* National CO2 pricing scheme starts 2015
* Covers about 60 percent of nation's carbon pollution
* Link with EU scheme not seen possible until 2018
* Industry worries about rising costs under scheme
(Adds details on linking schemes in paras 9-12)
By Meeyoung Cho
SEOUL, May 2 South Korea's lawmakers approved a
national emissions trading scheme on Wednesday to tackle its
growing greenhouse gas emissions, overcoming strong industry
opposition and joining a growing number of nations to put a
price on carbon.
Of the 151 lawmakers who voted, 148 approved the scheme,
underscoring bipartisan support for a cap on carbon emissions,
in stark contrast with the United States and Australia where
emissions trading has been deeply divisive.
Analysts and officials said the programme won approval,
despite fears it would hurt the economy, because of the
long-term benefits to the country's huge conglomerates from
being more energy-efficient and exporting greener goods.
The scheme has not generated the same bitter public debate
as in Australia and the United States, with the public more
concerned with neighbouring North Korea.
"This is to develop green industry technologies and
technology to reduce energy consumption, and develop those as
one industry ... ultimately we want to organise markets for
green business ahead of other countries," said Yang Soogil,
chairman of the Presidential Committee on Green Growth, told
The scheme caps carbon pollution across the economy, from
steelmakers, ship-builders and power generators to even large
universities, encouraging them to become more energy efficient.
South Korea is the world's fifth-largest oil importer and
the number two buyer of liquefied natural gas after Japan, so
curbing energy imports would bring big savings.
The programme, due to start Jan 2015, opens the possibility
of linkage to other schemes as part of a global effort to curb
the growth of carbon pollution, which scientists blame for
heating up the planet and triggering more chaotic weather.
To meet the mandatory cap, firms can trade emissions permits
or buy carbon offsets from U.N.-backed clean energy projects in
Carbon analysts and investors said the details of the scheme
were still quite vague, which made it difficult to predict its
impact on the U.N. scheme.
Links with the European Union's emissions trading scheme -
the world's lagrest - might not be possible until around 2018 at
the earliest, said Barclays Capital analyst Trevor Sikorski.
"The European Commission would want to be comfortable with
the rules and the operation of the scheme, and so linking would
not really begin to be considered until after there are a few
years of experience," he told Reuters.
Global carbon markets were valued at around $120 billion
last year but would be worth much more if established and
emerging schemes were able to trade with each other.
Final details of South Korea's programme are still to be
worked out, but the latest draft said it was likely to cover 60
percent of the country's greenhouse gas emissions. It focuses on
industrial operations producing more than 25,000 tonnes of
carbon dioxide (CO2) a year.
The nation's top industry body fought the scheme, saying it
would add unnecessary costs and that competitor Japan has yet to
put a price on carbon.
The Federation of Korean Industries has said the scheme
would add initial costs of 4.7 trillion Korean won ($4.2
billion) even when 95 percent of pollution permits are given for
Each permit represents a tonne of carbon emissions, with
free permits awarded during the scheme's two first phases,
spanning 2015-2017 and 2018-2020. The rest would be auctioned.
The government says the scheme is crucial to reining in
emissions from Asia's fourth-largest economy, which have doubled
since 1990, and to meeting a pledged goal of reducing emissions
by 30 percent from projected levels by 2020.
"The opposition had no reason to oppose as they have been
supporting the bill. Industry should be the one that's mostly
worried about the outcome," Heo Seong-wook, professor of law
from Seoul National University, told Reuters, referring to the
country's powerful industrial conglomerates called chaebols.
Yet despite their political clout, objections from industry
have not swayed lawmakers, Heo said, in part because of ongoing
talks among political leaders to try to rein in big corporates.
"The parties might be concerned that if they actively
support industry's opinion, they might be seen as not so
friendly towards ordinary people," Heo said.
Many Korean firms, particularly big exporters, remain
unconvinced but have nonetheless been preparing, analysts say.
Top emitters include major employers such as POSCO
, the world's No.3 steelmaker, and Samsung
Electronics, the world's biggest electronics firm by
"The news of carbon emission trading would not come as an
immediate shock to the steel industry as steelmakers have
prepared for the scheme," an analyst at Daishin Securities, Mun
Another analyst at Hanwha Securities, Kim Kang-o, said, "If
the cost burden accounts for a certain percentage of operating
profits, that is a problem ... Whether the industry would pass
on the cost to consumers is also an important factor."
($1 = 1,128 Korean won)
(Reporting by Meeyoung Cho, Eunhye Shin and Eun Jee Park;
Additional reporting by Nina Chestney and Jeff Coelho; editing
by David Fogarty and Jane Baird)