Global decarbonisation policies: lessons for Korea's petrochemical industry

Amid rapid changes in the international competitive environment, Korea's petrochemical industry faces a structural challenge. With deepening Chinese oversupply, the EU's tightening regulations, and aggressive transition policies in major economies all converging, this study explores response strategies for Korea.

Global Trends

China: Deepening oversupply and expanding self-sufficiency, eroding Korea's export markets

EU: CBAM/ETS strengthening with potential extension to petrochemical products — analysis of carbon-border tariff impact on Korean industry

Germany: Introduction of CCfDs (Carbon Contracts for Difference) to drive long-term contract-based investment in process innovation — government absorbs the uncertainty in private investment

Japan: GX (Green Transformation) push — restructuring through large-scale investment and asset consolidation

Korean Response Priorities

Drawing on these international cases, the priorities for Korea are:

1. A Korean CCfD scheme — long-term price stability for low-carbon process transition
2. Carbon-footprint certification system — meeting EU export requirements and capturing green premiums
3. Restructuring package for commodity assets — supporting an orderly exit of less-competitive facilities

Implications

Even under the same carbon regulation and technology readiness, energy policy design decisively shapes both transition cost and technology-choice risk. Industrial and energy policies must be integrated, and a place-based transition strategy is needed at the level of petrochemical clusters — bundling infrastructure deployment with industrial and labour transition.