Emissions Trading Key to South Korea’s Climate Agenda

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By Elaine Ramirez

South Korea’s new president will rely heavily on the country’s nascent cap-and-trade program and a plan to quadruple renewable energy to meet greenhouse gas reduction goals, the country’s climate change ambassador told Bloomberg BNA.

“After 2020, this [emissions trading] system will be fully, deeply rooted in our climate change policy, so it will be established as one of the most effective tools” against climate change, Kim Chan-woo said in an interview at his office in Seoul.

“In the past, we didn’t think this carbon-pricing scheme would be very effective,” Kim said in the July 19 interview. “Now, ETS is the basic foundation for Korea to address climate change or to reduce greenhouse gases.”

South Korea’s emissions trading system was established in 2015 as the world’s second-largest carbon trading market, covering around two-thirds of the country’s national greenhouse gas emissions.

But it met a lukewarm reception its first year, as 323,300 tons of carbon dioxide equivalant units worth 3.8 billion won ($3.4 million) were traded in 2015. Trading continued to be flat until the government in mid-2016 introduced changes. And the European Union, with the world’s largest ETS, joined hands with Korea in a three-year project to help the country implement and operate the first phase of its program.

Kim said South Korea would continue to “fine-tune” the ETS system. The second phase of implementation from 2018-2020 will include the introduction of foreign credits, while the third phase launches in 2021.

Increased Renewables

South Korean President Moon Jae-in, who took office in May, has pledged a vigorous nuclear-free shift to renewable energy and vows to use climate change as a driver for economic growth. South Korea’s energy matrix currently consists of 5 to 6 percent renewable energy, but the country now has a goal of raising that to 20 percent by 2030, Kim said.

“Increasing renewable energy up to 20 percent is not a small thing. … This is a big policy direction,” he said. “The Moon administration’s policy direction is very clear, so the market will react to the government’s direction.”

The government wants to replace coal-fired and nuclear power plants with renewable energy in the long run, and increase imports of liquefied natural gas to bridge the transition. The country imports almost all of its energy, and an increase in renewable production will help South Korea strengthen its energy security, Kim added.

The former ambassador for Arctic cooperation, Kim was appointed climate change ambassador last November, during the previous Park Geun-hye administration.

Phasing Out Coal Plants

One of Moon’s key environmental pledges during his presidential campaign this spring—a season notorious for “yellow dust” air pollution—was to reduce fine particulate matter (PM-2.5) air pollution by 30 percent, in part by shuttering coal-fired power plants when their lifespan expires, rather than renewing them. In June, the government temporarily halted eight coal plants to analyze air pollution, after which it announced it would shut down 10 aging coal plants by 2022.

On the diplomatic front, South Korea remains committed to the Paris climate agreement, in which it has pledged to reduce greenhouse gas emissions by 37 percent of business-as-usual levels by 2030, Moon reiterated at the G-20 summit in Germany this month.

But the withdrawal of the U.S., with the world’s second-highest emissions, from the Paris accord could deal a major blow to the international community, Kim said.

“Climate change is a global challenge, and the international community should respond to that problem with a sense of urgency,” Kim said. The remaining members of the Paris Agreement are now tasked with engaging the U.S. to rejoin their efforts, he added.

“The final aim for the international community is to secure universal efforts in reducing greenhouse gases. We need U.S. efforts in reducing GHGs,” he said. “We want the international community to have a dialogue and engage the U.S. in joining our forces against climate change.”

To contact the reporter on this story: Elaine Ramirez in Seoul at correspondents@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com

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