Industry and Energy Account for 70% of GHG Emissions, But Only 30% of Reduction Budget Allocated—A Clear Mismatch

Last year, more than 70% of greenhouse gas (GHG) emissions in Korea came from the industry and energy transition sectors. However, only 30% of the total reduction budget was allocated to these areas. Experts point out that this mismatch between emission scale and reduction budget stems from the absence of a control tower that manages both budgets and reduction targets. They emphasize that, now that the government has finalized the 2035 Nationally Determined Contribution (NDC), a dedicated organization is needed to coordinate and manage reduction budgets and performance under a mid- to long-term strategy.
According to the Ministry of Economy and Finance and the Ministry of Climate, Energy and Environment on the 11th, Korea’s national greenhouse gas emissions last year totaled approximately 691.6 million tCO2eq. Of this, industry (41.3%) and energy transition (31.6%) accounted for more than 70% combined. Emissions in the industry sector are concentrated in steel, cement, and petrochemicals, while the energy transition sector refers to GHGs generated during power production at power plants. The remaining shares were transportation (14.1%), buildings (6.3%), agriculture, forestry, and fisheries (3.7%), and waste (2.5%).
However, next year’s GHG reduction-related budget is criticized for not reflecting this reality. According to an analysis by the National Assembly Budget Office (NABO), the total reduction budget for next year is 11.9559 trillion won, with an expected reduction of 5 million tCO2eq. The budget allocation is as follows: transportation 37.9%, industry 21.0%, energy transition 11.1%, buildings 10.7%, agriculture, forestry, and fisheries 4.8%, and waste 2.1%. This structure concentrates the budget on the transportation sector, such as the supply of electric and hydrogen vehicles, rather than on industry and energy transition, which are the largest sources of GHG emissions.
The main reason for this budget imbalance is cited as the lack of a control tower. While the Ministry of Economy and Finance allocates the GHG reduction-related budget, the Ministry of Climate, Energy and Environment is the lead agency for GHG reduction policy. Currently, the Ministry of Economy and Finance issues guidelines, and each ministry submits its projects, which are then compiled into the budget. There is no unified decision-making structure that comprehensively manages reduction targets, budgets, and outcomes. The 2050 Carbon Neutrality and Green Growth Committee, which is directly under the President, is also criticized for not fully fulfilling this role.
The absence of a control tower also affects how budgets are allocated by each ministry. Ministries tend to prioritize short-term projects where reduction amounts are clearly measurable. In contrast, it is difficult for the industry and energy transition sectors to show immediate results relative to fiscal input. The industry sector, such as steel, cement, and chemicals, faces significant technical constraints, while the energy transition sector involves complex interests—such as reducing coal power, expanding nuclear power, and promoting renewable energy—which inevitably takes time.
Lee Sang-min, Senior Research Fellow at The Center for Fiscal Reform, stated, “There is currently no organization that manages both reduction targets and budgets together. While the government does assess the reduction effect by project when 100 million won is invested, there is no process to strategically reflect this in budget allocation.” He added, “Although the NDC target exists, budget execution and performance evaluation are carried out separately.”
Lee Jin-hee, Economic Analyst at the National Assembly Budget Office (NABO), also noted, “There is a clear mismatch between the national emission structure and the budget and reduction structure. In the short term, it is advantageous to secure reduction effects in the transportation sector, but for the industry and energy transition sectors, which account for the majority of total emissions, further strengthening of the mid- to long-term reduction foundation is necessary.” She emphasized, “Through strategic fiscal investment, it is essential to promote both structural reduction capacity and technological innovation in the industry and energy transition sectors in a balanced manner.”
Meanwhile, President Lee Jae-myung stated at a State Council meeting held at the Office of the President of the Republic of Korea in Yongsan, “Although there is recent controversy regarding the NDC, transitioning to a carbon-neutral society is an unavoidable path that must be taken for sustainable growth and to become a leading global economy, even if it involves some hardship.”
junjun@fnnews.com Choi Yong-jun Reporter