Government Provides Large-Scale Loans for Carbon Neutrality Investments... 450 Billion Won Requested This Year

Chimney of the combined heat and power plant in Mokdong, Yangcheon-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] The government will provide large-scale loans to support corporate investments in carbon neutrality starting this year.

The Ministry of Trade, Industry and Energy announced on the 27th that 51 companies applied for the '2022 Carbon Neutral Transition Leading Project Loan Support Program.' This program was newly established by the government this year to provide long-term, low-interest loans for investments in carbon-neutral facilities and research and development (R&D).

The scale of carbon-neutral investments submitted by the 51 companies amounts to 1.7 trillion KRW. According to the Ministry, these 51 companies applied for loan support worth 447.2 billion KRW to carry out carbon-neutral transition projects totaling 1.6668 trillion KRW over three years from this year to 2024. Facility investments accounted for about 87% (387.4 billion KRW) of the total application amount, while R&D investments made up the remaining 13% (59.8 billion KRW).

Notably, 96.1% (49 companies) of the applicants were small and medium-sized enterprises (SMEs) and mid-sized companies. SMEs and mid-sized companies applied for loan support worth 374.6 billion KRW, accounting for 83.8% of the total application amount.

By project type, sectors with high greenhouse gas emissions such as resource circulation and steel, as well as the carbon capture, utilization, and storage (CCUS) field, accounted for 64.7%. The Ministry explained that SMEs and mid-sized companies are accelerating carbon-neutral investments focusing on areas with significant greenhouse gas reduction effects.

The Ministry of Trade, Industry and Energy believes that the loan program can serve as a catalyst to increase growth opportunities for new industries related to carbon neutrality. It also has the advantage of minimizing the risk burden for investment companies leading the carbon-neutral transition.

The Ministry is currently conducting suitability reviews for the 51 companies that applied for the program. After completing the suitability review, a technical evaluation will be conducted. Subsequently, the evaluation results will be submitted to the loan program review committee to select some leading projects. The Ministry plans to finalize the loan support amounts for the projects by the end of next month.