S. Korea to pour W1,000tr into green industrial overhaul by 2035

The government plans to mobilize 1,000 trillion won ($744 billion) in investment over the next decade to transform carbon neutrality into a new engine of economic growth. The initiative aims to sharpen South Korea's competitiveness in green industries — including hydrogen-based steelmaking, next-generation solar technology and all-solid-state batteries — and propel the country into the ranks of the world's top three green manufacturing nations.

The government unveiled the strategy, dubbed "Korea Green Transformation" (K-GX), at a public briefing held Wednesday at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul.

The strategy was developed through discussions by a joint public-private K-GX task force that included the government, the Korea Chamber of Commerce and Industry, and other business and industry groups.

At its core, the plan pursues greenhouse gas reduction and industrial competitiveness simultaneously — nurturing green industries such as hydrogen steelmaking, electric vehicles, batteries and solar power while also strengthening domestic supply chains in key sectors.

The steel industry, one of the country's largest sources of greenhouse gas emissions, is a primary target for transformation. Last year, the sector provisionally emitted about 94.9 million tons of greenhouse gases, accounting for roughly 14 percent of the national total of 685.7 million tons.

The government will focus on developing hydrogen reduction ironmaking — a process that uses hydrogen instead of coal to strip oxygen from iron ore. The plan calls for securing demonstration technology capable of producing 300,000 tons annually by 2030, achieving what would be the world's first commercial-scale production, then expanding capacity to 2.5 million tons between 2031 and 2036. By 2050, the government aims to convert all domestic steel production to the hydrogen reduction method.

Through this shift, the government intends to cut carbon emissions from the steel sector while positioning South Korea to lead the emerging "green steel" market.

Industrial policies will be linked across sectors. The government has set a target for electric and hydrogen vehicles to account for more than 70 percent of new domestic car sales by 2035, and is considering offering additional subsidies for electric vehicles made with low-carbon steel — a measure designed to simultaneously accelerate vehicle electrification and boost demand for greener steel.

The government is also pursuing a plan to vary EV subsidies by region based on local renewable energy output. With a target to expand renewable energy capacity to more than 100 gigawatts by 2030, the government intends to align EV deployment policy with its renewable energy expansion goals.

South Korea's current global EV market share stands at 3.8 percent, ranking eighth worldwide; the government aims to lift that to third place by 2035. To that end, it plans to overhaul the EV subsidy framework, introduce electric fuel subsidies, expand support for converting internal combustion engine vehicles to electric, and introduce a battery leasing scheme. The plan also includes a requirement that all newly licensed corporate taxis be electric starting in 2035.

In the battery sector, the government aims to commercialize high-performance all-solid-state batteries by 2027 and cost-competitive sodium-ion batteries by 2030. It also plans to develop battery cells for use in defense, robotics and marine applications to open new markets beyond electric vehicles.

Strengthening domestic supply chains in the energy sector and high-emission industries is another central pillar of K-GX.

In solar power, the government has set a target to be the first in the world to commercialize and mass-produce tandem solar cells — which offer significantly higher efficiency than conventional products — by 2028. Domestic companies currently hold a 4 percent share of the Korean solar cell market and just 0.6 percent globally. The government aims to reach the top global market share in next-generation tandem cell technology by 2035, and plans to designate key solar power equipment as economic security items.

The government will also push to develop the small modular reactor industry. In line with the 11th Basic Plan for Electricity Supply and Demand, it plans to introduce the first innovative SMR (i-SMR) unit in 2035 and develop SMR technology for marine vessels. It will also seek to designate SMRs as a national strategic technology to expand tax incentives.

Production methods in carbon-intensive manufacturing sectors — including petrochemicals, cement, semiconductors and displays — will also be overhauled. The government plans to shift the energy source for naphtha cracking centers from LNG and byproduct gas to electricity, and will support development of blended cement technology that reduces the clinker ratio by increasing the use of supplementary materials such as steel slag.

The government will also develop low-global-warming-potential gases to replace the fluorinated greenhouse gases used in semiconductor and display manufacturing processes. It aims to secure the relevant technology for commercialization by 2040, cutting annual greenhouse gas emissions by an average of 50,000 tons.

Grid expansion to accommodate growing renewable energy output will proceed in parallel. The government plans to build out HVDC transmission lines as scheduled and replace existing lines with higher-capacity equipment to increase power transmission capacity.

Funding for the large-scale industrial transition will come primarily from fiscal spending and policy finance. The government will commit 200 trillion won in fiscal resources through 2035 and channel 790 trillion won in climate finance through five major policy financial institutions, including Korea Development Bank. Combined with additional funding sources, total investment will reach 1,000 trillion won.

The government plans to finalize a detailed issuance framework by the first half of next year and issue green government bonds for the first time in 2028. More than 50 percent of climate finance will be directed to regional areas, and more than 70 percent to small and midsize enterprises.

Tax support for domestic green industry production will also be expanded. The government plans to include key components and equipment for solar, wind and secondary battery industries in the domestic production tax credit program, with relevant legislation to be amended in the first quarter of next year.

Aging industrial complexes and climate-vulnerable sectors such as shipbuilding and logistics will receive support for the cost of upgrading preventive facilities.

The government has also set a target to identify and nurture 30 pre-unicorn companies by 2030 and produce 10 unicorn companies by 2035 in the climate technology sector. A separate pan-government plan with detailed measures to foster climate tech startups is set to be announced this month.