digestion tanks. The Korean government constructs more than 10 new sewage treatment plants per year, and upgrades existing ones to install tertiary processes, such as activated carbon filtering and advanced disinfection processes.36 Sewage pipelines are being constructed and maintained steadily. The sewer pipe distribution rate is 100% in Seoul; however it is only 66.8% in the countryside. As the Korean summer monsoon implies risk of flooding and surface drainage, capacity of public sewage systems has to be improved.

35 kosis.kr 36 www.bceia.com/media/17321/korea-water_wast_water_treatment_market.pdf

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Since 2013, disposing sludge and excretions to the sea is prohibited. Landfill disposal is also banned since landfill sites are saturated, and it is difficult to secure new landfill sites.37 As a consequence, there is a demand for advanced solutions for volume reduction and recycling of sewage sludge.

Private sewage treatment systems are installed where public sewage systems are cost-prohibitive or outside of the sewage service zone.38 In 2017, 1,217,409 inhabitants were benefiting from private sewage treatment facilities operating outside of the sewage service zone. Since 2007, any private sewage treatment facility must have a designated specialist manager and must be constructed by professional service companies.

The sewage and wastewater management sector has increased in 2018 (+2% compared to 2017). Altogether, the services related to wastewater management, water business and analysis, data collection and evaluation services – which includes water services based on software and data protected by patents and/or trademarks – accounted for 3.9% of the of the market performance in 2018 (+2% with KRW 10.06 trillion, i.e. EUR 0.8 billion).

Percentage 2017 (A) Component 2018 (B) Component Change (EUR billion) Ratio (EUR billion) Ratio (B/A-1)*100 Total 20.34 100% 20.75 100% 2.0% Manufacturing of wastewater 4.76 23.4% 4.89 23.6% 2.6% management equipment and products Construction related to wastewater 7.69 37.8% 7.80 37.6% 1.5% management Services related to wastewater 2.14 10.5% 2.21 10.6% 3.1% management Services related to 4.95 24.3% 5.04 24.3% 1.9% water business Analysis, data collection 0.80 3.9% 0.80 3.9% 0.2% and evaluation services Table 4. Sewage and wastewater management market in 2017 and 201839

37 www.eiskorea.org/03_Business/02_Report_down.asp?schMenuCode=MB200&schTabCode=&strIdx=1687&strFileIdx=1&schCom=&sch Search=&intPage=1 38 eng.me.go.kr/eng/web/index.do?menuId=294&findDepth=1 39 www.me.go.kr/

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As part of an initiative to further accelerate blockchain technology and applications, the Korean Ministry of Science and ICT is planning various initiatives to provide innovative public services by utilising blockchain technology. A budget of KRW 16.1 billion (EUR 12.9 million) is allocated for blockchain R&D while KRW 400 billion (EUR 320 million) will be allocated for blockchain preliminary feasibility studies.40 One of the pilot projects – which started in 2020 – is a blockchain- based water supply quality management system establishment in Busan City.

Process Water and Industrial Wastewater Management Korean large high-tech industry and stringent effluent pollution control standards contributed to the development of the industrial wastewater treatment industry. According to Korea’s Ministry of Environment, there are more than 155 registered industrial complexes and approximately 47,000 operating facilities run by small and medium-sized wastewater management firms.41 Besides treatment for processed water, there is also demand for ultrapure water treatment technologies to complement the Korean electronics sector.

Korean players Chemical companies that have focused on the production of chemical fibres have been moving aggressively to take the initiative in the fast-emerging market. They are concentrating on the development of membranes, which are a key material for water treatment. Toray Advanced Materials,42, the Korean subsidiary of Japanese Toray, came up with the first reverse-osmosis membrane in 1994, and Cheil Industries43, KOLON44, and SK Energy45 have followed since then.

ANT21 Co.46, Ltd. is a company that develops water treatment methods. Established in May 2002, ANT21 Co., Ltd. is laying its foundation in the water treatment market with its original water treatment systems.

40 http://www.businesskorea.co.kr/news/articleView.html?idxno=40356 41 eng.me.go.kr/eng/web/index.do?menuId=263 42 www.toray.com/news/manage/nr140228.html 43 www.cheilind.co.kr/eng/index.html 44 www.kolonindustries.com/Eng/ 45 www.sk.co.kr/ 46 www.ant21.net

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Established in 1995, BKT Co., Ltd.47 is an SME specialised in water treatment and maintains the No. 1 market share in Korea’s livestock excretion treatment industry. Its main business is in water treatment for sewage/wastewater, livestock excretions, and high concentrate viscosity material treatment using membrane, wastewater reuse membrane, as well as renewable energy and energy-saving industries.

ECONITY48 is a membrane expertise company, developing various high-quality membranes with its own technology. Econity provides water/wastewater treatment equipment/system and maintenance service.

Coway EnTech49 is a water treatment specialist, from sewage/wastewater treatment to high- purity water treatment. It also provides services in all areas of water treatment, including consulting, analysis, design, construction, test drive, and maintenance. As of 1 August 2016 the company has merged with Green EnTech, becoming one of the leading ‘Total Water Solution Providers’ based on technology and know-hows accumulated over the years.

Hyorim Industries Co., Ltd.50 was established in 1986. It manufactures and installs water and sewage and wastewater treatment equipment. It has an independent technology institute specialised in engineering and development for flawless products and processes and adopted Enterprise Resource Planning (ERP) systems, groupware, and other information systems for efficient resource management.

Ilshin Environmental Engineering Co., Ltd. 51 was established in 1991 and is a general engineering company specialised in advanced sewage/wastewater treatment, organic solvent recovery system, and environmental plants. Ilshin Environmental Engineering Co., Ltd. has won the Minister of Environment Award three times (1997, 2000, and 2005), the Mayor of Seoul Award (2011), and "The Outstanding Environmental Business” selection by the Ministry of Environment.

47 www.bkt21.com 48 www.econity.com 49 http://www.cowayet.com 50 www.hyorim.co.kr 51 www.okilshin.co.kr

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Established in 2003, Korea Water Technology52 is specialised in sludge treatment. It develops electric sludge reducers that can dehydrate and reduce the water content in organic sludge down to around 60%. Major clients are local government offices and large companies in Korea, Japan, Europe, and China.

Coway53 is Korea’s largest environmental appliance manufacturer and their activities include advanced water purification and industrial water treatment using separating membranes, sewage/wastewater treatment using Membrane Bio Reactor (MBR) systems, sewage recycling using Reverse Osmosis (RO) systems, and compact scattered systems to supply water to disaster areas or secluded regions.

3.1.2 EU Entry Opportunities Both Korean conglomerates (also known as Chaebols) and smaller companies, are participating in the water technologies market. There is strong demand among these players for more advanced technologies for which they look to potential foreign suppliers. The industry consensus is that the Korean companies’ technological level is about 70% of that of market leaders such as GE (USA), Veolia (France) or Siemens (Germany). 54 According to Korean experts, this technological gap with foreign companies has to be dealt with first, if Korean companies are intending to participate in the global market. This is an opportunity for European companies. Identified key technologies in demand for sewage and wastewater treatment are engineering, procurement and construction services, water reuse equipment and services (process specific), advanced filtration, membrane filtration, sludge dewatering systems, membrane bioreactors, reverse osmosis, UV disinfection, anaerobic digestion, nitrification, biological denitrification and testing equipment.

The Busan Eco-Delta Smart City (see detailed presentation of the project Busan Eco Delta smart city on p29) also offer opportunities to EU companies involved in blockchain technologies that can be applied for smart water systems and water management.

52 koreawt.com 53 www.coway.co.kr 54 www.businesskorea.co.kr/english/news/industry/4086-water-industry-water-rise-%E2%80%9Cblue-gold%E2%80%9D

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EU companies who successfully entered the Korean Wastewater Treatment Market SNF Floerger55 (France) established SNF Korea56 in 1986 as a joint venture with DC Chemical and Sanyo Kasel. It has a production facility located in Ulsan and a sales office in Seoul. SNF Korea is the largest water treatment chemical company in Korea. The company has the largest production capacity within the country for organic flocculants and water-soluble polymers.

Veolia 57 (France) first established a representative office in Korea in 1999, followed by its subsidiary in 2000, which was established following its first project for LG/Lotte Chemical. The company provides operation and maintenance, engineering procurement construction, chemicals and consumables services for industries and municipalities in the fields of water, waste and energy markets.

Siemens Korea (Germany)58 established a liaison office in Korea in 1967 before a joint venture in 1987. Siemens Industry Solutions is the systems and solutions integrator for its plant business and covers everything from planning and construction to operation and maintenance over a plant’s entire lifecycle. It offers integrated solutions in water and wastewater treatment.

55 www.snf-group.com/ 56 www.snfkorea.kr/ 57 www.veolia.co.kr/ 58 www.koreatimes.co.kr/www/news/tech/2016/02/133_188664.html

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3.2 Fresh Water Supply, Water Solutions and Soil Prevention Note: Fresh Water Supply, Water Solutions and Soil Prevention are considered in this section together since they are considered as part of the same sector in Korea, as per Korean Ministry of Environment definition.

The fresh water supply, water solutions and soil prevention market in 2018 was EUR 0.8 billion with an appreciation of 1.1% compared to 2017, essentialy due to the increase related equipment manufacturing (+2.3%). However, the analysis, data collection and evaluation services sub-sector – which includes water services based on software and data protected by patents and/or trademarks – decreased by 4.3% to a market value of EUR 0.02 billion in 2018.

2017 (A) 2018 (B) Percentage Component Component (EUR billion (EUR billion Change Ratio Ratio ) ) (B/A-1)*100 Total 0.80 100% 0.80 100% 1.1% Manufacturing of equipment for Soil, Surface Water, 0.30 37.2% 0.30 37.7% 2.3% Underground Water Improvement and Purification Services related to Soil, Surface Water, Underground Water 0.48 60% 0.48 59.7% 0.7% Improvement and Purification Services for Analysis, Data Collection, and 0.02 2.8% 0.02 2.6% -4.3% Evaluation Table 5. Fresh Water Supply, Water Solutions and Soil Prevention in 2017 and 201859

3.2.1 Fresh Water Supply, Water Solutions: Market Overview Korea's per-capita consumption of water per day was 302 litres in 2017.60

59 www.me.go.kr/ 60 https://www.statista.com/statistics/1076111/south-korea-seoul-daily-water-consumption-volume-per-capita/

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In 1989, the Korean government launched its first water quality conservation plan – the Comprehensive Measures for Supplying Clean Water – which in 2006 led to the First Water Environment Management Master Plan and in December 2016 to the Second Water Environment Management Master Plan. The 1990s focused on counter-measures against major pollution incidents, since tap water pollution was a serious social problem. In 1998, the government’s new plan – the Comprehensive Water Management Plan for the Four Major Rivers – aimed at establishing sustainable river basin communities and creating rivers with:

◼ clean water flowing from ridge to reef,

◼ vivacious and healthy river basins,

◼ decent environments surrounded by beautiful natural scenery, and

◼ a society in which river basin communities work together for water quality conservation.

