Business Community: "250% Increase in Greenhouse Gas Emission Permit Prices... Corporate Burden Must Be Reduced"

[Asia Economy Reporter Su-yeon Woo] The Korea Employers Federation (KEF) has jointly submitted the "Joint Industry Petition on the Greenhouse Gas Emissions Trading Scheme" to the government along with 11 major industry associations to overcome the management crisis faced by companies due to the COVID-19 pandemic.

On the 23rd, KEF announced that it submitted the petition on the 22nd to the Ministry of Economy and Finance, the Ministry of Environment, and the Ministry of Trade, Industry and Energy together with 11 industry associations including steel, petrochemicals, cement, paper, petroleum, automobiles, non-ferrous metals, chemical fibers, semiconductors, limestone processing, and shipbuilding and marine plants.

Through the petition, KEF and the 11 major industry associations stated, "Regarding the greenhouse gas emissions trading system, one of the core issues for the industry, the current price of emission permits has risen to about 252% compared to the early stages of the system's implementation," adding, "Due to the continuous imbalance in the supply and demand of emission permits, prices are expected to rise further. Considering the situation of domestic companies affected by COVID-19, it is urgent to alleviate the burden of purchasing emission permits."

The core content of the petition jointly submitted by KEF and the associations is a request to redistribute the remaining volume of the "Other Use Reserve"?which was prepared to allocate additional emission permits to companies that newly installed or expanded facilities during the emissions trading period?to existing allocation companies.

Looking at the case of the first plan period (2015?2017), out of the 23.73 million tons of the Other Use Reserve during the emissions trading period, 4.48 million tons of remaining volume (worth approximately 95.4 billion KRW, based on the first plan period average of 21,290 KRW/ton) were entirely discarded by the Allocation Committee at that time without sufficient consultation with the allocation companies.

Regarding the remaining volume of the Other Use Reserve for the second plan period (2018?2020), the Allocation Committee will decide after review whether to discard or carry over (in whole or in part) the total allowable emissions and reserves for the third plan period (2021?2025).

KEF and the associations estimated that "considering the 13.4 million tons of reserves additionally allocated in 2018, more than 20 million tons of the Other Use Reserve will remain in the second plan period," and proposed that "if this reserve is redistributed as requested by the 11 major industries, it will provide relief to key industries facing critical situations due to COVID-19."

Additionally, the business community proposed ▲ securing market liquidity through early supply of the market stabilization reserve, ▲ utilizing government revenue from paid allocation of emission permits for corporate financial and technological support, and ▲ maintaining the current criteria for selecting industries eligible for free allocation.

KEF and the associations stated, "The government and industry must find a reasonable balance between reducing greenhouse gas emissions and maintaining corporate competitiveness amid the severe economic crisis caused by COVID-19," and added, "We hope this petition will be actively reviewed so that companies can respond proactively to the current crisis and secure global competitiveness."

This content was produced with the assistance of AI translation services.