Status of Korean emissions trading market as of the years 2015 and 2016

Abstract

Considering the ETS participating organizations taking up 65% to 70% of the entire greenhouse gas emissions (GHG) in Korea (from 2015 to 2017), and stricter emission reduction targets as well as increased participation in the national ETS, it is likely that the roles of ETS in reducing the nation-wide total emissions will further increase. According to our analysis on the performances of Korean ETS, it is safe to say that the system has safelanded and achieved some purposeful results to some extent, since the total actual emissions were getting around the total allocated emission permits at the beginning of the second compliance year (2016). It is also found that reductions in external projects (offset credits), additional allocations and the allocations withdrawn are playing a pivotal role in balancing the demand and supply of emission permits in Korea. Reductions by external projects were found to have a significant contribution in addressing the shortage of emission permits. The trading volume of emission permits is still running low, but some steady progresses were found. However, emission permit tradings are concentrated on a few segments including power generation and energy industries which were found to have purchased nearly half of the total emission permits traded. This indicates that power generation and energy industries have driven the national emission market throughout the first compliance year.