Urges Government to Expand Tax Credits to Promote Carbon Neutrality Investments

[Asia Economy Reporter Jeong Hyunjin] The Federation of Korean Industries (FKI) has urged the Regulatory Reform Committee and others to urgently improve systems such as expanding tax credits to promote corporate ESG (Environmental, Social, and Governance) investments, including carbon neutrality.

On the 31st, FKI announced that it had submitted institutional improvement tasks collected from opinions on promoting ESG eco-friendly investments from K-ESG Alliance member companies to the Regulatory Reform Committee and others. The tasks proposed by FKI include △expanding tax support for carbon neutrality technologies, △establishing incentives for bio-aviation fuel suppliers and users, △including hydrogen combustion power generation projects under the Hydrogen Economy Act, △simplifying the registration of new white bio materials, △relaxing certification requirements for biodegradable plastic products, and △allowing bio-plastic certification for starch plastics, totaling six items.

The business community argues that since significant costs are involved in technology development and investment to promote carbon neutrality implementation, government support and system supplementation such as expanding investment tax credits are necessary. In particular, the Special Tax Treatment Control Act on support for core strategic technologies is scheduled to be submitted to the regular National Assembly session next month, but this bill classifies ‘carbon neutrality and bio technologies’ as new growth and source technologies with a support level one step lower than core strategic technologies such as semiconductors.

(Data provided by the Federation of Korean Industries)

FKI emphasized that "the domestic carbon neutrality industry is either at a stage before commercialization of technologies or in the early stages of facility investment, so the economic feasibility of related technologies is still low, and the outlook for value chain formation is uncertain, making it difficult for companies to actively invest," and called for a significant increase in government support levels. Specifically, it proposed upgrading carbon neutrality technologies to core strategic technologies to expand R&D cost and facility investment tax credit benefits and to expand tax support for greenhouse gas reduction or facility investments for coal phase-out.

Along with this, FKI suggested to the government the need to improve cases where the development of eco-friendly products is delayed due to complicated procedures for registration and certification. FKI argued that recently developed bio- and biodegradable plastics often have little environmental or human health hazards but still require registration under the Chemical Substances Registration and Evaluation Act (Chemicals Control Act), hindering technology development. FKI stated, "In a situation where the global white bio market competition is fierce and commercialization is urgent, there is a risk of missing the timing due to registration procedures," and proposed that "small quantities of bio-based or biodegradable plastics and other eco-friendly white bio products should be exempt from registration under the Chemicals Control Act."

Furthermore, regarding thermoplastic starch (TPS), FKI argued that although it has been commercialized in the European Union (EU) after proving biodegradability, it is difficult to obtain certification as a biomass synthetic resin product domestically, so related certification requirements and procedures need to be eased.

This content was produced with the assistance of AI translation services.