The Emissions Trading System to start in 2015
May 6, 2012 § Leave a comment
Korea will start green house gas emission trading from 2015 as part of its efforts to curb global warming and promote low-carbon, green growth.
In 2009 Korean Government voluntarily declared it would cut greenhouse gas emissions by 30 percents on a business as usual basis by 2020. The Framework Act on Low Carbon, Green Growths enacted in 2014 to attain this goal entrusted legislators to enact a bill on ETS(emission trading system).
There was a debate, however, on the proper timing of introducing ETS between government and industries. Contrary to the government insisting that benefits of ETS offset the costs, the Korea Chamber of Commerce opposed the bill, saying it would put an additional burden on domestic companies.
On May 3rd, 2012 the National Assembly approved the Act on Allocation and Trading of Greenhouse Gas Emissions despite opposition from industries.
According to the bill, companies with more than a certain amount of greenhouse gas emissions are to be allocated emissions rights as of 2015. Any emissions left unused can be sold to other companies that exceed their emissions cap.
The basic allocation during 2015 – 2020 consists of a free allotment of 95% or more. The legislation also enables a 100% free allocation for industries that show a high level of trade dependence or are liable to lose competitiveness due to ETS.
Separate from the cap and trade scheme in this act, the government will implement the greenhouse gas and energy target management system. Under this system, the government sets obligatory emissions and energy consumption reduction target for the nation’s 458 heaviest corporate polluters and imposes fines on violation of the targets.
Some critics said the ‘target management system’ and ‘cap and trade system’ are likely to overlap in regulating the emissions, putting an additional burden on industries. The Act on Allocation and Trading of Greenhouse Gas Emissions exempted companies allocated emission rights from the target management system to avoid this criticism.
Another concern is that the face-off over the main authority to preside affairs related with ETS between the Ministry of Knowledge Economy, which has focused on green growth and the Ministry of Environment, which has emphasized low-carbon regulation remains unsolved. The enforcement decree needed for the specification of presiding office will be announced later this year.