Decarbonization in South Korea Trends and Forecast
The future of the decarbonization market in South Korea looks promising with opportunities in the oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, and manufacturing markets. The global decarbonization market is expected to grow with a CAGR of 11.8% from 2025 to 2031. The decarbonization market in South Korea is also forecasted to witness strong growth over the forecast period. The major drivers for this market are the increasing investment in decarbonization technologies to reduce costs associated with carbon emissions, the growing awareness of the effects of climate change, and the stricter emissions standards across the world.
• Lucintel forecasts that, within the services category, the sustainable transportation service segment will remain the largest segment over the forecast period.
• Within the end use category, oil & gas will remain the largest segment.
Emerging Trends in the Decarbonization Market in South Korea
South Korea is accelerating its transition to a low-carbon economy, driven by global climate agreements, domestic policy shifts, and growing public support for sustainability. The government is pushing for carbon neutrality by 2050, prompting significant reforms across energy, transportation, and industry. These changes are not only reshaping South Korea economic landscape but are also creating new business opportunities and technological advancements. From green hydrogen initiatives to the expansion of carbon capture and storage, several key trends are defining the next phase of the country decarbonization journey.
• Expansion of Green Hydrogen Infrastructure: South Korea is investing heavily in green hydrogen as a clean alternative to fossil fuels, aiming to become a global hydrogen leader by 2030. The country is developing hydrogen production, distribution, and storage networks, particularly using renewable sources like solar and wind. This trend is enabling decarbonization in sectors that are hard to electrify, such as heavy transport and industrial manufacturing. Public-private partnerships are also accelerating R and D efforts. This strategy is central to the government roadmap for achieving carbon neutrality while fostering energy independence and industrial innovation.
• Growth in Renewable Energy Deployment: To reduce reliance on imported fossil fuels, South Korea is significantly scaling up its renewable energy capacity. Solar and wind power projects are expanding, with offshore wind emerging as a key area of focus. Regulatory reforms and subsidies are attracting private investments in clean energy. This shift is reshaping the power generation mix and supporting grid decentralization. As renewables become more competitive, they are playing a pivotal role in replacing coal-fired plants, thereby cutting emissions and creating new economic growth engines in the energy sector.
• Adoption of Carbon Capture, Utilization, and Storage (CCUS): Carbon capture, utilization, and storage technologies are gaining traction in South Korea, particularly in emissions-intensive industries such as steel and cement. Pilot projects and collaborations with global technology leaders are laying the groundwork for large-scale implementation. The government is including CCUS in its national decarbonization strategy, viewing it as essential for reducing industrial emissions. The trend reflects South Korea pragmatic approach to transition, acknowledging that some emissions are difficult to eliminate without these technologies. Successful deployment could position South Korea as a regional leader in CCUS innovation.
• Electrification of Transport and Mobility Solutions: The transportation sector in South Korea is undergoing a significant transformation with rapid electrification. Electric vehicles, including buses and trucks, are becoming more widespread due to government incentives and improved charging infrastructure. The development of next-generation batteries and investment in EV supply chains are boosting local manufacturing capabilities. This trend is reducing emissions from one of the most polluting sectors and aligning with global shifts toward clean mobility. South Korea strong automotive industry is also playing a critical role in advancing the adoption of electric transport solutions.
• Emphasis on Smart Grids and Energy Efficiency: South Korea is modernizing its electricity infrastructure through the deployment of smart grids and advanced metering systems. These technologies are enhancing energy efficiency, enabling real-time monitoring, and supporting the integration of distributed renewable energy sources. Smart buildings and automated demand response systems are also part of the strategy to reduce carbon emissions. This trend demonstrates a move toward intelligent energy management, helping consumers and industries optimize energy use. It is a crucial enabler of the wider decarbonization effort by making the energy system more flexible and responsive.
These trends are collectively reshaping South Korea decarbonization market by driving technological innovation, regulatory reform, and economic transformation. The focus on green hydrogen, renewables, CCUS, clean mobility, and smart infrastructure positions South Korea as a forward-thinking leader in the global climate transition. As these initiatives mature, they will create a more sustainable, resilient, and competitive economy that aligns with international climate commitments and domestic aspirations for a greener future.
Recent Developments in the Decarbonization Market in South Korea
South Korea is intensifying its decarbonization efforts to meet ambitious climate goals and enhance energy security. Recent initiatives include significant investments in nuclear energy, green hydrogen, renewable energy projects, and sustainable aviation fuel. These developments aim to reduce greenhouse gas emissions, diversify energy sources, and position South Korea as a leader in clean energy technologies. The following are five key developments shaping the country decarbonization landscape.