The First Master Plan for Water Environment Management (2006-2015) focused on the ecologically sound water environment and the safety from hazardous substances. The plan aimed to improve 85% of Korea’s rivers to the “good water” grade or higher, restore 25% of ecologically damaged rivers, and transform 30% of riparian areas in water supply sources into a riverine eco-belt.61

The Second Master Plan for Water Environment Management (2016-2025) objectives are to promote and ensure a healthier water environment in the countryside, high quality water treatment systems and smart water management systems.62 Around USD 2.7 billion will be funded during that period by the Korean government in order to modernise smart water management systems.

Today, advanced water treatment processes are being expanded to efficiently remove pollutants. In order to control toxicity and odour caused by algae in the water supply area, a pilot project on installing advanced treatment processes in drinking water treatment plants (DWTP) has been carried out since 2013. It resulted in the application of advanced treatment process in 32% of local DWTPs. The government continues to implement advanced treatment processes for drinking water

61 eng.me.go.kr/eng/web/index.do?menuId=262&findDepth=1 62 https://www.awa.asn.au/documents/South_Korea_Water_Market_Overview_2017_AWA.pdf

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plants nationally. This effort has resulted in the application of advanced treatment processes in 32 plants, representing 3% of all facilities. The government plans are to increase the ratio up to 53%.63

However, Koreans are still reluctant to drink tap water but prefer to use either water purifiers or purchase bottled water at home. The main reasons that makes Koreans avoid drinking tap water is their sensitivity toward the taste of chlorine and their concerns over old water pipes, water tanks and over sanitation at reservoirs.64 In order to have better tasting drinking water, many Koreans have installed water purifiers at home.65

In the past years, abnormal floods and drought66 have occurred in Korea, which are mainly associated to climate change caused by global warming. These events triggered the need of integrated watershed development. Therefore, the Korean water industry focused on the high- value added market items, such as membrane and intelligent water management systems combining IT with existing systems. The government is also active in fostering the water industry and has increased R&D investment in the development of core water treatment technology, fundamental technology and restoration of healthy aquatic ecology.67

Smart water grid68 In 2012, the Smart Water Grid (SWG) was launched by the Ministry of Land, Infrastructure and Transport (MOLIT) as a high-efficiency next-generation water management system. The SWG is a four-year project with an investment of EUR 20 million. It uses advanced information and communication technologies to overcome the limitations of existing water resource management systems. This intelligent water management system eases the regional and temporal imbalance of water resources. By controlling water demand and supply on a real-time basis through a two- way water resource information network, it allows relevant information to be exchanged in real time. As a total water management system, the SWG:

63 eng.me.go.kr 64 https://10mag.com/koreans-refuse-to-drink-tap-water/ 65 www.koreaherald.com/view.php?ud=20150526000906 66 pulsenews.co.kr/view.php?year=2015&no=968843 67 www.rvo.nl/sites/default/files/2014/05/Koreas%20Smart%20Water%20Grid%20and%20hybrid%20desalination%20technology.pdf 68 www.swg.re.kr/index_e.htm

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◼ makes use of water sources including rainwater, ground water and seawater,

◼ distributes, manages and transports water efficiently to ease the imbalance of water resources,

◼ monitors the stability of water resource networks in real time by using an advanced sensor network,

◼ distributes and carries clean water to the water resource networks.

Desalination Korea is also investing heavily in desalination technology. In 2014, the country completed the construction of its first commercial seawater desalination plant. The plant, built by POSCO E&C, employs ultrafiltration, reverse osmosis and seawater reverse osmosis methods to supply approximately 30,000 tons of industrial water a day.69

The government is setting out to develop new desalination technology using natural gas hydrate.70 Korea has also developed a small nuclear reactor design for cogeneration of electricity and potable water.71

The Korea Institute of Machinery & Materials developed a new desalination technology that allows for a significant reduction of energy consumption. It is a combination of forward osmosis (FO) and reverse osmosis (RO).72 The osmosis is a process in which water is transported through a semi- permeable membrane due to a difference in chemical potential between two solutions. Water naturally diffuses through the membrane from the solution with the lower concentration to the solution with the higher concentration.73

Busan Eco Delta smart city The Busan smart city project known as the Eco-Delta City is located in the city of Busan, in the south eastern part of Korea. The core of the Eco-Delta City development is an area of 2.2 km2, including a portion of the Nakdong River. The project is led by K-Water which expanded its

69 www.prnewswire.co.uk/news-releases/posco-ec-completes-koreas-first-commercial-desalination-plant-281266201.html 70 www.koreaherald.com/view.php?ud=20111004000851 71 www.world-nuclear.org/info/Non-Power-Nuclear-Applications/Industry/Nuclear-Desalination/ 72 www.filtsep.com/view/35723/what-s-the-future-for-forward-osmosis/ 73 www.rvo.nl/sites/default/files/2014/05/Koreas%20Smart%20Water%20Grid%20and%20hybrid%20desalination%20technology.pdf

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business scope from the management of water supply and resources to the development of industrial complexes and clean energy projects. The project began in late 2019 and residents are scheduled to begin moving into the city by late 2021. Construction will further continue into 2022 for some services such as healthcare and education, but core services such as mobility are expected to be in place within 2021 for the first residents.74 The vendor selection process utilises special-purpose companies (SPCs) or public-private partnerships (PPPs).

Figure 3. Busan Eco-Delta City water management technologies used for the restoration of natural water cycle in the city (rainfall→ stream→ treatment→ waste water→ reuse) and to develop a water waterfront city 75 A diverse range of projects have sought to further improve Korea’s infrastructure capacities through the addition of connectivity, particularly in areas related to logistics, factories, utilities and waste management. Busan is investing in a smart water management system expected to be in service in late 2021. The components of Busan’s smart water strategy include smart water meters, automated detection and drainage of pollutants, a water reuse system and a response system for natural disasters. An automated filtration plant will be operational in 2022. Busan follows a number of municipalities across Korea that have started the process of automating water meters in order to automate the collection and reporting of data from water meters, install a water

74 smartcity.go.kr 75 busan.ecodelta-smartcity.kr

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management platform providing visibility into all water assets, and add the capacity to detect leaks and trigger welfare checks in households without water usage.

Daegu water industry cluster76 The Korean government has set up the water industry cluster in the Daegu Industrial Complex so that technological development in water supply and sewage systems combined with ICT and commercialisation including overseas business expansion can be supported in a seamless way. It is planning to invest KRW 8.7 trillion (EUR 7 billion) until 2030 to come up with ICT-based water supply and sewage systems. 77 The government is expecting that the smarter systems will contribute to a better utilisation of water resources.

Korean players Doosan Heavy Industries & Construction78, is the global No. 1 in seawater desalination with a worldwide market share of 40% (the global water desalination market is set to reach USD 26.81 billion by 2025).79 It has a track record in all three desalination methods.

Filcore Co., Ltd.80 is a venture business specialised in manufacturing separating membranes and products such as UF Hollow Fiber Membrane Filters. Filcore supplies filters for water purifiers and for water ionizers to a number of large water purifier manufacturers.

Established in 1989, Gentro Co., Ltd.81 has developed and produces PDF Perforated Baffle Wall/PDF Baffle Wall/PDF Partition Wall.

GS E&C82, a leading Korean engineering and construction contractor, has been building up desalination expertise by acquiring global firms. It took over the Spanish desalination and water treatment company Inima in 2011 in order to obtain Inima's track record.

76 https://thewatercouncil.com/about-us/global-directory/korea-water-cluster/ 77 http://www.businesskorea.co.kr/news/articleView.html?idxno=16480 78 www.doosanheavy.com/en/main.do 79 https://www.prnewswire.com/news-releases/water-desalination-market-size-worth-usd-2681-billion-by-2025-hexa-research-642089153.html 80 www.filcore.co.kr 81 www.gentro.co.kr 82 www.gs.co.kr/en/branch/gs-ec

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Humas Co.83, Ltd. was established in 2000 and develops water quality analysis technologies. It provides online automated water quality meters that can monitor water quality and water quality analysis meters and reagents for labs.

Hyosung Goodsprings Co., Ltd.84 began its pump business in 1962 and has produced and supplied various pumps for agricultural irrigation, city water/sewage, large industrial plants, papermaking, chemical plants and power plants for more than 50 years. It also develops seawater desalination plants and containerised RO to be able to provide users with total water solutions.

KORBI Co., Ltd.85 was established in 1999 and provides integrated water monitoring system, measuring equipment, and water quality management systems.

Micro Filter86 was founded in 1996 and is specialised in producing filters and membrane elements installed on various environmental/health products, such as water-purifying filters for homes, refrigerators, ionizers, water softeners, and bidets. Main technologies are related to the removing of various heavy metals, bacteria, viruses, and other organic compounds dissolved in water.

PANGAEA21 Ltd.87 provides e-water resource management solution for smart water grid that combines environmental technology with IT technology. It was established in 1997 to build water operation systems, water/sewer integrated operation management systems, water/sewer process diagnosis and automated control systems, pipeline and leak management systems, environmental information systems, water quality meters and Temperature Measurement System (TMS).

Samsung Engineering88, the first Korean engineering firm, was established in 1970. It expanded its wastewater treatment business by adding a seawater desalination business. Another Samsung affiliate, Cheil Industries89, started a materials business in its R&D centre in Gyeonggi Province. The two companies provide comprehensive solutions in the water business.

83 www.humas.co.kr 84 www.hsgoodsprings.co.kr 85 www.korbi.com 86 www.filtercompany.co.kr 87 www.pangaea.co.kr 88 www.samsungengineering.com/ 89 www.cheilind.co.kr/eng/index.html

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Established in November 1999, SSENG Co., Ltd.90 has developed purified water treatment technologies, which allows for supplying up to 12,000 tons of purified water a day for a city with a population of 100,000 people with one standard 45ft container.

Established in 1999, Sungil En-Tech Co., Ltd. 91 developed an eco-friendly water quality purification technology based on artificial marshes, which can be applied to sewage treatment facilities and to nonpoint pollutant reducing facilities, river purification facilities, and lake purification facilities. The affiliated research centre, established in 2006, is specialised in developing key technologies in water treatment processes, performing government research projects, and providing technical advice.

Established in 1985, Synopex Inc.92 has two independent divisions for IT business and the water environment business. The water environment business focuses on membrane-based advanced water purification, seawater desalination, and wastewater treatment to develop and produce separating membranes, membrane structures, and supply and service membrane plant systems to provide new smart total solution services.

3.2.2 Soil Prevention (remediation & purification) Market Overview In 2018, largest sources of soil pollution in Korea were lead (Pb) and copper. The table below outlines the soil quality by source of pollution.

