Companies have voluntarily cancelled more than 1.2 million CERs in the past week in order to convert them into offsets that are usable in South Korea’s carbon market.

The vast majority, some 978,800 CERs, had been issued to a South Korean N2O Adipic Acid/Caprolactam project and were cancelled on Dec. 30 by the Hyosung Corporation.

The industrial conglomerate said it would exchange the CERs for Korean Offset Credits (KOCs) to be issued under the country’s ETS.

Samsung Display, a subsidiary of the Korean electronics giant, also voided 240,900 CERs from a UN-approved SF6 abatement project on Tuesday.

To date, some 4 million of the total 7 million CERs that have been voluntarily cancelled came from South Korea, UN data showed, with more than 3.5 million being converted into offsets for use in the country’s ETS.

As Korean carbon offsets, the reductions are worth exponentially more than CERs.

Korean Carbon Unit (KCU) prices on the Korean Exchange (KRX), the main marketplace for the country’s ETS, have jumped by more than 23% in the past fortnight to 13,700 won ($11.53/€10.73), compared to around €0.50 for CERs.

Offset prices rose as buyers scooped up fresh supply from government issuances of around 4 million credits under the country’s domestic programme.

The KRX currently only offers trade in KCUs, but last week said it would start listing KOCs from May in an effort to boost trading activity.

When the government issues new offsets, whether from projects under its domestic scheme or as replacement for cancelled CERs, they are issued as KOCs and can only be used for ETS compliance after they are converted to KCUs.

However, because of a lack of supply in the ETS, KOCs tend to be snatched up by emitters in the OTC market well before they are able to find their way to exchange, further diminishing liquidity.

By Mike Szabo – mike@carbon-pulse.com