Emissions cap for next year finally decided on

The government set a cap on carbon emissions for next year of 538.5 million tons, the same as the amount permitted between 2015 and 2017 and 85.18 percent of the 632.2 million tons of greenhouse gas expected to be emitted in 2018.

The decision was made on Tuesday during a cabinet meeting and will affect 591 companies.

The government said it will be deciding the carbon emission cap for 2019 and 2020 in the first half of next year.

Initially, the 2018 to 2020 carbon emission cap was supposed to be introduced by last June. That deadline was missed due to the impeachment and removal of President Park Geun-hye and the election of Moon Jae-in in May.

The postponement of the 2019 and 2020 plan was the result of changes in the Moon government’s energy policy, including the phasing out of nuclear and thermal power plants. The government recently laid out an energy policy that would reduce active nuclear reactors from the current 24 to 18 by 2030 while converting two of new thermal power plants into LNG generators.

“We were in a situation where we had to consider the changes in energy policies including fine dust and the phasing out of coal-based energy,” said Oh Il-young of the Finance Ministry’s climate change policy division.

Oh added that it laid out the carbon emission allowance for next year first because power companies will be affected if there was a further delay. According to the government, 20 or so power companies account for half of the carbon emissions allowance.

But another factor in the late decision was a continuous changing of the government department in charge of emission caps.

The carbon emission policy, which was initially handled by the Ministry of Environment, was transferred to the Finance Ministry in June 2016. The government is currently in the process of handing it back to the Environment Ministry, which will take effect in January.

This government inconsistency has been affecting the emissions trading market.

Due to the delay in the announcement of next year’s cap, the value of a single ton of carbon emissions credit surged 40 percent to 28,000 won ($25.76) on Nov. 23 compared to the beginning of the year, when it was traded in the 20,000 won range.

It has since stabilized in the 21,000 won range.

Industries are complaining about the delay as they plan their investment and emissions strategies.

Since the three-year-old market isn’t very active, even slight disruptions can have a huge impact on the price of carbon emissions credits.

The carbon emission allowance was first adopted in 2015 after the Paris climate agreement. Under the international accord, the Korean government has agreed to cut 37 percent of the business-as-usual (BAU) levels by 2030.

While it was expected that greenhouse gases emitted from Korea would reach to 850.6 million tons by 2030, the government is supposed to cut them to 536 million tons.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]