Hong Nam-gi Tackles Carbon Neutral Pricing System... Crucial to Inducing Private Sector Participation

[Image source=AP Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, emphasized that establishing green taxonomy and carbon pricing systems on the international stage is essential to encourage private sector participation in climate response policies.

On the 2nd (local time), at the 'Global Seminar for Strengthening the Green New Deal and International Climate Cooperation' hosted by the Ministry of Economy and Finance in Glasgow, UK, where the 26th United Nations (UN) Climate Change Conference of the Parties (COP26) was held, Deputy Prime Minister Hong made these remarks in his welcoming speech. He mentioned that the success factors of climate policy include utilizing climate response efforts as an engine for economic growth, finding the optimal policy mix tailored to each country's circumstances, encouraging private sector participation in the climate response process, and achieving domestic and international cooperation for a just transition. He stated that systems such as disclosure, taxation, and pricing frameworks must be established to draw out private companies' climate response efforts.

Deputy Prime Minister Hong said, "We must establish corporate climate information disclosure and green taxonomy to promote participation from consumers and investors, while also settling the carbon pricing system to induce voluntary efforts (such as carbon reduction) from producers." He stressed, "To promote international investment and prevent fragmentation between countries, international standards for these three systems must be promptly established." Green taxonomy is a list classifying so-called 'green activities' that contribute to greenhouse gas reduction, climate change adaptation, and environmental improvement. It is a system applied by large investors such as the National Pension Service, known as the 'president of the capital market,' which manages assets worth about 850 trillion won, when making investment decisions. The exclusion of nuclear power has sparked controversy. The carbon pricing system is a mechanism that assigns a price to emitted carbon. The government views that the pricing system should be activated to effectively spread the perception among the private sector that 'carbon reduction is cost reduction.'

Meanwhile, Deputy Prime Minister Hong informed the world that Korea is investing 73.4 trillion won, equivalent to 3.8% of its Gross Domestic Product (GDP), in the green sector through the Green New Deal. He introduced the current status of policy implementation aligned with four key factors: enhancing the utilization of the domestic carbon emissions trading market, introducing corporate climate information disclosure and green taxonomy, and expanding green Official Development Assistance (ODA). In May, the government held the External Economic Fund Management Committee and announced that it would triple the support amount for the Economic Development Cooperation Fund (EDCF) projects to 600 million dollars (about 705.2 billion won). It plans to contribute 300 million dollars (about 352.6 billion won) to the Green Climate Fund (GCF), the world's largest climate fund under the UN, and a total of 10 million dollars (about 1.18 billion won) next year to international organizations such as the Global Green Growth Institute (GGGI).

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