• Expansion of Nuclear Energy Reduces Fossil Fuel Dependence: South Korea has significantly increased its nuclear power production, leading to a notable reduction in thermal coal and liquefied natural gas imports. In the first quarter of 2025, fossil fuel imports decreased by 20% compared to the previous year. Nuclear reactors have been generating more electricity than coal and gas plants since September 2024, with nuclear power accounting for nearly 35% of the country electricity in January 2025. This shift enhances energy self-sufficiency and lowers carbon emissions, serving as a model for other nations.
• Reduction of Biomass Energy Subsidies: The South Korean government plans to reduce subsidies for biomass energy due to concerns over its contribution to deforestation and carbon emissions. Environmental activists have welcomed the move, although they note that the policy contains several loopholes and a slow phase-out timeline. South Korea has been heavily subsidizing biomass energy for over a decade, mainly relying on imported wood pellets, making it the third-largest importer globally. The policy change emphasizes the importance of sustainable practices in bioenergy use.
• Implementation of Sustainable Aviation Fuel Mandate: South Korea announced plans to require all international flights departing the country to use a mix of about 1% Sustainable Aviation Fuel (SAF) starting in 2027. This initiative aims to comply with a carbon offset and reduction scheme mandated by the International Civil Aviation Organization. As the leading exporter of aviation fuel, South Korea seeks to support the SAF market as a new growth avenue in response to expanding global demand. The government is considering tax breaks and incentives to support investment in SAF development and alleviate high production costs.
• Investment in Green Hydrogen Projects by Hyosung Group: Hyosung Group announced plans to invest approximately KRW 1 trillion (USD 835 million) in green hydrogen plants with an annual capacity of 200,000 tons. This investment includes constructing a 10-megawatt water electrolysis facility for green hydrogen generation. The initiative aims to create up to 300,000 jobs and support South Korea goal of becoming the world first hydrogen-powered society. Additionally, Hyosung and Linde plc agreed to form joint ventures to produce and sell liquid hydrogen, further advancing the country hydrogen economy.
• Launch of Clean Hydrogen Power Bidding Market: South Korea is launching a bidding market for up to 6,500 GWh of electricity to be produced from clean-hydrogen-fired power generation over 15 years. The Ministry of Trade, Industry and Energy stated that operations awarded contracts under the schemes must start by 2028. The initiative allows for 100% hydrogen-based electricity generation, ammonia co-firing, or hydrogen co-firing with natural gas. Companies will be selected based on bid price and greenhouse gas emissions from hydrogen production, promoting the use of clean hydrogen in power generation.
These developments underscore South Korea commitment to decarbonization through diversified energy strategies, including nuclear expansion, reduction of biomass reliance, promotion of sustainable aviation fuel, investment in green hydrogen, and the establishment of a clean hydrogen power market. Collectively, these initiatives aim to reduce greenhouse gas emissions, enhance energy security, and position South Korea as a leader in the global transition to sustainable energy.
Strategic Growth Opportunities for Decarbonization Market in South Korea
South Korea is making strides in decarbonization, motivated by its ambitious climate goals and international commitments to reduce emissions. The government is rolling out strategic initiatives and investments in clean technologies and renewable energy. In this context, growth opportunities have emerged across several key sectors, including renewable energy generation, green hydrogen, electric mobility, carbon capture and storage (CCS), and energy efficiency. As the country transitions to a low-carbon economy, these sectors provide businesses and investors with lucrative avenues for expansion.
• Expansion of Renewable Energy Generation: South Korea is increasing its commitment to renewable energy, especially solar and wind power. The government has introduced incentives and financial support for large-scale renewable energy projects, aiming to achieve 20% of its energy from renewables by 2030. Growth in renewable energy generation presents opportunities for both local and international companies to invest in projects that help diversify the energy mix. This shift toward clean energy not only reduces the nation carbon footprint but also stimulates job creation and economic growth in the green sector.
• Development of Green Hydrogen Infrastructure: Green hydrogen is gaining attention in South Korea as a clean fuel source for decarbonizing heavy industries such as steel and chemicals, as well as for use in transportation. The government plans to invest significantly in hydrogen infrastructure, including production, storage, and distribution. South Korea potential to produce hydrogen from renewable energy sources, particularly offshore wind, positions it to become a leader in the global green hydrogen market. This offers growth opportunities for technology providers, investors, and industry stakeholders aiming to capitalize on the hydrogen economy.
• Electric Mobility and Charging Infrastructure: South Korea is heavily investing in electric vehicles (EVs) and the development of charging infrastructure. The country has set ambitious goals to increase EV adoption, supported by subsidies and incentives for consumers and manufacturers. This creates a large market for electric mobility solutions, including vehicle production, battery technologies, and charging stations. The expansion of EV infrastructure is expected to drive innovation in the transportation sector while reducing emissions from traditional combustion engines, significantly contributing to South Korea’s decarbonization targets.
