Korean trading firm seeks to buy CERs through UN platform

Published 02:13 on February 2, 2016  /  Last updated at 10:01 on February 2, 2016  /  Asia Pacific, Kyoto Mechanisms, South Korea  /  No Comments

A Korean carbon credit company has filed an expression of interest with the UNFCCC to buy at least 100,000 CERs from projects in South Korea that are eligible in the domestic ETS, UN data showed.

A Korean carbon credit company has filed an expression of interest with the UNFCCC to buy at least 100,000 CERs from projects in South Korea that are eligible in the domestic ETS, UN data showed.

Seoul-based Korea Carbon Management wants to buy credits from any of 16 project types allowed in the nation’s emissions trading scheme, ranging from hydroelectric dams to solar and wind to N2O, according to the document.

The CERs must have been issued against emissions reductions made after Apr. 14, 2010, Korea Carbon Management specified, as older CERs are not eligible for conversion to Korean Offset Credits (KOCs).

If the CERs are from renewable energy projects they must not have been issued for emission cuts made after Dec. 31, 2011, the company said. Renewables offsets generated after that date may be ruled ineligible by the government due to the mandatory renewable portfolio standard it introduced on Jan. 1, 2012.

The tender appears to be an attempt to arbitrage the spread between UN and South Korean carbon credits, which are currently priced at a premium of more than 2600%.

South Korean CERs can be converted into KOCs, which can be converted further into Korean Carbon Units (KCUs), another type of credit that can be used in the country’s under-supplied carbon market, and which fetch some 13,700 won each ($11.36, €10.43) on the Korea Exchange, and sometimes more in the OTC market.

The expression of interest is open until July 4, 2016.

By Mike Szabo and Stian Reklev – stian@carbon-pulse.com

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