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By Kim Jung-soo, staff writer
During a Wednesday evening plenary session, the National Assembly approved a law on greenhouse gas emissions rights allocation and trading. The bill will go into effect in 2015 as part of an effort to curb global warming.
According to the legislation, single workplaces with greenhouse gas emissions of more than 25,000 metric tons of carbon dioxide per year, as well as companies with more than 125,000 MtCO2e of total emissions for all of their workplaces, are to be allocated emissions rights from a government allocation committee as of 2015. Any greenhouse gas emissions left unused can be sold to other companies that exceed their emissions cap.
The terms would apply to around 450 companies that account for 60% of the country’s greenhouse gas emissions. These include companies with workplaces generating large greenhouse gas outputs, such as steel, cement, electricity, and paper producers, as well as businesses that consume large amounts of energy.
The basic allocation is to consist of a free allotment of 95% or more of the total, as well as up to 5% in paid allotments. The legislation also enables a 100% free allocation for industries that are deemed likely to lose substantial competitiveness in the international market or move their workplaces overseas if reductions are required. Businesses that emit greenhouse gases above their cap are to be assessed a penalty of up to 100,000 won (about $90) per excess ton or up to three times the average market value for emissions rights.
The Presidential Committee on Green Growth hopefully predicted that the system would encourage South Korean businesses to play a leading role in the world carbon market.
“Now that an agreement has been reached to set up a mandatory greenhouse gas reduction system with all applicable countries participating as of 2020, there is a greater need for preemptive steps to prepare,” the committee said.
But environmental groups said they were not optimistic about the effectiveness of the legislation, noting that industry pressures resulted in the inclusion of provisions increasing the rate of free allotment and weakening penalties for noncompliance.
Experts emphasized the need for rigorous monitoring of allocation and verification to ensure that the trading system works properly. They argued that excessive allotments of emission rights not only would fail to reduce greenhouse gases, but might also lead some companies to sell off their rights without making any reduction efforts at all.
Another concern is that the legislation, reviews and certification for emissions verification will be conducted by different presiding offices rather than a single organization. If those offices apply differing standards of scrutiny, this would fail to guarantee equivalency for different companies, which could lead to distrust from the international community. For this reason, observers are looking ahead to the enforcement decree enactment process and focusing on the face-off between the Ministry of Knowledge Economy, which has primarily advocated for industry, and the Ministry of Environment, which has demanded compliance with international standards.
“It is significant to see the country’s first-ever intensive greenhouse gas reduction measures,” said Institute for Climate Change Action director Ahn Byung-ok. “But there are concerns about how rigorously they will be able to allocate and manage emissions rights.”
　
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