South Korea needs accelerated renewables as carbon risks threaten exporters: report
The think tank estimated that CBAM certificates could cost Korean chipmakers about $588m between 2026 and 2034,
The Institute for Energy Economics and Financial Analysis (IEEFA) said South Korea needs to accelerate the rollout of renewable energy to reduce growing supply chain carbon risks facing its major exporters.
In a new assessment, IEEFA said rising carbon disclosure requirements, including Scope 2 and Scope 3 emissions, are likely to raise supply chain risk for Korean companies through higher carbon costs, investor concerns, and reputational pressure.
IEEFA warned that Korean semiconductor exporters could face higher costs if the European Union expands its Carbon Border Adjustment Mechanism (CBAM) to include chips and full supply chain emissions.
The think tank estimated that CBAM certificates could cost Korean chipmakers about $588m between 2026 and 2034, which could also prompt buyers to shift to lower-carbon suppliers.
A scenario analysis in the report suggested that under a high EU ETS price, Korean exporters could face $162m in CBAM costs in 2034 alone, equal to roughly 9.9% of that year’s semiconductor exports to the bloc.
The institute also examined domestic policy settings, noting that if South Korea’s Emissions Trading Scheme applied Scope 2 and 3 emissions, Samsung Device Solutions’ annual carbon cost would be about $26m under current paid allocations. The cost would rise to about $264m if free allowances were removed.
IEEFA said continued reliance on LNG in semiconductor clusters and data centres increases exposure to future carbon costs and counterparty risk. It added that limited access to renewables is already affecting decisions on new data centre investment.
To address these issues, the group recommended creating a public-private framework to assess supply chain carbon risk, expanding access to renewable energy, removing bottlenecks in the PPA and RPS systems, offering targeted financial support, and strengthening the domestic ETS alongside international decarbonisation efforts.
The report said faster renewable energy deployment is central to protecting South Korea’s competitiveness in global supply chains.