Monitoring on Soil Quality Minimum Average by Source of Pollution in Maximum (mg/kg) (mg/kg) (mg/kg) 2018 Cadmium (Cd) 2,512.0 2,512.0 2,512.0 Copper (Cu) 3,471.0 3,471.0 3,471.0 Arsenic (As) 17.3 0.0 0.5 Hydrargyrum (Hg) 3,548.6 0.0 32.9 Lead (Pb) 123.3 0.0 4.7 Hexavalent Chrome (Cr+6) 31.5 0.0 0.1 Zinc (Zn) 3,487.1 0.0 33.2 Nickel (Ni) 17.3 0.0 0.2 Fluorine (F) 3,512.5 0.0 131.9

90 www.sseng.co 91 www.sungilet.com 92 www.synopex.com

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Monitoring on Soil Quality Minimum Average by Source of Pollution in Maximum (mg/kg) (mg/kg) (mg/kg) 2018 Organic Phosphorus 430.5 0.0 18.1 Polychlorinated Biphenyl 1,258.0 0.0 228.7 (PCB) Cyanogen (CN) 0.0 0.0 0.0 Phenol 0.0 0.0 0.0 0.6 0.0 0.0 0.3 0.0 0.0 Oil 1.1 0.0 0.0 5.3 0.0 0.0 13.6 0.0 0.0 Trichloroethylene (TCE) 37.8 0.0 0.1 Tetrachloroethylene (PCE) 7,510.0 0.0 102.5 Benzo(a)Pyrene 0.4 0.0 0.0 Hydrogen ion Concentration 0.6 0.0 0.0 (pH) Table 6. Monitoring on soil quality by source of pollution in 201893 In Korea, soil and groundwater legislations and policies have been gradually strengthened since the Soil Environment Conservation Act was enacted in 1995. The legislation of Soil and Groundwater is largely divided into two parts, namely the Soil Environment Act (SECA) and the Groundwater Act (GA).

Under the Master Plan for Soil Conservation (2010-2019), Korea has specified 21 substances that cause soil contamination, including cadmium, copper, arsenic, mercury, oils, and organic solvents, as controlled soil contaminants in the Soil Environment Conservation Act. For these substances, Korea has also prescribed soil contamination warning limits, describing the degree of soil contamination that may undermine human health, property, and animal and plant growth and development. In 2004, the Soil and Groundwater Information System was developed to share information on soil and groundwater among related areas.

The soil remediation market started with the enforcement of the Soil Environment Preservation Act in 1996. At the beginning, relatively small-scaled projects were dominant. After the District Moonhyun remediation project in Busan in 2000, large-scale projects ordered by the government

93 www.kosis.kr

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and projects from private sector, especially in the oil & gas industry, continuously emerged and have been implemented in the market.

As of 2018, 781 businesses are registered in the Soil and Groundwater Information System. They contributed 1.3% to the environmental market share in Korea. Among them, 55% are SMEs with sales less than KRW 10 billion (EUR 7.9 million) and 31% with sales comprised between KRW 10 billion (EUR 7.9 million) and KRW 50 billion (EUR 40 million).94 Companies with high-level of remedial technologies mostly access the market as a consortium with major companies.

Due to stricter soil pollution regulations, the demand for purification is increasing and the sites of companies such as oil companies or gas stations will be declared polluted, it is expected that the demand for the purification business will grow.

Korean players Founded in 1996, Beautiful Environmental Construction Co., Ltd. 95 is an environmental service company dealing with the purification work of contaminated soil/groundwater, environmental business of the U.S. Army, mine pollution prevention, ecological river restoration businesses, wastewater treatment, land fill stabilisation and bio-mass power plants.

Coenbio Co., Ltd.96 pursues the purification of polluted water quality, soil, and waste by using effective micro-organisms. The company was established in 2008 and investigates micro- organisms, which are useful in restoration and purification of polluted environment among natural biological resources.

Daeil E&C Co., Ltd. 97 was established in 2006, focuses its activities in soil/groundwater remediation, design and construction of environmental plants and soil/ groundwater environmental assessment. The company holds a thermal desorption technology which allows to

94 me.go.kr 95 www.esakorea.com 96 www.coenbio.com 97 www.daeilenc.co.kr

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treat high concentration polluted soils and non-biodegradable organic pollutants following the method of purification of vaporisation and complete combustion of pollutant by heating the soil.

Established in 1986, Dongmyung Enterprise Co., Ltd. 98 is developing comprehensive environmental pollution prevention systems for air, water and waste, and soil and groundwater contamination prevention systems. In 2012, the company has been awarded with the Bronze Tower Order of Industrial Service Merit from Green Management Award and is green technology certified by the Ministry of Environment.

Ecophile Co., Ltd.99 was established in 2000 and is focussing its activities on soil purification and ground water purification. The company has registered 18 patents for new environmental technologies, such as biological purification technology and purification techniques using dynamic electricity technology.

Oikos100 was founded in 2000 and provides consulting services on contaminated sites and environment remediation projects. The company also conducts soil contamination remediation projects, underground water purification projects, landfill maintenance projects and water treatment activities.

Founded in 2000, H-Plus Eco101 offers investigation and soil remediation services to various contaminated sites, such as soil contaminated with heavy metals, oil-refining facilities, army bases, areas with oil pipelines and general industrial areas. Company actitivies also includes wastewater treatment, environmental facilities, chemical sales, biomaterials sales and fuel cell supplying.

Kolon Water & Energy Co., Ltd. 102 operates and manages wastewater treatment plants. The company offers solutions for the water, soil, and energy sectors. It also provides sewage treatment services, livestock wastewater processing, environmental related consultation services,

98 www.dm-ent.co.kr 99 www.ecophile.com 100 oikos.designq.kr/ 101 eng.hpluseco.co.kr/ 102 www.kolonwe.com

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and environmental audit services. The company was founded in 1997 and is also providing site assessment consulting and soil remediation services.

3.2.3 EU Entry Opportunities Fresh Water Supply, Water Solutions EU companies who successfully entered the Korean wastewater treatment market are also active in the fresh water supply and water solution market. For more information, please refer to the Wastewater Treatment chapter (3.1).

As for the wastewater treatment market, Korean companies are willing to enter the global water market and there is a demand among these players for more advanced technologies for which they look to potential foreign suppliers. The technological gap has to be reduced and partnering with European companies is a way to do it. Identified key technologies in demand are engineering, procurement and construction and services, advanced filtration, membrane filtration, membrane bioreactors, anaerobic digestion, nitrification and biological denitrification.

For the desalination segment, Korean companies are already dominating the market but key technologies in demand are engineering and construction services, advanced filtration, membrane filtration, reverse osmosis, UV disinfection and flash distillation

The Busan Eco-Delta Smart City and the Daegu water industry cluster also offer opportunities to EU companies involved in blockchain technologies and ICT that can be applied for smart water systems and water management.

Soil Prevention (remediation & purification) Gas stations account for more than 60% of specified facilities subject to soil contamination control, and their oil storage facilities are buried underground, making them highly vulnerable to soil contamination. In this light, the Ministry of Environment aims to spread “clean gas stations” designed to eliminate contamination-causing factors in advance. A clean gas station reinforces contamination prevention by installing double-walled tanks, double-walled pipes, tanks, and dispenser sumps. A gas station designated as a clean gas station is provided with incentives such as a 15-year exemption from soil contamination tests, a designation plaque, and financing for the

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installation of prevention facilities. The spread of clean gas stations will be encouraged through such incentives. This can be seen as an opportunity for European companies.

EU companies who successfully entered the Korean Soil Prevention Market Veolia103 (France) provides remediation services for polluted soil resulting from industrial accidents or after a site has been vacated due to heavily polluting industrial activity.

103 www.veolia.co.kr

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3.3 Air Pollution Control 3.3.1 Market Overview In 2018, Korea ranked 119th out of 180 countries in terms of air quality according to the Environmental Performance Index (EPI), done by Yale University and Columbia University.104 The EPI evaluates countries’ performance on high-priority environmental issues based on 20 indicators such as air quality, health impact, climate and energy. Hyundai Research Institute assumed that the worsening air condition due to fine and ultrafine dust caused an economic loss of KRW 4 trillion (EUR 3.2 billion) in Korea in 2018.105 The OECD forecasts that Korea will suffer a 0.62% loss of GDP by 2060 because of the air pollution. Scoring 61.19 out of 100 in the air quality category, the country was one of the poorest performers among Asian countries. Therefore, tackling the air pollution is becoming of strategic importance for the country.

Air Quality Monitoring In its Nationally Determined Contribution (NDC) under the December 2015 Paris Climate Agreement, Korea committed to reduce its greenhouse gas (GHG) emissions by 37% from a business-as-usual level across all economic sectors by 2030.106 In 2010, the Korean government implemented the National Strategy for Low Carbon Green Growth, which included medium and long-term GHG emissions targets by expanding the green technology sector and integrating standards for low GHG emissions into industries such as transportation, finance and tourism.107 As of 2013 (most recent data), Korea had at least 48,000 air pollutant-emitting facilities. In 2016, it developed a GHG reduction roadmap which includes the building, transportation, agricultural, industrial and waste sectors. The government aims to manage large GHG emitters and energy consumers that are not covered by the emissions trading scheme through a national GHG and Energy Target Management System (ETMS). In 2015, it launched a nationwide Emissions

104 https://epi.envirocenter.yale.edu/sites/default/files/2018-kor.pdf 105 http://www.businesskorea.co.kr/news/articleView.html?idxno=30152 106 www4.unfccc.int/submissions/INDC/Published%20Documents/Republic%20of%20Korea/1/INDC%20Submission%20by%20the%20Republic %20of%20Korea%20on%20June%2030.pdf 107 www.oecd.org/korea/greengrowthinactionkorea.htm

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Trading Scheme (ETS) that includes 525 of the country’s largest polluters in 23 sectors and accounting for two-thirds of the nation’s non-vehicular emissions.108

