S. Korea to maximize benefits from U.S. IRA in battery, renewable energy fields: industry chief

All News 11:34 December 29, 2022

SEJONG, Dec. 29 (Yonhap) -- The South Korean government will strive to maximize the benefits from the U.S. Inflation Reduction Act (IRA), expected to create more business chances for local battery and renewable energy firms, while minimizing its fallout on carmakers, Seoul's industry chief has said.

The law, signed by U.S. President Joe Biden in August, is one of the trickiest pending trade issues for the two sides over its discriminatory features against South Korean and other foreign carmakers, as it gives up to US$7,500 in tax credits to buyers of electric vehicles assembled only in North America.

Hyundai Motor and Kia Corp. are feared to lose ground in the U.S. market, as they produce EVs at domestic plants for export to the United States.

"We have been swiftly and strongly pushing to address the concerns, while maximizing national interests under the law. We've been in close consultation with the U.S. government and Congress to have them reflect our demand, and working together with the European Union for joint responses," Industry Minister Lee Chang-yang told reporters Wednesday.

He said the Seoul government seeks to boost exports of eco-friendly cars for commercial purposes, as the vehicles are still eligible for tax credits though they are assembled outside North America.

South Korea's battery and solar and wind power generation fields will also be able to capitalize on the IRA, as it calls for tax incentives for related developers and investors and a significant investment in renewable energy technologies by the U.S. government, according to the minister.

"More business chances will be available in those sectors. The government will boost cooperation with private entities to help them expand their presence in the U.S. and the broader markets," Lee said.

Earlier this month, South Korea sent an official written opinion to Washington on tax benefits for clean hydrogen and fuel production and commercial eco-friendly cars, following the first input on EVs and related sectors last month.

Biden recently acknowledged that the law may have "glitches" and hinted at making "tweaks" to it, though any revision seems unlikely anytime soon given the administrative and congressional procedures in the U.S. regarding the matter, according to officials.