New carbon market gets green lightKorea will introduce a carbon exchange market in 2015, the Finance Ministry said at a public hearing yesterday.
The move indicates that the country, new home to the headquarters of the Green Climate Fund, a multilateral financing organization, is demonstrating its commitment to combating global warming.
The Ministry of Strategy and Finance unveiled its basic plan to start the system two years after the government first announced its intent to participate.
For 10 years through 2024, the finance minister will oversee the carbon exchange market as emissions permits commissioner.
Targets are companies that release more than 125,000 tons of carbon emissions over three years and individual factories that release more than 25,000 tons.
Each company or factory will be assigned emission caps by the government. If they fail short of the allowable limit, they can sell the “right” to their unused emissions to other companies.
Businesses that release more emissions than permitted without acquiring the right to exceed their quota in the form of so-called certified emission reductions (CERs) must pay penalties equivalent to three times the market price of carbon dioxide, which currently trades for 100,000 won ($95.10) per ton.
The carbon emissions permit system is being executed in 30 countries, including the members of European Union, New Zealand and Australia. Some parts of the United States, Japan and China also have implemented the system. From 2015, China, Mexico, Chile and Brazil will make a full implementation, according to the Finance Ministry.
Local businesses fret about mounting costs since the government decided two years ago to enforce implementation of its carbon emissions trading system.
The Ministry of Environment decided to give companies a grace period from 2015-17 before issuing fines for excess carbon emissions.
The carbon exchange market is part of the government’s goal to cut 30 percent of the country’s total greenhouse gas emissions, estimated to reach 570 million tons by 2020, under the law on low carbon and green growth.
Currently, the government regulates 584 companies that use significant amounts of energy.
According to data by the Environment Ministry, Korea’s total greenhouse gas emissions jumped 9.8 percent to 668 million tons in 2010, compared to 609 million tons in 2009.
“By implementing the emission permit trading system, the country can minimize negative effects on GDP and job growth,” said Park Il-young, director of future social policy bureau at the ministry. “In the fields that are sensitive to carbon emissions regulations, businesses will be able to maintain competitiveness by adapting to the international system.”
The official said an advantage of the international system is that local companies can use their permits bought at home even in other countries where the system is in force, helping companies make efficient investment abroad. Australia and EU countries will start trading the carbon emission permits among business of the relevant countries from 2015.
Globally, the total carbon emissions trading market was valued $142 billion in 2010, compared to $10.8 billion in 2005, according to a government report.
BY SONG SU-HYUN [firstname.lastname@example.org]