South Korea's government on 7 October unveiled the Korea Green Transformation (K-GX) strategy, a 1 quadrillion South Korean won ($747bn) plan for 2026-35 aimed at advancing the country's energy transition and decarbonisation goals.
Under the K-GX strategy, South Korea aims to decarbonise five greenhouse gas emitting sectors — steel, petrochemicals, oil refining, cement and semiconductors — develop more renewable energy, and increase electrification in the transport sector.
South Korea aims to mass produce hydrogen-reduced steel, and targets the pilot operation of a 300,000t hydrogen-based steelmaking facility by 2030.
In the petrochemical sector, the government aims to develop the technology for electric naphtha cracking, as well as increase the use of low-carbon fuels and feedstocks.
The country aims to achieve 100GW of renewable energy by 2030 and will identify locations for solar and wind power projects, as well as lower the unit cost of renewable energy generation. It also aims to upgrade power transmission networks and distribution infrastructure.
South Korea aims to raise the proportion of electric or hydrogen-powered vehicles sold to over 70pc by 2035. It aims to do this by establishing a subsidy system for sustainable fuels, and promote adoption by revising electric vehicle subsidies to account for local renewable energy production. The country also plans to conduct extensive electrification of public transport such as railways and buses.
The financing package consists of 200 trillion won in fiscal funds, and over 790 trillion won in climate finance. The country aims to expand its climate response fund to achieve this, and the institutional frameworks and detailed plans for government bonds will be established by the first half of 2027. The 790 trillion won will mainly be allocated to local governments and small and medium-sized enterprises.
The government will implement tax incentives and regulatory improvements, it said. It will also boost tax support by introducing domestic production tax credits for key components and equipment such as solar, wind and secondary batteries, and by designating small modular reactors as national strategic technologies.
South Korea in August unveiled projections for commercial renewable capacity to reach 220GW by 2040, reflecting a sharp increase in projected power demand. Solar is set to lead the expansion, with capacity expected to reach 155GW by 2040, compared with 61GW for wind.
But reaching 220GW by 2040 would be challenging, according to market participants, given renewable capacity has increased by only around 3-4GW/yr in recent years.
The rapid expansion of intermittent renewables could also place more operational pressure on power plants and increase reliance on fossil fuel generation to balance fluctuations in output.
South Korea raised coal-fired output during the peak summer demand period, although it reduced its gas-fired power generation. The higher coal-fired output was attributed to more frequent ramp-ups and ramp-downs at power plants to coincide with lower solar output days, its main generation type competitor in grid dispatch.
