Carbon Credit Trading Price Jumps over 50% Recently
The carbon credit trading price jumped more than 50 percent this year alone and companies emitting more carbon, such as steelmakers, cement manufacturers, oil refining companies and petrochemical companies, are getting increasingly tense.
Hyundai Steel, which emits the second-largest amount of carbon in South Korea, earmarked 65.4 billion won for carbon credit trading from 2018 to the third quarter of this year. The allowance is estimated to increase to over 100 billion won soon with the company’s operating profit for this year estimated at 114.2 billion won.
Enterprises’ carbon credit purchase burden is continuing to increase. According to the Korea Exchange, the greenhouse gas credit trading price per ton rose from 17,800 won to 27,000 won from Aug. 19 to Dec. 28. The price is affecting the performance of those companies. For example, Hyundai Steel’s credit purchase spending for the period of 2018 to 2020 increased no less than 20-fold compared to the three preceding years.
The problem is that those companies are required to invest in carbon reduction facilities while purchasing the credits. The European Union and the United States are likely to introduce carbon border taxes in the near future and whether the investment is made or not may constitute a new trade barrier down the road. Besides, the South Korean government’s plan to achieve carbon neutrality by 2050 is adding business reorganization burden to those companies. According to industry sources, their required carbon neutrality cost spending is estimated to amount to 400 trillion won for three decades to come.