1.

Key Revisions to K-Taxonomy
 

A.

GHG Reduction – Industry

Reflection of Republic of Korea’s 100 Core Carbon Neutrality Technologies and specification of core GHG reduction technologies: Aligned with Korea’s 100 Core Carbon Neutrality Technologies, the revision upgrades recognition criteria for core GHG reduction technologies across 17 fields.

Revision and establishment of economic activities based on the 4^th National Allocation Plan (2026-2030): Recognition criteria for existing economic activities now reflect the product emissions-efficiency benchmark (“BM”) allocation coefficients from the 4^th Planned Period of the Greenhouse Emission Trading Scheme (“ETS”), and semiconductor and display manufacturing have been added as new economic activities, reflecting the expansion of BM allocations.
 

B.

GHG Reduction – Power Generation and Energy

Subdivision of economic activities by generation type and establishment of waste-to-energy as a new economic activity: Previously consolidated economic activities are now categorized individually ((i) solar photovoltaics, (ii) concentrated solar power (“CSP”), (iii) wind power, (iv) hydropower, (v) ocean energy, (vi) geothermal energy, and (vii) hydrothermal energy) by generation type to better reflect unique source characteristics. Further, the construction and operation of waste-to-energy and combined heat and power (“CHP”) facilities have been newly classified as eligible economic activities.

Establishment of new economic activities for next generation low carbon technologies: The construction and operation of facilities for Sustainable Aviation Fuel (“SAF”) production have been added under “Bioenergy Manufacturing Activities.” Additionally, a new category for “Clean Methanol Manufacturing” has been established, encompassing both green and blue methanol, and new categories have been created for the installation and operation of heat pumps that utilize low-carbon thermal sources, such as renewable energy (geothermal, hydrothermal, etc.) or aerothermal energy.
 

C.

GHG Reduction – Transport

Expansion of pollution-free transport and infrastructure: The scope has been expanded to include the manufacturing and adoption of pollution-free motorized bicycles (including personal mobility devices). Furthermore, activities related to the construction of carbon-reducing aviation infrastructure and the development of supply infrastructure for low-carbon fuels (e.g., bio-marine fuel and SAF) have been added.

Transition of recycling exclusion criteria to “Annual Recyclability Rates”: To improve industry feasibility, the existing exclusion criteria for “end-of-life vehicle (“ELV”) recycling rates” have been replaced with the “Annual Recyclability Rate.”
 

D.

GHG Reduction – City and Building

Raising green building certification standards: The recognition criteria (Green Standard for Energy and Environmental Design, “G-SEED”) for zero-energy/green buildings and low-carbon internet data centers (“IDC”) have been strengthened, and international standards (e.g., Leadership in Energy and Environmental Design, “LEED”) are now recognized as valid eligibility criteria for domestic certification.
 

E.

GHG Reduction – Agriculture and Forestry

Inclusion of low carbon livestock in the definition of low-carbon agriculture and expansion of eligibility criteria: To encompass low-carbon livestock products, the definition of “low carbon agriculture” has been revised to: “Activities that apply technologies or methods contributing to GHG reduction during the processes of crop cultivation and livestock farming.” Additionally, the scope of eligibility has been expanded. Low carbon agricultural and livestock activities now qualify if they have obtained a “Registration Approval for Voluntary GHG Reduction Projects in Agriculture and Rural Areas” or have been validated for External Project Feasibility under Article 13 of the Guidelines for Feasibility Assessment of External Projects and Certification of Reductions.

Introduction of the forestry sector within GHG reduction goals: To promote forestry activities as a means of carbon sequestration and mitigation, two new categories have been established: (i) the creation of forest-based carbon sinks, and (ii) the utilization of domestic timber products.
 

F.

GHG Reduction – Carbon Dioxide Capture

Reorganization of economic activities and establishment of a new category for CO₂ utilization: To better reflect the operational flow of carbon management, economic activities have been reorganized into the following sequence: Carbon Capture - Transportation - Storage - Utilization. Additionally, a new category has been established for activities involving the development of technologies that utilize captured CO₂, as well as the construction and operation of facilities required for the production of CO₂-derived products.
 

