South Korean gov’t to invest $153M to support green shipbuilding and slash GHG emissions

The government of South Korea has laid out a plan to invest about KRW 222.3 billion(circa $152.89 million) to support the construction (or conversion) of 81 environmentally friendly vessels.

Illustration only. Courtesy of HD Hyundai Mipo

According to the nation’s Ministry of Ocean and Fisheries (MOF), KRW 163.5 billion has been set aside from the national budget while KRW 58.8 billion will come from local governments’ funds.

As disclosed, the public sector will build a total of 34 eco-friendly ships, comprising electric-powered or hybrid vessels, with the aim of positively contributing to the greenhouse gas (GHG) emission reduction efforts.

In addition to this, 15 more units will be outfitted with diesel particulate filters (DPF), devices engineered to remove diesel particulate matter or soot from the exhaust gas of a diesel engine.

On the other hand, the private sector will reportedly receive support to construct 20 more ships to keep pace with the growing demand for future-ready vessels.

The MOF has shared that assistance, for example in the form of secondary financing, is going to be offered for 12 vessels for the purpose of installing environmentally friendly equipment.

This development is the continuation of an existing government policy that encourages the private sector, particularly small and medium-sized coastal shipping companies that choose alternative fuels (such as liquefied natural gas) or electric propulsion for their fleets, to focus on green shipbuilding.

Specifically, the “Act on the Promotion of Development and Distribution of Environment-friendly Ships”, as it was dubbed, was passed in December 2018 to mandate the public sector to build sustainable vessels and open the door to subsidies for the private sector when converting existing units into low-emission ships.

It is understood that the act allows the government to offer subsidies of up to 30% to private companies for building such vessels.

As per the Ministry, as a result of this policy, a total of 199 vessels—118 government-owned and 81 privately owned—were either newly constructed with ecologically conscious technologies or retrofitted to integrate such solutions.

“We will make generous investments in small and medium-sized shipping companies to convert into environment-friendly ships, drastically reduce greenhouse gases in the shipping industry, and proactively respond to strengthening international decarbonization regulations,” Minister Kang Do-hyung emphasized.

The South Korean government has supported sustainable shipbuilding in the country through several initiatives over the past few years. Back in 2023, it was revealed that South Korea held the largest market share for high-value-added, green ship orders in the year before that, clinching 58% of the total ordering tally for 2022.

In November 2023, the country’s Ministry of Trade, Industry and Energy (MOTIE) announced it would put KRW 710 billion (around $545 million) into next-generation shipbuilding technology and carbon-free fuels. The plan also encompassed technological collaboration with overseas partners.

The Ministry of Ocean and Fisheries has set aside investments in infrastructural projects too, including those at ports; namely, in early December 2024, MOF revealed a whopping KRW 14 trillion (approximately $9.78 billion) plan to upgrade the Port of Busan—which reportedly handles 76.8% of South Korea’s container cargo—and turn it into a ‘central’ logistics hub by 2045.