Combined Heat and Power and Other District Energy Operators Will Also Receive Free Greenhouse Gas Emission Allowances Until 2023

Partial Amendment to the Enforcement Decree of the Emission Trading Act Approved at the Cabinet Meeting

[Sejong=Asia Economy Reporter Joo Sang-don] Collective energy operators managing combined heat and power plants, heat-only boilers, and resource recovery facilities will also receive free greenhouse gas emission allowances until 2023.

On the 16th, the Ministry of Environment announced that the partial amendment bill of the "Enforcement Decree of the Act on Allocation and Trading of Greenhouse Gas Emission Allowances" (hereinafter referred to as the Emission Trading Act Enforcement Decree) containing this content was approved at the Cabinet meeting and is scheduled to be promulgated and immediately enforced within this month.

This amendment to the Emission Trading Act Enforcement Decree reflects issues raised during the establishment of the "3rd Plan Period (2021?2023) National Emission Allowance Allocation Plan" formulated last September. Collective energy operators under Article 2, Clause 3 of the Collective Energy Business Act were included as special cases for free allocation during the initial three years (2021?2023) of the 3rd plan period. This measure aims to alleviate the economic burden on collective energy industry operators, whose cost burden due to greenhouse gas reduction is greater than that of other industries.

Additionally, considering the characteristics of market makers' duties, the eligible participants as market makers were specified as "those who have obtained licenses for both investment trading and investment brokerage."

The regulation allowing the use of overseas implemented external project offset credits within 50% of total offset credits was deleted. Offset credits are a means to offset emissions by converting greenhouse gas reduction achievements from external projects implemented outside the scope of the emission trading system, i.e., projects conducted abroad, into emission allowances. Accordingly, within the submission limit of offset credits usable per allocated company (within 5% of the company's allowances), domestic and overseas implemented external project offset credits can now be used without distinction.

Jang I-jae, Director of the Climate Economy Division at the Ministry of Environment, said, "This amendment to the enforcement decree reflects the results of continuous communication with industry and experts. From the 3rd plan period of the emission trading system, substantial greenhouse gas reductions are required, so we will continue to devise ways to reduce greenhouse gases while considering the burden on companies."

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