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South Korea has passed a law launching its emissions trading scheme (ETS) beginning in 2015, making the country the third in the Asia-Pacific region, and the first in Asia, to commit to a cap-and-trade scheme.
E-World 2025
Korea is the eighth-largest carbon emitter globally and has pledged to reduce CO 2 emissions by 30 per cent below business-as-usual (BAU) by 2020.
“Our government’s thought was that we had to keep our promise by introducing the best policy choice – which is the ETS,” said Nam Kwang-hee, director general of the Presidential Committee on Green Growth (PCGG), which authored the bill.
“It was a very difficult task for us to pass our ETS bill. We had a lot of opposition from industry, [but] despite this opposition, we managed to pass this bill through bipartisan cooperation,” Nam said.
The environment ministry has launched a voluntary “cap without trade” Target Management System (TMS) to prepare industry for compliance with the bill.
From 2015, only smaller installations emitting under 25 000 tonnes of carbon dioxide equivalent and firms emitting under 125 000 tonnes will continue with the TMS. Participation in the ETS will be mandatory for all installations and firms with emissions above these levels.
Currently, a trio of three-year phases are planned, with a minimum of 95 per cent of allowances given for free in the first two. Selected industries will receive 100 per cent of their allowances for free during these phases, said Nam.
Details of who will receive free allocations and the third-phase rules are still being decided by the PCGG, and to be announced via presidential decree.
“We haven’t decided which ministry will be responsible for managing this ETS bill, and that is a very important element,” said Nam. The first draft of the presidential decree should be ready for review by ministries, industry and the public by the end of May, Nam noted.
Despite its passing, industry opposition to the bill is not over. “Before the bill was passed they fought to stop the bill. Now they will fight for less pressure on them in the design and regulation of the scheme,” said Kim Sung-woo, Asia-Pacific head of sustainability and climate change at consultancy firm Samjong KPMG.