Government to supply 1,000 trillion won in fiscal and climate finance by 2035... Promoting a 220 trillion won private project, specifying investment plans for major companies such as hydrogen reduction steel, next-generation batteries, solar cells, and SMR
The government will supply green transition resources worth 1,000 trillion won through fiscal and policy finance over the next 10 years. In major industries such as steel, batteries, solar energy, and electric power, changes are expected in production facilities and the overall energy supply chain as investment projects worth 220 trillion won proposed by companies are promoted.
This Korean Green Great Transformation (K-GX) strategy goes beyond environmental policies to reduce carbon emissions and focuses on industrial policies that change the production method and energy supply system of the manufacturing industry. As the government proposes long-term funding and tax support plans, and companies present production facilities and technology development plans, investment directions for each industry are becoming concrete.
In particular, projects by major companies such as POSCO Holdings, Hanwha Q CELLS, LG Energy Solutions, and Doosan Energy included plans to commercialize next-generation technology and build production facilities. However, as existing projects are also included, the new investment of the entire 220 trillion won is not confirmed with this announcement.
#### Over 200 trillion won in finance and 790 trillion won in climate finance... Promotion of green government bond issuance
According to relevant ministries on the 8th, the government announced at the K-GX strategy public briefing held at the Korea Chamber of Commerce and Industry in Seoul the previous day that it would supply a total of 1,000 trillion won in financial resources, including 200 trillion won in finance and more than 790 trillion won in climate finance, from 2026 to 2035.
Climate finance is supplied through five policy financial institutions, including Korea Development Bank, Industrial Bank of Korea, Export-Import Bank, Credit Guarantee Fund, and Technology Guarantee Fund. The government plans to distribute more than 50% of policy finance to local areas and more than 70% to small and medium-sized businesses.
The scale of climate response fund spending is also planned to increase from 2.6 trillion won this year to 7.6 trillion won next year. The government will prepare detailed plans for issuing green government bonds by the first half of 2027 and promote the first issuance in 2028.
We are also pursuing the introduction of domestic production tax credits for solar, wind, and secondary battery core parts and equipment. Designation of small modular reactors (SMRs) as a national strategic technology and simplification of licensing procedures for related companies were also included in the support target.
1,000 trillion won is not an amount that the government directly invests or pays as a subsidy. It is a long-term supply plan that includes financial support and loans and guarantees from policy financial institutions. Since policy finance can also be used for the 220 trillion won private project presented separately, it is difficult to simply add the two amounts into a new investment amount without duplication.
#### POSCO Hydrogen Reduced Steel and Hanwha next-generation solar cells… Project specification for each company
Major companies participating in the government's K-GX strategy are focusing on low-carbon conversion of existing production processes and securing next-generation technologies. Although businesses in each field, such as steel, batteries, solar power, nuclear power, and shipbuilding, are different, large-scale facility investment and technology commercialization are common tasks.
Among these, steel requires high investment scale and technical difficulty in that the existing coal-centered production process must be converted to hydrogen-based. The government plans to promote a 300,000-ton hydrogen reduction steel demonstration project by 2030 and support the construction of related infrastructure. In addition to converting steelmaking facilities, investment in related industries such as clean hydrogen production and stable power supply is also necessary.
In the solar energy and battery fields, commercialization of next-generation technologies is a major task. The tandem solar cell promoted by Hanwha Q CELLS is a technology that can increase power generation efficiency over existing silicon products, and LG Energy Solution's sodium battery ESS is a project to expand technology options for energy storage devices by utilizing materials other than lithium.
Doosan Energy plans to build a dedicated SMR production facility in Changwon by 2030, and HD Korea Shipbuilding & Marine Engineering plans to use its Ulsan production base to develop electric propulsion ships and fuel cell-linked ships. However, as each company's project also includes existing facility investment and technology development plans, the actual scale of new investment and execution schedule are expected to become concrete in the future.
#### Expanded to power grid, eco-friendly vehicles, and housing… Pay attention to actual ordering and commercialization schedule
The government is expanding solar and wind power generation and expanding transmission and distribution networks with the goal of securing 100GW of renewable energy capacity by 2030. As the number of renewable energy power generation facilities increases, the demand for transformers, transmission and distribution facilities, and energy storage devices to send the generated power to industrial complexes and consumption areas may also increase.
Hyundai Motor Group is pursuing the production of electric vehicles and core parts and the establishment of autonomous driving infrastructure in Ulsan and Hwaseong. The government has set a goal of expanding more than 70% of new vehicles to electric and hydrogen vehicles by 2035, and will also support the distribution of electric vehicles and expand charging infrastructure.
In the residential sector, LG Electronics and Samsung Electronics are participating in a green conversion project using heat pumps and high-efficiency home appliances. Samsung Electronics plans to cumulatively distribute heating and cooling heat pumps to 30,000 apartment households by 2030, and LG Electronics plans to demonstrate an energy-independent modular residential complex in Jeju by 2029.
It is expected that there will be a significant time lag before the effects of each company's investment are reflected in its performance. This is because it takes several years to demonstrate and commercialize next-generation technology and build production facilities, and policy financing support and tax benefits also require follow-up system maintenance.
As the government's policy finance and tax support become more concrete, the investment schedule for each company is expected to become clearer. In particular, the expansion of the climate response fund next year, the issuance of green government bonds in 2028, and whether major companies begin construction of new facilities are expected to be indicators of the speed of future fund execution.