G.

Climate Change Adaptation – Reorganization Into Four Thematic Areas and 11 Specific Economic Activities

The economic activities for the “climate change adaptation” objective were previously categorized into the following five sub-activities under the theme of “climate change adaptation”: (i) manufacture of materials, parts and equipment to utilize core technologies for climate change adaptation, (ii) establishment and operation of facilities and systems for disaster prevention and climate-forecast, (iii) surveys and research related to climate change adaptation, (iv) educational, cultural and artistic activities related to climate change adaptation, and (v) support for fair transformation of workforce.

However, the MCEE has reorganized the existing economic activities into the following four thematic areas and 11 specific economic activities by comprehensively incorporating the National Basic Plans:
 

a.

Climate change monitoring and prediction

(i)

Monitoring and assessment of climate change

(ii)

Forecasting of climate change
 

b.

Climate change impact and vulnerability assessment

(i)

Climate change impact assessment

(ii)

Climate change vulnerability and risk assessment
 

c.

Enhancing climate crisis response capacity

(i)

Protection and assistance for vulnerable populations and areas

(ii)

Public relations (“PR”), educational, cultural and artistic activities related to climate change adaptation

(iii)

Climate insurance and re-insurance
 

d.

Strengthening climate crisis response infrastructure

(i)

Prevention, preparation, response and recovery of climate impacts – water sector

(ii)

Prevention, preparation, response and recovery of climate impacts – forest and ecosystem sectors

(iii)

Prevention, preparation, response and recovery of climate impacts – land and coastal area sectors

(iv)

Prevention, preparation, response and recovery of climate impacts – agriculture and fishery sectors
 

2.

Key Implications of Revisions to K-Taxonomy
 

A.

Implications for Financial Institutions

Pursuant to the above-mentioned revision of the K-Taxonomy, the Financial Services Commission (the “FSC”) plans to update the Green Credit Management Guidelines (for applying the K-Taxonomy to financial institutions’ lending operations) in early 2026. This amendment is expected to affect financial institutions’ credit evaluations, including loan eligibility and interest rates. Therefore, financial institutions must upgrade their green financial product management systems to enhance the reliability of their product design and screening processes.

In other words, by integrating the revised K-Taxonomy into green lending systems and redefining granular, practical checklists, financial institutions can minimize subjective judgment and establish objective, consistent screening standards. Furthermore, ensuring alignment with the forthcoming “Transition Finance Guidelines” (scheduled for release in the first half of 2026) will allow institutions to respond effectively to Korea’s Green Transformation (“K-GX”) initiative.
 

B.

Preparedness for Climate Disclosure

The International Financial Reporting Standards S2 (“IFRS S2”) and the Korea Sustainability Standards Board No. 2 (“KSSB Statement No. 2”) require organizations to disclose the amounts and percentages of assets or business activities associated with climate-related transition risks, physical risks and opportunities. Under the revised K-Taxonomy, companies subject to mandatory climate disclosure can identify eligible economic activities within their portfolios and utilize the resulting Revenue, Capital Expenditure (“CAPEX”) and Operating Expenditure (“OPEX”) data to report on climate-related opportunities.

However, greenwashing risks may arise when companies identify these eligible activities based solely on internal judgment. Therefore, companies must engage legal and technical experts to verify compliance with detailed criteria and ensure that all calculated figures maintain accounting integrity. Notably, as the government has specified core GHG reduction technologies via the mentioned 100 Core Carbon Neutrality Technologies in this revised K-Taxonomy, companies must assess their eligibility by understanding the specific core technologies and Carbon Neutrality Technological Innovation Roadmaps relevant to their sectors.
 

C.

Preparedness for Monitoring Relevant Trends

In addition, the Korean government has announced plans to restructure the support framework for transitional economic activities—such as energy production based on LNG—that facilitate the shift toward carbon neutrality. This restructuring will follow inter-ministerial consultations and will coincide with broader institutional reforms, including the introduction of Transition Finance. Consequently, corporations should stay abreast of upcoming developments, particularly the Transition Finance Guidelines scheduled for release in 2026.