1. Background and Objectives of the Research
In response to the global climate crisis and intensifying competition within the global supply chain, major international economies are reinforcing their industrial policies and enacting related legislation to bolster domestic supply chains and boost industrial competitiveness during the transition to carbon neutrality. These endeavors aim to proactively construct an economic framework centered on clean energy, stimulate related industries, and achieve national dominance in this new paradigm. However, given the trade-dependent nature of South Korea’s industrial structure, these initiatives may function as regulatory constraints, potentially exerting significant influence on domestic industrial competitiveness. Therefore, strategic responses are imperative. This research scrutinizes the legislative strategies of leading countries addressing climate crisis and enhancing industrial competitiveness. It aims to outline strategic directions for augmenting domestic industrial competitiveness by comparing and assessing domestically proposed legislative initiatives.
2. Key Content
The study delves into the Inflation Reduction Act (IRA) in the United States and European Union's Critical Raw Materials Act (CRMA) and Net-Zero Industry Act (NZIA). It assesses the context, objectives, legal structure, key content, and future outlook of these legislations, examining their implications for Korea. Furthermore, the study conducts a comparative review of domestic legislative proposals with the aim of stabilizing the supply chain and enhancing industrial competitiveness. The legislative proposals under review relate to the enactment of three pillars of supply chain legislation : Proposed Amendments to the Act on Special Measures for Strengthening the Competitiveness of Materials, Components, and Equipment Industries; the Framework Act on Supply Chain; and the Special Act on National Resources Security (tentative title). Additionally, the review includes the Act on Special Measures for the Protection and Competitive Enhancement of the Carbon-Neutral Industry, proposed to enhance the competitiveness of carbon-neutral industries. Through a thorough review, including literature analysis and expert consultations, the study comprehensively compared and evaluated domestic and international bills, deriving legislative strategies and identifying improvement directions essential for addressing the climate crisis and enhancing industrial competitiveness.
3. Policy Alternatives and Implications
By comparative review of domestic and international legislation, the study proposes strategic directions for climate crisis response and industrial competitiveness enhancement:
(1) The Need to Establish Legislation Based on Comprehensive Carbon Neutrality Transition Strategies in the Industrial Sector
Legislation in major regions, to include the United States' Inflation Reduction Act and the European Union's Critical Raw Material Act and Net-Zero Industry Act are known to contain strategies and objectives aimed at securing clean industry-related supply chains and strengthening domestic manufacturing bases. By contrast, the bills proposed in Korea, as legislation progresses in the absence of a comprehensive carbon neutrality strategy for the domestic industrial sector, have proved inadequate for presenting a framework for new energy transition and industrial transition. Thus, legislation must be advanced after clearly defining national security resources and outlining the purpose of supply chain stability based on a comprehensive carbon neutrality transition strategy for the industrial sector.
(2) Enhanced Legislative Effectiveness by Establishing Carbon Neutrality Funding Mechanisms
The Inflation Reduction Act in the United States has unquestionably demonstrated its effectiveness after enactment by advancing legislation after securing funds and providing detailed specifications on the scale, revenue, and investment categories. Conversely, the bills proposed in Korea lack clarity regarding the scale of necessary funds, and the feasibility of funding sources remains uncertain. Such obscurity may compromise their effectiveness, and challenges are anticipated in the implementation of the policies. Furthermore, considering the anticipated significant costs during the transition to a carbon-neutral society, proactive measures should be taken in the legislative process related to carbon neutrality, including in the industrial sector. This involves preemptively addressing the burden of necessary costs and securing funding avenues to enhance the effectiveness of the legislation.
(3) Need for Strengthened Coordination Between Energy and Industrial Policies
Achieving carbon neutrality in the industrial sector requires the energy transition to be implemented simultaneously. The need to enhance the coordination between industrial and energy policies continues to grow, given that energy forms a substantial part of the industrial landscape. Therefore, energy price normalization must be prioritized to ensure the proper functioning of price signals. This will facilitate the provision of funds required for carbon neutrality, enabling the establishment of a foundation for a clean energy market and the promotion of a low-carbon industry. The functions of the private sector and the market must be activated through these measures.
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