Theory and Impact
- Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Soocheol Lee, Kazuhiro Ueta, Janet E. Milne and Hope Ashiabor
Chapter 19: A survey analysis of company perspective to the GHG emissions trading scheme in the Republic of Korea
The Republic of Korea (hereinafter referred as Korea) announced in November 2009 a plan to reduce its greenhouse gases (GHG) emissions by 30 percent from the business as usual (BAU) scenario by 2020. Korean industry used 61.6 percent of the country’s total energy in 2011, making it a key target of climate policies (KEMCO 2013). The enactment of the ‘Basic Act on Low Carbon Green Growth’ in 2010 established a legal ground for the practice of market-based instruments (MBIs), i.e., a GHG emission trading scheme (GHG ETS) and carbon tax, etc. Korea adopted the mandatory ‘GHG-Energy Target Management System’ (TMS) in 2011 for large energy-consuming entities. The TMS paves the way for the introduction of GHG ETS in Korea. Accordingly, a bill of quasi-mandatory GHG ETS was approved in May 2012 and determined to launch the domestic GHG ETS at the beginning of 2015. More recently, a bill of carbon tax was also proposed, suggesting the introduction of this policy from 2016. GHG ETS holds a theoretical advantage in cost efficiency and shall be effective for GHG mitigation referring to the experience of the European Union (EU) ETS as the largest example of emissions trading in operation, encompassing over 11,500 installations across 30 countries and covering approximately 40 percent of total EU emissions.
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