A Seoul court has dismissed Hyundai Steel’s lawsuit against the Ministry of Environment over the allocation of CO2 permits in the nation’s emissions trading scheme, the Korea Herald reported, the first of several legal cases over the issue to receive a verdict.
The Administrative Court revoked Hyundai’s request for more allowances, with several more rulings expected over the next two or three months.
The result will be welcomed by the ministry, which has defended its allocation plan against industry and energy companies and analysts that claim too few allowances have been issued and that the CO2 caps set under the ETS to 2020 will be too difficult for emitters to meet.
But it may be a case of too little, too late for the ministry, which is in the process of losing its authority over the Korean carbon market.
Trade in the market has been all but paralysed since it opened in January this year, as most of the 525 companies covered by it have refused to participate, saying they are 10-20% short of the allowances they require.
The Ministry of Strategy and Finance is set to take over responsibility for the ETS and might be able to strike a compromise with the covered emitters, perhaps by increasing the allocation.
If not, observers say the lawsuits might continue to cast uncertainty over market for another two or three years as they are likely to make their way to the Supreme Court through appeals, regardless of who wins the initial rounds.
By Stian Reklev – email@example.com