South Korean government found that traffic commuting between rural and urban areas increased, producing tremendous air pollutions. Therefore, official agency tried to focus on public transportation as a preliminary means of reducing carbon emissions and enforced the adoption of CNG (compressed nature gas) buses. CNG buses are cleaner, quieter and more importantly safer than buses running on natural gas.
South Koreafirst started development of the CNG bus project in 1992. The goal was to reach 22,000 CNG buses, 1000 CNG garbage trucks, and 440 CNG stations by 2010.
In terms of subsidies and tax refund, government subsidized 22,500 U.S. dollars for every purchase of CNG bus and 60,000 U.S. dollars for every purchase of CNG garbage truck, and provided 700,000 dollars of low annual interest loan at 4.5% to every CNG station. In addition, buyers of CNG buses can get $10,000 sales tax reduction and every CNG station are entitled to $15,000 reduction in corporate tax.
South Korean government implemented new taxation on fuel, increasing fuel oil tax and decreasing liquid oil tax to widen the gap in order to encourage consumers to choose more environmentally sustainable energy.