ed Curbing carbon emissions

The country’s carbon emission trading scheme began operations Monday on the Korea Exchange in Busan amid concerns about side-effects. Trading was expected to be extremely light, but as of 10:30 a.m., 700 tons of emission rights were traded.

The price of 1 Korean Allowance Unit (KAU) was set at 7,900 won, up 40 won or 0.51 percent from its initial price. One KAU is equivalent to a ton of carbon dioxide. The cap-and-trade system will operate for two hours in the morning in the early stages of its implementation.

Under the trading scheme, which is aimed at reducing greenhouse gas emissions, the government gave 525 companies across 17 industries about 1.6 billion tons in emission permits for the 2015-17 period. However, companies have called for raising the emissions quota to more than 2 billion tons.

Businesses argue that the cap-and-trade system, which allocates emission permits to companies and allows them to trade surpluses or buy them as needed, will increase their manufacturing costs and hurt competitiveness. Their arguments sound plausible, given that even China and the United States, the world’s top two greenhouse gas emitters, are not imposing emissions schemes. .

The Federation of Korean Industries, the lobby for large conglomerates, opposed introducing the system, saying the scheme could cost businesses up to 27 trillion won over the next three years unless changes are made to its current form.

The system, which went into effect two years behind schedule at the request of the business community, requires companies either to cut production or reduce carbon emissions through further environmental investment. If not, they have to buy emission rights or face fines.

Companies have a point when they claim that corporate investment could weaken as firms eager to invest are destined to bear a greater burden from the new scheme. It seems contradictory for the government to impose greater environmental costs while encouraging businesses to invest actively.

Even so, reducing greenhouse gas emissions is a global trend Korea cannot miss. So there is a strong need for our businesses to look at the cap-and-trade system not as a regulation but a new business opportunity. That is, the new scheme can be painful for the time being, but it will serve as an occasion to advance our industrial structure through enhanced energy efficiency.

The problem is how to cope with the anticipated slowdown in trade in the initial stages, which requires the government to play a role in making the market more effective.