CO2 Policies
The emissions trading system starts next year. But a subsidy on low-carbon vehicles, which was supposed to start next year as well, has been delayed until 2021.
In a political decision sense, there might be adverse effects on Korean industries if the two systems become effective at the same time. The government decided so after the economic ministerial meeting held on Sept. 2 in which a national emissions quota and subsidies on low-carbon vehicles were discussed.
Choi Kyung-hwan, deputy prime minister for Economic Affairs and minister of Strategy and Finance, said, “The emissions trading system will start next year as planned to encourage overall industries to reduce greenhouse gas. However, subsidies on low carbon vehicles will be delayed until late 2020, which is the target term of the Framework Act on Low Carbon, Green Growth.”
The government, considering its international credibility, decided to implement an emissions trading system as planned. So, national emission quota plans naming the industries to be assigned with emissions rights and the total emissions limit will be set up during the phase one period from 2015 to 2017.
But relief plans will also be created in order to minimize the burdens upon industries, which are expected to strongly oppose the move.
This includes a 10 percent emissions reduction in all industries, adjustment of the emissions quota of indirect emissions and power generation industries to the level of 2013-2014 records, and the formation of a per-ton emissions price at 10,000 won (US$9.80). In particular, to lower the burdens of companies that want to buy more emissions rights if the price of emissions rights surges, market stabilization measures will be promoted as well.
Deputy Prime Minister Choi added, “While working on the long-term Business As Usual [BAU] started this year, the BAU from 2015 to 2020 will be reviewed again.”
However, strong opposition is expected from industries that emit more greenhouse gases, including the power generation, transportation, and industrial waste industries. They have been insisting that the multi-trillion won in additional costs will be incurred purchasing additional emissions rights when the emissions trading system becomes effective.