Forced Disadvantage
China, the world’s number one greenhouse gas emitter, emitted 9.084 billion tons of greenhouse gases in 2012, which was equivalent to one-third of the global total. It was followed by the United States, which has emitted more than six billion tons this year.
Still, American and Chinese corporations are more laid-back than their Korean counterparts when it comes to greenhouse emissions reductions, because their governments are protecting their business. For example, some governments are only implementing emission trading systems on a regional basis and in a limited number of industrial sectors.
In contrast, the Korean government has led the introduction of the trading system and environmental regulations and added the burden to Korean companies already struggling in the global economic recession.
Except for indirect means such as energy structure diversification and energy efficiency improvement, no direct regulation associated with greenhouse gas emissions is found in China’s national economic development plan for the five-year period from 2011 to 2015. In addition, China is not one of the Annex-1 countries, according to the Kyoto Protocol.
The United States, in the meantime, refused to ratify the protocol adopted in 2001 from the get go. Instead, it opted for the Regional Greenhouse Gas Initiative (RGGI). The initiative covers no more than nine states, including Connecticut, and greenhouse gas emissions in the thermal power generation sector only. The introduction of a federal government-level emission trading system was discussed, but it was rejected in the Senate four years ago. The Environmental Protection Agency (EPA), in 2010, made it mandatory for 8,000 or so major power generation and industrial facilities to make regular reports on their emissions quantities. However, the program has entailed no restrictive measure.
“Kyoto Protocol is a Mere Scrap of Paper”
Canada withdrew from the Kyoto Protocol two years ago in order to protect its industries, and Russia and New Zealand decided not to participate in the renewed protocol effectively until 2020. Under the circumstances, it has become an incomplete international agreement covering only 15 percent of global greenhouse gas emissions.
It is said that the Korean government is too eager to comply with the protocol despite all this. Korea is a non-Annex-1 country, but volunteered to declare in 2009 that it would maintain its emissions at 70 percent of the BAU by 2020. “The former Lee Myung-bak administration, which put up low-carbon green growth as one of its national policy goals, suggested an unnecessarily high emissions reduction target while hurrying to show off its ambitions,” an industry insider commented.
Experts are also pointing out that the government is making unnecessary haste concerning the nationwide trading of carbon emission rights scheduled to start next year. At present, such nationwide schemes are or will be in place only in New Zealand, Switzerland, Kazakhstan, Russia, Turkey, Ukraine, Brazil, Chile, Mexico, and Thailand. In China, carbon emission trading is testing in just five cities and two provinces of Guangdong, Shenzhen, Beijing, and Shanghai. Canada has limited the trading to Quebec, too.
Reverse Discrimination Looming Large against Korean Industry
Last month, the Bank of Korea said in its report that the international cooperation for greenhouse emissions reduction is insufficient, and some countries may be subject to reverse discrimination in the form of increasing cost burdens and weakening industrial competitiveness.
The business community’s consensus is that the reverse discrimination is near at hand. For example, the petrochemical industry has to reduce its emissions by 15.4 percent, according to the government’s emission rights allocation plan, and the only way for them to meet the target is production cutbacks. “The petrochemical industry is one of the sectors where large capital expenditures are inevitable and greenhouse emissions reduction by 1 percent or more is possible by no means,” the Korea Petrochemical Industry Association claimed. It added, “We may have to pay a fine of 780 billion won [US$708 million] for the next three years for being unable to attain a goal that cannot be achieved from the beginning.”
Economists point out that the bulldozer-like introduction of the new systems not allowing for the economic environment, with local companies not yet stable enough, is sure to result in market distortions and an increase in the burden on the government. “The policy needs to focus on the protection of major industries and incentives for those adopting carbon reduction techniques,” one added.