Gov't offers subsidies to shield small businesses from global climate rules

The Ministry of SMEs and Startups building at Government Complex Sejong in Sejong City / Courtesy of Ministry of SMEs and Startups

Korea on Monday began accepting applications from small businesses for a new supply chain-focused carbon reduction program, offering funding and equipment support as global climate regulations tighten.

The Ministry of SMEs and Startups said companies can apply for the “carbon neutrality facility investment support” program until May 6. A total of 30 firms will be selected.

The program offers up to 300 million won ($201,000) in combined support for consulting, market research and the installation of equipment tailored to reduce carbon emissions. Eligible investments include energy-saving systems, emissions monitoring equipment, process optimization technologies using artificial intelligence and renewable energy facilities, such as solar and biogas.

Unlike earlier tracks that closed in February, the new “supply chain track” focuses on small firms linked to larger parent companies or primary contractors, reflecting growing pressure across global supply chains to cut emissions.

Under the program, applications must be submitted jointly by a lead company and its small business partner. The lead company must commit to covering 40 percent to 50 percent of the total project cost, with the government funding the remaining portion.

When the lead company covers 40 percent and the partner firm 10 percent, government support can reach up to 300 million won. If the lead company covers 50 percent, support is capped at 100 million won.

Officials said participating companies will be selected through document screening, site inspections and presentation evaluations. After completion, the government will provide follow-up management for five years, including optimization of equipment operations and measurement of emissions reductions.

Kim Dae-hee, director general for small business strategy and planning, said the program is designed to help companies respond to tightening global regulations, including the European Union’s Carbon Border Adjustment Mechanism and upcoming supply chain due diligence requirements.

Kim said the initiative is expected to encourage cooperation between large companies and smaller suppliers, helping them navigate regulatory risks while creating positive effects across supply chains.

This article was published with the assistance of generative AI and edited by The Korea Times.