Industry leaders force S. Korea to delay carbon trading scheme

Responding to strong opposition from industry to a plan to start carbon emission trading in 2012, the South Korean government may delay the initiative until between 2013 and 2015, according to a presidential secretary.

The announcement is an initial victory for powerful export-led industrial coalition which has voiced considerable dissatisfaction to the plan due to similar delays by competitors such as Japan and the US. The coalition continues to call on the government to shelve the plan entirely.

Under earlier proposals the scheme would have started in 2013, but in an interview with Reuters, presidential secretary for green growth and environment Kim Sang-Hyup admitted the launch could be delayed following extensive lobbying from industry groups.

"It is no longer an issue whether or not the government would implement cap-and-trade systems. We aim to get parliamentary approval on the bill before its general session," he said. "However, we will fully reflect industrial opinions in the bill to prevent them from reducing international competitiveness and help them minimize any damage."

The South Korean Parliament's general session begins on September 1 each year. The revised bill would allow for a higher proportion of emission allowances to be handed for free to heavy emitters from the 90 percent originally planned, but not as high as 100 percent, Kim said.

The government had originally intended to sell 10 percent of allowances at auction, but Kim said that while some auctioning would remain the proportion of sold allowances will be reduced. However, he rejected any suggestion the government was watering down its commitment to the scheme, insisting "we are not backing off".

South Korea's scheme would cover about 60 percent of the nation's greenhouse gas emissions. If passed by legislators, it could become the region's second cap-and-trade scheme after New Zealand's.

Major business groups on Monday filed a petition to the government calling for a moratorium on the plan saying that the plan of eventually having 100 percent of credits provided at a cost via auctioning could cost local manufacturers up to 14 trillion won (USD12.57 billion).

Emissions from South Korea's economy have doubled since 1990, are slightly larger than Australia's nearly 600 million tonnes and, on a per-capita basis, are on par with some European nations. The government aims to reduce greenhouse gas emissions by 30 percent from projected levels by 2020.