Carbon cap conundrumIn a recent radio address, President Lee Myung-bak said that the government will incorporate the opinions of local businesses as it crafts a plan to cap carbon emissions and develops a system that will allow companies to trade the rights to emit certain pollutants.
Lee vowed to examine international trends and the competitiveness level of Korea’s industries to craft a flexible system, a bid to allay some concerns about the economic impact of limiting carbon emissions.
In November, the Presidential Committee on Green Growth proposed a bill to establish such a system in 2013 and enact limits on 468 companies that emit more than 25,000 tons of carbon dioxide annually. Under the plan, companies could buy and sell the rights to release certain amounts of gases such as carbon dioxide into the atmosphere. The government plans to hold a meeting with the ruling party and submit a bill to the National Assembly.
The European Union adopted an emissions trading system in 2005, capping emissions levels and allowing companies that don’t hit the limit to sell the rights to whatever they don’t use.
The United States and Japan, however, are dragging their feet on the issue as their economies slowly recover, despite being aggressive in this area in the past. In a cabinet meeting on Dec. 28, the Japanese government decided to postpone an emissions trading plan - which was initially scheduled to go into effect this year - for an indefinite period. Democrats in the United States also seem to have put the issue on the back burner after losing to corporate-friendly Republicans in the mid-term elections in November.
The business community in Korea doesn’t dispute the necessity of green growth and efforts to curb emissions. Rather, it simply wants to delay any plans to reflect the changed sentiments in Japan and United States, its key export rivals.
Limiting emissions now could have dire consequences for the economy and our largest companies. The manufacturing sector as a whole would have to spend anywhere from 6 trillion won ($5.4 billion) to 14 trillion won on such permits, which could put it at a competitive disadvantage versus other nations.
The system is not without financial merits. A company that emits less than the cap can sell the permits and make a profit, and it would force firms to save energy.
Nevertheless, we should approach this plan with international trends in mind.