By Kim Hyun-cheol
Staff Reporter
In an attempt to keep pace with global efforts to regulate greenhouse gas emissions, a new company specializing in carbon exchange will be set up later this month.
The Ministry for Knowledge Economy (MKE) said Wednesday the tentatively named Korean Carbon Finance (KCF) will be established within the month, with an initial investment of 5 billion won or $4.4 million.
Korea Investment and Securities, which is now operating the nation's first carbon fund, will be the main operator with KT&G and other companies.
Managing local companies' transactions of greenhouse gas emission rights according to United Nation's clean development mechanism (CDM) policy will be KCF's key business, as well as the country's certified emission reductions under the ministry's supervision. The new company will also make direct investments to cut down on greenhouse gases and provide research and consulting services.
The MKE has been issuing the certificates to companies that have agreed to reduce greenhouse gasses.
The UN-managed CDM allows companies that have reduced greenhouse emissions to sell the portion they cut to others for extra profit. South Korea's CDM business is the world's fourth largest with 146 million-tons of carbon dioxide emissions per year.
South Korea is currently not subject to the obligatory emissions cut under the current Kyoto Protocol, but is likely to join the protocol after 2013. The country is actively engaged in the low-emission global effort, which is now also an emerging business worldwide.
A carbon tax is likely to be introduced from 2010 in a master plan to achieve low-carbon based development, initiated in President Lee Myung-bak's speech for the nation's 63rd Liberation Day last month.
The new tax will be imposed on emissions of greenhouse gases including carbon dioxide. The direct taxation system is now applied in several European countries, such as Sweden, the Netherlands and Norway, as well as several states in North America.