Last week, the South Korean National Assembly passed legislation to start a cap-and-trade system by 2015. The vote was passed unanimously by both Korea’s ruling party and opposition, 148-0, with three members abstaining. The plan is part of President Lee Myung Bak’s aggressive agenda to fight climate change while transforming Korea into a green technology powerhouse.
By most accounts, Korea ranks among the top 10 countries in the total amount of carbon emissions. Korea’s rise from one of the the poorest nations on earth in the 1960s to its current status as a G-20 heavyweight relied on developing an economy heavily driven by exports. But the country’s strength in steelmaking, shipbuilding, automobile manufacturing and petrochemicals has come with an environmental cost. The past 10 years has witnessed a nudge in Korea away from an emphasis on heavy industry and development to an economy that is leaner, greener and more reliant on cutting edge and disruptive technologies.
Nevertheless manufacturing still reigns in Korea and will for a long time. As the country grew at an even more rapid pace during the 1990s, greenhouse gas emissions soared from 350 million tons in 1990 to 640 million tons last year. Among the 34 countries within the Organization for Economic Cooperation and Development (OECD), Korea has had the most rapid percentage increase in greenhouse gas emissions.
The country has targeted an agressive 30% reduction from forecasted 2020 greenhouse gas emissions and Korea’s government has decided that the carbon emissions trading system is one way to tackle the problem. Korea has already implemented a feed-in tariff to encourage the development of more clean energy sources. But now the country’s 14 power generators and companies that emit more than 25,000 tons of carbon dioxide annually will have to purchase credits for their CO2 emissions. Companies that exceed those CO2 limits limits would incur penalties that could rise as much as triple the cost of the initial purchase of emissions credits. To ease into the system, the emission permits, at first, will be free or at a reduced price for three to six years, depending on the industry. Another goal, besides decreasing greenhouse gas emissions in Korea, is to increase the amount of Korea’s renewable energy generation to 10 percent of the country’s energy portfolio by the end of the decade.
Business lobbies in Korea, including the Federation of Korean Industries and the Korea Chamber of Commerce and Industry, have objected to the carbon emissions plan, complaining that the cap-and-trade program will increase business costs and make Korean industry less competitive than other countries. But that reaction discounts the incredible resilience and innovation that set Korean companies apart from the competition. Despite being wedged between the world’s largest manufacturer, China, and one of the most competitive economies, Japan, Korea still thrives and its companies lead in many sectors from massive construction projects to mobile telephones. With China and Australia on target to launch cap and trade systems, Korea is on target to lead in yet another emerging industry.
Photo of Seoul’s traffic at night courtesy Leon Kaye.