This article has also been published in Startups Magazine, here.
South Korea has set challenging decarbonisation targets across eight sectors including energy, industry, buildings and waste, with the energy and industrial fields together accounting for more than 70% of the country’s total emissions.
In my previous article, I explored the primary challenges and technologies shaping Korea’s energy transition. This time, I’m looking at the nation’s industrial sector, which is arguably the most difficult part of its economy to decarbonise – and where, once again, there’s significant demand for input from international innovators.
Understanding the structure of Korea’s industrial emissions is necessary to identify where decarbonisation efforts should be concentrated. Innovation-led growth in CO₂-intensive sectors including steel, construction, shipbuilding and petrochemicals has been central to Korea’s rise as a global industrial powerhouse, making these sectors foundational to the country’s economy.
This success, however, has come at a significant environmental cost: around 40% of Korea’s total carbon emissions in 2024 originated from the industrial sector.
Steel is the single largest contributor, responsible for approximately 34% of industrial emissions, followed by petrochemicals and cement at 19% and 14%. So, it’s not surprising that these three sectors sit at the centre of Korea’s industrial decarbonisation strategy.
Given the hard-to-abate nature of these fields, near-term reduction targets are relatively modest, with emissions expected to fall just 11% by 2030 from their 2018 peak, before accelerating sharply downwards towards a 50% reduction by 2035 and 80% by 2050.
To support this transition, the Ministry of Trade, Industry & Energy (MOTIE) has allocated $170 million this year to fund R&D, equipment deployment and enabling technologies aligned with Korea’s “core 100 technologies for carbon neutrality”.
At the same time, major industrial players are ramping up investment in next-generation processes and materials, creating growing prospects for global climatetech companies with proven, scalable solutions.
Let’s explore the opportunities in Korea’s main industrial sectors in more detail and highlight the roles international innovators can play.
In steelmaking, Korea’s largest two manufacturers, POSCO and Hyundai Steel, continue to rely on coal-based blast furnaces, with coal used both as the energy source and a reduction agent. This process emits CO₂ and makes steel difficult to decarbonise. Reducing emissions will require a transition from blast furnaces to electric arc furnaces and, over time, hydrogen-based steel reduction – a process that uses green hydrogen as a reduction gas.
POSCO is pushing the transition, having signed a collaboration agreement with UK-based Primetals to develop HyRex (Hydrogen Reduction Ironmaking) technology. Their ambition is to develop the technology to maturity in the next 10 years and fully switch to hydrogen-based steel production by 2050.
In the short and medium terms, steel companies are introducing a range of measures to reduce emissions. Low-carbon manufacturing technologies including hydrogen steel reduction, advanced electric furnace systems and the recycling of steel by-products will all play a critical role.
Cement production poses an even greater challenge. The essential step of limestone calcination releases CO₂ as a by-product, and one tonne of cement produced generates roughly 0.8 tonne of CO₂.
Alongside switching to renewable energy as a power source, decarbonising the process by reducing the clinker content and increasing the mineral content through new aggregates and additives – such as fly ash, blast furnace slag and limestone fines – will be crucial.
Korean companies have shown great interest in low-carbon cement and concrete technologies, with Samsung C&T investing $7.5 million in Canadian low-carbon startup CarbonCure and Ssangyong investing $550 million to decarbonise its cement process by 2030 and using slag from steel production as an additive.
In addition, Sampyo Cement is using more than 1 million tonnes of alternative raw materials to reduce the carbon-intensive production of clinker.
For the petrochemical and refining industries, decarbonisation efforts extend beyond energy transition to include process and fuel changes.
Focus areas include feedstock switching using pyrolysis oil from waste plastic for refining, replacing grey hydrogen with green hydrogen, and the introduction of bio-based feedstocks such as bio-naphtha for petrochemicals.
Given that Korea has one of the world’s highest per-capital levels of plastic consumption, resource circularity has also become a national priority. As a result, plastics recycling – both mechanical and chemical – is a key area Korea aims to commercialise by 2030.
