Now Reading
Spotlight: South Korea’s climate change policy, regulation and law

Spotlight: South Korea’s climate change policy, regulation and law

Spotlight: climate change law, regulation and policy in South Korea

All questions

Climate change

Korea is an active participant of the international community’s collective efforts against global warming. It joined UNFCCC 1993, ratified Kyoto Protocol 2002, and ratified Paris Agreement 3 November 2016. In 2015, the government submitted its Intentionally Determined Contribution (INDC). The INDC was a proposal to set an economy-wide goal to reduce greenhouse gas emissions by 37% below the business-as usual level by 2030. The government declared its 2020 commitment to net-zero emissions by 2050.

The Framework Act on Low Carbon Green Growth (or the Carbon Neutrality Act) will be abolished in 2021. This Act was a key legal foundation for Korea’s domestic implementations of the INDC. Instead, the Framework Act on Carbon Neutrality and Green Growth (or Carbon Neutrality Act), will come into effect on 25 March 2022. It requires that the government cut its greenhouse gas emission by at least 35% in 2030 from the 2018 levels. This is necessary to achieve carbon neutrality before 2050. The Carbon Neutrality Act also provides for a Climate Response Fund to support those classes, regions, and industries that are most vulnerable to climate crisis. It is based on the concept ‘climate justice’.

In response to climate change, the government has taken a variety of policy measures. Two of the most prominent schemes are the Renewable Portfolio Standard scheme (RPS) under the Act on the Promotion of the Development, Use and Diffusion of Renewable Energy in 2012 and a national cap-and trade system and greenhouse gas emissions allocation system, also known as the KETS under the Act on the Trading and Allocation of Greenhouse-Gas Permits in 2015.

As the price for new and renewable energy continued falling, it was pointed that the RPS had reached its limit of supply. Thus, the Clean Hydrogen Portfolio Standard, (CHPS), was created in Korean in 2021. The Hydrogen Act, the world’s first Hydrogen Economy Safety Management Act (the Hydrogen Act), is the basis law for the CHPS. It was enacted in 2020. The Hydrogen Law was created to promote hydrogen economy implementation and manage hydrogen safety. It will soon be amended to include the CHPS in 2022.

i The RPS Scheme

The government repealed the feed-in tariffs regime and implemented the RPS under the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energies. The RPS relies upon renewable energy certificates (REC), which are certificates that authenticate the fact of supply using renewable energy facilities. They are based on every megawatt-hour of electricity produced from a renewable resource. Once issued, RECs are able to be traded.

Companies with a production capacity of 500 MW and more are required to generate a minimum amount of gross power from renewable sources by the government. This obligation is currently in force for 22 large power companies in Korea. Administrative fines up to 1.5 times the average trading price for REC may be imposed if the required generation quota is not met. The average trading price for REC was 35,000 Korean won as of October 2021.

The REC weight of RPS system was adjusted in 2021 to increase the weight of offshore wind power from 2.0 to 2.5 and lower it from 0.7 to 0.5 for mountain solar power. In addition, RECs were removed from RPS in the instance of coal IGCC. Due to the implementation of CHPS, fuel cell power generation will be also excluded from the RPS in 2022.

ii Korea Emissions Trading Scheme

See Also
The sun shines through high security fencing surrounding Norwich Prison on August 25, 2005, in Norwich, England.

Korea established a national scheme for greenhouse gas emissions trading in 2015. This scheme is commonly known as the KETS. The Phase 3 allocation plan (2021-2025), which will allow for emissions rights, was allocated to 685 public entities and companies whose annual emissions are not less than 125,000 tonnes CO in 2020.2Or to businesses with annual emissions of not less than 25.000 tCO2, which represents a drastic increase from 589 companies in the Phase 2 allocation plan (2018–2020). If greenhouse gas emission of a public entity or company exceeds the allocated emissions, the entity or company must pay administrative penalties, purchase emissions rights on the emissions trading marketplace, or offset excessive emissions by purchasing offset credits.

A revision to the KETS subregulation in 2021 means that an organisation can earn credit for carbon emissions by purchasing RECs. This is equivalent to the amount of the purchase amount (indirect electricity use). This is to encourage companies and other entities to participate in RE 100 (production using only renewable energy), which is a partial integration of RPS and KETS markets.

Korea has not yet joined an international scheme to trade greenhouse gases. The EU CBAM’s recent proposal is expected to have an effect on many industrial sectors around the globe, starting with targeted industries like steel and aluminium. Given these circumstances, it is likely that the KETS will undergo a change and that, eventually, discussions about the ETS integration focusing on East Asia may also take place.

iii Hydrogen Act and CHPS Scheme

Korea passed the first Hydrogen Act in February 2020. It was then entered into force on February 2021. The Hydrogen Act is a law that implements the “Hydrogen Economy roadmap”, which was first announced in 2019. It has been updated with the 2.0 version. It also promotes safety for hydrogen fuel and hydrogen supply facilities. The amended bill, which is expected to be approved in December 2021 will expand the current hydrogen power generator sector to include hydrogen turbine power production and ammonia-mixed power generation. It will also define clean hydrogen, which is hydrogen produced from renewable energy rather than fossil fuels. It will also describe how to promote clean hydrogen. The Hydrogen Bill will also create the CHPS system which will require electricity providers, in a similar manner to the RPS, to supply clean hydrogen-based electricity. This will allow for the transfer of fuel cell power generation, which is currently part of the RPS, to the CHPS system.

View Comments (0)

Leave a Reply

Your email address will not be published.