The carbon emissions trading system has been put in place for six months, but the conflict between the government and industry is being exacerbated over details such as the emission allowance.
On July 8 and 9, the Ministries of Environment, Strategy & Finance, and Trade, Industry and Energy had a meeting with industry associations and corporate directors to discuss the matter. Similar closed meetings were held late last month and early this month, too. However, the gap between the two sides still remains wide.
One of the major issues is the greenhouse gas emissions estimate. The industry has claimed that the emission allowance is too low for each company, because the national allocation plan recently announced by the Ministry of Environment is based on the BAU calculated in 2009. According to the plan, a total of 1.64 billion tons are allocated for the first period of the plan from 2015 to 2017.
Under the circumstances, the associations and corporations have demanded that the newly-updated BAU be open along with the basis of the calculation of the total emission allowance in the national allocation plan. The government reexamined the BAU last year but has not opened the result.
“The BAU estimates have not changed between 2009 and 2013, and there is no problem concerning emission allowance planning,” the government said, adding, “We will not change the plan and we have not opened the result because our international reliability would be compromised if the BAU announced by the previous administration was changed.” Various industrial sectors, in response, are opposed to the government’s bulldozer-like policy management not reflecting Korea’s industrial structure and reality. “I have no idea why Korea is in such a hurry, with even the United States and China having yet to adopt the emissions trading system,” an industry insider stated.
Another hot-button issue is reverse discrimination caused by the same burden on the companies that have been engaged in the early reduction of greenhouse gas emissions. It is said that those which already built eco-friendly systems could suffer damages due to the government’s allocation of uniform upper limits.
According to industry sources, the penalty associated with the emissions trading system could exceed 28 trillion won (US$27.7 billion), and the shortage of carbon emission rights is likely to occur across industrial sectors, which is expected to result in a trading breakdown. Nevertheless, the Ministry of Environment affirmed during the meeting that it would not postpone the enforcement of the system, change the total emission allowance, or open the 2013 BAU.