• Carbon Capture and Storage (CCS) Technologies: South Korea is prioritizing the development of carbon capture and storage (CCS) technologies as a means to reduce emissions from heavy industries and power plants. CCS projects capture CO2 emissions before they enter the atmosphere, storing them safely underground. South Korea has invested in large-scale CCS pilot projects and is collaborating with international partners to refine the technology. As industries look for cost-effective solutions to meet emissions reduction targets, CCS offers a promising growth opportunity in sectors such as energy, cement, and petrochemicals.
• Energy Efficiency Solutions for Industry and Buildings: Improving energy efficiency in both industrial and residential sectors is a crucial element of South Korea’s decarbonization strategy. The government is offering incentives for energy-efficient technologies in manufacturing processes and building retrofits. By promoting smart grids, energy management systems, and green building practices, South Korea is encouraging businesses and consumers to adopt more sustainable energy practices. This market expansion will lead to a reduction in energy demand and greenhouse gas emissions, driving long-term sustainability and cost savings across industries and households.
The decarbonization market in South Korea is witnessing growth in several key sectors, with renewable energy, green hydrogen, electric mobility, CCS, and energy efficiency driving the transition to a low-carbon economy. These growth opportunities are reshaping South Korea’s energy landscape, creating avenues for businesses to invest in clean technologies while contributing to climate goals. As the country continues to prioritize sustainability, these applications will help accelerate the decarbonization process, positioning South Korea as a global leader in clean energy and emissions reduction.
Decarbonization Market in South Korea Driver and Challenges
The decarbonization market in South Korea is shaped by several drivers and challenges that include technological advancements, economic factors, and regulatory frameworks. As the country aims to meet its climate targets, these factors interact to either facilitate or hinder the transition to a low-carbon economy. Key drivers such as technological innovation and government support play a critical role in advancing decarbonization, while challenges such as high implementation costs and policy uncertainty present obstacles. A detailed analysis of these drivers and challenges offers valuable insight into South Korea path to a sustainable future.
The factors responsible for driving the decarbonization market in South Korea include:
• Government Policy and Regulations: South Korea’s government has set ambitious targets to reduce greenhouse gas emissions, including a plan to reach carbon neutrality by 2050. The implementation of green policies such as the Green New Deal, which focuses on energy transition and green job creation, is a major driver of decarbonization. Regulations supporting renewable energy deployment, electric vehicles, and carbon pricing mechanisms provide clear pathways to reduce emissions. These policies foster investments in clean technologies, helping to accelerate the country’s decarbonization efforts.
• Technological Innovation: Technological advancements in energy efficiency, renewable energy, and carbon capture and storage (CCS) are central to South Korea’s decarbonization strategy. Breakthroughs in renewable energy technologies, such as solar, wind, and hydrogen fuel cells, are reducing costs and improving efficiency. Additionally, innovations in energy storage systems and smart grids are enabling better integration of renewable energy into the national grid. These technologies provide scalable solutions to decarbonize various sectors, from power generation to transportation.
• Economic Diversification and Green Investment: South Korea’s decarbonization efforts are closely linked to economic diversification, as the country shifts its focus from heavy reliance on fossil fuels to green industries. Investments in green sectors such as renewable energy, electric vehicles, and energy-efficient technologies are driving economic growth while addressing climate change. Green finance initiatives, including green bonds and sustainable investment funds, are mobilizing capital to support decarbonization projects. This shift creates new market opportunities and strengthens the country’s global competitiveness.
• Renewable Energy Potential: South Korea’s renewable energy potential, particularly in solar and wind energy, is a significant driver in the transition to a low-carbon economy. The country’s commitment to increasing renewable energy capacity, including the development of offshore wind farms, is central to its decarbonization strategy. Expanding the use of renewables not only reduces the dependence on coal and other fossil fuels but also helps to ensure long-term energy security. By leveraging its renewable energy potential, South Korea can reduce its carbon footprint while boosting energy independence.
• Global Collaboration and Trade Partnerships: South Korea’s active participation in international climate initiatives and partnerships enhances its decarbonization efforts. The country collaborates with global organizations, including the United Nations and the World Bank, to implement sustainable projects. Trade agreements with other countries also focus on sharing green technologies and promoting decarbonization strategies. International cooperation accelerates the flow of knowledge, expertise, and investment, helping South Korea achieve its carbon reduction goals while remaining competitive in the global green economy.
