Emissions Trading Scheme to Align with 53% NDC Lower Target... 5 Trillion Won Support for Climate Tech

Climate and Industry Ministries Hold Stakeholder Meeting with Industrial Sector
Additional Emission Allowances to Be Granted for Facility Expansion at Business Sites

Minister of Climate, Energy and Environment Kim Sung-hwan and First Vice Minister Geum Han-seung are talking at the plenary meeting of the Climate, Energy, Environment and Labor Committee held at the National Assembly in Yeouido, Seoul on November 14, 2025. Photo by Kim Hyun-min

In order to address concerns from the industrial sector regarding the '2035 National Greenhouse Gas Reduction Target' (2035 NDC), the government has decided to operate the Emissions Trading Scheme based on the lower-end target of 53%. The upper-end target of 61% will be achieved through non-regulatory measures. The government will also inject 5 trillion won into the development of carbon-neutral technologies.

The Ministry of Climate, Energy and Environment and the Ministry of Trade, Industry and Energy held an 'Industrial Stakeholder Meeting for 2035 NDC Implementation' at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul on November 25, where they discussed the results of establishing the 2035 NDC and support measures for the industrial sector.

The 2035 NDC, finalized through a Cabinet meeting on November 11, sets out to reduce greenhouse gas emissions by 53-61% compared to 2018 levels by 2035. The target for the industrial sector has been set at a reduction of 24.3-31.0%.

The industrial sector has expressed that the reduction targets are excessively high and burdensome, given that emission reduction technologies are not yet fully commercialized. They have also requested practical support such as tax and financial measures.

In response, the government will operate the allocation for the Emissions Trading Scheme based on the lower-end target of 53% to reduce the burden on companies to purchase emission allowances.

The Emissions Trading Scheme is a system in which the government allocates greenhouse gas emission allowances to companies, allowing them to emit within those limits. If a company emits less than its allocated amount, it can sell the surplus allowances on the market; if it emits more, it must purchase the shortfall from other companies.

The government plans to achieve the upper-end target of 61% for the 2035 NDC through non-regulatory measures, such as expanding the supply of carbon-free energy and promoting the transition of industry to low-carbon and high value-added sectors.

Additionally, to alleviate the burden on the industrial sector, the government will recognize up to 5% of external greenhouse gas reduction projects as offset credits, and allow additional allocation if facility capacity increases at business sites.

Starting next year, the Ministry of Climate, Energy and Environment will strengthen support for large-scale emission reduction projects by major emitters, and will consider introducing the Carbon Contracts for Difference (CCfD) system, which has been adopted and operated in Europe since 2027. Projects that deliver significant greenhouse gas reductions will be eligible for additional interest rate support.

The Ministry of Trade, Industry and Energy will launch a large-scale 'Industrial GX Plus' research and development (R&D) initiative, investing more than 5 trillion won in carbon-neutral technologies over nine years (2027-2035), and will support incentive-based facility replacement through auctions and agreements.

An Sechang, Director General for Climate and Energy Policy at the Ministry of Climate, Energy and Environment, stated, "The 2035 NDC is not only a reduction commitment but also a blueprint for our economic growth," adding, "We will spare no effort in providing large-scale support to ensure smooth implementation by the industrial sector."

Park Dongil, Director General for Industrial Policy at the Ministry of Trade, Industry and Energy, said, "The government will actively support the 2035 NDC so that it can serve as a turning point for our industry to transition to low-carbon and high value-added sectors."

The government plans to gather feedback from the industrial sector through a series of relay meetings by industry and establish a comprehensive 'K-GX Strategy' in the first half of 2026.