South Korea is asking its largest emitters to make cuts at home before giving them credit for overseas spending to reduce greenhouse gases.
The nation, which agreed earlier this year to start a cap- and-trade system in 2015 to rein in the fastest-growing emissions in the developed world, won’t allow so-called global offsets until after 2020, according to a statement posted this week on the prime minister’s website. More than 400 companies participating in the program will be able to use offsets for as much as 50 percent of their required emissions reductions starting in 2021, the government said.
“We hope to use the system in an initial stage to support the government pledges for reduction,” Nam Kwang Hee, director- general of the Presidential Committee on Green Growth, said by phone. “As companies focus on cutting domestic emissions, it will help the country meet planned reduction targets.”
South Korea, which pledged to reduce greenhouse-gas emissions by 30 percent from forecast levels, follows the European Union, Australia and New Zealand in allowing emitters to meet at least some of their pollution-abatement targets by paying for overseas rather than domestic clean-ups. With the price of credits in the United Nation’s Clean Development Mechanism trading near record lows, offsets can reduce compliance costs for emitters subject to carbon limits.
Australia’s carbon-pricing system, which started July 1 and is set to convert to cap and trade in 2015, allows companies to achieve as much as 50 percent of their compliance using UN Certified Emission Reductions. New Zealand’s carbon market, which began in 2008, permits factories to achieve all their compliance using CERs.