FACTBOX-S.Korea moves toward carbon cap-and-trade

Tue May 4, 2010 11:45am IST

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 SEOUL, May 4 (Reuters) - South Korea, Asia's fourth-largest
economy, says it will finalise plans in September for an
emissions trading scheme covering the majority of the nation's
carbon pollution.
 Trading is likely to start from 2012 and is part of a
two-step plan by the government to mandate emissions cuts by
big polluters. The trading scheme will allow firms to set a
market price for carbon and other industrial emissions.
 South Korea last year set a 2020 emissions reduction
target, aiming to curb greenhouse gases by 30 percent from
projected levels if no action were taken. [ID:nSEO204081]
 Although the target is voluntary, the government will
impose regulations to force major emitters to comply as part of
the nation's efforts in the broader international fight against
climate change.
 Following are details of the scheme known to date and the
emissions profile for the South Korean economy, which is
heavily dependent on oil and gas imports.
 PROPOSED EMISSION REDUCTION TARGETS
 South Korea implemented a green growth law in April that
set up the regulatory process to achieve the 30 percent
reduction target.
 While the environment ministry supervises the overall
scheme, four ministries will set individual emission targets
for 600 leading companies responsible for 70 percent of the
country's total emissions, or more than 90 percent of
industrial emissions.
 DATES FOR IMPLEMENTATION
 The master plan will be set up by September. The biggest
emitters, which produced more than 125,000 tonnes of CO2 in the
past three years, will be given a grace period before they are
subject to mandatory cuts.
 This extra time is designed to help them set up
implementation plans, which are to be submitted by March 2011.
They must begin taking action by April 2011. No detailed
incentives or penalties for the cuts have been decided.
 Major emitters include the world's biggest electronics firm
by revenue Samsung Electronics (005930.KS) and the world's No.4
steelmaker POSCO (005490.KS). POSCO accounts for 10 percent of
the country's emissions at 60 million tonnes per year.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
  For graphic on South Korea's emissions data by sector
  here
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 The nation's emissions were just over 600 million tonnes in
2007, slightly larger than Australia's, a large consumer and
exporter of coal.
 EMISSION TRADING PLANS
 In addition to the cuts, the Presidential Green Growth
Committee is separately drafting a bill for the trading of CO2
and other industrial gases to submit to parliament by
September.
 The bill will decide the ministry to run the plan from
among Knowledge Economy, Environment or Strategy and Finance.
The actual trading plan will be managed by either Korea Power
Exchange, Korea Exchange or a new commodities exchange to trade
emissions.
 Korea Exchange has been promoting emissions trading and
possible derivative products and is looking at cross-listing
emissions products traded on other international exchanges.
 With the bill, the presidential committee plans to adopt a
"cap-and-trade" plan, under which firms facing a greenhouse gas
emission limit can buy allowances from other polluters to stay
under their emissions cap.
 The committee is also thinking of trading certified
emission reductions (CERs). These are tradeable offsets or
credits that are created under a domestic version of a U.N.
scheme that promotes and rewards investors of clean-energy
projects.
 Linking the trading scheme with bigger markets such as
China in future is also being considered.
 (Sources: Environment Ministry and the Presidential Green
Growth Committee)
 (Reporting by Cho Mee-young; Editing by Jon Herskovitz and
David Fogarty)

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