South Korean tech industry faces rising carbon risks amid tightening global standards

South Korea’s leading technology companies, including Samsung and SK Hynix, are under increasing pressure to reduce carbon emissions as new international standards and EU policies threaten market competitiveness and impose hefty costs amid growing global climate commitments.

South Korean companies, particularly in the technology and semiconductor sectors, are grappling with escalating carbon risk exposure amid tightening global climate regulations. The Institute for E...

nergy Economics and Financial Analysis (IEEFA) highlights how emerging standards such as the International Financial Reporting Standards Sustainability Standards (IFRS S2) and the European Union’s Carbon Border Adjustment Mechanism (CBAM) are reshaping compliance landscapes and supply chain responsibilities, with profound financial and reputational implications for South Korea’s export-driven economy.

The IFRS S2 mandates disclosure of greenhouse gas (GHG) emissions, including Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and, notably from 2026, Scope 3 emissions which account for embedded emissions across entire supply chains. The latter broadens the ambit of carbon accountability, exposing companies to risks ranging from investment aversion and soaring carbon costs to heightened counterparty and reputational risks. This is particularly pertinent to South Korea’s semiconductor industry, a key pillar of the national economy that depends heavily on international trade accounting for around 70% of GDP.

IEEFA’s analysis reveals South Korea’s Samsung Device Solutions as the highest emitter amongst major global tech companies, with combined Scope 1–3 emissions estimated at approximately 41 million metric tonnes of CO2 equivalent in 2024. This results in a carbon intensity of about 539 tonnes per USD million of revenue, significantly surpassing global tech giants like Apple and Amazon Web Services, whose carbon intensities stand at 37 and 107 tonnes per USD million respectively. SK Hynix also faces notable emissions intensity at approximately 246 tonnes per USD million of revenue. Such disparities highlight the uneven pace at which energy transition strategies are being implemented within key technology supply chains.

The high carbon footprint accentuates South Korean companies’ vulnerability to carbon pricing mechanisms under schemes like South Korea’s domestic Emissions Trading System (ETS) and the EU’s CBAM. Should indirect emissions be fully incorporated into the ETS framework, Samsung Device Solutions’ carbon costs could escalate drastically, from an estimated USD 26 million to USD 264 million if free emission allowances are phased out. More consequentially, the expansion of the EU’s CBAM to include semiconductors and comprehensive supply chain emissions could impose an estimated USD 588 million in CBAM certificate expenses on South Korean chip exporters between 2026 and 2034. This presents a tangible risk of European importers pivoting towards low-carbon alternative suppliers, further challenging South Korea’s competitiveness on the global stage.

Compounding these risks, South Korea’s semiconductor clusters and burgeoning Artificial Intelligence (AI) data centres are largely powered by liquefied natural gas (LNG), exacerbating carbon intensity. The country’s relative shortage of cheap, abundant renewable energy further hampers the attraction of foreign data centre investments, which increasingly favour jurisdictions with low-carbon energy availability. This energy constraint risks leaving South Korea behind in the intensifying global competition to host cutting-edge, sustainable tech infrastructure.

In response, the South Korean government has launched initiatives aimed at mitigating these supply chain carbon exposures. This includes promoting RE100 industrial complexes, industrial parks powered entirely by renewable energy, and the development of an ‘Energy Highway’ infrastructure to expand renewable energy distribution and integrate it efficiently with industrial consumers. Legislation supporting these goals, such as the Special Act on the Creation and Support of RE100 Industrial Complexes and Energy New Cities, is anticipated to take effect in 2025.

Leading companies are also stepping up efforts. Samsung, for instance, has committed to achieving net-zero Scope 1 and 2 carbon emissions for its Device eXperience Division by 2030 and for its Device Solutions Division by 2050. The company reports that as of 2024, 93.4% of the DX division’s energy consumption is sourced from renewables. Furthermore, Samsung is advancing greenhouse gas reduction through improved process efficiency, alternative gases, and comprehensive gas treatment facilities, achieving a reduction of over 15 million tons of GHGs in 2024 alone. The company has also attained a ‘Zero Waste to Landfill’ Platinum designation for all its global manufacturing sites, exemplifying its commitment to resource circularity and sustainable manufacturing practices.

However, while Samsung represents a leading example, the broader industry must accelerate the transition to lower carbon intensity to meet expanding regulatory and market expectations. The contrast with companies such as Apple, which leverages strategies to maximize clean energy use and lower upstream GHG intensities, underscores the competitive imperative.

The intensification of global carbon regulations alongside geopolitical trade challenges, including rising US tariffs and shifting data centre investments, places South Korea at a pivotal juncture. According to IEEFA, failure to adequately address supply chain carbon risks threatens not only corporate financial health, with increased costs and reduced access to capital, but also national economic viability. Navigating these complexities demands coordinated policy support, aggressive renewable energy deployment, and industry-wide adoption of robust carbon management frameworks.

In summary, South Korea’s technology sector, particularly semiconductors and AI-related industries, confronts mounting pressure to curtail carbon emissions across their supply chains. As global regulatory frameworks harden and market demands pivot toward sustainability, a rapid and systemic energy transition coupled with transparent carbon disclosures will be vital for safeguarding both corporate futures and the nation’s economic resilience.

Source: Noah Wire Services