Government to Provide 1,000 Trillion Won, Private Sector to Invest 220 Trillion Won in 'Green Grand Transformation'; Lee: 'We Must Be Market Designers, Not Followers' (Comprehensive)

200 trillion won in fiscal support and over 790 trillion won in climate financing by 2035
Lee Hyungil: "We will pool all our resources"
President Lee: "The government could proactively take on the risks of industrial transition"
Calls to ease bur

The government plans to provide support totaling 1,000 trillion won through fiscal spending and policy finance by 2035, while the private sector will invest 220 trillion won, as part of its Korean Green Transformation (K-GX) initiative. The plan aims to move climate action beyond the realm of costs and regulations and turn it into a source of competitiveness for advanced industries and a future growth engine. President Lee Jaemyung even set out the principle that the government could share the risks of early investment in green industries with businesses, emphasizing, “We must break away from the practice of following others and become architects and leaders of the green market, shaping it ourselves.”

President Lee Jaemyung listens to remarks at a public briefing on the Korean Green Transformation (K-GX) strategy in Seoul on Oct. 7, 2026. Yonhap News

President Lee chaired a public briefing on the Korean Green Transformation strategy at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on Oct. 7. Deputy Prime Minister and Minister of Finance and Economy Lee Hyungil announced the K-GX strategy, saying, “There is only one choice: whether to move ahead or fall behind,” and adding, “The government and private sector will bring together all their resources to drive the green transformation.” From 2026 to 2035, the government will provide support totaling 1,000 trillion won, including 200 trillion won in fiscal spending and more than 790 trillion won in climate finance through five major policy finance institutions. The private sector plans to invest 220 trillion won, focusing on 10 signature K-GX projects.

The government’s 1,000 trillion won in support is intended to serve as seed funding that reduces uncertainty in the green transformation (GX) process and draws in private capital. It will expand the Climate Response Fund and establish the institutional foundation for issuing green bonds by the first half of 2027. Of the more than 790 trillion won in policy finance, at least 50% will go to regional areas and at least 70% to small and medium-sized enterprises and mid-sized companies, to ensure that the benefits of industrial transformation are not concentrated in the Seoul metropolitan area and among large corporations. The government will introduce domestic production tax credits for key solar, wind power and secondary battery components and equipment, and pursue the designation of small modular reactors (SMRs) as a national strategic technology.

The K-GX strategy is built around three pillars: “Growth-Engine K-GX,” which seeks technological innovation and a first-mover advantage in new markets; “K-GX for All,” which extends the benefits of the transition to regional communities and vulnerable groups; and “Sustainable K-GX,” which encourages private investment through government support and policy consistency. The government and private sector will jointly pursue projects to decarbonize key industries such as steel and petrochemicals, achieve self-reliance in clean energy supply chains, electrify transportation, and advance GX in residential spaces.

In his opening remarks, President Lee said GX was an industrial strategy, not an environmental policy. “Taking the lead in GX is a solid strategy for the future: it will secure international competitiveness while protecting people’s lives and livelihoods from the climate crisis,” he said. “K-GX is an essential prerequisite for maintaining our advanced industries’ overwhelming technological lead and successfully carrying out three mega-projects.” He also called for the country to secure key green technologies ahead of its competitors, drawing on its world-class research and development (R&D) capabilities, and gain an early foothold in future markets.

The president provided more specifics on the government’s role during an open discussion. When participants pointed out that early-stage companies operating at a loss could not manage investment risks through production tax credits alone, which are available only once a company turns a profit, President Lee suggested an “advance support” option: paying subsidies upfront and deducting them later from tax credits. “If we believe that an industry in this area absolutely must develop, we can take on the risks proactively,” he said. Lee replied, “We’ll look into it.”

In response to a request to expand opportunities for domestic wind turbine manufacturers to demonstrate their products, participants raised the need for institutional safeguards to ensure that public officials are not deterred from actively supporting industry by the risk of audits or punishment. They specifically noted that officials could face accusations of breach of duty or causing a loss to the state treasury for choosing relatively expensive domestic products to foster local industry, followed by questions such as, “Why didn’t you use cheaper foreign products?”

“Shouldn’t we create some kind of system that allows public officials to do this without worrying about punishment, audits or disciplinary action?” President Lee said. “Frontline officials don’t want to take on that personal burden. We need to eliminate all those risk factors.” His point was that when domestic technologies are still catching up with overseas leaders, the government must create a market for demonstrations while also protecting the policy judgments of the officials who implement them.

He also stressed the importance of policy consistency in the energy industry, where investment takes a long time. President Lee said past solar power policy had swung “from one extreme to the other,” and noted that domestic GX had been delayed for several years in part because of “policy changes that came close to persecution.” Regarding the debate over nuclear and solar power, he said, “Energy is one of the areas of national policy most affected by politics,” adding, “Politicizing policy is truly dangerous.”

The private sector also responded with major investments. Hanwha Qcells will work to localize next-generation perovskite tandem solar cell technology; POSCO Holdings will build a decarbonized industrial ecosystem based on GX in the steel industry; and Samsung Electronics and LG Electronics will pursue GX in people’s homes.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyungil (left) and Minister of Climate, Energy and Environment Kim Seonghwan talk at a public briefing on the Korean-style Green Transformation (K-GX) strategy, chaired by President Lee Jae-myung, at a venue in Seoul on October 7, 2026. Yonhap News

Choi Tae-won, chairman of the Korea Chamber of Commerce and Industry, said, “Businesses hesitated to invest in carbon neutrality not because they lacked the will, but because it was difficult for them to shoulder the risks of investments spanning decades on their own amid uncertainty over technology, markets and policy. Regulations can bring businesses up to the baseline, but it is incentives that give them the impetus to go beyond it.” He described the artificial intelligence (AI) transformation (AX) and GX as “twin national strategies that must be designed and pursued together,” adding, “We will carry out the 220 trillion won in investment, including the signature projects, without disruption and demonstrate results on the ground.”

In his closing remarks, President Lee said, “South Korea’s current challenges are recovery and growth,” adding, “The most fundamental task is to solve the problem of making a living.” He continued, “We can expand opportunities only by restoring growth, and expanding opportunities can ease conflicts among members of society. Businesspeople and workers involved in production are all cornerstones of national development. I will work to build a country where all members of society can live well together in harmony.”

This content was produced with the assistance of AI translation services.