The Korea Exchange (KRX) will start listing Korean Offset Credits (KOCs) from next May, the bourse operators announced, hoping to boost trading activity in the country’s fledgling carbon market.

The exchange made the announcement following pressure from market participants to add the offset type. The KRX currently offers trade in Korean Allowance Units (KAUs) and Korean Carbon Units (KCUs).

When the government issues new offsets, whether from projects under its domestic offset 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.

But because of a general lack of supply in the Korean emissions market, KOCs tend to be picked up by emitters in the OTC market before they are able to find their way to the exchange, further diminishing liquidity on the KRX.

When KOCs start trading on the exchange in May, anyone holding the offsets will be eligible to become a member on the exchange.  However, companies not covered by the ETS can only trade KOCs and will continue to be barred from trading KAUs and KCUs.

Only operators as well as four designated public policy banks can trade compliance carbon units under the current ETS rules.

By Stian Reklev – stian@carbon-pulse.com

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