SEOUL - South Korea launched Asia's first nationwide carbon emissions trading scheme in January. It is part of the government's efforts to reduce greenhouse gas emissions 30 per cent by 2020.
The creation of the world's second-largest cap-and-trade system, after the European Union Emissions Trading Scheme, created a lot of excitement around the world. Locally, concerns about the lack of trading and the government's top-down approach are mounting. Critics question whether the country can possibly meet its ambitious emissions reduction target.
A carbon trading system puts a price on emissions. Initiated by the EU, it requires an official cap on the total amount of greenhouse gases that companies can emit and the allocation of carbon credits, or allowances. These credits can be bought and sold like commodities, with companies that have gone over their limit paying those that have managed to rein in their emissions. The government will gradually lower the emissions cap over the time, thus raising the amount companies have to pay for carbon credits unless they turn greener.
Since the South Korean market opened Jan. 12, trading volume has been minimal. More than half of the 525 companies that were given allowances have filed complaints; some companies have filed lawsuits against the government for "unfair" carbon-credit allocations.
Government stands firm
South Korea is the world's seventh largest greenhouse gas emitter. It is also the fastest growing emissions source among Organisation for Economic Cooperation and Development members, according to the International Emissions Trading Association.
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