Carbon exchanges in South Korea and Beijing on Thursday signed an MoU to cooperate in developing their markets, boosting speculation that China and Korea at some stage might link their emissions trading schemes.
The deal was signed after senior officials from the Korea Exchange (KRX) visited the China Beijing Environment Exchange (CBEEX), the latter announced Thursday.
The Korea Exchange hosts trading under the South Korean ETS, while CBEEX is the platform for the Beijing pilot carbon market and is vying to handle trade under the national ETS that will begin in 2017.
Under the MoU, the two agreed to work together on bolstering market development in China and South Korea, as well as do research on regulatory framework, capacity building, product development and market linkage.
The fact that the matter of linking was included adds momentum to China special representative on climate change Xie Zhenhua’s comments in Paris last week that South Korea had notified China that it would be willing to consider a market link.
“Between China and Korea we can establish a much bigger market in Asia, and with the EU we one day want to see a global carbon market,” Xie said.
The Paris Agreement approved by countries over the weekend puts in place a framework for “cooperative approaches” that is based on robust accounting rules and under which national and subnational governments can link their trading schemes together.
Former Australian PM Kevin Rudd also told Carbon Pulse on the sidelines of the UN talks in France that he is fronting an effort to create a common East Asian carbon market, spanning China, South Korea and Japan.
It is unclear how the KRX-CBEEX deal would fit into this, as it is not a government-led initiative.
Sources in Beijing told Carbon Pulse on Thursday that the two nations initially are interested in cooperating on market development, and that a potential link might be the ultimate outcome of that process, though it’s unlikely before 2020.
By Stian Reklev – email@example.com