Securities firms eye carbon emissions market

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By Anna J. Park

As global awareness of climate and net-zero targets rises, the market for carbon emissions trading is also growing quickly in Korea. In order to facilitate the local emissions trading market, the Korea Exchange (KRX) allowed 20 local brokerages late last year to participate in carbon emissions trading. The local emissions trading market opened in early 2015, where some 650 registered business entities trade carbon credits.

Against that backdrop, Goldman Sachs' Seoul office is joining the growing market from this year, aiming to broker emissions trading between Korean businesses and foreign companies. It will be the first time for such a cross-border emissions brokerage service to be provided in the country.

The Seoul office of the U.S.-headquartered global investment bank officially registered for cross-border carbon emissions trading with the Financial Supervisory Service (FSS) ― the country's financial authority ― at the end of last year, declaring that the office will kick off the brokerage service starting this year. Goldman Sachs aims to support the carbon emissions trading process from the negotiation to implementation phases and offer follow-up management consulting between companies from different countries.

But the brokerage service registered by Goldman Sachs will be different from the local carbon emissions trading conducted by the bourse operator KRX. Emissions trading on the KRX market is allowed only for 650 registered business entities as well as state-run Korea Development Bank (KDB) and the Export-Import Bank of Korea. A total of 20 securities firms have been allowed to participate in the trading, but the brokerages are only allowed to engage in proprietary trading using their own money, with a trading size limit of 200,000 tons a year.

Goldman Sachs' emissions brokerage service aims to connect demand for carbon emissions by local and overseas companies outside of the KRX market.