South Korea's climate ministry drew up a record budget of more than 25 trillion won for next year, allocating 1.9 trillion won ($1.4 billion) for power and water supply to three mega projects and sharply raising spending on renewable energy. Subsidies for electric vehicle purchases will cover 430,000 vehicles, up more than 40% from 300,000 this year.
The Ministry of Climate, Energy and Environment said on the 1st that combined budget and fund spending for next year will total 25.73 trillion won ($19 billion), up 18.3%, or 3.94 trillion won, from this year. The figure includes funds under the ministry as well as programs under the ministry's authority within the Future Response Fund managed by the Ministry of Planning and Budget.
The sharp increase reflects the Lee Jae-myung administration's goal of reaching 100 gigawatts of renewable energy capacity ahead of its 2030 target. Financial support to accelerate renewable power plant construction will more than double to 1.5 trillion won. Loans for rooftop solar on factories will grow 4.4-fold to 544 billion won from 122.9 billion won this year, expanding supported capacity to 512 megawatts next year from 116 megawatts this year.
Support for residential solar was set at 75 billion won, double the amount in this year's supplementary budget, benefiting about 200,000 households. The ministry will also shift its solar income village program from direct loans to interest subsidies, and expand energy storage system projects linked to those villages to 50 sites from 21. Budgets for future energy technologies also rose sharply, including early commercialization of next-generation tandem solar cells, upgrades to wind power materials and components, and development of innovative manufacturing technology for small modular reactors.
Spending to build out the power grid on schedule also increased. The government will use fiscal funds to cover electricity bill discounts for vulnerable households and for school heating and cooling, costs previously borne by KEPCO, and earmarked 350 billion won in next year's budget for that purpose. It also decided to inject 500 billion won in cash into KEPCO, whose debt exceeds 205 trillion won, in view of the large investment the utility must make in transmission networks. It is effectively the first time the government has made a cash injection into KEPCO.
The budget also includes funding for power facilities, such as 65.8 billion won to build substations in advance to attract demand outside the greater Seoul area, 572.4 billion won for energy storage systems at transmission points, and 2.7 billion won for underground cabling to improve grid connection conditions for renewable energy.
A total of 127.7 billion won was allocated for industrial water supply to advanced industries and for expanding water resource facilities. Of that, 119.6 billion won is for a semiconductor industrial complex in the Honam region and 8.1 billion won for advanced industries in the Chungcheong region. The government plans to supply 1.33 million tons of water a day to the Honam semiconductor complex by 2032 and 380,000 tons a day to Chungcheong industries by 2033. It will also make a 250 billion won cash injection into Korea Water Resources Corporation for wide-area water supply and other projects.
Spending on greenhouse gas reduction programs also rose sharply. The electric vehicle rollout budget will increase 32.8% to 2.14 trillion won next year from 1.61 trillion won this year. Because the purchase subsidy for small trucks falls to 8 million won from 10 million won, among other changes, the number of vehicles covered will rise to 430,000 from 300,000. The allocation reflects a surge in electric vehicle sales this year.
The budget for electrifying heat energy through heat pumps will rise more than 5.5-fold to 85.9 billion won, with demonstration projects extended to apartment complexes. To cope with worsening droughts caused by climate change, the ministry will spend 3 billion won to introduce two mobile seawater desalination facilities, each capable of supplying 120 tons of water a day. Spending on upgrades to water intake and pumping facilities needed for opening weirs on the four major rivers will rise 67.7% to 78.8 billion won.
