1. Korean policy for NGV Promotion Clean Gas! Clean Drive! Clean Life! Deputy Director Kuk. Hyun Soo Environmental Transportation Division Ministry of Environment, Republic of Korea

2. Korean policy for NGV Promotion 01 Background 02 Progress 03 Policy Achievements 04 Government Support 05 Future Direction Contents Korean policy for NGV Promotion

3. Korean policy for NGV Promotion Increasing Number of Vehicles in Korea Need for responding to the increasing demand for automobiles Increasing car ownership with economic growth - 130K cars in the 70’s → 19.40 million cars by the end of 2013 Background Deepening problems of air pollution such as PM Seoul : 71 ㎍ / ㎥, London : 20 ㎍ / ㎥, Tokyo : 40 ㎍ / ㎥ 3

4. Korean policy for NGV Promotion Characteristics of Metropolitan Air Pollution Main Sources of air pollution (PM10) in Metropolitan Area PM10 emission by vehicle type in the Road Traffic Sector * Source: National institute of Environmental Research(2010) 4

5. Korean policy for NGV Promotion Main Policy Measures for Addressing Air Pollution Strengthening Emission Standard Promoting Low Emission Vehicles Adopting Global Standards ※ EURO 5, SULEV Electric Vehicle Hybrid Car Natural Gas Bus Retrofitting Existing Vehicles Emission Reduction Equipment (DPF) Natural Gas Bus is the most cost-effective method for reducing PM 5

6. Korean policy for NGV Promotion Lower emission of harmful exhaust gas (compared to diesel) - Exhaust (PM): 100% reduction - CO: 90.6% reduction - NOx: 38% reduction - HC: 64.6% reduction Characteristics of Natural Gas Vehicles! Already commercialized engine technology 19 million NGV in the world (as at Jan. 2014 – The GVR) Lower price compared to other fuels (based on natural gas buses; savings of 58K US$/year) Low carbon content allows reduced CO2 emission CO2 Emission Factor (LNG : LPG : Diesel = 100 : 113 : 132) Clean Practicality EconomicLow Carbon Characteristics of CNG BUS 6

7. Korean policy for NGV Promotion Emission from NGV Emission from Diesel and NGV Bus 7

8. Korean policy for NGV Promotion CNG Vehicles Worldwide More than 19 Million NGVs operating globally (Jan. 2014) Argentina Brazil India Korea China Pakistan Iran Italy Iran 3,500 K China3,000 K Pakistan2,790 K Argentina2,288 K Brazil1,753 K India1,800 K Italy 823 K Colombia 457K Thailand 422 K USA 250 K Korea 35 K : : Total 19,820K * Source : The GVR (The Gas Vehicles Report) 8 US A Colombia Thailand

9. Korean policy for NGV Promotion G7 Project : Develop CNG Bus (MOE, MOKE, MOST) Pilot Operation of CNG Bus 「 Clean Air Conservation Act 」 amendment Establish a legal basis upon NGV supply Beginning of CNG Bus Supply 「 Special Act on Metropolitan Air Quality Improvement Act 」 enact Obligation of Low Emission Vehicles Beginning of Mass Production for CNG Waste Truck and Supply Extend the type of vehicles to intercity bus/airport shuttle bus/commute bus/school bus Set the CNG Hybrid Bus supply plan Planning Test Drive(11.7) Organize "Eco Friendly Vehicle Development Agency" Research on HCNG, CNG Hybrid Bus Technology and Infra CNG Hybrid demonstration project Progress Major Progresses 9 ’92~’98 ’99.4 ’00~ ’03.12 ’05.07 ’04~’06 ’10.1 ’11.6 ’12.7

10. Korean policy for NGV Promotion Growth of Natural Gas Bus Distribution The Natural Gas Bus Supply Project helped improve the atmospheric environment of Seoul and reduce pollutant emission. Environment Improvement Benefit : 1,466M US$ Job Creation & Increase of Export Amount : 1,017M US$ ('05~'11, for 7yr) Improvement in fine dust conditions (PM10) in Seoul Reduction in pollutant emissions ('00~'08) Achievements PM 7,794 tons NOx 190,126 tons CO 74,236 tons 10 34,297 42

