The Impacts of Government Support Schemes on Technological Innovation in High CO2 Emitting Industries: The Case of Korea

Korea’s industrial structure faces a critical challenge: the proportion of high CO2 emitting industries in the GDP decreased during the 2000–2021 period, whereas their contribution to national CO2 emissions increased. This study evaluates the impact of the government’s comprehensive support system—encompassing seven areas: tax incentives, general funding, financial support, human resource development, technical support, certification, and public purchase—on technological innovation in high CO2 emitting industries. Using the Probit model on data from the Korea Innovation Survey 2022 (2019–2021) and a financial statement database of firms, we analyzed firms in high CO2 emitting industries. The findings reveal that among the various forms of government support, human resources development ranks highest in its positive impact on innovation, followed by tax incentives and general funding. The results suggest that effective climate policy must shift to prioritize targeted technical and knowledge-based assistance to overcome the specific innovation prevalent in high CO2 emitting industries.