By Park Si-soo
LG Chem, SK Global Chemical and other chemical companies are considering filing a collective lawsuit against the government to nullify their respective annual carbon emission quotas, sources said Thursday.
They have engaged in negotiations with the ministry to increase their quotas. However, if the talks end fruitlessly, the companies will take legal action, they said.
"It's very difficult to reduce carbon emissions to a level that meets the state quota," said a chemical industry insider. "Under the quotas, each company will have to spend a lot of money to buy emission rights. And this will end up denting the competitiveness (of chemical companies)."
He said an estimated 15 corporate members of the Korean Petrochemical Industry Association are considering joining a legal battle against the ministry.
The carbon emission quota program, which kicked off last month, has already faced a legal challenge from a group of metal companies, which argue that their quotas are too low to accept.
Chiefs of the country's three biggest chemical companies ― LG Chem, SK Global Chemical and Lotte Chemical ― formally suggested the readjustment of existing quotas during a closed-door meeting with government officers Wednesday. Those familiar with the meeting said the three CEOs called on ministry officers to come up with ways to quell the outcry from the chemical industry.
A total of 502 companies, including Samsung Electronics, Hyundai Motor, POSCO and Hyundai Heavy Industries, were given their emission quotas early this year. The total sum of their emission quotas amounts to 1.59 billion tons this year, about 21 percent less than the 2.021 billion tons suggested by the companies.
Companies whose annual emission volume exceeds a quota set by the government will have to purchase extra emission rights from other companies, with the trade taking place at the Korea Exchange in Busan.
Analysts said the trading volume will be minimal for a while, given the shortage of sellers on the market. Emission rights that have so far been traded are valued at 11.5 million won.
The carbon trading system is aimed at curbing greenhouse gas emissions to 30 percent below business-as-usual (BAU) levels over the next five years. Each company has received a quota of15.98 billion Korean Allowance Unit (KAU) from the government, with one KAU equivalent to a ton of carbon dioxide gas.
Analysts estimated that the affected companies will have to spend nearly 12.7 trillion won ($11.71 billion) over the next three years to buy extra emission rights or to install carbon emission-reducing facilities.
Critics say the emission quota will end up compromising the government's desperate efforts to boost the country's sagging economy.
"The government is encouraging big companies to make investment because it is one of the most time-efficient ways to revitalize the economy," he said. "But, putting a cap on carbon emission at this stage is like pouring cold water on a small candlelight that is poised to become bigger and brighter."
LG Chem, SK Global Chemical and other chemical companies are considering filing a collective lawsuit against the government to nullify their respective annual carbon emission quotas, sources said Thursday.
They have engaged in negotiations with the ministry to increase their quotas. However, if the talks end fruitlessly, the companies will take legal action, they said.
"It's very difficult to reduce carbon emissions to a level that meets the state quota," said a chemical industry insider. "Under the quotas, each company will have to spend a lot of money to buy emission rights. And this will end up denting the competitiveness (of chemical companies)."
He said an estimated 15 corporate members of the Korean Petrochemical Industry Association are considering joining a legal battle against the ministry.
The carbon emission quota program, which kicked off last month, has already faced a legal challenge from a group of metal companies, which argue that their quotas are too low to accept.
Chiefs of the country's three biggest chemical companies ― LG Chem, SK Global Chemical and Lotte Chemical ― formally suggested the readjustment of existing quotas during a closed-door meeting with government officers Wednesday. Those familiar with the meeting said the three CEOs called on ministry officers to come up with ways to quell the outcry from the chemical industry.
A total of 502 companies, including Samsung Electronics, Hyundai Motor, POSCO and Hyundai Heavy Industries, were given their emission quotas early this year. The total sum of their emission quotas amounts to 1.59 billion tons this year, about 21 percent less than the 2.021 billion tons suggested by the companies.
Companies whose annual emission volume exceeds a quota set by the government will have to purchase extra emission rights from other companies, with the trade taking place at the Korea Exchange in Busan.
Analysts said the trading volume will be minimal for a while, given the shortage of sellers on the market. Emission rights that have so far been traded are valued at 11.5 million won.
The carbon trading system is aimed at curbing greenhouse gas emissions to 30 percent below business-as-usual (BAU) levels over the next five years. Each company has received a quota of15.98 billion Korean Allowance Unit (KAU) from the government, with one KAU equivalent to a ton of carbon dioxide gas.
Analysts estimated that the affected companies will have to spend nearly 12.7 trillion won ($11.71 billion) over the next three years to buy extra emission rights or to install carbon emission-reducing facilities.
Critics say the emission quota will end up compromising the government's desperate efforts to boost the country's sagging economy.
"The government is encouraging big companies to make investment because it is one of the most time-efficient ways to revitalize the economy," he said. "But, putting a cap on carbon emission at this stage is like pouring cold water on a small candlelight that is poised to become bigger and brighter."
