EU and South Korea will increase technical cooperation on their emissions trading schemes
Leaders from the EU and South Korea reaffirmed their intentions to advocate for an “ambitious” and “effective” UN climate agreement at the end of this year during a bilateral summit held in Seoul,
In a bid to further increase climate efforts, the leaders confirmed that they would launch an initiative next year to increase technical cooperation on their emissions trading schemes.
The effort to bolster technical cooperation on carbon markets will be closely watched by a number of governments and analysts alike.
South Korea’s ETS is the currently the world’s second largest carbon market behind the EU’s Emissions Trading System (ETS) and covers roughly two-thirds of the country’s total greenhouse gas (GHG) emissions. While plans for South Korea’s ETS were initialised in 2012, trading did not commence until January of this year, partly owing to concerns from industry.
Several experts have identified multiple benefits for the linking of these two schemes, because of the expected higher carbon price in South Korea due to limited cost-effective mitigation measures in certain high-emitting sectors. Linking with the EU ETS could reduce the cost of carbon allowances in South Korea while at the same time boosting the low carbon price in the EU.
However, the large size of the ROK ETS could pose a risk to the EU, as it would make the EU ETS more exposed to economic developments in South Korea, a possibility currently not as prevalent in current linking negotiations between Switzerland and the EU as the former ETS is relatively small.