Seoul City Takes Action on Carbon Border Adjustment Mechanism, Reviews ESG Policy Directions

Mandatory Carbon Border Adjustment Mechanism in 2026
Seoul Institute Hosts 'Seoul ESG Management Forum'
Promoting 'Carbon Neutral Basic Plan' Including Climate Tech

Seoul City has begun preparing responses ahead of the mandatory implementation of the European Union (EU)'s Carbon Border Adjustment Mechanism (CBAM). As Seoul City promotes ESG (Environmental, Social, and Governance) management, it plans to proactively review various policy support measures for related organizations and companies within the so-called carbon border tax impact zone.

According to Seoul City on the 7th, the Seoul Institute will hold the 'Seoul ESG Management Forum' on the afternoon of the 8th at the Korea Press Center in collaboration with the Society for Sustainable Management. The forum aims to discuss response measures to the mandatory implementation of the EU's CBAM in 2026 and to explore ESG policy directions that resonate with citizens.

The Carbon Border Adjustment Mechanism is a system that imposes and collects carbon prices equally on products imported into the European Union from outside regions. Companies exporting six items, including steel and aluminum, to the EU must mandatorily report the greenhouse gas emissions generated during the product manufacturing process through EU importers. This system acts as a kind of tariff that charges costs equivalent to the amount of carbon emissions. During the transition period until next year, only emission reporting is required, but with full implementation in 2026, emission verification and the obligation to purchase and submit CBAM certificates will be added.

Although some criticism points to a somewhat delayed response, the government appears to be actively addressing the issue. In June, a delegation was sent to the EU Commission to deliver the Korean government's position and engage in discussions related to CBAM. It is reported that the government emphasized that CBAM should operate without discriminating against non-EU companies and conveyed domestic industry concerns regarding certificate requirements and related matters.

Seoul City also intends to use this opportunity to explore ESG policy directions aligned with CBAM. The purpose is to anticipate and consider factors and mitigation measures related to the burdens that local governments and companies will face due to the mandatory implementation of CBAM. The forum will cover not only the current status of CBAM and comparative analysis of overseas responses but also ways to activate climate tech.

Seoul City itself is promoting the 'Seoul Carbon Neutral Green Growth Basic Plan,' which aims to reduce greenhouse gas emissions in the Seoul area by 50% compared to 2005 levels by 2033. This includes ▲decarbonization of buildings through total greenhouse gas management ▲traffic demand management and expansion of eco-friendly vehicles ▲transition to clean energy suitable for urban spaces ▲citizen-led participation in the establishment and implementation of carbon-neutral policies. Additionally, a process has been established where citizen evaluation groups and citizen committees assess the implementation of carbon-neutral policies.