"US·EU Carbon Regulations Deal Direct Blow to Korean Steel Industry"… Public and Private Sectors Seek Breakthrough

KCCI and Ministry of Industry Joint 'Carbon Neutral Policy Council'
Companies Request "Government Support for Hydrogen Reduction Steelmaking"
Government Tax and Loan Benefits, Support for Data Platform Development

In anticipation of the U.S. Clean Competition Act (CCA) and the European Union (EU) Carbon Border Adjustment Mechanism (CBAM), the public and private sectors have jointly begun preparing countermeasures. It is expected that major Korean manufacturing industries, such as steel, will suffer significant impacts once major countries implement carbon regulations.

On the 29th, the Korea Chamber of Commerce and Industry (KCCI) announced that it co-hosted the first "Industrial Sector Carbon Neutrality Policy Council" with the Ministry of Trade, Industry and Energy at the KCCI building in Jung-gu, Seoul. The meeting was attended by Park Il-jun, Vice Chairman of KCCI; Lee Seung-ryeol, Director General of Industrial Policy at the Ministry of Trade, Industry and Energy; Byun Young-man, Executive Vice President of the Korea Iron & Steel Association; and industry executives and experts including Kim Hee, Executive Director of POSCO Holdings.

An official who attended the meeting said, "In addition to achieving the 2030 Nationally Determined Contribution (NDC) for greenhouse gas reduction, there is an increasing demand for managing and reducing carbon emissions from global carbon regulations and global companies' suppliers." He added, "Especially in the steel and aluminum sectors, which are major target products of the EU's CBAM and also subject to the U.S. Clean Competition Act, urgent countermeasures are needed."

CBAM, which will be fully implemented from 2026, is a system that imposes carbon costs on EU-exporting companies based on the amount of carbon emissions generated during the production process of their products. It applies to six items: steel, aluminum, fertilizer, hydrogen, cement, and electricity.

The CCA, expected to be implemented from next year, imposes a carbon adjustment tax of $55 (approximately 73,000 KRW) per ton on emissions exceeding the average carbon intensity standard of U.S. products for 12 products including steel and aluminum imported into the U.S.

First, the industry proposed support for hydrogen-based direct reduction steelmaking in the steel industry. The steel industry is known as a high carbon-emitting sector due to heavy use of coal and electricity in blast furnace and electric furnace processes. As of 2018, greenhouse gas emissions from the steel industry amounted to 101.2 million tons, accounting for 14% of the nation's total emissions and 39% of the industrial sector's emissions.

The EU supports up to 60% of transition costs. Japan provides 450 billion yen (approximately 4.15 trillion KRW) in technology research and development (R&D) support, 3 trillion yen (approximately 27.7 trillion KRW) in decarbonization demonstration and facility transition support, and tax credits. It also supports facility operating costs of 20,000 yen (approximately 184,500 KRW) per ton of "Green Steel" sold.

Executive Director Kim said, "If hydrogen-based direct reduction steelmaking technology, which drastically reduces carbon emissions, is developed and commercialized, the reducing agent separating oxygen from iron ore must be changed from coal to hydrogen, requiring 3.7 million tons of green hydrogen annually and an additional 4.5 GW of carbon-free electricity." He emphasized, "The government must ensure a steady supply of green hydrogen and carbon-free energy."

There was also a call to consider the pace of technological innovation in establishing the 2035 national carbon reduction target (NDC). Jung Eun-mi, Head of the Industrial Research Institute, said, "For the sustainable growth and leap of the domestic steel industry, the commercialization of hydrogen-based direct reduction steelmaking technology and innovative electric furnaces must be urgently promoted." She added, "The establishment of the 2035 NDC should be pursued with a thorough review of conditions such as the speed of technology development, carbon-free energy, and steel scrap supply."

In response, the government proposed solutions through financial support and the establishment of a carbon neutrality platform. Director Lee said, "The government will strengthen support for core technology development in the steel sector as well as tax and loan assistance." He added, "We will promptly establish an industrial supply chain carbon neutrality platform that allows carbon data exchange among supply chain companies to actively support carbon neutrality in the steel and aluminum industries."

Vice Chairman Park said, "Companies that aim to lead carbon neutrality need full government support so that their enthusiasm is not dampened by future uncertainties and investment risks." He added, "Starting with the steel and aluminum sectors, we will check the implementation status of carbon neutrality in 11 key industries including semiconductors, displays, petrochemicals, refining, batteries, and automobiles, and seek ways to strengthen competitiveness."

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