In Korea, attention to urban air quality has increased: monitoring stations in urban areas have been set up and the data are publicly available online. Seoul’s First Metropolitan Air Quality Control Master Plan 109 (2005-2014) emphasised reduction of PM10 and nitrogen dioxide (NO2) concentrations in particular. The Second Master Plan (2015-2024) added ultrafine particles (PM 2.5) and ozone to the list of managed pollutants, which also includes sulfur oxides (SOx), nitrogen oxide (NOx) and Volatile Organic Compounds (VOCs). The Second Master Plan aims to reduce the emission of each pollutant by 34% to 56%.110 Installation costs for low nitrogen oxide (NOx) boilers in homes will be subsidised to cover a total of 680,000 units in the Seoul Metropolitan area from 2015 to 2020. New manufacturing standards have been formulated for home boilers and low NOx boiler installation will become compulsory when building any multi-unit dwelling of 20 households or more. In terms of industrial boilers, eligibility for the low NOx burner replacement cost subsidy will be extended from 0.3 tons or more to 0.1 tons or more. The Korean government recently applied stricter regulatory limits on SOx, carbon monoxide (CO), NOx, ground level ozone (O3), particulate matters (PM-10 and PM-2.5), lead, and benzene. Other pollutants such as total suspended particles (TSP), VOCs, ammonia (NH3), and secondary pollutants such as peroxy acetyl nitrate (PAN), peroxy benzoic nitrate (PBN), and aldehyde are also being monitored. In 2018, the government decided to implement tougher fine dust guideline levels for health-threatening particulate matter (PM) to curb air pollution.111 According to the enforcement decree, the standards for PM 2.5 fine dust have been revised to a daily average of 35 micrograms per cubic meters (g/m3) from 50g/m3 and a yearly average from 25g/m3 to 15g/m3. The Korean Ministry of Environment looks to further push the standard level on PM 2.5 with the WHO’s target level of 25 g/m3 for daily average and 10g/m3 for an annual average. This decision has been taken, as the country’s air

108 www.nrdc.org/sites/default/files/paris-climate-conference-SouthKorea-IB.pdf 109 eng.me.go.kr/eng/web/index.do?menuId=235 110 eng.me.go.kr/eng/web/index.do?menuId=238 111 https://respromasks.com/2018/03/21/s-korea-to-apply-stricter-fine-dust-guideline-to-reduce-air-pollution/

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pollution was getting worse as the average PM 2.5 concentration reached 99 g/m3 in March 2018 – the worst level since Korean weather watchdogs started monitoring air pollutants in 2015.112

In an effort to curb the air pollution, the Korean government announced in November 2019 that the country will shut down up to a quarter of its coal-fired generators113, i.e. between 8 and 15 generators, for three months during the winter, from December 1 to February 29, while the remainder would be operating at a maximum 80% capacity. 114 In March 2020, the country announced it would stop up to 28 of its coal-fired power plants within the month, scaling up the country’s ongoing efforts to curb air pollution.115

The air pollution control market was worth EUR 4.5 billion in 2018. The main segment of the air pollution control sector is the manufacturing of equipment for air pollution control which represented about 77% of the sector with a market size of EUR 3.5 billion.

Percentage 2017 (B) Component 2018 (B) Component Change (EUR billion) Ratio (EUR billion) Ratio (B/A-1)*100 Total 4.41 100% 4.54 100% 2.8% Manufacturing of Equipment 3.38 76.7% 3.49 76.9% 3.1% for Air Pollution Control Construction related to Air 0.51 11.7% 0.53 11.8% 3.7% Pollution Control Services related to Air 0.06 1.4% 0.06 1.4% 1.4% Pollution Control Manufacturing of Equipment 0.27 6.1% 0.28 6.1% 2.2% for Indoor Air Quality Control Services for Indoor Air 0.09 2.0% 0.09 2.0% -1.4% Quality Control Services for Analysis, Data 0.09 2.1% 0.09 1.9% -4.8% Collection, and Evaluation Table 7. Air pollution control market in 2017 and 2018116

112 http://www.scmp.com/news/asia/east-asia/article/2139435/tougher-air-pollution-law-thesouth-korean-capital-bans- outdoor?edition=international 113 According to KEPCO, there are 58 publicly owned coal-fired generators in Korea which generate 46% of the country's energy. 114 https://edition.cnn.com/2019/11/29/asia/south-korea-coal-plants-pollution-intl-hnk/index.html 115 https://www.reuters.com/article/us-southkorea-coal-power/south-korea-to-close-up-to-28-coal-fired-power-plants-in-march-idUSKBN20O182 116 http://kosis.kr/eng/statisticsList/statisticsList_01List.jsp?vwcd=MT_ETITLE&parentId=101_E

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Industrial Air Pollution Reduction Under the National Strategy for Low Carbon Green Growth,117 Korea has seen an expansion of the pollution control equipment industry (the manufacturing of equipment for air pollution control was EUR 3.5 billion in 2018, with an increase of 3.1% compare to 2017), with imports accounting for about 10% of the total market. Control measures to achieve the goals set forth in the National Strategy consist of automobile management, including a project to reduce exhaust gases from vehicles in operation; management of emission facilities, including the total load management system for large establishments; and management of eco-friendly energy and cities. Korean manufacturers are seeking advanced products and technologies to meet the government’s standards. In Seoul, the Second Metropolitan Air Quality Control Master Plan (2015-2024) also aims to manage high-risk pollutants distributed throughout everyday surroundings.118 The city government is prescribing control measures for VOC sources, such as laundry shops, gas stations, painting facilities, printing offices and everyday consumables. To help reduce total PM2.5 emissions, Seoul offered subsidies to help 10,000 Korean barbecue restaurants and 1,135 bathhouses to install filters in 2015.119 A national chemical emissions survey conducted in 2010 found that approximately 61% of the 50,000 tons of annual emissions of 388 hazardous air pollutants (HAP) were fugitive emissions from non-smokestack facilities and processes. The “Chemical Emission Reduction Stewardship-based Management for Area-specific Risk reduction Target (SMART) Programme” has been implemented since 2011 to reduce emissions of chemicals. The SMART Programme sets reduction goals for industrial complexes that emit large amounts of specific substances by gathering opinions from a variety of stakeholders, including local residents, environmental groups, associated businesses, and local governments. The pilot project began in 2011, and four industrial complexes had signed the agreement by the end of 2013. The aim was to reduce benzene by 100 tons, butadiene by 29 tons, and dichloromethane by 950 tons by 2019.120

117 www.unep.org/PDF/PressReleases/201004_unep_national_strategy.pdf 118 eng.me.go.kr/eng/web/index.do?menuId=238 119 blogs.wsj.com/korearealtime/2014/02/04/seoul-to-crack-down-on-barbeques-and-spas-to-combat-pollution/ 120 eng.me.go.kr/eng/web/index.do?menuId=342

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Power Plant Emissions Reduction The government is making efforts to shut down old coal-fired power plants in order to curb fine dust emissions. In 2019, with about 60 active coal-fired power plants, the share of coal power plants was 40% of Korea’s total primary energy consumption.121 It is estimated that 60% of Korean air pollution is caused by these coal-fired plants. Korea needs advanced abatement technologies if it is to increase its fossil fuel fleet and still attempt to meet its emissions reduction and climate change targets. The country has the highest share of supercritical and ultra-supercritical power plants operating in the world.122 The government is taking measures to retrofit carbon dioxide capture and storage (CCS), selective catalytic reduction (SCR), and flue gas desulfurisation (FGD) systems. In 2016, the country’s Trade Minister announced further air pollution control measures by targeting the closure of 10 thirty-year-old coal-fired power plants by 2025. In addition, within the same timeframe, the government will replace turbines at several plants to boost power efficiency and expand the capacity of circulation pumps to reduce emissions and stricter emissions standards for future coal-fired power plants will also be applied.

IoT & big data initiatives In 2018, Korean Telecommunication (KT)123 launched the “KT Air Map Korea” project as an effort to cope with the ever-worsening fine dust problem in Korea based on an internet of things (IoT) platform and big data analysis. The company built an air quality monitoring network in 1,500 locations in Seoul and six metropolitan cities by using its ICT infrastructure.

The Air Map Platform is connected to fine dust measurement equipment based on LTE-M, a global standard networking technology specialised in the internet of things (IoT). In addition, the platform is able to carry out fine dust reduction activities by interlocking with air purifiers, air

121 https://www.japantimes.co.jp/news/2019/11/28/asia-pacific/science-health-asia-pacific/south-korea-close-15-coal-fired-power-plants-winter- limit-pollution/#.Xq6KCZP7QWo www.eia.gov/beta/international/analysis.cfm?iso=KOR 122 Conventional coal-fired power plants, which make water boil to generate steam that activates a turbine, have efficiency of about 32%. Supercritical (SC) and ultra-supercritical (USC) power plants operate at temperatures and pressures above the critical point of water, i.e. above the temperature and pressure at which the liquid and gas phases of water coexist in equilibrium, at which point there is no difference between water gas and liquid water. This results in higher efficiencies – above 45%. Supercritical (SC) and ultra -supercritical (USC) power plants require less coal per megawatt-hour, leading to lower emissions (including carbon dioxide and mercury), higher efficiency and lower fuel costs per megawatt. 123 https://www.kt.com/

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conditioners and artificial rain drones in addition to indoor and outdoor air quality measurement networks.

Korean players Auto Industrial Co., Ltd.124 was established in 1982 and is developing, producing, and selling automobile electronic components and sensors aiming at managing the indoor level of air pollution by detecting poisonous gas (CO, NOX, etc) outside of automobiles while driving, and auto defog sensors, which detect or foresee the defog of automotive air conditioning.

CERACOMB Co., Ltd. 125 was established in 1987. It produces and supplies catalysts that remove poisonous gas caused from industrial production worksites by coating catalysts with materials such as platinum or palladium, CP-DOC, which is an oxidation catalyst for diesel automobiles as well as PDPF (Passive Diesel Particulate Filter) and DPF (Diesel Particulate Filter) systems which remove particulate matter and poisonous gas of diesel engines. It has also developed equipment and catalysts to remove hydrogen, and it has been selected as a supplier of all PAR (PArticulate Reduction) equipment for 17 power plants in Korea.

DASANRND Co., Ltd.126 (1998) supplies instrumentation systems for environmental protection and develops remote monitoring systems of exhaust gas from stack and engine test systems for automobile manufacturers.

DH-M Co., Ltd.127 develops high pressure fans, ring blowers, wash water pumps, and high- pressure plunger pumps. It is also involved in the biogas industry and has acquired anaerobic digestion, gas purification, gas development, waste heat energisation, odour power plants and soil deodorisation treatment systems.

124 www.autosanup.com 125 www.ceracomb.com 126 www.dasanrnd.co.kr 127 www.dh-m.co.kr

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Enbion Inc.128 was established 1999 and produces oxidation catalyst treatment equipment for volatile organic compounds. Enbion is also involved in odour and biological treatment systems.

GDECOTECH Co., Ltd.129 was founded in 1980 and develops exhaust systems for air pollution prevention facility for semiconductor manufacturers and chemical industry. It also produces purification treatment equipment for toxic gas.

J-E TECH Co., Ltd.130 produces atmospheric filtration systems and fusion-type high efficiency precipitation facilities. J-E TECH’s various technologies focus on the improvement of worksite environments and the prevention of air pollution with the production of general exhaust gas treatment such as denitrification, desulphurisation and dust collection from the incinerator, PM2.5/PM10 level of ultra-fine dust treatment technology for thermal power plants and cement plants and special precipitators for metal machining processes such as copper smelting and melting plating processes.

