An institutional base will be established for Korean exporters to cope with the “green trade barrier” as early as this year. According to the Ministry of Trade, Industry and Energy on December 27, the South Korean government is planning to initiate a pilot project within this year with regard to the Tradable Green Certificate (TGC).
The TGC is related to new and renewable energy purchase and use by companies not doing power generation business and their investment in the sector via special purpose companies. The purpose of the TGC is to regard the purchase, use and investment as their new and renewable energy business performance. At present, non-power generation companies cannot obtain, buy or sell the Renewable Energy Certificate (REC) at all in South Korea. Under the circumstances, a number of South Korean exporters have had to relocate their factories abroad or give up on supply since last year with global buyers demanding the history of new and renewable energy use. The number of RE100 members amounts to 102 now, including Google, BMW, HP, MS and Nike.
Once the TGC is introduced, however, South Korean companies can have records of new and renewable energy use even without manufacturing facility relocation. Last year, the RE100 companies used 22,971 GWh of renewable energy and the use based on REC purchase accounted for 59.6% of it.
South Korean exporters are welcoming the news although the introduction of the TGC is rather late. “In South Korea, private-sector companies have no way to accumulate the records,” Samsung Electronics explained, adding, “However, the introduction of the TGC will contribute to the South Korean government’s Renewable Energy 3020 Initiative as well as the companies’ response to global buyers’ demands.” Samsung Electronics uses 16,000 GWh of electric power a year but renewable energy currently represents only 1% of it.
Based on the introduction of the TGC, companies can also save the money they have spent to purchase carbon credits. The amount of the money is estimated to reach 17.59 trillion won in 2030 according to the National Assembly Budget Office and 32 trillion won according to the Korea Environmental Industry & Technology Institute. “South Korea is scheduled to reduce greenhouse gas emissions 37 percent below projected business-as-usual (BAU) emissions by 2030 and reduction abroad accounts for 11.3% of it,” said the Korea Energy Agency, continuing, “Once the TGC is adopted, more greenhouse gas emissions can be reduced at home.”