Increasing Carbon Emission Quota
On January 24, the South Korean government increased the carbon emissions quota by 1,700 tons to 539 million tons and added 51 million tons to emission rights in view of companies’ efforts for greenhouse gas reduction prior to the implementation of emissions trading.
Community energy suppliers, industrial complexes, petrochemical companies, cement manufacturers and display panel manufacturers are expected to benefit particularly from the adjustment with the price per ton of carbon emission rights recently tripled from a year ago to 20,850 won in the Korea Exchange.
The government also voted for its second three-year plan on emission trading, which is to be effective from 2018 to 2020. According to this plan, greenhouse gas emission rights, which are currently allocated for free, are to be allocated in return for a payment equivalent to 3% of allowance. Still, the new rule is not applied to industries with higher trade intensities or production costs such as steel and semiconductor.
Those in various industries are opposed to the new rule, claiming that the payment will result in an additional burden of no less than 4.5 trillion won (US$3.8 billion) each year. The government, in response, explained that the payment is optional, the allocation equivalent to 3% is what is to be supplied on a payment basis by the government and the annual burden is estimated at 150 billion won (US$127 million) to 600 billion won (US$513 million).