South Korea’s industry ministry said it will provide nearly KRW 300 billion (US$220 million) in low-interest loans to 16 companies investing in carbon reduction facilities and research, as part of efforts to accelerate the country’s green industrial transition and meet future emissions targets.
South Korea, home to major exporters such as Hyundai Motor, POSCO, and Samsung Electronics, has pledged to reach net-zero emissions by 2050 but continues to face criticism for its reliance on coal and slow rollout of renewable energy.
The loans, offered under the Carbon Neutral Transition Leading Project Loan Support Scheme, will go to firms in energy-intensive sectors such as refining, shipbuilding, and hydrogen. Beneficiaries include S-Oil, Hanwha Ocean Ecotech, HD Hydrogen, and SK Plug Hybus, the Ministry of Trade, Industry and Energy (MOTIE) said in a statement on 6 November.
Each project can borrow up to KRW 50 billion (US$34 million) at a 1.3 per cent interest rate with repayment terms of up to 10 years, including a three-year grace period.
Since 2022, the ministry has approved 95 projects under the loan scheme, providing roughly KRW 800 billion (US$550 million) in public financing and helping attract a combined KRW 34 trillion (US$23 billion) in corporate spending related to carbon neutrality, MOTIE said.
Park Dong-il, director-general for industrial policy at MOTIE, said the new round of funding was “timely”.
“We urge industries to take the lead in advancing low-carbon, high-value transformation so that Korea’s green transition can gain speed,” he said.
Draft NDC
The latest announcement comes as South Korea prepares to unveil its 2035 Nationally Determined Contribution (NDC), a new mid-term emissions reduction target under the Paris Agreement.
The country’s ruling Democratic Party and the government have agreed to set a new 2035 national greenhouse gas reduction target of 53 per cent to 61 per cent below 2018 levels.
Industrial emissions account for nearly 38 per cent of South Korea’s total carbon output, according to government data.
The party said the decision took into account recommendations from the Intergovernmental Panel on Climate Change (IPCC), a recent Constitutional Court ruling, and domestic industrial conditions.
The move reflected the administration’s determination to show the world that its climate commitments are bold and credible, said Park Soo-hyun, the Democratic Party’s chief spokesperson.
“It was set to express the government’s strong will and direction,” he said during a media briefing on 8 October.
Responding to concerns from industry that the new plan might undermine the country’s economy, Park said the target may appear “somewhat excessive”, but setting ambitious goals now could reduce the burden on future generations.
The Korean Nuclear Society, for instance, warned that South Korea’s proposed greenhouse gas reduction target could weaken the country’s industrial competitiveness, saying it lacks a realistic plan to ensure stable and affordable power.
In a statement, the group said the draft NDC focuses on large-scale industrial electrification without presenting a viable energy supply strategy. It criticised the absence of nuclear power from the plan’s power-sector roadmap, calling it “unscientific and unrealistic”.
To ease the transition for businesses, the government and ruling party also agreed to prepare additional support measures for the emission-intensive sector, according to the Democratic Party.
They plan to take into account the challenges faced by South Korea’s manufacturing-heavy economy and the feasibility of carbon-reduction technologies, while easing reduction burdens on industry.
The two sides also said they would establish a new “K-GX Green Transformation Strategy” to support companies’ decarbonisation efforts and nurture green industries.
The plan will include measures to minimise the social and regional impact on coal power plants, internal combustion vehicle manufacturers, and affected workers and communities, said the party, without elaborating.
The final 2035 NDC will be reviewed by the 2050 Carbon Neutral Green Growth Commission and approved by the Cabinet before being submitted to the United Nations this week.
