Korean cap-and-trade legislation adds to global momentum
After many months of delay in the face of lobbying from business groups, South Korea has finally passed legislation that creates a cap-and-trade system to control its greenhouse gas output. In the end it was near unanimous, with the new emissions trading scheme, due to start in in January 2015, being passed by 148 votes in favor and none against with three abstentions.
The 2015 start-up coincides with new cap-and-trade schemes in Australia and California but is two years behind the Korean government's original schedule. Nonetheless, passing the Korean legislation marks another very significant step in the globalization of GHG emissions trading.
Within the last twelve months the number of such schemes on the statute books has gone from three (operating in the European Union, New Zealand and among the Northeast and Mid-Atlantic states of the US) to seven if one includes the pilot schemes in four Chinese municipalities and two provinces.
Jockeying is now underway to link these these cap-and-trade schemes to create a broader global market. Since passing its own carbon emissions legislation Australia has been lobbying to create a pan-APAC carbon trading market. And, responding on Twitter to the news, EU climate action commissioner Connie Hedegaard described South Korea as a "natural EU co-operation partner", suggesting the possibility of connecting with the world's largest carbon trading system.
Although, somewhat ludicrously, South Korea is not obliged to reduce its GHG emissions under the Kyoto Protocol, the government has pledged to cut them by 30 per cent from projected levels by 2020. The country is currently the world's eighth largest emitter and the fastest growing source of emissions among the 34 nations of the OECD, according to a Bloomberg New Energy Finance report in February.
Details of the new scheme have yet to be finalized but it is expected to cover around 60 per cent of the country's carbon output by focusing on industrial operations producing more than 25,000 tonnes of CO2 per year.
Although 95 per cent of the emission permits will be given away for free in the first six years, the Federation of Korean Industries has nonetheless complained that the scheme will add initial costs of 4.7 trillion Korean won (USD4.15 billion).
The government, however, likes to emphasize the long-term benefits to South Korean the business sector of reducing energy consumption and leading the market in green goods.
"This is to develop green industry technologies and technology to reduce energy consumption, and develop those as one industry," Yang Soogil, chairman of the Presidential Committee on Green Growth, told news agency Reuters. "Ultimately we want to organise markets for green business ahead of other countries."