South Korea has handed out an additional 6.7 million emission allowances to participants in its new emissions trading scheme, the government said on Tuesday, after more than 240 firms filed complaints about their allocated amount.

Nearly half of the 525 companies covered by the ETS had written to the Ministry of Environment, saying they had been given too few allowances under the scheme, which launched on Jan. 1.

A joint working group consisting mostly of academics found in favour of 40 companies, who will receive a share of the extra 6.7 million Korean Allowance Units (KAUs), the ministry said on its website.

The increase in permits is small compared to total allocation, originally set at 1.687 billion allowances over three years, but the complaints reflect a view by many in the market that most emitters are short.

On the Korea Exchange, KAUs closed Wednesday at 10,000 won ($9.12), up from 8,640 won when trading first started on Jan. 12, though not a single trade has gone through since Jan. 16.

“No sellers exist in the market,” said Jin Kim with The ITC, a brokerage and consulting firm.

The market is open for trading two hours a day, and although there are plenty of bids available, there is nothing on the offer side, he said.

The main reason is that most firms say they expect to be short in the scheme’s first three-year phase, and those who might have a surplus are choosing to hold on to them for use in the next trading period when the cap is likely to be even tighter.

Korean companies can use domestically produced offsets to cover for 10 percent of their emissions, but so far there is no supply.

By Stian Reklev – stian@carbon-pulse.com