3.3.2 EU Entry Opportunities The challenge that Korea is facing in controlling air pollution offers opportunities to European companies.

For the air quality monitoring segment, key technologies and services in demand131 are:

◼ continuous emissions monitoring systems,

◼ ambient air quality monitoring equipment,

◼ source emissions measurement technologies,

◼ analytical and laboratory testing goods and services,

◼ air pollution control equipment and fuel vapour control systems.

128 www.enbion.com 129 www.gdecotech.co.kr 130 www.j-etech.com 131 https://www.trade.gov/

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For the industrial air pollution reduction segment, key technologies and services in demand132 are:

◼ carbon capture and storage (CCS),

◼ volatile organic compounds (VOC) control,

◼ dioxin abatement,

◼ advanced sulfuric oxides/nitrogen oxides abatement in power plants and steel mills,

◼ energy saving and waste-to-energy products,

◼ pollution-free and low-emission vehicles and engineering technologies,

◼ pollution abatement technologies for the automobile and oil refinery industries,

◼ environmentally friendly construction materials.

◼ H13 or above high-end air purifiers

◼ HEPA filter media

◼ High-end vacuum cleaners

◼ Dust-proof bedding and curtains and dust masks

As said above, power generation and coal-fired power plants are especially responsible for a large part of the air pollution in Korea. There are opportunities for advanced abatement technologies as the country plan is to meet its emissions reduction and climate change targets. For this segment, key technologies in demand133 are:

◼ continuous emissions monitoring systems,

◼ dry sorbent injection technologies,

◼ flue gas desulphurisation equipment,

◼ activated carbon injection technologies,

132 https://www.trade.gov/ 133 https://www.trade.gov/

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◼ inspection, adjustment, maintenance and repair services

◼ selective catalytic reduction technologies.

EU companies who successfully entered the Korean Air Pollution Control Market Sibelco134 (Belgium) is established in Korea and provides environmental solutions such as flue gas desulphurisation solutions, water filtration systems and wastewater purification. The company is also involved in the automotive sector where it offers diesel particulate filtering solutions.

CERAM IBIDEN 135 (Austria) has been manufacturing homogeneous extruded honeycomb catalysts since 1985. These products mainly consist of titanium oxide, tungsten oxide and vanadium pentoxide. The necessary mechanical strength is achieved by adding glass fibres. The catalysts are used as the key part of the selective catalytic reduction (SCR) process. This technology is employed in thermal power stations, waste incinerators, stationary diesel motors, industrial plants and heavy-duty trucks. Ceram Frauenthal Korea Co. Ltd.136, is the company’s Korean subsidiary which manufactures custom DeNOx SCR catalysts.

CTP 137 (Chemisch Thermische Prozesstechnik GmbH, Austria) is one of the world leading companies in air pollution control for industrial applications. CTP was founded in 1985 and produces highly efficient and cost-effective systems for the removal of: VOCs, nitrogen oxides, PCDD/F, odours, organic particulate matter. CTP Korea was established in 2004 as a joint venture with Hanyang.

134 www.sibelcokorea.com/ 135 www.ceram-ibiden.com/ 136 www.ceramkorea.net/ 137 www.ctp-airpollutioncontrol.com/

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3.4 Waste Management 3.4.1 Market Overview Solid Waste Management In Korea, waste is roughly classified into two categories according to its source of origin: municipal waste from households, and industrial waste from business sites or factories of a large scale (generation of waste above 300kg/day). Industrial waste is further divided into two categories: “general industrial waste” which consists of slag, ash, dust, construction waste and “specified waste”, which consists of toxic wastes such as waste acid, waste alkali, waste oil, waste organic solvent and so on. In Korea, waste is managed in a dual system; the local government is responsible for the final disposal of municipal waste, while the discharger of industrial waste is responsible for the final disposal of it.

Korea has elaborated and implemented a very comprehensive waste management policy during the early 1990s and has adopted a comprehensive waste management plan with ambitious targets for disposal and recycling. It has set up a detailed institutional structure and has organised full devolution of waste management to local authorities.

While the volume of commercial, industrial and construction waste generated has increased since 2000, per capita household waste production has increased only marginally since 1995 due to the implementation of the Volume Based Waste Fee (VBWF) system, which operates under the “producer pays” principle with the taxation of garbage collection bags. Volume-based waste bags are purchased at grocery stores for the price of the waste treatment cost. Under this new system, households are required to separate recyclables from unrecyclable waste. This foundational system encourages residents to decrease unrecyclable waste with economic incentives.

In 2002, the government established the “Allbaro” system138, an online mechanism that tracks waste from generation to transport to disposal. The system has streamlined the waste treatment verification process and served as a basis for domestic waste-related policy development. The Allbaro system consists of a transfer and takeover system managing the transfer and takeover process of waste, an authorisation and permission system to enhance authorisation and permission

138 exim.allbaro.or.kr/eng/service.do?id=52040000

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convenience, a construction waste management system, and a waste volume reduction system. The Allbaro system’s operation involves the Ministry of Environment, local public environmental agencies, local governments, Korea Environment Corporation (KECO) and users. The main functions of Allbaro include the following six main and additive functions: ◼ Legal handling of commercial wastes, ◼ Legal handling of construction wastes, ◼ The management of medical refuse based on RFID, ◼ Portal system for imported waste, ◼ Reporting results of waste disposal, and

◼ Approval and basic information management.

The waste management market was worth EUR 5.6 billion in 2018, slowing down by 0.04% compared to the previous year. In 2018, the main segment of the waste management sub-sector were services related to waste management. It represented 41% of the sector with a market size of EUR 2.3 billion. Compared to the previous year, this segment increased by 0.8%.

Percentage 2017(A) Component 2018(B) Component Change (EUR billion) Ratio (EUR billion) Ratio (B/A-1)*100 Total 5.58 100% 5.58 100% -0.04% Manufacturing of Equipment 2.15 38.5% 2.19 39.2% 1.7% for Waste Management Construction of Facilities related to Waste 0.87 15.5% 0.89 15.9% 2.6% Management Services related to Waste 2.29 41.0% 2.31 41.3% 0.8% Management Services for Analysis, Data 0.28 5.0% 0.20 3.6% -28.5% Collection, and Evaluation Table 8. Waste management market in 2017 and 2018139 Hazardous Waste Management The Korean government has set objectives to reduce pollution generated by industrial activity and to restrict the use of hazardous materials in manufacturing. It has supported the development of

139 http://kosis.kr/eng/statisticsList/statisticsList_01List.jsp?vwcd=MT_ETITLE&parentId=101_E

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cleaner technologies, including drafting a strategy to reduce or substitute the use of rare metals used in electronic appliances and automobile manufacturing. Since 2016, certain types of hazardous waste – including acidic and alkaline waste, spent oil and organic solvents, synthesised high molecular compounds, dust and sludge140 – must be physically separated from other solid wastes under the country’s Waste Control Act. The Ministry of Environment also established a national-level institutional framework for mercury management (2016 to 2020), per the provisions of the Minamata Convention on Mercury. The plans include environmental monitoring, emissions reduction, more environmentally-friendly disposal of mercury, including a take-back programme for, and the ultimate phase-out of, mercury-containing products.

Nuclear waste Korea, the world's fifth-largest user of nuclear power, has around 70%, or nearly 9,000 tons, of its used fuel stacked in temporary storage pools originally intended to hold it for five or six years. The 23 nuclear reactors add a total of 750 tons of spent fuel every year to the 13,300 tons that filled 71% of its wet and dry storage capacity as of last year, according to reactor operator Korea Hydro and Nuclear Power Co Ltd, owned by state-run Korea Electric Power Corp. That means storage could fill by 2021, with some pools in danger of reaching capacity in due course. The country hopes to win time by stacking spent fuel more densely in those concrete-covered pools next to reactor buildings, and by moving waste to pools at 11 new power plants that are set to be built by 2024.141

Smart waste management Seoul has installed public trash cans in the central Bukchon neighbourhood that send a signal when full, optimising the collection frequency and the routes made by garbage trucks. A new project will expand on the Bukchon project by installing sensors in streetlights to monitor illegal dumping and parking, as well as noise violations and pollution levels. Seoul has also made efforts to automate the sorting of recycling waste at apartment complexes. The smart city of Songdo has gone a step further by utilising waste collected in each building to generate energy. Waste is

140 www.bna.com/south-korea-tightens-n17179934025/ 141 www.reuters.com/article/us-southkorea-nuclear-storage-idUSKCN0I10WR20141012

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collected in the basement of each building by a vacuum system, which captures the heat from the waste and distributes it around the Songdo district.

Korean players Chosun Refractories ENG Co. Ltd. 142 can handle all design, producing, installation, and operation for incinerators – some of high capacity with 600 tons a day – for domestic waste, industrial waste, medical waste, and derived fuel boilers. The company has the highest performance in design and installation of incinerators in the domestic market, and also exports overseas to countries such as Oman, Thailand, Vietnam, Japan, and Iraq.

DONGLIM ENG143 was established in 1999 and is specialised in waste treatment. Owning its technology, the company takes full charge of design of products and processes thanks to its affiliated laboratory.

Forcebel Co., Ltd. 144 was founded in 2000 and is specialised in research, development, production and commercialisation of automated mechanical selective device for various wastes including domestic waste. It develops Mechanical Biological Treatment (MBT), Material Recovery Facilities (MRF), Sustainable Land Fill Reclamation (SLR), and C&D waste to energy Recycling & Facilities (CDWEF).

KBEC Korea Co., Ltd. 145 is specialised in the construction and management of landfills, the recycling field, and organic waste reduction. Established in 2004, KBEC’s main activities are the construction and management of sanitary landfills using advanced eco-friendly technology, organic waste reduction business, waste resource energisation business (RPF), and CDM.

KM GREEN Co., Ltd.146 constructed the largest waste disposal facility in Korea, and is operating the facility to seal off environmental pollution with air-dome type landfills. Also, as a way of

142 www.chosunrefeng.co.kr 143 donglim-ene.co.kr 144 www.forcebel.co.kr 145 www.kbec.co.kr 146 www.kmgreen.co.kr

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diversification, the company also focuses on the photovoltaic power generation business and intermediate treatment of waste.

Ecube Labs147 is a Korean start-up that provides smart waste management solutions to more than 100 municipalities worldwide, including in Korea, the UK, USA and France. It seeks to address inefficiencies in waste collection, such as infrequent or unnecessary collection trips, by installing ultrasonic sensors in trash bins indicating when the bin is full. Sensors transmit data in real time to a waste analytics platform, which is able to calculate the most effective route for collection vehicles, reducing costs. Ecube also offers a solar-powered trash compactor that reduces collection frequency by up to 80%.

