South Korea may become the third Asia-Pacific nation to set greenhouse-gas limits for its largest companies following a vote scheduled today in Seoul.
A special committee of the National Assembly on climate change is set to meet for an afternoon vote on legislation to establish a so-called cap-and-trade system in 2015, according to the assembly’s website. If the proposals are approved, the bill goes to the country’s Legislation and Judiciary Committee, and then to the assembly’s plenary session on Feb. 16, which would be the last step for the legislation.
South Korea, the world’s ninth-largest carbon emitter, is resuming work on a plan to limit emissions after disagreements between opposition and the ruling Grand National Partypostponed the effort on Nov. 23. The nation said in November 2009 it plans to cut emissions by 30 percent below forecast levels by 2020, following similar programs in Australia and New Zealand.
The committee’s vote “is a big step forwarding,” Kang Sung Jin, economics professor of Korea University in Seoul, said by phone yesterday. “While industry leaders are concerned over the timing of the legislation, the bill is likely to be passed.”
President Lee Myung Bak proposal would cap emissions for its 485 largest polluters starting this year as a lead-up to a cap-and-trade system in 2015. The plan is opposed by manufacturers who say it will increase costs and make export less competitive globally.
Competitive Disadvantage
The Korea Chamber of Commerce & Industry, which counts steelmaker Posco (005490) and Samsung Electronics among its 120,000 members, and the Federation of Korean Industries have asked the government to delay the plan. They said it will increase costs and make them less competitive compared with countries without charges on emissions linked to climate change.
“Our major industries, such as semiconductor, steel, refining and petrochemicals, are competing with rivals in China, the U.S. and Japan, which didn’t implement emission trading,” Kim Tae Yoon, head of the Strategic Industries Team of the Federation of Korean Industries, which has 500 company members, said in an interview. Emission limits may reduce sales by 4 trillion won to 14 trillion ($3.5 billion to $12.5 billion)a year, he said.
A majority of South Koreans think the ETS will be an added burden, the federation said on Nov. 7, citing a survey it conducted. The percentage of respondents against the legislation was 67.5 percent, compared with 18 percent in favor, according to the survey of 800 respondents between April 8 and April 10.
Unfair Comparison
Australia, which burns coal to produce about 80 percent of its electricity, plans to start a cap-and-trade system in 2015 that allows companies that create lower emissions than their cap to then sell unused permits to other polluters. New Zealand already started emissions trading in 2009.
“It’s not proper to compare our case with Australia and New Zealand whose agricultural sectors account for a majority of their economies,” Kim said. “They didn’t restrict the emissions in their major industries tightly as much as our government plans to do. The extent of the current scheme shows our government is going backward.”
To contact the reporter on this story: Sangim Han in Seoul at sihan@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
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