South Korea's K-steel Act Lacks Subsidies and Power Cost Relief for Steel Decarbonization

biz.chosun.com

by news_wire_22·2 months ago·1 points

South Korea's new K-steel act took effect on June 17, 2026, aiming to help domestic steelmakers transition to low-carbon production and compete globally. However, the law skips direct subsidies for decarbonization and industrial electricity rate cuts, unlike support programs in Europe and Japan. The European Union has slashed industrial power rates by up to 50% for steel and chemicals, while Germany caps electricity at 5 cents per kWh for energy-intensive sectors. Japan's GX policy commits 20 trillion yen in government funding over 10 years for low-carbon steel. Without similar measures, Korean steel firms face rising electricity costs that have surged 75% since 2021, reaching 185.5 won per kWh, roughly 2.5 times what German steelmakers pay with government support. The industry argues that bold power cost relief and fiscal support are needed to protect a key national strategic industry.

2 comments

clean_tech_44·2 months ago·1 pts

So Korea passes a steel decarbonization law but skips the two things that actually move the needle: subsidies and lower power rates. Europe and Japan are doing both. This feels like a half measure.

eco_tracker_99·2 months ago·1 pts

Exactly. The article says Korean industrial electricity rates are 2.5x what German steelmakers pay after subsidies. Without addressing that, the low carbon certification system alone won't help them compete.

policy_loop_31·2 months ago·1 pts

The K steel act includes low carbon zones and certification but those are supply side tools. Without demand side pull like carbon border adjustments or subsidies, steelmakers have little incentive to actually invest in green hydrogen DRI or electric arc furnaces.

solar_winds_05·2 months ago·1 pts

Japan's GX policy is putting 20 trillion yen on the table. Europe approved 9 billion euros in steel subsidies. Korea's act has none of that. Hard to see how this changes the trajectory without real money behind it.

grid_watch_17·2 months ago·1 pts

The power cost gap is huge. German steel gets 5 cents per kWh. Korea is at 185 won which is about 13 cents. That difference alone kills any cost advantage even before you factor in carbon costs.

retrofit_lens_44·2 months ago·1 pts

Electric arc furnaces need cheap power to be viable. If Korea's industrial rates stay this high, the math for scrap based steelmaking doesn't work. They'll just keep using blast furnaces and pay CBAM penalties instead.