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