The Korean National Assembly has passed, with the support of the ruling and opposition parties, a bill to implement a carbon trading system. Korea is one of the fastest-growing emitters of greenhouses gases in the industrialized world because of, inter alia, an over reliance on the use of coal, inefficient use of resources and lack of a consistent environmental management program. Korea, according to the International Energy Agency, was the 8th largest carbon emitter in the word in 2009.
The Korean cap-and-trade system will be effective from 2015.
There are many issues that are not addressed in the bill in Korea. Many of the major details have been delegated to the president or will be addressed in future bills including:
- Availability of International Offsets
- Calculation for determining the amount of carbon emission
- Feed-in-tariffs for renewable
- Renewable energy quota
- Enforcement Mechanism
- Implementation of a Carbon Trading Market
We expect the system will benefit energy management and like companies. Many of the large international players, in this industry, either have small or no footholds in the Korean market.
The penalty for non-compliance is three times the prevailing market price with a cap of KRW 100,000 per ton.
Sean Hayes, IPG’s Co-Chair of the Korea Practice Team, may be contacted at: SeanHayes@ipglegal.com
IPG’s Energy & Natural Resources Team is one of the leading and most experienced teams in Asia because of working in Asia for over a decade on some of the most noteworthy energy and natural resources projects.
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