Korea environment ministry’s net zero 2024 budget falls

South Korea's environment ministry has announced a higher budget overall for 2024 at 14.4 trillion won ($10.9bn), up by 7.3pc from this year, although funding allocated to energy transition slipped.

It said on 29 August the 2024 budget will focus on preventing floods, fostering green industries and supporting carbon neutrality, as well as protecting the environmentally vulnerable and improving public environment services. Of the total budget, funds allocated to energy transition funds were W3.686 trillion or about 25.5pc, according to Argus calculations based on ministry data.

This marked a slight drop of 4.4pc from the W3.854 trillion the previous year, despite the addition of two new funds — a W5bn fund for research and development related to improving secondary battery recycling and a W60bn fund to support green infrastructure exports. This came as the ministry appears to focus more on developing "green growth engines", in a move that will also bolster the domestic economy.

Most energy transition funds received an increase, with the ministry planning to provide more financial support to developing environmental industries and domestic companies' overseas expansions into green industries.

The support to commercialise environmental enterprises includes the creation of green clusters, with it allocating W1.2bn for this purpose next year. The ministry is considering Gumi city, Gyeongbuk province, Haenam county, Jeonnam province, Boryeong city and Chungnam province as potential locations, with three locations to be selected after surveys.

The ministry plans to raise W300bn in government funds and W100bn in private funds over 2024-28 to help finance overseas investment companies related to carbon neutrality and the circular economy. This translates to the government investing W60bn/yr. Such companies include those involved in waste plastic pyrolysis, waste battery recycling, renewable energy and power generation.

South Korea also signed an initial agreement with Oman to achieve carbon neutrality and promote green industries, the ministry said on 28 August. The agreement involves South Korean companies building green hydrogen infrastructure, hydrogen charging stations and expanding hydrogen commercial trucks in Oman.

Funds to support environmental industry exports increased to W32.8bn in 2024, up by almost 60pc from W20.7bn, with a more than twofold increase in the Green Official Development Assistance (ODA) budget to W30.1bn. The country will also continue expanding charging infrastructure, including the introduction of about 20,000 new portable and fire-preventive EV chargers. The ministry raised funding for this by 42pc from W518.9bn to W734.4bn. The ministry is also more than doubling funds provided to international greenhouse gas reduction projects to W23.6bn.

Funding cuts

But increases in these funds could not offset the lower amounts allocated to the supply of zero-emissions vehicles and carbon-neutral facilities.

South Korea is aiming for a supply of about 306,000 zero-emission vehicles in 2024, comprising 295,000 electric vehicles (EVs) and 10,750 hydrogen vehicles, in line with goals to achieve 4.5mn units of such vehicles by 2030. But funding for this will drop by 6.5pc to W2.4 trillion from W2.57 trillion in 2023, marking a drop of W166.4bn, while financial support for carbon-neutral facilities will drop by 8pc to W127.7bn.

South Korea previously in May released plans to extend investment tax credits to EV and hydrogen technology and facilities, which came after the Korea Automobile Industry Association in March called for more EV incentives to support the domestic industry.

But the Korea International Trade Association has urged the country to allocate more funds towards hydrogen transportation solutions, saying that there is a gap in infrastructure development and that the country lacks "technological prowess".

By Tng Yong Li