Asan Nanum Foundation, Startup Alliance, Banks Foundation for Young Entrepreneurs D.CAMP and Korea Startup Forum released the “2023 STARTUP KOREA!” report at the Yeouido 63 Convention Centre on 1 November, exploring policy directions to foster domestic climate tech startups and revitalise the ecosystem.

Co-hosted by the Asan Nanum Foundation, Startup Alliance, Banks Foundation for Young Entrepreneurs D.CAMP, and Korea Startup Forum, the policy proposal launch was attended by Kim Sang-hyeop, Chairman of the 2050 Carbon Neutral Green Growth Committee, Lee Kwang-jae, Secretary General of the National Assembly, Kang Hoon-sik, Member of Parliament for the Democratic Party, Han Moo-kyung, Member of Parliament for the People Power Party, and Shin Sang-jun, Vice Minister of Environment, and greetings were delivered via video by Jae-jung Lee, Chairman of the National Assembly’s Trade, Industry, Energy, SMEs, and Startups Committee, and Se-hoon Oh, Mayor of Seoul.

Next, SangWon Moon, Managing Director of Samjong KPMG, presented the “2023 STARTUP KOREA!” report for policy proposals to foster climate tech startups and revitalise the ecosystem, followed by a panel discussion. During the panel discussion, moderated by Sungjin Choi, CEO of Korea Startup Forum, Sohee Kim, Secretary General of Climate Change Centre, Hyunjoo Je, CEO of Envisioning Partners, Jongkyu Kim, CEO of 60Hertz, Myungjoon Min, CEO of RE:harvest, and Sang-uk Lee, Director of POEN, discussed the direction of climate tech startup development policies in Korea.

Firstly, the report shared the key status and issues of the domestic climate tech startup market. According to the report, climate tech accounts for only 4.9% of domestic startups, and a comparative analysis of the scale of climate tech investment as of 2022 shows a difference of more than 7.5 times between the top 10 countries and Korea. In terms of regulations, 34% of the global top 100 climate tech startups entering Korea are unable to commercialise due to regulations, highlighting the urgent need to change the regulatory environment.

In order to create an environment conducive to the revitalisation and growth of the climate tech startup ecosystem, the “2023 STARTUP KOREA!” report proposes three main measures: introducing incentives to expand the supply and demand of the climate tech industry, designing policies for climate tech startups to reduce investment uncertainty, and changing the structure for managing, establishing, and improving climate tech-related regulations.

First, the report emphasises that due to the public goods characteristics of climate technology, demand or supply incentives should be provided at the government level. Looking at the cases of major developed countries such as the US, EU, China, India and Japan, which recognised the importance of the climate technology industry early on, they have actively used tax credits and subsidies for climate technology R&D investment at the national level to support the growth of various climate technology industries. In Korea, on the other hand, the report points to the lack of specific support measures for each major climate technology industry. Therefore, this report analyses the supply and demand status of each of the five climate technology areas (Clean Tech, Carbon Tech, Eco Tech, Food Tech and Geo Tech) proposed by the Carbon Neutrality and Green Growth Commission, and proposes a plan to establish an incentive system.

In the Clean Tech area, the report notes that there is an urgent need to expand the supply of renewable energy, which is a flagship technology, and to review the renewable energy supply plan by providing subsidies or incentives to renewable energy providers. As the waste and recycling sector, which falls under ‘Eco Tech’, is a representative state-licensed industry with high barriers to entry, it was suggested that incentives should be provided to companies that lead innovative new technologies and services related to waste management and recycling to help build a circular economy in Korea.

For green mobility, which is part of ‘Carbon Tech’, it was suggested that subsidy policies should be improved to reduce the burden on domestic consumers of electric vehicles, and for the alternative meat market in ‘Food Tech’, which is slow to grow compared to overseas markets such as the US and Singapore, it was suggested that the industry should be encouraged through support for changing domestic consumer perceptions rather than technology. For satellite, AI and data companies in ‘Geo Tech’, providing benefits such as subsidies or incentives to consumers who actively reduce carbon could help boost the geotech industry by increasing consumer participation in the market.

Secondly, government support to reduce uncertainty in climate technology investment is a strategy to increase the scale of total investment and investment per company, which is woefully inadequate compared to developed countries, the report says. Noting that the lack of investment in new industries and start-ups is not unique to the climate change industry due to the lack of an active venture capital market in Korea, the report explains that the uncertainty faced by investors in climate change technology is high due to the lack of technology demonstration opportunities, and that attracting investment is more difficult than in other industries because not many companies have sufficient track records and credit at this early stage of industry formation. In response, the report highlights the need for government support for technology demonstration and an increase in public procurement related to climate change technologies to lay the groundwork for attracting investment.

The third policy suggestion relates to regulatory rationalisation in response to the rapid changes in the climate technology industry. Given the highly regulated nature of the climate technology industry, policies to reduce barriers to entry are crucial. This can be done by removing or modifying problematic regulations, but ultimately it is important to establish a system for creating, improving and managing regulations in a timely manner so that new and diverse start-ups can do innovative business in the climate technology market. The report calls for a government role in establishing a regulatory management control tower, creating a management framework for regulatory formulation, and building public-private alliances to improve regulation.

Suk-Whan Chang, Chairman of the Asan Nanum Foundation, said: “The Asan Nanum Foundation, together with Samjong KPMG, initiated this study for STARTUP KOREA! because we recognise the importance of the climate technology industry as a new growth engine that will be responsible for the country’s future. We felt that government-led policy support should also be provided to help the industry achieve the targets recently set by various government ministries.” “We hope that empirical support and concrete policies at the government level will be prepared soon, understanding the public good nature of the climate tech industry, in line with the plans to nurture and revitalise the climate tech industry presented at STARTUP KOREA.

“The innovation and technology of climate tech startups are needed to solve the climate crisis, but the foundation for the growth of climate tech startups is slowly being laid,” said Dohyeon Kim, Chairman of Startup Alliance. “We hope that the report will serve as an opportunity for not only policymakers, but also members of the startup ecosystem to take an interest in climate tech startups and create an ecosystem together.”

Youngduk Kim, CEO of Banks Foundation for Young Entrepreneurs D.CAMP, said: “Supporting climate tech startups is important from a business perspective. The bigger the problem, the bigger the opportunity. We hope this report will help climate tech startups find their own growth momentum”.

“The climate crisis cannot be solved by incremental efforts, and the survival of the entire human race depends on the innovation of startups,” said Sungjin Choi, CEO of Korea Startup Forum. “The public should take the lead in creating a market and laying the institutional foundation so that innovative climate technology startups can grow and solve the problem.”