The South Korean government on the 7th announced its “Korea-style Green Transformation (K-GX) Strategy,” which will mobilize a total of 1,000 trillion won (approximately $746.8 billion) by 2035, combining 200 trillion won (approximately $149.4 billion) in fiscal resources with over 790 trillion won (approximately $590.0 billion) in climate finance. The initiative aims to link carbon neutrality with industrial competitiveness and growth momentum, with core targets including achieving 100GW of renewable energy capacity and converting more than 70% of new vehicles to electric or hydrogen-powered models.
The strategy serves as an implementation roadmap for the “2035 Nationally Determined Contribution (NDC),” which commits to reducing greenhouse gas emissions by 53–61% from 2018 levels by 2035. The government unveiled the plan at a public briefing held at the Korea Chamber of Commerce and Industry, developed through deliberations of the public-private joint K-GX task force, headed by the Deputy Prime Minister for the Economy and involving relevant ministries, business organizations, and major industry associations.
Funding will be sourced from 200 trillion won in fiscal spending and over 790 trillion won in climate finance channeled through the five major policy financial institutions. The Climate Response Fund will expand significantly from 2.6 trillion won (approximately $1.9 billion) this year to 7.6 trillion won (approximately $5.7 billion) under next year’s government proposal. Green government bonds will see detailed plans finalized in the first half of 2027, with the first issuance targeted for 2028. To prevent climate finance from concentrating in large corporations and the Seoul metropolitan area, at least 50% will be allocated to regional areas and over 70% to small and mid-sized enterprises.
Tax incentives to drive corporate investment will also be introduced. A Domestic Production Tax Credit for solar, wind, and secondary battery core components and equipment will be established in the first quarter of 2027, while Small Modular Reactors (SMRs) will be designated as national strategic technologies to expand tax support. A transition finance framework to help high-emission industries shift toward low-carbon operations will also be activated. The plan links the Financial Services Commission’s “Transition Finance Best Practice Guidelines” with the Ministry of Trade, Industry and Energy’s “Sector-specific Carbon Reduction Roadmaps,” approving funding only for projects that demonstrate actual emissions reduction trajectories.
Fostering 10 Flagship Green Industries Centered on SMRs, Renewables, and EVs
The government has designated electric vehicles, batteries, solar power, wind power, SMRs, power equipment, power semiconductors, heat pumps, hydrogen, and carbon capture, utilization and storage (CCUS) as the “10 National Flagship Green Industries” for concentrated development.
SMRs will be cultivated as a next-generation export industry. Targeting a 40% share of the global market by 2035, the government plans to introduce the first innovative SMR (i-SMR) unit and pursue reactor type diversification. Doosan Enerbility will build a dedicated SMR foundry plant in Changwon with capacity to produce more than 20 units annually, developing the southeastern region as an SMR manufacturing hub.
In solar power, South Korea aims for the world’s top position by leveraging next-generation technologies such as tandem cells and perovskites. The goal is to achieve the world’s first commercialization and mass production of next-generation solar cells by 2028. In wind power, development of ultra-large offshore wind turbines exceeding 20MW and floating offshore wind technology will proceed through 2034. Nine additional berths for offshore wind support ports will be added, along with dedicated installation vessels for 15MW-class and larger turbines.
Renewable energy deployment will expand with a target of reaching 100GW by 2030. Starting January 2027, the Renewable Energy Certificate (REC) and spot market-centered system will shift to a competitive bidding approach, and existing transmission lines will be replaced with higher-capacity alternatives to increase grid capacity. The direct current transmission and distribution industry, which supplies electricity from renewable energy generation complexes directly to end users, will also be developed.
Electric vehicles aim to enter the global top three by 2035. Core component technologies—including rare-earth-free drive motors, batteries, and fuel cells—will be advanced, alongside the establishment of a circular resource supply chain. In batteries, all-solid-state batteries will be demonstrated and commercialized by 2027, sodium batteries by 2030, with the goal of achieving the world’s top position in high-performance ESS and EV battery markets. In semiconductors, low-temperature process gas replacement technologies will be developed, with reduction equipment commercialized by 2035. Compound power semiconductors target commercialization of core technologies from materials to devices and components by 2032, with demonstration infrastructure to be established in Busan by 2029.
Decarbonization of Five High-Emission Sectors and 220 Trillion Won in Private Investment
Five high-emission sectors—steel, petrochemicals, refining, cement, and semiconductors/displays—will accelerate the decarbonization of production processes.
In steel, hydrogen-based steelmaking will be demonstrated at a 300,000-ton scale by 2030, followed by commercialization in 2037. This will be supported by hydrogen production base construction and measures to ensure stable supply of affordable electricity contingent on corporate investment. Low-carbon and premium steel production will increase to 3.6 million tons by 2035.
Petrochemicals will develop electric furnace-based naphtha cracking center (NCC) technology by 2028, targeting commercialization by 2040. Use of bio-based and recycled feedstocks will also expand. The refining industry will scale up sustainable aviation fuel (SAF) and biodiesel production. SAF blending ratios will rise incrementally from 1% in 2027 to 3–5% by 2030 and 7–10% by 2035. Cement will increase blended cement production from the current 16% to 40% by 2035 and apply AI transformation (AX) to manufacturing processes.
In transportation, more than 70% of new vehicles will be electric or hydrogen-powered by 2035. EV subsidy reforms will account for regional renewable energy production, an eco-friendly fuel subsidy framework will be established, and electrification will extend to railways, buses, two-wheelers, construction equipment, and ships.
Private sector-led “K-GX Signature Projects” were also unveiled, with a total scale of approximately 220 trillion won (approximately $164.3 billion). POSCO Holdings (005490.KS) will build hydrogen-based steelmaking facilities and hydrogen production infrastructure in the southeastern region, fostering a steel decarbonization industrial ecosystem. Hanwha Qcells will establish perovskite tandem solar cell mass production lines in Jincheon and Eumseong, North Chungcheong Province. Samsung Electronics (005930.KS) and LG Electronics (066570.KS) will advance residential green transformation projects featuring integrated heating and cooling heat pumps.
Regional Hubs and a Just Transition
At the regional level, the government will develop representative regional GX models centered on five poles and three specializations. Naju will be developed as an energy-specialized city anchored by Korea Electric Power Corporation and Korea Institute of Energy Technology, while Jeju will pursue a carbon-neutral model converting all new vehicles on the island to electric by 2035.
To support a soft landing for existing workers during the industrial transition, “Just Transition Special Zones” will be designated within the year, along with a “2040 Coal Power Transition Roadmap” for coal plant workers and related legislation. Green remodeling of energy-intensive public buildings will become mandatory, and fossil fuel-based heating support programs will be converted to heat pump deployment initiatives.
The government will select 200 climate tech companies over four years, providing up to 10 billion won (approximately $7.5 million) or more per company for R&D, commercialization, and exports. Legal grounds will be established to apply fast-track permitting for companies holding GX core technologies, along with new circular economy regulatory special zones and climate tech regulatory exemptions. The government plans to monitor the implementation of detailed tasks and continuously refine the strategy through the public-private joint K-GX consultative body.
