Feb. 8 (Bloomberg) -- Lawmakers in South Korea voted to impose greenhouse-gas limits on the nation's largest companies, overruling industry opposition and laying groundwork for the third emissions-trading program in the Asia-Pacific region.
A special committee of the National Assembly on climate change passed legislation today to establish a so-called cap-and-trade system in 2015. The bill now goes to the nation's Legislation and Judiciary Committee, and then to the assembly's plenary session on Feb. 16, the last step for the law.
South Korea, the world’s eighth-largest carbon emitter based on 2009 figures from the International Energy Agency, approved limits after disagreements between opposition and the ruling Grand National Party postponed the effort last year. The nation said in November 2009 its target for 2020 is to cut emissions by 30 percent from forecast levels, following similar programs in Australia and New Zealand.
“The legislation is the first step toward becoming an advanced country,” Kim Jae Yun, an opposition party member, said at thecommittee meeting today. “We can resolve what companies are concerned with.”
President Lee Myung Bak’s proposal sets emission targets for almost 500 of Korea's largest polluters starting this year as a lead-up to cap and trade in 2015. Manufacturing groups in Korea oppose the plan.
“Our position remains intact,” Im Sang Hyug, deputy secretary general of the Federation of Korean Industries, told lawmakers at today’s meeting. The association has about 509 large companies as members. “We are opposing the legislation on carbon-emissions trading. It’s doubtful whether we need the bill, as government targets for cuts already began this year.”
The Korea Chamber of Commerce & Industry, which counts steelmaker Posco and Samsung Electronics among its 120,000 members, joined the Federation of Korean Industries in asking the government to delay the plan. They said it will increase costs and make them less competitive against countries that don’t impose 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 emission trading 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.
Australia, which burns coal to produce about 80 percent of its electricity, plans to start a cap-and-trade system in 2015. It will allow companies that emit less that their cap to sell unused permits to other polluters. New Zealand already started emissions trading in 2009, and the European Union has operated the world’s biggest cap-and-trade program since 2005.
“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.”
The government agreed to delay the start of cap and trade to 2015 after consulting with companies, the vice minister said.
“We need to give incentives to companies that made faithful commitments to reducing greenhouse gas emissions,” Yoon Jong Soo, vice minister for the environment, said today. “The bill will give more flexibility to companies by allowing the trade of emission rights.”
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