After the National Assembly's Special Committee on the Climate Crisis (climate committee) passed amendments to the Carbon Neutrality Act setting a 2040 national greenhouse gas reduction target (NDC), concerns are emerging in the steel industry. To meet the target, the pace of cutting greenhouse gas emissions must be raised to about 10 times the current rate, but steelmakers say it is hard to keep up given the surge in expenses tied to adopting eco-friendly facilities and the limited time.
According to the steel industry on the 12th, the Carbon Neutrality Framework Act Review Subcommittee of the National Assembly's climate committee reached an agreement on the 28th on amendments to the "Framework Act on Carbon Neutrality and Green Growth for Coping with the Climate Crisis (Carbon Reduction Framework Act)."
The amendments to the Carbon Neutrality Act are a response to the Constitutional Court's decision in 2024 finding the Carbon Reduction Framework Act inconsistent with the Constitution. The bill will be finalized if it passes the climate committee's plenary session and then the National Assembly's plenary session.
The amendments require cutting greenhouse gas emissions, based on 2018 levels, by 53%–61% by 2035, 69%–80% by 2040, and 84%–90% by 2045.
Last year's greenhouse gas emissions were 691.58 million tons, about 5% lower than the 727.60 million tons in 2018. To meet the target of a 69% cut from 2018, emissions in 2040 must be reduced to about 225.56 million tons.
Maintaining an annual reduction rate of 7% would cut emissions by 466.02 million tons over the remaining 14 years. Given that the average annual reduction from 2018 to 2025 was around 0.7%, the pace must be raised to roughly 10 times the current level.
The steel industry says the greenhouse gas targets are realistically hard to achieve.
Over the past three years, POSCO's greenhouse gas emissions fell by about 1% each year compared with the previous year. According to the "2026 POSCO Sustainability Report" released in June, POSCO's emissions last year were 69.84605 million tons, down 1.7% from 71.06517 million tons a year earlier. In 2024, the year-over-year reduction rate was 1.2%.
Hyundai Steel's greenhouse gas emissions were 28.406 million tons last year, down 2.8% from 29.224 million tons the previous year. In 2024, the year-over-year decrease was 1.5%.
The steel industry currently accounts for about 15% of Korea's total greenhouse gas emissions. If national emissions are reduced to 225.56 million tons by 2040, the steel industry must cut to around 33.83 million tons.
To reduce emissions, the steel industry has increased the share of electric arc furnace production over blast furnaces. But a large-scale conversion of facilities takes a long time and requires massive expenses, so many in the industry say it will be difficult to cut emissions as quickly as the National Assembly proposes.
The industry also cites intensifying price competition with low-priced Chinese products and rising iron ore prices, which have sharply increased expense burdens, as reasons it is hard to speed up emissions cuts in the short term.
Lee Jae-yun, a research fellow at the Korea Institute for Industrial Economics & Trade (KIET), said, "In the short term, the way to cut greenhouse gases in the steel industry is to use less iron ore and more scrap," adding, "In that case, production costs rise, while it is hard to command a proper price premium."
Lee added, "We need to provide various incentives, such as subsidizing expenses for facility investment or creating conditions to properly value low-carbon products when they are produced, so that production and investment in low-carbon steel products can proceed more actively."