The government’s plans to launch a carbon emissions trading scheme next year have become a hot subject of national debate because of the strong call from industries to delay it until 2020. New Deputy Prime Minister Choi Kyung-hwan’s pro-business stance is adding to the intensity of the debate.
The debate surrounds Korea’s plans to open a carbon trading market next January to impose what industries here say would be the world’s toughest caps on greenhouse gas emissions. The scheme is in line with the Seoul government’s commitment in 2009 to restrict greenhouse gas emissions to 30 percent below business-as-usual levels by 2020.
The National Assembly enacted the carbon trading law in 2012, under which industries are given a cap on carbon emissions and those who exceed the limit must buy permits for more emissions. But the cap-and-trade scheme was put on hold for two years in the face of strong opposition from businesses.
In two years’ time, however, there has been little change in businesses’ position that the new regulations are too costly and would damage the competitiveness of Korea Inc. as a whole.
They argue that it is too early for Korea to launch the carbon trading market. They note that countries like China, the U.S. and Japan, the world’s major polluters, have yet to start it in earnest. The Environment Ministry counters that those countries are running a carbon trading scheme on a limited basis and will expand it soon. Moreover, the ministry notes that the European Union and 38 other countries have already adopted the carbon trading scheme.
Industry players say the emissions cap for 2015-2017, 1.64 billion tons, is too low and will incur 28 trillion won in penalties to be paid by local companies. The Environment Ministry refutes this argument as well, saying that the estimate is based on the projection that all businesses given emissions cap will pay penalties without trading permits. The Environment Ministry’s own projection is that industries will have to pay only 1.1 trillion won. But private experts believe the government projection is too mild and that there is no doubt that the emission caps would impose a heavy burden on businesses, especially manufacturers, and energy and utility businesses.
But businesses can no longer look at environmental regulations only from the perspective of costs. Besides, there is more at stake in Korea’s opening of the carbon emissions trading market.
Above all else, Korea’s plan to restrict greenhouse gas emissions is in line with its commitment to the world. Any significant backpedaling on such a promise would taint the nation’s reputation as the world’s leading advocate of an eco-friendly economy and sustainable development. That is what we promised when Korea was proudly chosen as the site for such international organizations as the Global Green Growth Institute and the Green Climate Fund.
A carbon emissions trading system would also bring about benefits to the Korean economy, like development of new growth engines in green technologies and a boost to local companies’ global competitiveness. Moreover, the planned carbon trading market, which is expected to become the second biggest after the European Union, has the potential to make Korea a regional hub for carbon trading.
All things considered, Korea needs to open the carbon trading market. But as Choi recently said, the government plan needs some adjustment, like recalculation of the baseline for the business-as-usual levels, to reduce the burden on industries.
This is necessary because some local and foreign experts predict that the Korean carbon price may be the highest in the world because the emission cap is far below the expected emissions level.