Analysis on the Eco-friendly Vehicles Policy

Published on July 25, 2022
Published by Economic Industrial Program Evaluation Division

   Due to the global move toward strengthening environmental regulations, a paradigm shift is underway to eco-friendly vehicles in many countries. The Korean government is also promoting various policies to reduce greenhouse gas emissions, as well as to take the lead in the global eco-friendly vehicle market. Accordingly, government policies need to be assessed as to whether they were properly designed and implemented to achieve the goal of fostering an eco-friendly automobile industry and expanding domestic penetration. This report divided the eco-friendly vehicle support programs into industrial, penetration support, and infrastructure sectors, followed by a review of issues in each sector.
   First, although the eco-friendly vehicle market is expanding as a way to address the global climate crisis, and its potential as a new growth engine is growing, when it comes to eco-friendly vehicles, Korea's localization rate and level of technology advancement are insufficient with its high dependence on overseas trade for key materials and parts, requiring a need for technological improvements and support for globalsupply chains. In addition, as more rigorous environmental regulations such as a possible introduction of life-cycle assessment (LCA) are expected to be implemented mainly in Europe, appropriate measures need to be prepared, including changing the energy mix and securing objective data to determine environmental viability.
   Second, a budget for the purchase subsidy needs to be streamlined for efficient and systematic use of the budget, support for the domestic automobile industry, and improved support for hydrogen vehicles with less-desirable market conditions in general, indicated by insufficient charging stations. Futhermore, since non-fiscal support measures, including those related to the low-emission vehicle supply target and the eco-friendly vehicle purchase target have design shortcomings, those issues should be addressed to improve effectiveness. In addition, preparations need to be made once increased penetration of eco-friendly vehicles is achieved. In particular, since some special accounts and funds may suffer reduced revenues, a penetration of eco-friendly vehicles and its impact need to be examined thoroughly to ensure fiscal management will be carried out seamlessly.
   Lastly, considering that there is a high demand for infrastructure expansion and improvement centered on eco-friendly vehicle charging facilities, new infrastructure should be built commensurate with the infrastructure building target and the speed of eco-friendly vehicle penetration, etc., additionally operation and safety management of existing infrastructure should be reinforced as well.