11. Korean policy for NGV Promotion Subsidies for Purchases (State /Local Funding : 50% each) - Large Size Bus : 17K US$ - Medium Size Bus : 14K US$ - 11ton Street Sweeper : 37K US$ - 5ton Street Sweeper : 24K US$ Subsidies for CNG Bus Purchases 5-year and 10-year repayment period with variable interest rate Loans for CNG Station construction Maintain over 0.06 US$/ ㎥ price difference from diesel Fuel Cost Assistance CNG Station : Corporate Tax ($17,849/station) Tax Exemption Natural Gas Bus Support Policy Basis on : Atmospheric Environment Preservation Act Government Support 11 Loan Size varies according to type - Fixed Station (625K US$) - Mobile Station (178K US$) Vehicle : VAT, Acquisition Tax,Tariff ($13,976/bus)

12. Korean policy for NGV Promotion Accounting : Special Account for Environmental Improvement - Purpose : expand investments in environmental improvement - Funding : environmental improvement charges, waste charges, etc. Period : ‘00~ ‘13 Amount : 447M US$ Conditions : Matching Fund (State/Local Funding : 50% each) Implemented by : Ministry of Environment/local governments Period : ‘00 ~’13 Amount : 234M US$ Condition : 5year deferment, 10years amortization Implemented by : Ministry of Environment Purchase/ Fuel Cost Loan For CNG Station Support Amount : 681M US$ (’00~’13) Scale of Government Support 12

13. Korean policy for NGV Promotion Planning & support of CNG Bus Promotion CNG Bus Safety Management CNG Station Safety Management Clean Air Conservation Act Special Act on Metropolitan Air Quality Improvement Automobile Management Act / enforcement decree / enforcement rules Automobile Safety Standard Rules High Pressure Gas Safety Control Act / enforcement decree /enforcement rules Technology Standard (KGS CODE) Major NGV Regulations 13

14. Korean policy for NGV Promotion EURO VI standard has come into effect. Diesel cars from 2014, CNG buses from 2013. GHG restriction starts from 2015 allowing 140g/km with 17km/ℓ fuel efficiency. The HCNG technology is considered as the next generation technology applicable to natural gas vehicles, which can result in better fuel efficiency and lower GHG emissions. Future Directions for Natural Gas Bus Low Emissions LNG/CNG Low Emissions+ Low CO 2 CNG Hybrid/HCNG Near Zero Emissions ? Future Directions HCNG Natural Gas + Hydrogen(20~30%) mix Increased thermal efficiency and GHG reduction with combustion stabilizing CNG Hybrid Natural gas + electric energy Recovers and reuses energy during deceleration Fuel efficiency potential: more than 30% 14

15. Korean policy for NGV Promotion Over 30% Fuel Efficiency increase and GHG Reduction is expected Pilot Project & Evaluation (’11~’12) Pilot Project for Running Performance Evaluation Pilot Project : Targeting on nationwide Metropolitan Area Support Scale : 36K US$ Purchase Subsidy (per unit) -Total price is estimated to be 58K US$ higher than CNG Bus Phased Promotion ( ’13~) Establish Stable Supply System with price reduction For Replacement/Dismantlement of urban Diesel/CNG Bus Supplied 34 CNG Hybrid Buses by the end of 2013 Full-scale promotion in 2014 with 300 target supply CNG Hybrid Bus Promotion 15

16. Korean policy for NGV Promotion HCNG Bus reduces 11.3% of CO2 and 55.4%(max.) of CO compare to CNG Bus Pilot Project & Evaluation (’11) Promote Pilot Project for Evaluation of Running Performance Pilot Project : Test Supply for 30buses in Metropolitan Area Support Scale : 36K US$/Unit Purchase Subsidy - Purpose : expand investments in environmental improvement Pilot Project & Evaluation (’11) Establish Stable Supply System with price reduction, Phase in Target : Diesel/CNG Urban Bus Replacement Support Scale: Considering 27K US$/Unit Subsidy after ‘13yr Technological Development (’09~’15) HCNG Engine Commercialization Technology Development (’15) Eco-Friendly Vehicle Dev. Project (’11.6~’16.5) : Engine/Infra. building Method for building Infra. with existing CNG station utilization(KOGAS) Examine related law and Regulation for HCNG Supply Demonstration Project (’16) HCNG Demonstration Project (’16) Establish Govt. Promotion Policy through evaluation of the Pilot Project Test operation of Hydrogen reforming equipment on existing CNG Station Phased supply of HCNG Bus from 2017 HCNG Bus Promotion 16

17. Korean policy for NGV Promotion Thank You