According to the World Energy Outlook 2022 report released by the International Energy Agency in October 2022, even if countries’ carbon neutrality goals and 2030 climate commitments (known as nationally determined contribution, “NDC”) are all realized, it is expected that the global temperature will still rise by 1.7°C on average by the end of the century. This means that it will be difficult to achieve the Paris Agreement’s goal of limiting global temperature increase to 1.5°C above the pre-industrial levels, despite the fact that many countries, including South Korea, have raised their greenhouse gas (“GHG”) reduction targets in recent years. Moreover, the actual implementation of these goals will be more difficult and urgent than their announcement. Only seven years are left for countries to meet their NDC targets by 2030. Due to the increase in energy demand, which was briefly reduced by the COVID-19 pandemic, and the increase in the use of fossil fuels attributable to the Russian-Ukrainian War, reductions of global GHG emissions have been less than initially expected.

At the 27^th Conference of Parties to the United Nations Convention on Climate Change (“COP27”), each country’s efforts to implement its goals were further emphasized, and the UN Secretary-General António Guterres announced that a new international conference would be held in September 2023 with a focus on coming up with practical response measures. In the past few years, carbon neutrality has been declared, and the announcement of reduction targets by global companies has spread rapidly. However, from now on, it will be an important task for each country and company to check the progress and pace of their implementation of such goals. To this end, the Government is expected to promote policies that send the right signals to the market by advancing reduction regulations, securing means to achieve GHG reduction goals via codification of climate technology, and promoting green investment to achieve the goals. At the inflection point of this policy change, companies should (i) establish carbon-neutral implementation strategies that are in line with detailed changes in the Government’s policies, (ii) competitively respond to GHG reduction regulations, (iii) use climate technology to pre-occupy the market, and (iv) not miss the timing of green investment.

In the attached Climate Insight, we closely examine the recent changes in the Government’s major carbon neutrality policies regarding, for example, GHG reduction regulations, climate technology, and green investment, as well as considerations for companies.

[Korean Version]