South Korea Ministry of Environment issued an administrative notice on proposed partial revision of the Annual Penetration Target for Low-emission and Zero-emission Vehicles from March 17 to April 5, 2023. The main contents of the draft notification include the establishment of annual penetration target for low-emission and zero-emission vehicles, new details on penetration results transaction and reimbursement method to make the system more flexible, clarification of applicable targets, extension of the applicable period for use and conversion of results, and relaxation of penetration results standards. With this revision, the penetration target for low-emission vehicles in 2023 will be 22%. Meanwhile, in order to encourage the early scrapping of vehicles, the Ministry announced that it would increase the subsidies to subsistence type (basic livelihood recipients and next-tier class) and small business owners to a fixed amount of 1 million won, and also increase the subsidies provided to purchase zero-emission vehicles (electric and hydrogen vehicles) after scrapping existing vehicles.
- Annual Penetration Target for Low-emission and Zero-emission Vehicles (Ministry of Environment Notification No. 2022-64)
In accordance with Articles 58-2 and 58-3 of the Clean Air Conservation Act, automobile dealers must achieve an annual penetration of low-emission and zero-emission vehicles. With the end of the target period (2021-2022) for the annual penetration of low-emission and zero-emission vehicles as stipulated in the current notification, a new penetration target (2023-2025) will be set, and a flexible system will be established to reduce the burden on automobile dealers, thereby ensuring the effectiveness of the system. The main contents of the draft notification for partial revision of the annual penetration target for low-emission and zero-emission vehicles are as follows.
Set annual penetration targets for low-emission and zero-emission vehicles (draft Appendix 1)
|Low-emission vehicle penetration target
(including zero-emission vehicle penetration target)
|Zero-emission vehicle penetration target||15％||18％||22％|
|Differential penetration target||11％||14％||18％|
If the three-year average annual sales volume of passenger cars and omni-buses with a seating capacity of 15 or less is 20,000 units or more for three consecutive times from 2016 onward, the automobile dealer will be required to promote zero-emission vehicles. If the average number of units is less than 20,000 for three consecutive years, the automobile dealer will be excluded from the list of dealers that must promote zero-emission vehicles from two years after the relevant fiscal year. However, a differential penetration target will be applied to automobile dealers whose relevant average number of units is 20,000 or more but less than 100,000.
Establishment of new detailed method for transaction and reimbursement of penetration results (draft Articles 6 and 7)
Details regarding methods for transaction and reimbursement of penetration results will be newly established, i.e., that a person who intends to purchase the excess must apply in writing to the Minister of Environment for results transactions in advance and receive confirmation, and that the unfilled amount may be reimbursed within three years following the year in which the failure to achieve the amount is incurred.
Clarification of applicable targets, extension of applicable period for use and conversion of results, relaxation of standards for penetration results, etc. (draft Article 2 and Appendix 3)
When the penetration results exceed the target, the ratio of penetration results of low-emission vehicles and zero-emission vehicles that can be allocated to each other will be determined as follows.
|Penetration results that can be used||2023||2024||2025|
|Percentage of zero-emission vehicle exceedance results that can be used as low emission vehicle results||200%||200%||200%|
|Percentage of low emission vehicle exceedance results that can be used as zero-emission vehicle results||100%||100%||100%|
Meanwhile, in order to encourage the early scrapping of vehicles, the Ministry of Environment will increase the subsidies to subsistence type (basic livelihood recipients and next-tier class) and small business owners to a fixed amount of 1 million won and will also increase the subsidies provided for the purchase of zero-emission vehicles (electric and hydrogen vehicles) after scrapping existing vehicles.
Change in additional subsidies for early scrapping of vehicles
|Classification||Vehicle gross weight||Target||Current||Modified|
|When scrapped early||All||Class 4 and 5||10% of the vehicle value
(150,000 won on average)
|1 million won|
|Less than 3.5 tons||Class 5||600,000 won||1 million won|
|When purchasing a new car||Less than 3.5 tons||Class 4 and 5||Five or less passengers
|3.5 tons or more||Class 4 and 5||(New vehicles)
200% of the value of the scrapped vehicle
200% of the value of the scrapped vehicle
100% of the value of the scrapped vehicle
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