JIPYONG LLC

Jipyong News|KOREA LEGAL INSIGHT

Implications of South Korea’s New Climate Crisis Bill

2021.02.15

1. The New Climate Crisis Bill proposed by the Korean Government 
 
In his policy speech on October 28, 2020, President Moon Jae-In announced that the Korean government would be investing KRW 8 trillion in Korea’s Green New Deal with the goal of achieving carbon neutrality by 2050. Since the announcement, bills and policies in support of the Green New Deal have been introduced, including the following four bills: a Framework Act on the Implementation of a Decarbonized Society to Address Climate Crisis, a Special Act on Promotion of Green Finance to Address Climate Crisis, an Act on Climate Crisis Response, and a Framework Act on Climate Crisis Response.1 
 
Of the proposed bills, the “Framework Act on the Implementation of a Decarbonized Society to Address Climate Crisis” (the “Green New Deal Act”) proposed by Assemblywoman Soyoung Lee on November 11, 2020 deserves particular attention as it will replace the current Framework Act on Low Carbon, Green Growth and will take precedence over other laws introduced to respond to climate emergency and to achieve carbon neutrality. 
 
 
2. Legislative Efforts to Achieve Carbon Neutrality by 2050 
 
According to the Green New Deal Act, the government should: (i) by 2050, achieve carbon neutrality with a net national greenhouse gas emission of zero; and (ii) by 2030, achieve greenhouse gas emission targets (Articles 10(1)-(2)). Carbon-neutrality targets should be reviewed every five years and the greenhouse gas emission targets should be reviewed annually, in each case in line with the principle of progression beyond previous efforts under the Paris Agreement (Article 10(3)). The principle of progression beyond previous efforts requires countries to present targets that are more advanced than previous levels when submitting their next reduction targets. 
 
To this end, the government must establish and enforce “national strategies” such as policy objectives, driving strategies and key projects in order to achieve a decarbonized society (Article 12(1)). It is anticipated that these will include the ‘3+1 strategy’ (that is, (i) low carbonization of the economic structure (adaptation), (ii) creation of a new low carbon industry ecosystem (opportunity); and (iii) transition to a carbon-neutral society (process)) contained in the ‘2050 Carbon Neutrality Strategy’ announced on December 17, 2020, as well as strategies, policies and projects to improve the financial system, to revitalize green finance, to expand technological development and to strengthen carbon-neutral infrastructure through international cooperation. 
 
In addition, the Green New Deal Act calls for the establishment of detailed plans to achieve these objectives. According to the Act, the government must establish (i) a master plan for responding to national climate crises, including domestic and foreign climate crisis situations and future prospects, changes in the concentration of greenhouse gases in the atmosphere and the status of greenhouse gas emissions and absorption (Article 33), and (ii) a general energy plan that reflects the basic principles of building a power grid without carbon emissions, reforming the energy tax system to reflect social costs, expanding market competition for energy prices and industries, transitioning to a decentralized energy system, guaranteeing energy use rights for the underprivileged and energy security (Article 36), in each case while setting goals for each sector and establishing implementation plans on a sectoral and annual basis (Article 11(1)). 
 
 
3. Establishment of a National Climate Crisis Committee (Carbon Neutrality Committee): Carbon Neutral Governance 
 
The Green New Deal Act also provides for a carbon neutral governance structure. Specifically, it provides for the establishment of key policies and plans to achieve a carbon neutral society and of a National Climate Crisis Committee as a central administrative agency under the Office of the President to execute related administrative tasks (Articles 18(1), (2)). Given that the Korea Communications Commission, the Fair Trade Commission and the Financial Services Commission are the only central administrative agencies currently recognized under law, it is likely that the National Climate Crisis Committee will have significant status. 
 
 
4. Realization of a Decarbonized Economy 
 
The Green New Deal Act also includes provisions relating to the promotion of and support for a decarbonized economy and industries, such as support for and promotion of decarbonized management (Article 50(1)); establishment of policies to promote the research and development and commercialization of carbon-free technology (Article 51(1)); establishment of financial policies including the setting-up of funds and financing to support decarbonized economy and industries (Article 52(1)); and provision of subsidies and credit guarantees for carbon-free technologies and industries (Articles 53(1), (2)). 
 
Another noteworthy provision relates to the establishment of the Climate Crisis Response Fund (Article 64). The Climate Crisis Response Fund will be funded by government contributions, emission-based allocations, power industry base funds and energy/environment-related taxes and will be used to promote reductions in greenhouse gas emissions, to develop a foundation for responding to climate emergencies, to establish an information system, to support the underprivileged, and for corporate climate crisis response activities. 
 
 
5. Implications of the Bill 
 
This is not the first time the Korean government has pledged to go green – the Framework Act on Low Carbon, Green Growth was indeed enacted with the goal of reducing Korea's carbon footprint and promoting green growth. However, this Act did not achieve any significant results; rather, even after its enactment, new coal power plants continued to be established and the level of greenhouse gas emissions continued to increase (from 592 million tons in 2008 to 728 million tons in 2018) so much so that in 2016, Korea was named one of the four “climate villains”. 
 
The Green New Deal Act is reflective of a heightened awareness and determination to respond to the climate crisis and is significant in that it marks the beginning of a social and economic reorganization centered on decarbonization. The fact that there are already seven standing committees (the Science, ICT, Broadcasting and Communications Committee; the Land Infrastructure and Transport Committee; the Strategy and Finance Committee; the Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee; the Trade, Industry, Energy, SMEs and Startups Committee; the Public Administration and Security Committee; and the Environment and Labor Committee) related to the Act is reflective of the anticipated far-reaching effects of this Act. 
 
The Green New Deal Act will be submitted to the plenary session after review by the relevant legislative subcommittees, review and vote by the National Policy Committee, and final review by the Legislation and Judiciary Committee. Going forward, it will be necessary to pay close attention not only to the Green New Deal Act itself, but also to the industry-specific carbon and greenhouse gas reduction plans and standards proposed pursuant to the Act. 
 
______________________________________________________ 
1.  The official English names of these bills are yet to be confirmed.

KOREA LEGAL INSIGHT Korea’s Cash Subsidies and Tax Incentives: What Foreign Investors Need to Know in 2025 2025.03.17

Back to List

Professionals

SHARE

Disclaimer

Limited Liabilities