• Studies have pointed out that low carbon prices and high price volatility in the emissions trading system (ETS) market may explain why commercialization remains challenging despite active research and development of low-carbon production methods.

• In order to encourage companies to adopt low-carbon technologies, several European countries, including the Netherlands and Germany, have introduced or are planning to introduce the carbon contract for difference (CCfD).

• The CCfD is a long-term contract in which the government and companies agree on a strike price for a single project. If the carbon price in the market falls below the strike price, the government will pay the difference. If the carbon price exceeds the strike price, companies will pay the difference to the government. This creates a stable revenue flow structure that reduces uncertainty and lowers total and project funding costs.

• To effectively introduce and operate the CCfD in Korea, the following elements should be considered in the system design:

: Selection of candidate technologies to be supported and recruited

: Determination of the CCfD strike price and fund allocation methods

: Determination of the CCfD support scale and budget procurement methods