The government and Hyundai Motor and Kia will work together to begin full-scale support for carbon reduction by auto parts partners.
The Ministry of SMEs and Startups (MSS) and the Ministry of Trade, Industry and Energy said on the 17th that they will hold a "win-win partnership agreement ceremony for carbon reduction in the automobile supply chain" with Hyundai Motor, Kia, and 87 auto parts partners, and will jointly respond to strengthen carbon competitiveness across the auto industry.
Recently, as carbon regulations, centered on the European Union (EU) and others, have shifted from a "business sites unit" to a "product unit," the total amount of carbon dioxide generated in the production process is becoming the standard for export restrictions. The government and Hyundai Motor and Kia plan to support partners' low-carbon transition to raise carbon competitiveness across the entire supply chain.
The MSS will expand the scale of the "SME carbon neutrality facility investment support" program to help parts SMEs switch to low-carbon equipment. The Ministry of Trade and Industry (MOTI) is also conducting a pilot project this year for supply chain consortia with LG Electronics, LG CHEM, LX Hausys, and POSCO. Next year, the support will be expanded across industries under the "industrial supply chain carbon partnership program."
Under this agreement, the MOTI and Hyundai Motor and Kia will support the replacement of carbon reduction facilities at first-tier partners. First-tier partners will return the funds they receive to support second-tier partners. The plan is to build a cooperative carbon reduction support system between the public and private sectors through a "chain support structure."
Hyundai Motor and Kia will reduce the carbon footprint at the finished vehicle stage by including partners in carbon reduction, and the reductions secured in this process can be used as offset allowances in the emissions trading system.
No Yong-seok, first vice minister of the MSS, said, "With stronger carbon regulations across global supply chains, reduction efforts throughout the supply chain are becoming important," and noted, "We highly evaluate the preemptive reduction efforts at the supply chain level in the auto industry, where the proportion of SMEs in the parts sector is high, and will continue to support them."
Park Dong-il, director general for industrial policy at the MOTI, also said, "Carbon reduction in supply chains cannot be done by any one company alone; it requires collaboration among the government, large corporations, SMEs, and mid-sized companies," adding, "We expect this supply chain carbon reduction agreement to accelerate the green transition (GX) of our industry as a whole and serve as an opportunity to gain an edge in the contest among global supply chains."
A Hyundai Motor and Kia official said, "This agreement is a practical cooperation model for low-carbon transition in supply chains created jointly by corporations, the government, and public institutions," and emphasized, "It will serve as a primer for practicing sustainable management and transforming the industrial ecosystem."
Starting with this agreement, the government will expand the "supply chain carbon partnership" to key industries such as electric and electronics, steel, petrochemicals, semiconductors, and shipbuilding, and strengthen the capacity of domestic industry to respond to global carbon regulations.