Explosives firm Hanwha Corp. has cancelled 286,000 CERs in the UN registry with a view to converting them into offsets eligible in the Korean emissions trading scheme, a UN website showed.
The CERs had been awarded for emission cuts made at the company’s nitric acid plant in Ulsan, the UNFCCC said.
“CERs to be cancelled in exchange for Korean Offset Credits (KOC), issued by Korean Offset Program to Hanwha Corp,” it said.
KOCs are tradable for any firm in South Korea looking to reduce its carbon footprint, but can also be further converted into Korean Carbon Units (KCUs), which are eligible for use in the nation’s emissions trading scheme.
KCUs are valued at $8.90 each, and are usually picked up by emitters seeking to meet their ETS targets as soon as they are issued by the government, and represent a far better asset than the UN-issued CERs, which only fetch around 40 cents.
Last month, more than 465,000 CERs from a tidal wave project were cancelled for the same purpose, although those have yet to find their way onto the Korea Exchange, which hosts carbon trading in South Korea.
According to sources, the government was expected to hold an issuance meeting in August, but it has not yet made any announcements so it remains unknown when a fresh batch of offset supply may come to market.
The Korean ETS, the world’s second biggest in terms of tonnes of CO2e covered, has been dysfunctional since its launch in January this year, amid industry claims that emission reduction targets are too ambitious and that the government has issued too few permits.
The market is bereft of any supply and not a single allowance has traded in the market since January. A number of industry groups have sued the government over what they claim are low allocation levels, even though analysts say the market is over-supplied.
By Stian Reklev – firstname.lastname@example.org