3.4.2 EU Entry Opportunities The waste management market is slowing down in Korea especially for services for analysis, data collection, and evaluation. The construction of facilities is the fastest growing segment and could offer opportunities for European companies, since new facilities have to give attention to air/soil pollution and climate risks. Equipment and services still represent 80% of the market (EUR 2.5 billion, see Table 8. Waste management market in 2017 and 2018). Highly innovative technologies will offer opportunities to European companies. Identified key technologies in demand 148 for this sub-sector are: waste collection technologies, sanitary landfill systems, environmental monitoring and analytical equipment, sorting machines, crushing and grinding machines, materials handling equipment, collection services, containers and vehicles, waste incinerators, specialised sensors for devices in a range of settings, such as industrial facilities, waste receptacles, and energy/utility management used to provide real-time connectivity.

Policies related to hazardous waste production are becoming more and more restrictive in Korea – e.g. the mercury management – and is offering opportunities for European companies that can provide highly efficient treatment of these hazardous materials. Identified key technologies in

147 www.ecubelabs.com 148 https://www.trade.gov/

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demand are: waste handling equipment, waste treatment technologies, brownfield site remediation design and equipment, and testing and monitoring equipment.

European companies who successfully entered the Korean Waste Management Market Veolia149 (France) offers solutions and services for waste management. Veolia is specialised in the management of both liquid and solid hazardous and non-hazardous waste, and covers the entire waste lifecycle, from collection to recycling: production of energy, organic and raw materials from waste, waste plastic recycling, such as SRF production, recycling to plastic flakes, waste management and logistics for municipalities and industrial clients. This includes maintenance, cleaning, sewer cleaning, collection and transfer, sorting, treatment and recycling services for hazardous and non-hazardous waste by incineration, composting, landfilling and physical- chemical treatment or biogas generation.

TOMRA Sorting Solutions150 (Norway) provides sensor-based sorting systems for waste and other recycling applications. Tomra has opened a test centre in Korea where the company customers are invited to test their own material with TOMRA machines, providing comprehensive services for the development of potential sensor-based sorting projects. The test centre in Seoul allows a variety of different applications including both waste and metal sorting and recycling to be tested, with the sensor configuration of NIR (Near Infrared) and metal sensors. Tests are conducted by local experts.

149 www.veolia.co.kr 150 www.tomra.com

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3.5 Recycling 3.5.1 Market Overview In an effort to substantially reduce the waste generation and promote waste recycling, the Extended Producer Responsibility (EPR) system has been implemented in Korea since 2003. The EPR is a system based on the premise that the primary responsibility for waste generated during the production process and after the product is discarded, is on the manufacturer of the product. It establishes a waste management system that is recycling-focused and increases the overall rate of recycling. It requires manufacturers and importers to recycle products of certain categories, including 27 electrical and electronic devices, as well as tires, lubricant, batteries, fluorescent lamps, styrofoam float and packaging materials.

Korea is now looking to take the next step in recycling by fundamentally changing how it views its waste. A new set of laws will consider waste as an important national resource. The Promotion Law for Achieving a Resource Circulation Society 151 integrates all existing laws, taking the fundamental approach that waste needs to be used more efficiently. The law promotes the use of resource circulation products and tries to solve the dilemma that many companies face in struggling to find a market for their recycled materials. The purpose of this Act is to prescribe basic matters necessary for preserving the environment and creating a sustainable resource- circulating society, by reducing the generation of wastes to the maximum extent possible through the efficient use of resources and by decreasing the consumption of natural resources and energy through promoting circular utilisation and appropriate treatment of wastes generated.

The recycling sector was stable in 2018 compared to 2017 with a slight growth of 0.01%. The manufacturing of recyclable processed materials and recycle products is the main sub sector, occupying 78% of the market with a value of EUR 10.7 billion.

151 https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=51210&type=sogan&key=16

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Percentage 2017(A) Component 2018(B) Component Change (EUR billion) Ratio (EUR billion) Ratio (B/A-1)*100 Total 13.68 100% 13.68 100% 0.01% Manufacturing of raw materials for recycling and recycling 10.68 78.1% 10.67 78% -0.1% products Distribution of recycled 3.00 21.9% 3.01 22% 0.4% products Table 9. Recycling market in 2017 and 2018152 Household waste recycling Korea introduced a volume-based fee system in 1995. It imposes a charge for waste to the general population based on the “producer pays” principle. Food waste is separated from unrecyclable waste and collected separately so that it can be made into animal feed or fertiliser, etc. Incineration facilities provide more than the task of burning waste as they have developed advanced technologies designed to reduce negative environmental impacts to the surrounding areas. They provide energy and heat for nearby residences and companies. For example, the Nowon Resource Recovery Facility in Seoul is an incineration facility that additionally uses solar power. It takes in all the unrecyclable waste from 6 out of 25 districts in Seoul. Emissions from the incineration process go through electric precipitation, a wet scrubber, a bag filter, an SCR (selective catalytic reaction) reactor, a chimney and a DMS (dioxin monitoring system). After the waste is incinerated, it amounts for about one-tenth of the original amount. The ashes that are buried in a landfill take far less time to decompose compared with regular buried waste.153 In Seoul, recyclers separate and compress recyclables according to type and sell them for new material manufacturing. When it comes to household appliances, Korea has a system where residents must drop off electronic home appliances and big household items to a designated centre for proper disposal. Resource centres recycle these large household items and materials are sold back to manufacturers for reuse.

152 http://kosis.kr/eng/statisticsList/statisticsList_01List.jsp?vwcd=MT_ETITLE&parentId=101_E 153 www.recyclingtoday.com/article/rtge1112-municipal-recycling-seoul/

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Construction Waste Recycling The recycling rate of construction waste has increased to 97.3% in 2012, 154 thanks to the government’s recycling policy, and thus the landfill rate has been gradually decreasing. However, most of the construction waste is recycled at a low level, such as mounding and backfill, and the real recycling rate of high-value-added waste resources such as aggregates and asphalt remains at 32.3% due to negative perception and reluctance to use them.

Plastic Waste Recycling Korea is one of the world’s biggest consumers of plastic. In 2015, it consumed 132.7kg of plastic per capita, surpassing both the US (93kg ) and China (58kg). In 2016, 98.2kg of single-use plastic containers, 420 single-use plastic bags and 509 single-use plastic cups were used per capita in Korea.155

In 2018, China’s ban on imports of almost all recycled waste including plastic and paper led to a “trash crisis” in Korea.156 The country then turned to South East Asian countries to export its plastic waste. However, with regulations tightening abroad, Korea began to see trash pile up in cities. There are about 235 mountains of garbage, totalling about 1.2 million tons, across the country, according to government data.157

Over 2018-2019, the country has banned the use of single-use cups in cafes and fast-food chains and the use of disposable plastic shopping bags in supermarkets.

In January 2020, the Korean government has enforced regulations banning the usage of plastic materials difficult to recycle such as PVC and coloured PET bottles for the packaging of food and beverages. This is part of the country’s objectives of reducing its plastic waste production by 50% as well as increasing the recycling rate from 34% to 70% by 2030.158

154 This is the most recent data available based on the National Waste Statistics Survey, which is conducted every 5 years. 155 http://www.koreaherald.com/view.php?ud=20190721000041 156 In May 2018, following the China’s ban on the importation of 24 kinds of solid waste, 48 private recycling companies in Seoul and the surrounding area refused to collect recyclable plastic bags, bottles and plastic foam https://www.koreatimes.co.kr/www/nation/2018/04/371_246607.html 157 http://www.koreaherald.com/view.php?ud=20190721000041 158 http://www.me.go.kr/

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In February 2020, the Ministry of Environment (MOE) announced the implementation of a pilot project for the separate disposal of transparent plastic bottles. Separate containers exclusively for transparent plastic bottles are to be established at shared residences, while bags specifically for containing and disposing of waste plastic bottles are to be distributed for individual houses. Also being adopted is a plastic bottle collection system utilising the logistics networks of private businesses. When purchasers request bottle collection at the time of ordering water and other bottled beverages online, the seller is to collect the waste bottles while delivering new items.

Korean players Established in 2002, Greenpla Co., Ltd’s.159 business includes building plants to recycle food waste, livestock excretions, and sewage sludge based on our wastewater treatment and organic sludge recycling technology.

Established in 1999, Enbiocons Co., Ltd.160 focuses on sewage sludge recycling, food waste recycling into animal feed, household waste recycling into fuel, and livestock excrement recycling into fuel.

In 2005, Korean company Ionia E&T161 became the first company in Asia to develop automatic sorting system technology for the treatment of municipal recyclable waste. Ionia E&T’s automatic sorting system is now being utilised by about 30 recycling centres in Korea.

Insun ENT Co., Ltd.162 is specialised in the construction waste field and was established in 1997. The company commercialises systems that can recycle all kinds of wastes and practices the transportation, collection and intermediate treatment of construction waste, landfill and incineration, automobile recycling by disassembly, scaffolding structure facilities, etc.

With a yearly turnover of 18,000 tons, Samyang Corporation163 is the largest PET bottle recycler in Korea.

159 www.greenpla.com 160 www.enbiocons.com 161 ioniaent.en.ec21.com 162 www.insun.co.kr 163 www.samyangcorp.com/eng

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Korea Recycle System Co., Ltd (KRS) is a Refuse Plastic Fuel (RPF) recycler, taking refuse plastic waste and turning it into compact pieces that are burned as fuel for energy. KRS is one of the larger RPF recyclers in Korea. and recycles about 7,000 tons of household RPF waste per year.

Founded in 1972, Kumhofiber Industries Co., Ltd.164 is a leading company in the recycling industry in Korea and is involved in the recycling of waste resources such as plastic bottle waste, polyester industrial waste, etc. The company also developed a raw material production technology of high added value through the production of high-quality and low-cost plastic bottle flakes and recycling polyester staple fibre through recycling processing of waste resource based on eco-friendly treatment process.

SHENTECH Co., Ltd 165 is an environmental plant company that focuses on recycling compressors, conveyors and wind power selectors for construction waste. The company has also developed a new construction method of refuse derived fuel.

VISION RECYCLE Co., Ltd.166 was established in 2008. It develops recycling equipment and is involved in the recycling of waste wire, valuable metal, synthetic resin.

3.5.2 EU Entry Opportunities

European companies like France’s Pellenc (c.f. below) are spreading their automated sorting technologies in Korea. But despite the availability of these technologies, it is yet to be utilised on a large scale in Korea. All of the companies that currently use these kinds of machinery are government owned recycling centres, set up in big cities and recycling large quantities. The main reason lies in the size of the Korean market; as the majority of recycling companies are privately owned and small. Automated recycling technology remains inaccessible to these small companies because of the cost of complete system installation. Being able to provide cheaper technology could offer opportunities to European companies to enter this market. Other opportunities are to provide high technology systems to large private companies or government-owned recycling centres. The Korean steel market also represents a business opportunity for European companies, as it is home to the world’s fourth largest producer of steel dusts. Identified key technologies in demand

164 www.kumhofiber.com 165 www.shentech.kr 166 www.visionrne.co.kr

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for the recycling market are waste collection technologies, sorting machines, crushing and grinding machines, materials handling equipment, collection services, containers and vehicles, and recycling process expertise services.

