The Ministry of Environment (MOE) laid out a ‘National Emissions Permit Allocation Plan’ for implementing the Emissions Trading Scheme (ETS) and will hold briefing sessions to collect opinions of stakeholders at Daejeon, Daegu and Gwangju on May 29. Public hearing will be held in Seoul on June 2.
The Emission Trading Scheme is introduced to effectively achieve the National Greenhouse Emissions Reduction Target. The Act on the Allocation and Trading of Greenhouse Gas Emission Permits was enacted in 2012 and will take effect from January 2015. The government established Emissions Trading Scheme Master Plan in January and designated Korea Exchange (KRX) as an emission permits exchange. The allocation plan, as a follow-up, is to flesh out the operation method of the ETS and decide the total amount of emissions permits.
MOE has operated a standing consultative body consisting of the industry representatives and experts to heed voices of stakeholders in designing allocation plan and reflected recommendations of the private advisory council into the plan.
Major contents of the allocation plan are as follows.
The aggregate amount of emissions permits refers to the total amount of emissions permitted for business entities under the ETS during the 1st commitment period (2015-2017). The amount was calculated taking the emission performance and growth prospect of business entities into account based on the National Greenhouse Gas Emissions Reduction Roadmap and Emissions Trading Scheme Basic Plan. The aggregate amount of emissions to be permitted for the first commitment period is approximately 1.64 billion tons.
The total amount will be allocated to each business entity based on their past emission record and their plan to establishment or expansion of facilities. When emissions increase due to the establishment or expansion of facilities during the commitment period, additional permits can be allocated to the business entity.
To prepare for additional allocation due to the unexpected establishment or expansion of facilities or market-stabilizing measures, certain amount of the total is saved in reserve.
The allocation plan carries the following implications.
First, it enhances the feasibility of Korea’s greenhouse emissions reduction policies setting the total amount based on 2020 national emissions reduction target. It also lays a foundation for operating the ETS with detailed methods utilizing the market mechanism. In addition, it gives the industry flexibility to cope with the ETS and helps the scheme take root in early stage.
After the public hearing, MOE will submit the plan to the Allocation Committee and Green Growth Committee and finalize the plan through a Cabinet meeting by the end of June. When the allocation plan is finalized, the business entities for allocation will be designated by the end of July and MOE will receive applications for permits allocation by the end of August. At the end of October, emissions permit will be allocated to each business entity.