"To Achieve Carbon Neutrality, Incentives for Companies Investing in Greenhouse Gas Reduction Must Be Expanded"

KCCI, 3rd Carbon Neutrality and Energy Policy Seminar
"Importance of Rational Regulatory Improvements for Emissions Trading System and RE100"

[Asia Economy Reporter Oh Hyung-gil] The government’s emission trading system (ETS), implemented to achieve carbon neutrality, has been criticized for having low emission permit prices, high price volatility, and thin trading volumes, making it difficult for companies to assess profitability when investing in greenhouse gas reduction.

At the 3rd Carbon Neutrality and Energy Policy Seminar held on the 14th at the Korea Chamber of Commerce and Industry International Conference Hall, Professor Oh Hyung-na of Kyung Hee University stated, "For the ETS to function properly and be a cost-effective tool, it must set emission caps reflecting national reduction targets while providing incentives for reduction investments."

Professor Oh proposed measures to encourage companies’ greenhouse gas reduction investments, including ▲tax and financial support ▲introduction of a revenue guarantee system for investments in core reduction technologies ▲consideration of institutional use of voluntary carbon markets ▲minimization of uncertainties in allocation.

On the same day, Kim Yong-geon, Director of the Climate and Atmospheric Research Division at the Korea Environment Institute, argued, "Expanding the role of the carbon market is crucial for achieving 2050 carbon neutrality and the 2030 NDC. We need to increase paid allocation and reduce excessive government intervention to normalize the emission trading market."

However, concerns were also raised that leaving trading solely to the market without government intervention could increase the burden on companies. Kim Kyung-sik, Director of the Scrap Research Institute, countered, "Activating trading by relying only on market demand without government intervention in the ETS could increase corporate burdens. Allowing third-party market participants such as securities firms and introducing futures markets and financial products may excessively raise emission permit prices."

In response, Ahn Se-chang, Director of Climate Change Policy at the Ministry of Environment, said, "The ETS is the most cost-effective method for reducing greenhouse gas emissions in the industrial sector. There is a growing need to revitalize the emission trading market and increase the proportion of paid allocation for more effective reductions. We will gather field opinions sufficiently through communication channels such as the ETS advancement consultative body and prepare improvement measures."

During the event, proposals were also made to establish a renewable energy trading infrastructure, related insurance, and contract markets to enable companies to easily procure renewable energy.

Lee Sang-jun, Research Fellow at the Korea Energy Economics Institute, pointed out, "Global companies are focusing on decarbonizing their supply chains, notably requiring their partners to achieve RE100. In Korea, the conditions for RE100 implementation are generally unfavorable, especially due to high renewable energy prices and the competitive relationship between the Renewable Portfolio Standard (RPS) and corporate Power Purchase Agreements (PPA)."

He added, "Japan reduces the burden on companies purchasing renewable energy by subsidizing renewable energy generation facility costs initially when signing PPAs between renewable energy producers and companies. The United States offers investment tax credits for renewable energy equity investments or self-generation companies. Korea also needs to establish related insurance and contract markets to enable companies to easily procure renewable energy."

Choi Jin-hyuk, Director of Renewable Energy Policy at the Ministry of Trade, Industry and Energy, acknowledged, "We are well aware of the difficulties domestic companies face in fulfilling RE100. We plan to expand renewable energy supply to ensure companies have sufficient renewable energy usage volumes, while also considering various measures such as incentives for corporate renewable energy use, promotion of RE100-specific power generation projects, and establishment of a smooth renewable energy trading infrastructure."

There was also a call to link policies across ministries related to pyrolysis oil from waste plastics and recycling of used batteries from electric vehicles as part of fostering a circular economy to achieve 2050 carbon neutrality.

The seminar was attended by over 200 key figures from various sectors, including Korea Chamber of Commerce and Industry Chairman Chey Tae-won, government officials, businesses, academia, and civic groups, showing strong interest in the ETS and RE100.

Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, stated, "We plan to hold two more seminars in the future and will gather opinions from experts and stakeholders across government, industry, academia, and civil society on various topics such as technology innovation infrastructure, the hydrogen economy, and public participation, and deliver alternatives to the government."

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