Environmental Technologies Industries
||Environmental Technologies Industries
|South Korea Environmental Export Market Plan|
|Chapter 8 - Environmental Engineering and Consulting Services|
Chapter 8 - Environmental Engineering and Consulting Services
The engineering and consulting services segment of Korea’s environmental market is beginning to develop as a stand-alone business category. Under Korea’s environmental laws, there are 17 business categories classified into the environment industry. Among them, business categories corresponding to the environmental engineering and consulting service are “pollution control (or environmental) engineering and construction” and “environmental impact assessment (EIA) consulting.” The ISO 14000 certification was introduced to Korea in 1996. Since then, more than 300 Korean companies have obtained this certification. Currently 9 Korean institutions are accredited to conduct environmental audits for the ISO 14000 certification, and some of them are affiliated with foreign organizations.
Each engineering and construction contractor typically provides engineering services as part of the whole environmental project it undertakes. To date, there are no foreign engineering companies licensed as prime contractors for pollution control projects in Korea. A few U.S. and European engineering companies, such as Black & Veatch, Bechtel, and Man GHH, operate branch offices in Korea. They provide environmental engineering services as part of total engineering service package on sophisticated infrastructure and plant engineering projects such as civil, power generation, and petrochemical projects.
In Korea, the pollution control industry is broken down into three sub-categories: air pollution, water pollution, and noise and vibration. According to 1998 data, there are 775 licensed pollution control contractors, of which 47 firms are registered for all the three fields. The Korean pollution control industry is dominated by general construction engineering contractors, and many of these contractors are subsidiaries of large conglomerates or chaebo such as Hyundai, Samsung, LG, SK, Kolon, Hanhwa, and Doosan. These prime contractors typically conduct sophisticated environmental projects through subcontract arrangements with specialized engineering firms and/or equipment suppliers.
Foreign environmental engineering firms and equipment manufacturers usually participate in the Korean market for environmental infrastructure and other major private projects as subcontractors to large Korean companies or as technology transferors in specialized fields of technology where Korean firms do not have adequate technology. Although foreign firms have not been well positioned as prime contractors for environmental projects, hundreds of foreign players have entered the Korean environmental market through technology transfer. By 1996, a total of 227 cases of technology transfer were filed with the government as made from foreign sources. The accumulated license fees paid to foreign licensors amounted to approximately $90 billion. In the 1990s, 13 to 36 cases of foreign technology transfer were reported to the government each year until 19951). Historically, Japanese firms have dominated Korea’s market for foreign environmental technologies through all fields, including wastewater treatment, air pollution control, and waste incineration, with an estimated share of 40 to 50 percent. The United States is the second largest source of foreign environmental technology in Korea with around 20 percent of foreign share. European technology suppliers were not active in the Korean market in the past, but they have expanded their role and market shares since the mid-1990s. The main European sources are Germany, Sweden, France, Belgium, Switzerland, Denmark and the United Kingdom. In particular, several European engineering firms have successfully entered Korea’s expanding market for municipal incinerators in recent years, while U.S. firms have not been active in this growing market segment.
Korea’s technological capability still depends largely on foreign sources, particularly in the fields of designing core equipment and parts, core end-of-pipe treatment, and preventive pollution control. The Korean environmental industry has largely focused their efforts on adopting, operating and applying foreign technologies, rather than making efforts to develop original technologies for components. The government’s efforts for the technology development has been oriented toward the environmental infrastructure construction, while advanced nations are developing next-generation technologies in the fields of environmental cleanup, restoration and recycling. Since 1992, the government has executed a comprehensive environmental technology research and development program. Under this program, 192 R&D projects were conducted by 1999, of which 51 projects resulted in commercialization. So far, this program does not seem to have been so successful in terms of actual commercialization. The Ministry of Environment is continuing various policy efforts to develop practical technologies and promote the distribution and adoption of as many new domestic technologies as possible.
Environmental Impact Assessment
Currently approximately 120 engineering or consulting firms are licensed as Environmental Impact Assessment (EIA) consultants. They also conduct environmental feasibility studies for other infrastructure projects on behalf of national, regional and local governments and other public organizations. In order to be qualified as an EIA consultant, one should register itself with one of Environment Management Offices or Regional Environmental Management Offices.
Registration requirements are technical manpower, facility and equipment, among others. In 1999, there were 143 EIA projects contracted, which were valued at $13.7 million in total. Main EIA project categories are road construction (49 projects in 1999), urban development (26 projects), tourist complex development (13 projects) port development (10 projects), industrial estate development (9 projects), sports facility construction (8 projects), railroad development (6 projects), and waste treatment facility construction (4 projects). No foreign firm has yet been licensed as an EIA consultant in Korea.
EIAs are required for 17 development categories:
- Urban development
- Industrial estate development
- Energy development
- Port development
- Road construction
- Water resource development
- Railroad development
- Airport development
- Rural residential area development
- Reclamation and land-filling
- Tourist complex development
- Sports facility construction
- Forest area development
- Designated area development
- Waste treatment facility construction
- Defense or military facility construction
- Mining of soil, stones, sand, pebbles and minerals
Environmental Audit (ISO Series)
The ISO certification system was introduced into Korea in 1993 with the Quality Management Promotion Act enacted and enforced. In 1996, the ISO 14000 certification was adopted with the Act on the Promotion of Environment-Friendly Industry Structure. Initially the Ministry of Commerce, Industry and Energy (MOCIE) was responsible for the ISO accrediation. In 1997, the accrediation role was commissioned to the Korea Accrediation Board (KAB). Currently, 31 institutions are accredited by KAB for ISO 9000, QS 9000, and/or ISO 14000 series. Among them, 9 institutions are qualified for the ISO 14000 environmental management certification. As Korea’s economy and industries depend heavily on international markets, leading Korean companies have actively adopted the ISO 14000 as well as the ISO 9000. Since 1996, KAB issued 309 certificates of ISO 14000 series by the end of 1999, and the number continues to increase.
Korea has been a production-oriented country. Products are usually defined in terms of “hardware” only, and “software” (such as technical information and services) is not regarded something that has a separate value apart from the product. Software costs are usually expected to be included in the hardware cost, and purchasers are reluctant to buy any software separately. But exceptions exist with high-tech engineering services required to design, build and operate sophisticated facilities, such as nuclear power plants, petrochemical plants, and large-scale civil and environmental infrastructures.
In spite of such constraints, opportunities for advanced U.S. environmental technologies still exist in the public infrastructure construction sector due to the shortage of highly-qualified Korean engineers. Main segments offering opportunities for U.S. engineering and other service firms include municipal incineration, hazardous waste treatment, and design of water and wastewater treatment facilities. From a long-term perspective, the Korean market offers greater growth potential with “preventive” environmental technologies, such as clean process design, ecological management and restoration, and sophisticated environmental information management systems, than “end-of-pipe” technologies in the future.
Opportunities for advanced U.S. technologies are emerging in the commercial sector as well. Many leading Korean manufacturing companies have already recognized that they need to approach their own environmental management issues in a proactive way to improve their corporate image as well as to avoid possible trade barriers related to environmental issues in major advanced international markets where more stringent environmental requirements exist. This trend will generate greater growth potential for environmental audit and management consulting services in the future.
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