Historic Day in South Korea, National Cap-and-Trade Begins

On January 1, South Korea launched national cap-and-trade, the second largest program in the world after the European Union.

Out of the gate it covers the biggest 525 polluters – about 60% of total emissions – in a wide range of economic sectors: utilities, refineries, steel and car manufacturers and even airlines and ship-builders, livestock farms and large universities.

On the first day of trading, over 1000 emissions permits sold for an average $7.97 on the Korea Exchange, about the same as in the EU.

The fourth largest economy in Asia, South Korea is the fastest growing source of greenhouse gas emissions among industrialized countries, doubling since 1990. It is the 8th biggest source of the world’s emissions – the goal is to cut them 30% by 2020. The cap-and-trade program has been planned since 2012.

The country ranks #10 in the world for energy efficiency and  has specific targets for cap-and-trade, which it says is the most efficient, least burdensome way to lower emissions: 34.3% from transportation; 26.9% from buildings; 26.7% from power generation; 25% in the public sector; 18.5% in industry; 12.3% from waste and 5.2% from  agriculture and fisheries.

South Korea is headquarters for the Green Climate Fund and pledged $100 million in donations to help developing nations. 

Cap-and-trade programs are taking root around the world. Besides the EU, there are national programs in Kazakhstan,  Croatia and New Zealand, and one that covers the city of Tokyo. There’s the joint California/ Quebec program and RGGI in the eastern US. South Africa is planning one. 

China’s regional program goes nationwide next year – the world’s biggest. Phased in over the past few years, pilot programs are now operating in all seven regions.

73 countries, 22 states, provinces and cities – together responsible for 54% of the world’s greenhouse gas emissions and 52% of GDP – and over 1,000 businesses and investors signed a document supporting pricing carbon emissions, either through a carbon tax or cap-and-trade program. The US is not among them.