Companies hoard their carbon emission creditsThe government will pressure companies to actively trade their carbon emission rights as some are stockpiling them, depriving companies that need them.
The Ministry of Strategy and Finance on Wednesday said companies that have accumulated too many carbon emission rights during the 2015 to 2017 period will see a significant amount of their quotas reduced from 2018 through 2020.
Companies should stockpile less than 10 percent of the annual average quota that received from the government plus 20,000 tons. For example, a company with an annual average carbon emission quota of 1 million tons should not save more than 120,000 tons.
Companies have been letting their carbon emission rights pile up instead of trading them in the market because they are uncertain about future quotas, particularly for the 2018-2020 period.
Carbon emission rights are given for three-year periods: from 2015 to 2017 and from 2018 to 2020.
Among 522 companies, 283 saw their carbon emission falls far below the government quota, allowing them to save rights to 15.5 million tons of emissions. They held onto rights for 13.6 million tons of emission rights instead of selling them on the market. As a result, the prices of carbon emission rights traded on the market went up.
As of February a ton of carbon emission rights was valued at 24,300 won ($21.55), up 45 percent from last year’s average of 16,737 won.
“Companies in need of the carbon emission rights have trouble buying them,” said Oh Il-young, the Finance Ministry’s director for climate change policy. “If the shortage of tradable carbon emission continues, the price will continue to rise and companies that need them will have to pay too much.”
Oh said when the prices get too high there’s a possibility that companies won’t buy rights and just pay fines for excess emissions.
“Although we could leave it to the market… policy-wise [the goal is to] reduce overall emissions and therefore there is a need [for the government] to intervene,” Oh said.
Companies that struggled to buy emission rights have been using their own emission quota for the following years. But that is not sustainable, the government says.
The maximum ceiling that companies could use of carbon emission rights for future years between 2015 and 2017 was 20 percent. The government is lowering that maximum limit to 15 percent. This means that if a company uses 10 percent of the carbon emission rights for the following year in 2018, in 2019 they can only use 5 percent of the 2020 carbon emission quota.
BY LEE HO-JEONG [email@example.com]
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