South Korea has approved a national emissions trading scheme to tackle its growing greenhouse gas emissions.
Of South Korea’s 151 lawmakers who voted, 148 approved the scheme, underscoring bipartisan support for a cap on carbon emissions, in stark contrast with the United States and Australia where emissions trading has been deeply divisive.
"This is to develop green industry technologies and technology to reduce energy consumption, and develop those as one industry ... ultimately we want to organise markets for green business ahead of other countries," said Yang Soogil, chairman of the Presidential Committee on Green Growth, said.
The scheme caps carbon pollution across the economy, from steelmakers, ship-builders and power generators to even large universities, encouraging them to become more energy efficient.
South Korea is the world's fifth-largest oil importer and the number two buyer of liquefied natural gas after Japan, so curbing energy imports would bring big savings.
The programme, due to start January 2015, opens the possibility of linkage to other schemes as part of a global effort to curb the growth of carbon pollution. To meet the mandatory cap, firms can trade emissions permits or buy carbon offsets from UN-backed clean energy projects in poorer nations.
Final details of South Korea’s programme are still to be worked out, but the latest draft said it was likely to cover 60 per cent of the country's greenhouse gas emissions. It focuses on industrial operations producing more than 25,000 tonnes of carbon dioxide (CO2) a year.
The nation's top industry body fought the scheme, saying it would add unnecessary costs and that competitor Japan has yet to put a price on carbon. The Federation of Korean Industries has said the scheme would add initial costs of 4.7 trillion Korean won even when 95 per cent of pollution permits are given for free.
Each permit represents a tonne of carbon emissions, with free permits awarded during the scheme's two first phases, spanning 2015-2017 and 2018-2020. The rest would be auctioned.
The government says the scheme is crucial to reining in emissions from Asia's fourth-largest economy, which have doubled since 1990, and to meeting a pledged goal of reducing emissions by 30 per cent from projected levels by 2020.
"The opposition had no reason to oppose as they have been supporting the bill. Industry should be the one that's mostly worried about the outcome," Heo Seong-wook, professor of law from Seoul National University, said, referring to the country's powerful industrial conglomerates called chaebols.
Yet despite their political clout, objections from industry have not swayed lawmakers, Heo said, in part because of ongoing talks among political leaders to try to rein in big corporates.
"The parties might be concerned that if they actively support industry's opinion, they might be seen as not so friendly towards ordinary people," Heo said.
Many Korean firms, particularly big exporters, remain unconvinced but have nonetheless been preparing, analysts say.
Top emitters include major employers such as POSCO, the world's No.3 steelmaker, and Samsung, the world's biggest electronics firm by revenue.
"The news of carbon emission trading would not come as an immediate shock to the steel industry as steelmakers have prepared for the scheme," an analyst at Daishin Securities, Mun Jeoung-up, said.