The September 8, 2026 amendments to the Framework Act on Carbon Neutrality and Green Growth for Responding to the Climate Crisis (the “Carbon Neutrality Framework Act”) will take effect on March 9, 2027.
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Background of the Amendment
Although the former Carbon Neutrality Framework Act established carbon neutrality by 2050 as a national objective, the Constitutional Court held that the relevant provisions were incompatible with the Constitution, because the Act failed to establish any quantitative greenhouse gas reduction targets for the period from 2031 to 2049 [Constitutional Court Decision Nos. 2020Hun-Ma389, 2021Hun-Ma1264 (consolidated), 2022Hun-Ma854 (consolidated), 2023Hun-Ma846 (consolidated), dated August 29, 2024]. Concerns had also been raised that the statutory framework did not provide a sufficiently objective and scientific basis for setting reduction targets.
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Key Changes under the Amendment
The amended Carbon Neutrality Framework Act introduces the concept of a “mid- to long-term national greenhouse gas reduction target” (the “Mid- to Long-Term Reduction Target”) (Article 2, subparagraph 8-2) and establishes the principles and framework for setting such targets (Article 8(1)). In particular, the government is required to set Mid- to Long-Term Reduction Targets at five-year intervals through 2045, expressed as a range consisting of an upper and lower limit (Article 8(2) through (6)). From 2035 onward, the lower end of the range will serve as the target applicable for regulatory purposes, including under the emissions trading scheme. The amendment also specifies the factors to be considered when establishing or modifying the Mid- to Long-Term Reduction Targets (Article 8(10)).
The specific Mid- to Long-Term Reduction Targets under the amended Carbon Neutrality Framework Act are as follows:
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Period
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Mid- to Long-Term Reduction Target
(reduction from 2018 national net greenhouse gas emissions)
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Note
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Through 2030
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To be set by Presidential Decree at 35% or more; currently set at 40% under the Presidential Decree
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Through 2035
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Lower limit: 53%; upper limit: 61%
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From 2035 onward, the lower limit will serve as the target applicable for regulatory purposes, including the emissions trading scheme under the Emissions Trading Act
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Through 2040
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Lower limit: 69%; upper limit: 80%, with the specific targets to be prescribed by Presidential Decree
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Through 2045
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Lower limit: 84%; upper limit: 90%, with the specific targets to be prescribed by Presidential Decree
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※ When establishing or modifying the Mid- to Long-Term Reduction Target, the government will also take into account the availability of reduction measures and the conditions for their implementation, the impact on groups vulnerable to the climate crisis, scientific evidence concerning climate change, and relevant international standards.
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Practical Implications for Businesses
By establishing Mid- to Long-Term Reduction Targets under the amended Carbon Neutrality Framework Act, the amendment is expected to have significant implications not only for carbon-intensive industries, but for the broader economy as well. Businesses may increasingly need to take the long-term emissions-reduction trajectory into account when developing investment plans and technology strategies. Businesses should therefore closely monitor how the specific reduction rates are ultimately set by Presidential Decree.
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[Korean Version]
