More than 40% of South Korean industry expects the economy to worsen this year, with the emissions trading scheme seen as the second biggest obstacle to growth, a business survey showed Wednesday.

In an annual economic outlook survey published by the Federation of Korean Industries (FKI), 54.9% of respondents listed the newly introduced Korean carbon market among the nation’s biggest economic difficulties, with only a drop in domestic demand considered a bigger threat.

The survey illustrated industry’s negative view of the ETS, which is the government’s main tool to reach its target to keep greenhouse gas emissions in 2020 at 30% below BAU levels.

Respondents referred to the scheme as “excessive environmental regulation” and 93.5% said their costs would increase because of the carbon market.

As many as 87% thought South Korea would not be able to meet its 2020 emissions target.

Several Korean industry associations have filed lawsuits against the government in a bid to receive more permits.

The perceived scarcity – emitters say they have been under-allocated by as much as 20% – has paralysed the market  but so far the government has refused to give in to industry pressure.

news@carbon-pulse.com