The country’s actions to reduce plastic usage and increase its recycling rate from 34% to 70% by 2030 will offer opportunities to European companies focusing on plastic recycling.

EU companies who successfully entered the Korean Recycling Market

Abengoa167 (Spain) applies innovative technology solutions for sustainable development in the energy and environment sectors, generating electricity from the sun, producing biofuels, desalinating sea water and recycling industrial waste. In 2012, the company has entered the Korean waste recycling market by acquiring 55% of the Korean company Hankook R&M which is specialised in recycling steel dusts and has constructed a plant in the city of Gyeongju, in the south eastern part of the country. The plant has been in operation since 2013. Abengoa is responsible for operating the plant. The plant, which serves the principal steelmakers in the region, is capable of recycling 110,000 tons/year of steel dusts and uses advanced SDHL168 technology, developed and patented by Abengoa.

Pellenc ST169 (France) develops optical sorting machines for household and industrial wastes and the recycling industry. The technologies used to sort these materials are near infrared, middle infrared, vision and induction technologies. In Korea, Pellenc ST is partnering with ACI170 since 2005. With Pellenc ST’s expertise in optical sorting solutions and ACI’s dedication to systems engineering for waste sorting applications and as an integrator, the two companies offer solutions that answer the local market needs.

167 www.abengoa.com 168 www.befesa-steel.com/web/en/nuestra_tecnologia/detalle/The-SDHL-Waelz-Process/ 169 www.pellencst.com/ 170 www.acichemical.com/

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3.6 Noise Prevention 3.6.1 Market Overview Traffic noise and factory-generated vibration are managed by the Noise and Vibration Control Act under the Ministry of Environment.171 The factory noise is regulated by the emission facility reporting and permit system under this act.

Installation of any noise-emitting facility near a school, general hospital, public library, multi-unit dwelling, residential area, childcare facility, or other places where quietness is required must be permitted by the local government. Traffic noise is generated by sources such as motor vehicles and trains, which not only have very high noise levels, but also affects vast areas. Noise complaints account for the largest part of all environmental complaints.172 Recently there have been frequent incidents of noise between floors in multi-unit dwellings. Accordingly, the Ministry of Environment jointly enacted the “Control Standards on Noise between Floors in Multi-unit Dwellings” with the Ministry of Land, Infrastructure and Transport. Aircraft noise generated by airports also affects surrounding areas. Accordingly, aircraft noise limits have been prescribed in the Noise and Vibration Control Act since 1994. The Airport Noise Prevention and Areas Assistance Act was enacted in 2010 to lay the groundwork for the successful execution of noise measures projects to address aircraft noise damage.

Noise barriers have been installed to reduce the road traffic-generated noise and these have been developed in a way of changing soundproof materials. In 1998, there were only 2 km of noise barriers dispatched in the country. It reached 1,317 km as of 2011. The walls have been built at 60 locations in 2014 and the cost was estimated at USD 53.88 million. Forecasts till 2040 estimate a total of USD 998.05 million to be required for new installation.173

The Seoul government has taken a tailored approach to noise control. In 2014, Seoul installed a total of 25 noise meters, in each of the 17 large-scale construction sites of which the construction

171 eng.me.go.kr/eng/web/board/read.do;jsessionid=4xwajaJpTtkfafcnY6ejVAWvJCX3I0wPSPIHsAUrzAG9Z6lX2bs7tP1peLeIyT8Y. meweb1vhost_servlet_engine3?pagerOffset=0&maxPageItems=10&maxIndexPages=10&searchKey=&searchValue=&menuId=28&orgCd= &boardMasterId=529&boardCategoryId=&boardId=19&decorator= 172 eng.me.go.kr/eng/web/index.do?menuId=344 173 citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.683.5330&rep=rep1&type=pdf

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period is longer than two years. It has been expanded to 50 noise meters in 2015, which represents the latest data.174 Seoul is also encouraging large-scale construction sites of greater than 100,000 m2 to voluntarily install such meters. Seoul also deployed four mobile noise meter vehicles to noise sites. The vehicle equipped with scientific metering system can be dispatched to a noise site immediately when needed.

Seoul’s smart city masterplan – with smart infrastructure and smart services – is aiming for a further 50,000 IoT sensors deployed across the entire city by 2022 to monitor fine dust, wind direction, noise, vibration and floating population.175

The noise / vibrations prevention market was EUR 4.5 billion in 2018, decreasing by 4% compared to 2017, essentially due to the decrease of the manufacturing of noise / vibrations reduction devices segment (-5.1% compared to 2017). That said, this sector remains the most important occupying 84.4% of the market share.

Percentage 2017 (A) Component 2018 (B) Component Change (EUR billion) Ratio (EUR billion) Ratio (B/A-1)*100 Total 4.68 100% 4.49 100% -4% Manufacturing of Noise / 3.99 85.3% 3.79 84.4% -5.1% Vibrations Reduction Devices Construction for Noise / 0.66 14% 0.67 14.9% 1.9% Vibrations Reduction Analysis, data collection and 0.03 0.6% 0.03 0.7% 6.9% evaluation services Table 10. Noise prevention market in 2017 and 2018176 Noise barriers In Korea, noise barriers are nowadays being revamped with multiple new functions, including anti- fine dust particle and solar energy production features. The rise in the number of multi-functional noise barriers comes amid growing concerns over the unpleasant appearance of tall structures surrounding major thoroughfares, which have been repeatedly criticized by local residents for

174 seoulsolution.kr/en/content/noise-control-noise-free-seoul 175 https://www.smartcitiesworld.net/special-reports/special-reports/seoul-a-city-based-on-data 176 www.me.go.kr/

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blocking the view, as construction companies and road safety and traffic authorities try to give more purpose to noise barriers by adopting new environmental and energy technology.

In 2017, a total of 69 patent applications were filed for tunnel-type noise barriers, which can more effectively block noise and scatter dust than their predecessors, while 57 patents were filed for vegetation noise barriers, which feature plants for a more natural appearance and helping control the temperature and humidity to tackle thermal effects in the surrounding area. Another 42 patent applications were filed for noise barriers with solar panels, which can both tackle traffic noise and produce solar energy.177

Korean players Founded in 1970, Sangjin178 manufactures soundproof panels, noise barriers, acoustic insulation panels and tunnel soundproof walls. The soundproof tunnel is used when the existing noise barrier wall cannot lower the noise efficiently. The company also produces a noise interference device which can be installed at the top of noise barriers, reducing diffracted sounds

Established in 2002, Samjung Steel Co., Ltd.179 is one of the leading Korean manufacturers for noise barrier and owns more than 20 patents for technologies and design rights. Headquartered in Seongnam and with two factories in Kwangju the company proposes solutions for the noise emitted from construction sites, rails, roads or entertainment.

Founded in 1998, T-Max180 proposes environmentally friendly polyester acoustical panels which are also efficient for thermal insulation. All T-Max panels are made of 100% of pure polyester fibre, which has more advantages than traditional fiberglass cores commonly used in acoustical sound control panels.

177 http://koreabizwire.com/patent-applications-for-multi-functional-noise-barriers-on-the-rise/98938 178 www.sangjin.com/ 179 sjsteel21.en.ec21.com/ 180 t-maxkorea.com/

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3.6.2 EU Entry Opportunities The Korean noise prevention market has opportunities for EU companies. Forecasts till 2040 estimate a total USD 998.05 million to be required for new installation.181 The primarily medium level of technology development in this sector gives opportunities for EU companies which could propose highly innovative technologies to enter the Korean market.

In Korea, research and development for noise barrier technology is mostly being conducted by a limited number of specialised firms and individuals, rather than major companies, as the industry itself is relatively small. EU companies providing innovative noise barrier technologies will have opportunities in Korea.

EU companies who successfully entered the Korean Noise Prevention Market Established in 1969, Pulsar Instruments Plc 182 (United Kingdom) supplies instruments for industrial and other noise measurement applications. The company focuses on designing and manufacturing noise at work measurement instruments. Pulsar Instruments products are distributed in Korea by ECOSYSTECH CO.183

ROCKWOOL 184 (Denmark) was founded in 1909 and insulation production started in 1937. Part of the Rockwool group, RockDelta anti-vibration mats provide a highly efficient, durable and environmentally friendly solution to most of the noise and vibration problems encountered in the vicinity of rail and tram tracks. ROCKFON is a subsidiary of ROCKWOOL and produces stone wool acoustic ceiling and wall solutions for noise insulation. Rockwool has installed its products in the Tianjin Samsung Plant. The total area of this plant is 315,500 m2, and the project is considered as one of the biggest plants outside the Republic of Korea.

181 citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.683.5330&rep=rep1&type=pdf 182 pulsarinstruments.com/ 183 ecosystech.tistory.com/ 184 www.rockwool.com/

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4 Regulations & Supervision

The Environment & Water Technologies sector is governed by various Korean laws which focus on the environmental impact during the construction phase, such as the “Water Quality and Ecosystem Conservation Act”, the “Sewerage Act”, the “Clean Air Conservation Act”, the “Waste Control Act”, the “Construction Waste Recycling Promotion Act”, the “Waste Recycling Promotion Act” the “Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy”, the “Special Act on the Improvement of Air Quality in Seoul Metropolitan Area”, the “Indoor Air Quality Control in Publicly Used Facilities Act”, the “Air Quality Control in Underground Location Act” or the “Noise and Vibration Control Act”.185

The respective laws as well as rules and regulations can be found on web-pages administered by the Korea Legislative Research Center (KLRI)186 or the Ministry of Government Legislation.187 It needs to be explicitly stated that this information should be used only for reference purposes as not always changed or amended Korean laws are translated and published in time.

For government projects, the “General Terms and Conditions of Construction Contracts” published by the Ministry of Strategy and Finance (MOSF)188 serve as the general terms and conditions as for local government projects, the “General Terms and Conditions of Technical Services Contracts of Local Governments” published by the Ministry of Public Safety and Security (MPSS)189 are commonly used. There are no standardised forms of contract for private projects but the ones published by the Ministry of Land, Infrastructure and Transport (MOLIT) and the Korea Fair Trade Commission (KFTC) are normally used.

The Environmental Impact Assessment Act requires Environmental Impact Assessment for: ◼ Projects involving urban development ◼ Development of industrial sites and complexes

185 The latest updates regulations/acts can be found at the following link: http://www.law.go.kr/LSW/eng/engMain.do 186 elaw.klri.re.kr/eng_service/main.do 187 www.moleg.go.kr/english/ 188 english.mosf.go.kr/ 189 www.mpss.go.kr/en/

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◼ Energy development ◼ Construction of roads, rail, ports and airports ◼ Water resources development ◼ Development of special areas

◼ Installation of waste disposal facilities

The “Construction Waste Recycling Promotion Act” defines certain construction works in which the use of recycled aggregate or recycled construction waste is mandatory.

