South Korea opened its new emissions trading system today, with firms able to buy and sell credits on the Korea Exchange (KRX).
Said to be the second largest carbon trading scheme in the world, it is meant to cut the country’s greenhouse gas emissions by 30% by 2020 (compared to a business as usual baseline).
Organisations able to trade are corporations given emissions allowances by government, plus public financial institutions such as the Industrial Bank of Korea, Korea Development Bank and Korea Exim Bank.
Ahead of the opening, the Ministry of Environment said the amount of credits likely to be traded “will be rather small”, claiming this was based on the early example of the EU ETS and China’s emissions trading system.
Analysts at PwC expected the market to cover more than 500 companies in industries such as oil, mining, steel and cement. To make sure carbon emissions are reduced directly in Korea, rather than abroad, for the first few years of the trading scheme no international credits can be bought.
Today’s news was hailed as the “first step in an important year” for carbon markets by the International Emissions Trading Association (IETA).
Dirk Forrister, IETA President and CEO said: “The start of South Korea’s ETS is a significant milestone for Asia, marking the first national carbon market in the region.”