"Establish Low-Carbon Policy and Certification Infrastructure to Respond to 'Carbon Trade'"

June 26 Korea Chamber of Commerce Seminar
"Global Carbon Trade Barrier Challenges: Decarbonization, Certification Infrastructure, and International Cooperation"

[Asia Economy Reporter Moon Chaeseok] As carbon trade barriers imposed by major countries such as the European Union (EU) and the United States are spreading, there are calls to address challenges including product decarbonization, building certification infrastructure, and cooperation to apply domestic standards on the international stage.

At the 'Global Carbon Trade Barrier Status and Challenges Seminar' held on the 26th by the Korea Chamber of Commerce and Industry (KCCI) in collaboration with the Ministry of Trade, Industry and Energy, various opinions were shared on strategies to respond to international carbon neutrality regulations. The seminar, conducted via online broadcast, was attended by Woo Tae-hee, Executive Vice Chairman of KCCI; Yeo Han-gu, Director General of Trade Negotiations at the Ministry of Trade, Industry and Energy; Professor Ahn Deok-geun of Seoul National University; Professor Kang In-soo of Sookmyung Women’s University; Professor Kang Byung-gu of Korea University; Attorney Ahn Jeong-hye of Yulchon LLC; Shin Ho-jung, Director at the Korea Institute of Industrial Technology; Lee Sang-jun, Team Leader at the Korea Energy Economics Institute; Christophe Heider, Secretary General of the European Chamber of Commerce in Korea; Daniel Carruthers, Counselor at the British Embassy in Korea; and Philippe de Baer, Attorney at Van Bael & Bellis.

The seminar was divided into three topics: 'Current Status and Future Prospects of Carbon Trade Barriers,' 'Impact on Domestic Industry and Response Measures,' and 'Status and Challenges of Domestic Infrastructure Development.' In the first session, Attorney Ahn Jeong-hye of Yulchon LLC reported that major countries, starting with the EU, are preparing to introduce carbon trade barriers. Attorney Ahn stated, "On the 15th of last month, the Carbon Border Adjustment Mechanism (CBAM) legislative proposal was agreed upon by the EU Council, positioning the EU at the forefront of carbon trade barrier measures," adding, "South Korea ranks sixth globally in steel exports to the EU, so the implementation of CBAM raises concerns about damage to the steel industry."

Regarding the U.S. carbon trade barriers, she noted, "Recently, the U.S. has been rapidly strengthening carbon trade barrier policies in the steel and aluminum sectors, cooperating with the EU, the UK, Japan, and others not only to address climate change but also to counter China through initiatives like the Global Sustainable Steel Agreement (GSSA)." She added, "China introduced an emissions trading system from July last year to be exempt from carbon border adjustment charges, and Russia and Turkey have implemented similar systems. We must also respond swiftly through low-carbon technology development, promoting ESG (Environmental, Social, and Governance) investments, and participating in the Green Steel Club."

In the second session, Lee Sang-jun, Team Leader of the Climate Change Policy Research Team at the Korea Energy Economics Institute, said, "Although the detailed implementation plan of the EU CBAM has not been disclosed, making quantification difficult, the steel industry is expected to be the most directly affected based on current export volumes." However, he predicted, "Since the greenhouse gas emissions of Korea’s steel industry are not significantly different from those in Europe and North America, the short-term impact of CBAM will not be substantial." Nevertheless, Lee emphasized, "If the EU reduces free allowances under the emissions trading system as scheduled by 2035, companies will need to enhance their response capabilities. To prevent corporate emissions data from being unfavorably applied compared to EU CBAM standards, the domestic emissions trading system should also align with EU standards."

In the third session, Shin Ho-jung, Director of the National Clean Production Support Center at the Korea Institute of Industrial Technology, analyzed, "Recently, global major companies are requiring 'carbon footprint certification' from raw material and component suppliers to manage carbon emissions within their supply chains. The U.S. Securities and Exchange Commission has prepared regulations mandating listed companies to disclose their carbon emissions, reflecting the diversification of global carbon barriers." The carbon footprint refers to the total carbon emissions generated throughout the product lifecycle from production to use and disposal. Shin pointed out, "There is a lack of domestic infrastructure such as databases (LCI DB) necessary for calculating carbon emissions, so foreign institutions’ information is being used, and carbon footprint certifications vary by country. It is urgent to establish a carbon footprint system that is interoperable between countries and to build domestic infrastructure for carbon emission calculation and verification. Therefore, a division of roles between the public and private sectors and international cooperation are necessary."

In his opening remarks, Woo Tae-hee, Executive Vice Chairman of KCCI, emphasized, "The world is currently facing a turning point with inflation caused by rising raw material prices, and economic recession due to COVID-19 and interest rate hikes. As protectionist movements such as the U.S.-China hegemonic competition and carbon border adjustment mechanisms become more complex, swift responses are needed to reduce the burden on companies caused by carbon trade barriers." KCCI supports consulting for small and medium-sized enterprises and mid-sized companies regarding overseas import regulations and industrial damage. For more details, inquiries can be made to the KCCI International Trade Headquarters.

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