South Korea faces lawsuits over carbon trading plan

Published 14:43 on February 13, 2015  /  Last updated at 15:30 on May 11, 2016  /  Asia Pacific, South Korea  /  No Comments

A group of chemical companies are weighing a potential lawsuit against the South Korea government over its new emissions trading scheme, media reported Friday, adding pressure on officials to issue more CO2 permits.

A group of chemical companies are weighing a potential lawsuit against the South Korean government over its new emissions trading scheme, media reported Friday, adding pressure on officials to issue more CO2 permits.

Around 15 chemical firms, including LG Chem and SK Global Chemical, might take the government to court over the amount of permits handed out over the first three years of the ETS, the Korea Times reported.

“It’s very difficult to reduce carbon emissions to a level that meets the state quota,” one source told the paper.

Metal producers have already filed a separate lawsuit over the ETS, claiming it will damage their competitiveness.

The ETS caps CO2 from 84 petrochemical firms, limiting their emissions to 143.7 million tonnes over the 2015-2017 period.

South Korea aims to limit its greenhouse gas emissions in 2020 to 30 percent below a business-as-usual scenario, but emitters say the BAU scenario is too low and that the emission cap is too strict.

Earlier this week the government issued an additional 6.7 million Korean Allowance Units (KAUs) to some of the over 240 companies that had filed complaints over their allocation.

The perceived scarcity in the market has hampered liquidity since the market began trading on January 12. Fewer than 2,000 permits have changed hands amid a complete dearth on the supply side.

KAUs closed Friday at 10,000 won ($9.11) for the third consecutive day, but with no deals done.

By Stian Reklev – stian@carbon-pulse.com