South Korea to exclude international carbon offsets from ETS till 2020

South Korea will ban 460 companies from using international offsets in its planned ETS, which will start in 2015.The move could raise the cost of the scheme and protect the huge national chemical industry providing a home for millions of controversial credits coming from two of the country’s biggest plants. According to a government proposal published on the Prime Minister’s website, industries will be forced to meet their emissions reduction target only through domestic carbon cuts until after 2020. Kwang-Hee Nam, director general at the climate policy division of the Green Growth Committee, justified the decision stating that “the national 2020 emission target is based on domestic reductions, therefore we will not accept international units”. According to the statement, from 2021 Korean emitters will be allowed to use international units to cover 10 percent of their emissions, but the volume used must not exceed the number of domestic offsets used. Companies will get as much as 97 percent of their emission allowances for free between 2018 and 2020, and 90 percent after 2021 while industries emitting more than 125,000 MtCO2 a year, or worksites emitting more than 25,000 MtCO2, will be subject to reduction targets. Four state financial companies, including Korea Development Bank and Industrial Bank of Korea, will be designated to trade carbon offsets with companies in the initial stages. South Korea will hold a public hearing in August with business and academia experts to finalize rules on the cap-and-trade system by November 15.