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Industries balk at government's new climate goals, citing financial pressures and China

Published: 06 Nov. 2025, 18:09 Updated: 06 Nov. 2025, 18:46

A Posco steel mill in Pohang, North Gyeongsang [POSCO]

Korean industries are pushing back against the government’s new climate goals, citing mounting pressures from Chinese competition, U.S. tariffs, rising electricity rates for industrial use — and now, climate-related regulatory risks.

At the heart of the backlash is the government’s newly proposed national greenhouse gas reduction target, known as the nationally determined contribution (NDC), for 2035, unveiled Thursday during a public hearing at the National Assembly by the Ministry of Climate, Energy and Environment. The plan calls for cutting greenhouse gas emissions by “at least 50 percent” compared to 2018 levels.

Industry representatives had called for a lower threshold of 48 percent, saying they were not adequately prepared. But the government maintained its position, citing the need to confront the global climate crisis.

Industry groups say the targets ignore current technological limits and the real-world competitiveness of Korea’s export-led economy. “Increased reduction targets mean production must be cut,” said one source, “which leads directly to profit losses, job cuts and weakened competitiveness.”

To maintain production while reducing emissions, companies would need to adopt new technologies — but the necessary infrastructure is not yet in place.

The steel and petrochemical sectors, already undergoing restructuring, expressed deep concern. The steel industry argued that the government based its targets on hydrogen-based steelmaking — a technology still in the development stage — making the goals unrealistic. “Commercialization of hydrogen-based steelmaking is projected for 2037,” said Nam Jeong-im, director at the Korea Iron and Steel Association. “The government failed to factor in the timeline for technological readiness.”

The petrochemical industry says it lacks the capacity to invest in large-scale, environmentally friendly facilities. Technologies like electric furnaces and methane pyrolysis processes are only expected to be viable after 2030, and their production costs are two to three times higher than current methods. Jo Young-jun, director of the Sustainability Management Institute at the Korea Chamber of Commerce and Industry (KCCI), said, “The government needs to share the risks to ensure companies can continue investing in innovation.”

The city of Pohang, with the Posco steel mill in sight, is seen on a cloudy day on July 31 in North Gyeongsang. [NEWS1]

The semiconductor sector, one of Korea’s key industries, consumes more energy than most. With limited renewable energy infrastructure, industry representatives warned that achieving the NDC could threaten their global competitiveness. Small and mid-sized enterprises in particular face an uphill battle. Unlike large conglomerates, they have fewer resources, and many may suffer from the emission reduction responsibilities passed down from larger companies.

Companies that fail to meet reduction targets will be forced to purchase emissions credits — another financial burden. According to the KCCI and eight other trade groups representing sectors including steel, chemicals and cement, the additional cost of emissions permits during the fourth emissions trading plan (2026 to 2030) could total 5 trillion won ($3.5 billion).

Environmental regulations aligned with the NDC are also raising alarm. The auto industry objected to the government’s goal of having between 8.4 million and 9.8 million zero-emission vehicles — electric and hydrogen — on the road by 2035, representing 30 to 35 percent of all cars. Automakers say this effectively phases out internal combustion engines. Meeting the target would require 93.8 percent of all vehicles sold in 2035 to be zero-emission, they claim.

“About 45 percent of the roughly 10,000 auto parts suppliers in Korea still produce parts for combustion engines,” said Kang Nam-hoon, head of the Korea Automobile and Mobility Association. “Rapid regulation could only accelerate the influx of Chinese electric vehicles.”

The airline industry, meanwhile, is bracing for the mandatory introduction of sustainable aviation fuel (SAF), officially announced in September. SAF — made from used cooking oil and household waste — is environmentally friendly but costs about 2.5 times more than conventional jet fuel.

“Companies must now take responsibility for having prioritized profits over climate action,” said Yoo Seung-hoon, an energy policy professor at Seoul National University of Science and Technology. “Still, given the manufacturing-heavy structure of Korea’s economy, rapid adaptation is difficult. The government must reposition emissions reduction as a national industrial strategy and offer both financial and technological support to businesses.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM KI-HWAN, LEE SU-JEONG [[email protected]]