※ The attached PDF is provided in Korean.

Geopolitical shocks such as the Hormuz Strait blockade in the 2026 Iran War have redefined renewable energy and clean technologies as essential instruments of national security, shielding economies from fossil-fuel supply disruptions. In this issue brief, we assess the latest industrial strategies of the European Union and China, focusing on the newly proposed European Industrial Accelerator Act and China's 15th Five-Year Plan. Our analysis finds that while Europe focuses on protective tools like low-carbon public procurement and technology-transfer requirements to rebuild its domestic manufacturing base to at least 20 per cent of GDP by 2035, China is scaling up high-end manufacturing while rapidly shifting from energy consumption controls to absolute carbon emission limits. As both powers race to decarbonise energy-intensive sectors, the competitive pressure on export-oriented economies is intensifying.

We analyse these global shifts alongside the domestic policy landscape in South Korea, where a regulatory framework equivalent to Europe's green industrial initiatives is still absent. Unlike European nations seeking to raise their manufacturing share from 14.3 per cent, Korea already maintains an exceptionally high manufacturing share of 26.6 per cent of its gross domestic product. Consequently, our focus must be directed towards the rapid decarbonisation of established energy-intensive sectors (including petrochemicals, steel, automotive, machinery, and shipbuilding) rather than merely expanding the manufacturing base. Although legislative discussions around reforming industrial structures are under way, current state policies remain disproportionately focused on digital sectors, leaving domestic heavy industries exposed to global carbon barriers.

The proposed approach calls for the immediate introduction of structured decarbonisation policies for heavy industries and a substantial expansion of renewable energy capacity. To remain competitive in a world economy increasingly governed by carbon-intensity standards, Korea must transition its carbon-heavy manufacturing sectors into high-value, low-emission operations. The findings point to an urgent need for legislative action that aligns domestic industrial standards with international benchmarks, ensuring that energy transition serves as the foundation for future industrial resilience.

Author
Byoung Kweon KIM | Director | bkkim21kr@igt.or.kr