Korea will start a carbon-trading system in 2015 and gradually increase the rate of paid allocation of emission allowance in three years from the launch, as part of efforts to stem global warming in a way that secures the country's industrial competitiveness, the Prime Minister's Office (PMO) said Tuesday.
The system requires companies to take action to reduce greenhouse emissions levels or to buy rights to release gases if they are unable to so. Companies can also sell emission rights and receive cash payments.
The rules will affect businesses that release 125,000 tons of greenhouse gas per year. Individual plants that emit 25,000 tons of global warming gases such as carbon dioxide will come under the new restrictions, according to the government.
Following the establishment of the relevant law in May, the Cabinet on Tuesday approved enforcement rules and penalties for non-compliance.
In the first phase of the system from 2015 to 2017, the government will provide sectors with their benchmarked allocation for free, which will be reduced to 97 percent from 2008-2020 period and to under 90 percent in the following three years, according to the PMO.
The purchase of 3 percent of the allowance is expected to cost industries a combined 4.5 trillion won (US$4.13 billion) per year, and 10 percent to cost 14 trillion won annually, according to the industry sector calculation.
In an effort for the newly launched system not to hurt the national competitiveness, the government decided to give emission allowance for free based upon a company's trade-intensiveness and production cost, the PMO said.
Up to 100,000 won of fines for every ton of greenhouse gas emissions that a company releases above the limit will be levied, it added.
"The government devised the system to meet the global standard on efforts to tackle global warming while boosting the national competitiveness," the PMO said in a statement.
"To launch the system without a hitch in 2015, ministries concerned will cooperate further on raising public awareness and coming up with supportive measures for companies subject to the new system." (Yonhap)
Both the law and the enforcement rule will go into effect on Nov. 15, 2012.