In line with this shift, major conglomerates are already moving. CJ CheilJedang is scaling production of marine-degradable PHA plastics, while Lotte Chemical is converting its 70,000-tonne Yeosu plant to bio-PET, and SK is investing $3.6 billion to expand its recycling capacity to 2.5 million tonnes by 2027.
LG Chem has formed a partnership with American renewable chemical company Gevo to develop bio-propylene. The company recently secured $1.3 billion to invest in biodegradable plastics and bio-based specialty materials including PLA, PHA, adhesives, coatings and films used in electronics.
Industrial plant in Incheon, South Korea
Beyond plastics, battery recycling is emerging as another critical focus. With Korea home to three of the global top 10 battery makers, securing access to raw materials is strategically important. However, the economic viability of materials extraction and recycling and the diversity of battery chemistries make this challenging.
Despite these hurdles, Korean companies are accelerating development in this area. SK Innovation is working with global engineering company KBR on recycling technologies for black mass (concentrated powder from battery recycling containing lithium, nickel, cobalt and manganese). In parallel, POSCO and Sungeel HiTech have developed a wet process to extract materials from black mass.
Looking ahead, innovations in chemical recycling (pyrolysis, methanol conversion, depolymerisation), bio-degradable plastics, electronics and battery recycling, material extraction and high-value waste-to-material conversion will be critical. In addition, energy efficiency innovations across these processes will be essential to ensure economic viability and energy consumption do not offset environmental gains.
Because emissions in industrial processes cannot be fully eliminated, CCUS is also expected to play a pivotal role in the industry’s decarbonisation.
The Korean government estimates that CCUS will account for 8-12% of total emission reductions by 2050. Yet, CCUS technologies in Korea are still at an early stage, meaning significant innovation, R&D and capital investment will be required in the coming years to meet national targets.
Korea aims to commercialise carbon capture systems capable of handling 1 million tonnes of CO₂ per year by 2030 and 4 million tonnes by 2050, at a long-term cost of $50 per tonne inclusive of compression, liquefaction and refining. This will require large-scale, affordable carbon capture technologies (dry, wet, membrane) for industrial applications including steel, cement and petrochemicals.
The Korean ‘CCU Technology Innovation Roadmap’ aims to cut carbon capture costs by 30% by 2030 and launch a 400,000-tonne facility. And the Ministry of Science & Technology has committed $104 million this year for climate technologies, including a demonstration project.
Carbon utilisation is also advancing, although Korea is estimated to be five years behind global leaders. Research institutes and petrochemical companies are developing pathways for CO₂-derived materials, fuels and chemicals, but large-scale commercial deployment will depend on continued international collaboration and technology inflow.
Several initiatives are underway. Kolon Industries, for example, has invested in Canada’s Carbonova to convert captured CO₂ into solid carbon nanomaterials for batteries, construction and plastics. LG Chem and POSCO will use LG’s Dry Methane Reforming technology to turn CO₂ from steel making into carbon monoxide and hydrogen, enabling reuse as raw materials for other processes.
Meanwhile, S-Fuel Cell and Lotte E&C have launched a partnership to harness captured CO₂ from fuel cell systems in Lotte’s smart farms to boost crop growth.
On the carbon storage side, the national goal is to secure more than 120 million tonnes of capacity by 2050 at a cost of $55 per tonne. Because Korea lacks sufficient geological formations to store all captured CO₂ domestically, international storage hubs and technical logistics collaboration – particularly in locations such as Malaysia and Australia – are expected to form an integral part of Korea’s strategy.
Decarbonising Korea’s industrial processes, then, is vital for the nation, but it’s a challenge it cannot achieve on its own.
Korea understands where its industrial strengths lie and will not trade its global competitiveness for environmental improvements. And this is creating major opportunities for global innovators with cutting-edge technologies that will enable fast, effective and affordable decarbonisation across Korea’s industrial base.
To discuss the prospects for your business to help Korea reach its net zero goals, you can contact Ayoub at ayoub.ouahidi@intralinkgroup.com.