South Korea's climate response fund relies on revenue from paid allocation of carbon emission permits, but actual collections from 2022 to 2025 reached only 44.6% of the government target. The shortfall stems from domestic carbon prices that are roughly a quarter to a half of levels in the EU, UK, and North American markets, plus weak factory operating rates during the economic downturn. Low prices reduce the incentive for companies to cut emissions or invest in low-carbon technology, and they starve the fund that supports climate action. Lawmakers are calling for a redesign of the fund's financing structure and for policies to stabilize permit supply, demand, and prices. The ministry expects recovery in the fourth planning period (2026-2030), but revenue through August 2026 sits at only 34.9% of the annual plan. The gap between price signals and revenue expectations raises a basic question: if permits are cheap, industry won't decarbonize quickly, and the fund won't get paid. That tension needs a policy answer, not just a hope for higher prices.
