South Korea revises rules on surcharge for automakers’ failure to meet fuel efficiency or CO2 emission standard 
On August 30, 2024, the Ministry of Trade, Industry and Energy of South Korea promulgated a new revised version of the Enforcement Order of the Energy Use Rationalization Act, announcing that it will enter into force on September 1, 2024. This revised version primarily extends the deadline for the notification of the surcharge and modifies the deadline for payment of the surcharge in the event that a manufacturer or importer of automobiles fails to fulfill its obligation to comply with the Average Energy Consumption Efficiency Standards.
South Korea stipulates that manufacturers and importers of motor vehicles must choose to comply with either the Greenhouse Gas Emission Permissible Standards or the Average Energy Consumption Efficiency Standards. The outline of the surcharge system is summarized as follows.
[Summary of the surcharge system (through to August 31, 2024)]
| Item | Rule |
|---|---|
| Average energy consumption efficiency standard | Standards for the average efficiency (km/L) calculated by dividing the aggregated energy consumption efficiency values of all vehicles sold by the manufacturer or importer by the number of vehicles sold. |
| Greenhouse Gas Emission Permissible Standards | Standards for the average value (g/km) calculated by dividing the aggregated greenhouse gas emissions (CO2 emissions) of all vehicles sold by the manufacturer or importer of the vehicle by the number of vehicles sold. |
| Main obligations of the manufacturer or importer |
|
| Criteria for imposing surcharges | In the event of failure to achieve the Average Energy Consumption Efficiency Standards, a surcharge shall be imposed in an amount calculated by multiplying the portion not achieved against the Average Energy Consumption Efficiency Standard (km/L) by a rate specified by the relevant regulation.
In such a case, the Ministry of Environment must notify the business operators concerned in writing in the fiscal year following the date on which the trading period for the average energy consumption efficiency standards ends, and the business operator shall pay the surcharge by September 30 of the year in which it receives the notification. |
In this newly revised version, the Criteria for Imposition of Surcharges are modified as follows, to be effective on September 1, 2024.
- The Ministry of Environment shall notify the applicable business operators in writing in two years from the day following the day on which the trading period for the average energy consumption efficiency standard ends.
- The business operators must pay the surcharges within 60 days from the date of receipt of the notification.
The Ministry of Trade of Industry and Energy explained that this Enforcement Order was revised since the Enforcement Order of the Clean Air Conservation Act was revised on July 23, 2024 to modify the period for imposing and paying the surcharge in the case where a manufacturer or importer of motor vehicles fails to meet the Greenhouse Gas Emission Permissible Standards. Given this, rules for cases where the Average Energy Consumption Efficiency Standards are not achieved were also revised.
The original text of the Enforcement Order of the Energy Use Rationalization Act is available via the following URL.
https://www.law.go.kr/LSW/lsInfoP.do?lsiSeq=265113&viewCls=lsRvsDocInfoR#
