Gov’t, companies to invest 94 trillion won in carbon neutrality

The Korean government and private companies said they will invest 94 trillion won (about 79.5 billion U.S. dollars) toward carbon neutrality in the energy sector through 2025.” The government will designate areas that are expected to face a crisis due to carbon neutrality as “special districts of righteous transition,” and provide generous assistance. The industrial sector has criticized that the government is making excessive demand to industry but failed to present estimated costs involved and specific alternative measures.

The government held a strategy briefing session with invited leading industrial companies in carbon neutrality at the presidential office on Friday and announced its vision for ‘great transition to carbon neutrality in the industrial and energy sector.’ The event took place to mark the first anniversary of the government’s proclamation of Korea’s carbon neutrality. The government and private companies will invest 94 trillion won through 2025 to secure carbon neutrality in the energy sector. The government plans to pump in 61 trillion won (about 51.6 billion dollars) of the total. The government will spend the investment in a Green New Deal that aims to transition urban, spatial and living infrastructure into eco-friendly one and to spread low-carbon energy.

The government will also put in place financial and taxation support. It will increase the number of items entitled to tax deduction for investment in R&D in new growth and fundamental technology from 13 to 59. Conglomerates and larger companies will be entitled to tax deduction of up to 30 percent and 40 percent, respectively. A financial assistance package worth 35 trillion won (about 29.6 billion dollars) will also be introduced to provide low-interest loans to companies pursuing carbon neutrality. The government will increase its R&D investment in carbon neutrality to 408.2 billion won next year, almost double the amount for this year.

The government will increase assistance to industries and regions that are expected to face difficulties due to transition to carbon neutrality. It will provide assistance to conventional gas stations to support their transition into eco-friendly energy superstations. Areas that are expected to experience seismic changes including reduction of jobs will be designated as “special districts of righteous transition.” Specific measures will be devised after relevant laws are take effect in March next year.


Teuk-Gyo Koo kootg@donga.com