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South Korea joins Australia, NZ in setting carbon limits

27 February 2012 No Comment

South Korean lawmakers voted to impose greenhouse-gas limits on its large st companies, making it the third Asia-Pacific nation to set targets opposed by industry.

A special committee of the National Assembly on climate change vote in favor today of legislation to establish a so-called cap-and-trade system in 2015, according to the assembly’s website. The bill now goes to the country’s Legislation and Judiciary Committee, and then to the assembly’s plenary session on February 16, which would be the last step for the legislation.

South Korea, the world’s ninth-largest carbon emitter, passed the plan to limit emissions after disagreements between opposition and the ruling Grand National Party postponed the effort in November. The nation said in November 2009 it plans to cut emissions by 30 per cent below forecast levels by 2020, following similar programs in Australia and New Zealand.

The vote is “very important,” Yoon Jong Soo, vice minister for the environment department, said today in a briefing in Seoul. “As long as members of the committee form a quorum for a meeting, it will go to the February 16 main session.”

President Lee Myung Bak’s proposal would set emission targets for South Korea’s 485 largest polluters starting this year as a lead-up to cap and trade in 2015. The plan is opposed by manufacturers who say it will increase costs and make export less competitive globally.

Competitive disadvantage

The committee’s vote “is a big step forwarding,” Kang Sung Jin, economics professor of Korea University in Seoul, said by phone yesterday. He said industry leaders are concerned over the timing of the legislation.

The Korea Chamber of Commerce & Industry, which counts steelmaker Posco and Samsung Electronics among its 120,000 members, and the Federation of Korean Industries have asked the government to delay the plan. They said it will increase costs and make them less competitive compared with countries without charges on emissions linked to climate change.

“Our major industries, such as semiconductor, steel, refining and petrochemicals, are competing with rivals in China, the U.S. and Japan, which didn’t implement emission trading,” Kim Tae Yoon, head of the Strategic Industries Team of the Federation of Korean Industries, which has 500 company members, said in an interview. Emission limits may reduce sales by 4 trillion won to 14 trillion ($3.3 billion to $12 billion)a year, he said.

Added burden

A majority of South Koreans think emission trading will be an added burden, the federation said on November 7, citing a survey it conducted. The percentage of respondents against the legislation was 67.5 per cent, compared with 18 per cent in favor, according to the survey of 800 respondents between April 8 and April 10.

Australia, which burns coal to produce about 80 per cent of its electricity, plans to start a cap-and-trade system in 2015. It will allow companies that emit less that their cap to sell unused permits to other polluters. New Zealand already started emissions trading in 2009, and the European Union has operated the world’s biggest cap-and-trade program since 2005.

“It’s not proper to compare our case with Australia and New Zealand whose agricultural sectors account for a majority of their economies,” Kim said. “They didn’t restrict the emissions in their major industries tightly as much as our government plans to do. The extent of the current scheme shows our government is going backward.”

The government agreed to delay the start of cap and trade to 2015 after consulting with companies, the vice minister said.

“We need to give incentives to companies that made faithful commitments to reducing greenhouse gas emissions,” Yoon said. “The bill will give more flexibility to companies by allowing the trade of emission rights.”

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