Why GHG reduction targets are being strengthened

Kim Sung-woo

Climate Week NYC, held in New York alongside the U.N. General Assembly each September, concluded late last month with record participation from corporations and institutions. Since 2009, the world's largest private-sector-led climate event has brought together governments, businesses and civil society to discuss climate crisis responses.

This year, its attention focused sharply on national greenhouse gas (GHG) reduction targets, called nationally determined contributions (NDC), and climate response plans announced at the U.N. Climate Summit during Climate Week, as the growing severity of climate change intensified international calls for stronger country-level emission reduction commitments — even as the United States maintained its stance against climate policy.

Particular attention centered on Chinese President Xi Jinping's September 24 announcement that China would reduce its GHG emissions by 7 to 10 percent from peak levels by 2035.

This marked the first time China — responsible for more than 30 percent of global GHG emissions — presented an absolute emission reduction target rather than an intensity-based goal. Xi also stated that fossil fuels would account for less than 30 percent of total energy consumption by 2035. The critical observation here is that China is linking its NDC to the expansion of clean technology markets, including renewable energy and electric vehicles.

China has already exceeded its domestic decarbonization targets while expanding its global clean technology dominance. As of 2024, China controls 70 to 90 percent of global manufacturing capacity for solar modules and cells, electric vehicles and energy storage batteries, and wind turbines. The country also commands nearly 60 percent of the emerging electrolyzer equipment market for producing clean hydrogen. Building on this foundation, the clean industry sector now represents a remarkable 10 percent of China's gross domestic product, while foreign direct investment in developing countries has nearly doubled compared to two years ago, strengthening its external influence. China's decarbonization progress is already yielding tangible results in clean industry development and expanded influence in developing nations.

Separately, the European Union provisionally agreed on a Statement of Intent to reduce GHG emissions by 66.3 to 72.5 percent from 1990 levels by 2035. The 72.5 percent target is particularly ambitious considering the internal and external crises facing the EU, including the Russia-Ukraine war and ongoing negotiations with the United States.

This goal reflects the EU's determination to simultaneously secure industry competitiveness while achieving emission reductions, energy price stabilization and energy security. This commitment was foreshadowed in February, when the European Commission announced its Clean Industrial Deal.

This policy framework aims to enhance industrial competitiveness while reducing GHG emissions, with a core focus on strengthening support for energy-intensive industries and clean technologies. Japan, having already set a 60 percent reduction target by 2035 from 2013 levels, is pursuing its Green Transformation (GX) strategy to promote public-private collaboration toward carbon neutrality and support-related investments through economic transition bonds. The GX strategy emphasizes investing approximately 150 trillion yen over a decade into power generation, manufacturing, consumption, infrastructure, and research and development, to achieve both emission reductions and enhanced competitiveness, thereby fostering economic growth.

Even as the United States, having declared its withdrawal from the Paris Agreement, no longer participates in GHG reduction efforts, major countries continue to announce strengthened reduction targets to the international community. Behind this lies a strategic intent to cultivate domestic clean technologies while preemptively securing global climate leadership.

This explains why technology investment, government support and regional international cooperation for industry competitiveness are actually intensifying, alongside the now-inevitable implementation of carbon neutrality. Through a joint statement at the EU-China summit last July, both sides pledged cooperation on carbon markets and technology dissemination. That same month, the EU and Japan launched a competitiveness alliance at their summit, which included climate and energy cooperation.

Last month, the World Resources Institute (WRI) projected that targets from major emitters like the EU and China would play a crucial role in closing the global emissions gap.

However, WRI's analysis revealed that even if newly submitted NDCs are fully implemented, they would achieve only an additional 1.4 billion tons of reductions by 2035. To limit global temperature rise to within 1.5 degrees Celsius, at least an additional 26 billion tons of reductions are required. If countries now strengthening their reduction targets succeed in capturing global clean technology markets through their emission reduction processes, the international community will later have no choice but to use these technologies to achieve the necessary additional reductions. Perhaps, the countries now postponing reductions will ultimately face the highest technology acquisition costs in the future.

The strengthening of GHG reduction targets, despite policy headwinds, reveals a fundamental shift in how countries view decarbonization. No longer simply an environmental obligation, emission reduction has become a strategic pathway to industrial competitiveness and geopolitical influence.

Countries are recognizing that early movers in clean technology development will establish dominant market positions, while late adopters will face mounting costs for both climate impact and technology procurement. This dynamic creates a compelling incentive structure: Countries that invest in decarbonization today are positioning themselves to supply the technologies the world will inevitably need tomorrow.

As climate impacts intensify and the 1.5 degree target becomes increasingly difficult to achieve, the value of clean technologies will only grow. The question facing each country is no longer whether to decarbonize, but whether to lead or follow — and pay the price for their delay.

Kim Sung-woo, head of Environment & Energy Research Institute at Kim & Chang, is a member of the National Climate Fund management committee.