Prices in the Korean emissions trading scheme were unmoved this week at 10,100 won ($9.19) with no trades reported as lack of supply continued to restrain trading.

Spot Korean Allowance Units (KAUs) closed at 10,100 won on the Korea Exchange every day throughout the week, but the market remains untraded since Jan. 16, when one deal went through at 9,610 won.

No companies are willing to sell at the moment amid widespread complaints that the government has issued far fewer permits than emitters need to meet their targets.

Emitters covered by the scheme received 20% fewer permits than they had applied to get for the 2015-2017 period, and some industry groups are preparing lawsuits against the government.

Responding to media demands that the Korean market open up to allow CERs, the Ministry of Environment this week said it had no immediate plans to do so, although it admitted it could take it into consideration if price levels and compliance rates suggested it was necessary.

It also said it is currently reviewing whether to accept offsets from projects in North Korea.

Interest in the domestic offset market is increasing, traders said, but it will take time for supply to trickle through.

So far only one project has been approved, and no offsets issued. There is interest in negotiating with project developers, but many ETS participants have yet to finalise internal procedures for contracting carbon credits.

“Some companies are delaying their purchasing decision, which puts them at risk of not being able to purchase offsets in the end, thereby subjecting them to the risk of having to pay the penalty for non-compliance,” one trader said.

By Stian Reklev – stian@carbon-pulse.com