4.1 Wastes Control Act The Waste Control Act aims at contributing to environmental conservation and the enhancement of people's standard of living by minimising the production of wastes and disposing of generated wastes in an environmentally friendly manner.

Under this act the term "wastes" means such materials as:

◼ garbage,

◼ burnt refuse,

◼ sludge,

◼ waste oil,

◼ waste acid,

◼ waste alkali, and

◼ carcasses of animals, which cease to be useful for human life or business activities.

The chapter 2 of this act defines the discharge and the treatment of waste. In Chapter 4 of the act called “Waste Treatment Business”, it is stated that the Minister of Environment or the relevant Mayor/ Governor “shall examine a waste treatment business plan of the person who wishes to obtain a license for waste treatment business.” In chapter 5 “Guidance for and Supervision Over Waste Treatment Business Operators”, it is stated that “technical personnel who engage in a waste

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management business, technical managers of a waste disposal facility, and other persons in charge of waste management specified by Presidential Decree shall take training courses provided by an educational institution designated by Ordinance of the Ministry of Environment”.

4.2 Soil Environment Conservation Act The purpose of this Act is to prevent potential hazard to public health and environment to be caused by soil contamination, to conserve the soil ecosystem by properly maintaining and preserving soil including purifying contaminated soil, etc., to enhance the value of the soil as a resource, and to enable all citizens of the nation to live in a healthy and comfortable environment.

4.3 Noise and Vibration Control Act The purpose of this Act is to enable all citizens to live in a calm and tranquil environment by preventing any damage due to noise and vibration generated in factories, construction work fields, roads, railroads, etc. and by properly controlling such noise and vibration.

In chapter 2 of the act, “Control of Factory Noise and Vibration”, it is stated that permissible emission standards for noise and vibration emitted from a factory in which noise and vibration emission facilities are installed shall be determined by Ordinance of the Ministry of Environment. Chapter 3 refers to the control of living noise and vibration. It is stated that the Minister of Environment and the Minister of Land, Infrastructure and Transport shall jointly determine inter-floor noise standards to minimise damage to occupants and users from inter-floor noise generated in multi-unit housing. It is stated in chapter 3 “Control of Traffic Noise and Vibration” that control standards for noise and vibration produced from any means of transportation shall be determined by Ordinance of the Ministry of Environment. Standards for performance and installation of soundproof facilities and matters necessary for follow-up management, such as performance evaluation, are determined and publicly notified by the Minister of Environment.

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4.4 Framework Act on the Construction Industry The “Framework Act on the Construction Industry”190 is the overarching act to define and regulate the overall construction process starting with registration of businesses towards survey, design, execution, supervision, maintenance and management, technological management, etc. of construction works and for other matters necessary for the registration of the construction business, up to contracts for construction works.

Under this act, construction is defined as:

◼ Engineering works,

◼ Building works,

◼ Industrial equipment works,

◼ Landscaping works,

◼ Environmental installation works,

◼ Other works to install, maintain and repair facilities (including site preparation works for installing such facilities), as well as

◼ Installation and dismantling works, etc. of machinery and equipment and other structures.

In Article 5 of the act, called “Determination of Standards for Foreign Constructors”, it is stated that the Ministry of Land, Infrastructure, and Transport “…may determine standards for recognising requirements, academic background, career, etc. obtained in a foreign country with respect to construction business, if necessary for registering construction business of foreigners or foreign corporations.”

The act includes the requirement that the Ministry of Land, Infrastructure, and Transport shall publish and implement a masterplan every five years to further foster the construction industry in respect to:

190 KLRI Korea Legislation Research Institute; elaw.klri.re.kr/eng_service/lawView.do?hseq=32685&lang=ENG

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◼ Overall market development,

◼ Introduction of new technology, and

◼ Safety and quality of construction works.

In order to carry out construction works, companies must register with the Ministry of Land, Infrastructure and Transport (MOLIT).191 Registration will only be confirmed if the applicant has – among others – the technical capability, sufficient capital, as well as adequate facilities and equipment.

4.5 Approved Exporter Status under the EU-Korea FTA The 'Approved Exporter Status' is not a mandatory requirement but useful in order to help companies benefit from the preferential tariffs agreed under the EU-Korea FTA. Contrary to the situation in certain other FTAs, certificates of origin are not issued by customs authorities and the EUR 1 form is not accepted as a proof of origin. Instead, exporters have to issue an ‘origin declaration’ themselves. However, in order to be entitled to do so, they have to apply for the status of an ‘approved exporter’ with their national customs authority, unless they export consignments of products of which total value does not exceed EUR 6,000. In this case, there is no need for the exporter to be an ‘approved exporter’, as any exporter can make out the origin declaration. There is no limit on the number of consignments not exceeding EUR 6,000 which can be exported. An origin declaration has to be made out when the products to which it relates are exported, or after exportation, but no later than one year after importation into Korea and two years after importation into the EU. A declaration of origin issued after exportation should be valid, provided that the exporter has the status of approved exporter at the time he makes the declaration, even if at the time of exportation, he was not an approved exporter.

In order to become an ‘approved exporter’, companies have to make an application to the customs authorities of the Member State where they are established and keep their records. The procedures for granting ‘approved exporter’ status depend on Member State national

191 In case the company is rather providing consulting services such as engineering services, the company needs to be registered at the Ministry of Trade, Industry and Energy (MOTIE).

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provisions. Their main point is to make sure that the company knows the rules applicable and that the customs authorities will be able to verify at any time the originating status of the products for which preferential treatment has been requested. When an exporter has been approved by the customs authority, they will grant them an authorisation number which they must quote on the invoice declaration. The customs authorities carry out regular controls on authorised exporters. These controls are designed to ensure continued compliance with the use of the authorisation and may be carried out at intervals determined, if possible, by risk analysis criteria. The Korean customs authorities are not allowed to come to the premises of any EU approved exporters for control, except under very specific conditions and subject to the previous agreement by the authorities of the Member State where the control takes place; such visits must always be in the presence of EU customs authorities.

Origin declaration The request for preferential treatment under the EU-Korea FTA is made on the basis of an ‘origin declaration’. The following text (in one of the 23 EU languages or in Korean) is to be included by the exporter on an invoice, a delivery note or any commercial document which describes the products involved in sufficient detail to enable them to be identified: The exporter of the products covered by this document (customs authorisation No ...) declares that, except where otherwise clearly indicated, these products are of ... preferential origin. (Place and date) (Signature of the exporter, in addition the name of the person signing the declaration has to be indicated in clear script)

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4.6 Import Regulations The Korea Customs Service (KCS)192 is a governmental agency belonging to the Ministry of Strategy & Finance and is in charge of all related processes in respect to the import and export of goods.

The main logistics operating spots are the Incheon International Airport (ICN) for air cargos and the Busan Port on sea freights followed by Incheon Port.

The Korean government requires all importers to have either a general or specific import license. The import price used for the determination of customs duties is an adjusted transaction value that includes cost, insurance and freight (CIF) incoterm at the time of declaration. A Value Added Tax rate of 10% is applied on imports based on customs value plus duties. In 2008, Korea introduced a new system called Advanced Customs Valuation Arrangement (ACVA) which was amended in 2012 and 2015. The latest amendment in 2015, focused on a joint application related to tax (transfer pricing) and customs (import price) under the condition that the transfer pricing method and the customs valuation method must be reconcilable.193

The documents to receive import approval depend on many factors, among other types of product or country of origin. In order to import food and beverages into Korea, the authorities require following documents:

◼ General required documents: commercial invoice including, description of goods, brand name, quantity, specifications, type or model number, unit price, freight, insurance and other expenses, amount of duty reduction or exemption of duties obtained at the port of shipment, certificate of origin, packing list and bill of lading.

Goods imported into Korea for general consumption must be declared and accepted by the Korean Customs Service before being released for domestic consumption. The procedure contains the following steps:

192 http://www.customs.go.kr 193 Detailed information on Advanced Pricing Agreement (APA) and Advanced Customs Valuation Arrangement (ACVA). can be maintained from accounting or law firms

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◼ Goods are stored after arrival in a bonded area (incl. bonded transport) until customs clearance is provided

◼ Import Declaration – electronic or manual – is filed by either the broker or importer

◼ Customs review the documents and import declaration

◼ Cargo inspection is performed when considered necessary

◼ Korea Custom Service assesses the value of goods and determines payable amount; payment of duty by the importer

◼ Customs Importation Certificate is issued upon customs clearance

A certain focus needs to be put on “country of origin”. The Korea Customs Service states that the European Union cannot be considered as country of origin. The “country of origin” of goods means the nationality of exported or imported goods and also refers to the area where such goods have grown or have been produced, manufactured or processed. However, such a regional cooperative organisation as EU, NAFTA or ASEAN which is not a political and economic independent entity cannot become a country of origin of goods.

In accordance with Article 33 of the Foreign Trade Act, the Minister of Trade, Industry and Energy has announced 674 4-digit HS code items as items subject to country of origin labelling, centring on consumer goods such as agro-fishery products, food items, clothes, bags, electronics, and games among the imports and mandates labelling country of origin for establishing the order of fair trade and consumer protection.194

The “Authorised Economic Operators (AEO) programme is recognised as a long-term vision of custom authorities to reinvent their deal with trade flows and supply chain”.195 AEOs means that one custom authority recognises the AEO status granted by another country and recognises the customs security standards, risk assessment controls and control results of another country. However, mutual recognition of AEOs has not been established between the EU and Korea.

194 http://www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000001342&layoutMenuNo=21063 195 Doing Business and Investing in Korea, Samil Pricewaterhouse Coopers, April 2012

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In respect to the handling of importing goods, it is recommended to work together with a local shipping agent – although this is not required by local law. Furthermore, legal rules and regulations and the interpretation of those can change from time to time. It is advisable to review all related import requirements including certificates and documents prior to the shipment.

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5 Annexes

5.1 References Korea Water Resources Corporation (K- Greenhouse Gas Inventory & Research Water) Center of Korea (GIR) kwater.or.kr www.gir.go.kr/

Korean Ministry of Environment Korea Chemical Management Association www.me.go.kr http://www.kcma.or.kr

Korea Environment Corporation Konetic www.keco.or.kr www.konetic.or.kr

Virtual Center for Korea Environmental Environmental Information System Korea Technology Exchange www.eiskorea.org www.apec-vc.or.kr

Korea Environmental Industry and Technology Institute (KEITI) www.keiti.re.kr

Korea net – Gateway to Korea www.korea.net

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