Challenges in the decarbonization market in South Korea are:
• High Upfront Costs of Green Technologies: One of the significant challenges to decarbonization in South Korea is the high initial costs associated with adopting clean technologies. Renewable energy projects, such as wind and solar installations, require large capital investments. Similarly, the transition to electric vehicles and the infrastructure needed to support them, including charging stations, involves substantial upfront expenses. These costs can be a barrier for both businesses and consumers, slowing down the adoption of green technologies despite their long-term economic and environmental benefits.
• Energy Grid Limitations and Infrastructure Gaps: South Korea’s energy grid and infrastructure are not yet fully equipped to handle the large-scale integration of renewable energy. Although the country has made significant progress in expanding its renewable energy capacity, challenges in grid management remain. The intermittency of solar and wind power requires advanced energy storage systems and smart grids to ensure a stable and reliable power supply. Without significant investments in grid modernization and energy storage technologies, South Korea may struggle to integrate renewables effectively into its national energy system.
• Policy and Regulatory Uncertainty: Although South Korea has set ambitious decarbonization goals, the policy and regulatory landscape can sometimes be uncertain. Frequent changes in government leadership and policy direction can lead to inconsistencies in the implementation of decarbonization measures. Additionally, the pace of regulatory changes may not always align with the rapid advancement of green technologies. This creates uncertainty for businesses and investors, making it difficult to plan long-term investments in clean energy projects.
The decarbonization market in South Korea is significantly influenced by drivers such as government policies, technological innovation, and economic diversification. However, challenges like high upfront costs, infrastructure limitations, and regulatory uncertainty remain obstacles to achieving carbon neutrality. By addressing these challenges and leveraging its strengths in renewable energy and international cooperation, South Korea can pave the way for a sustainable, low-carbon future. The interplay of these drivers and challenges will shape the future of decarbonization in the country.
List of Decarbonization Market in South Korea Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies, decarbonization companies cater to increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the decarbonization companies profiled in this report include:
• Company 1
• Company 2
• Company 3
• Company 4
• Company 5
• Company 6
• Company 7
• Company 8
• Company 9
• Company 10
Decarbonization Market in South Korea by Segment
The study includes a forecast for the decarbonization market in South Korea by services, technology, deployment, and end use.
Decarbonization Market in South Korea by Services [Analysis by Value from 2019 to 2031]:
• Carbon Accounting & Reporting Services
• Sustainable Transportation Services
• Waste Reduction & Circular Economy Services
Decarbonization Market in South Korea by Technology [Analysis by Value from 2019 to 2031]:
• Renewable Energy Technologies
• Energy Efficiency Solutions
• Electric Vehicles
• Carbon Removal Technologies
• Carbon Capture and Storage
Decarbonization Market in South Korea by Deployment [Analysis by Value from 2019 to 2031]:
• On-premises
• Cloud
Decarbonization Market in South Korea by End Use [Analysis by Value from 2019 to 2031]:
• Oil & Gas
• Energy & Utility
• Agriculture
• Government
• Automotive & Transportation
• Aerospace & Defense
• Manufacturing
• Others
Features of the Decarbonization Market in South Korea
Market Size Estimates: Decarbonization in South Korea market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends and forecasts by various segments.
Segmentation Analysis: Decarbonization in South Korea market size by services, technology, deployment, and end use in terms of value ($B).
Growth Opportunities: Analysis of growth opportunities in different services, technology, deployment, and end use for the decarbonization in South Korea.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the decarbonization in South Korea.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.
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FAQ
Q1. What are the major drivers influencing the growth of the decarbonization marketin South Korea?
Answer: The major drivers for this market are increasing investment in decarbonization technologies to reduce costs associated with carbon emissions, growing awareness of the effects of climate change, and stricter emissions standards across the world.
Q2. What are the major segments for decarbonization market in South Korea?
Answer: The future of the decarbonization market in South Korea looks promising with opportunities in the oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, and manufacturing markets.
Q3. Which decarbonization market segment in South Korea will be the largest in future?
Answer: Lucintel forecasts that sustainable transportation service segment will remain the largest segment over the forecast period.
Q4. Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.
This report answers following 10 key questions:
Q.1. What are some of the most promising, high-growth opportunities for the decarbonization market in South Korea by services (carbon accounting & reporting services, sustainable transportation services, and waste reduction & circular economy services), technology (renewable energy technologies, energy efficiency solutions, electric vehicles, carbon removal technologies, and carbon capture and storage), deployment (on-premises and cloud), and end use (oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, manufacturing, and others)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.4. What are the business risks and competitive threats in this market?
Q.5. What are the emerging trends in this market and the reasons behind them?
Q.6. What are some of the changing demands of customers in the market?
Q.7. What are the new developments in the market? Which companies are leading these developments?
Q.8. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.9. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.10. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?