Summit News

S.Korea's CO2 trade bill receives bipartisan backing

SEOUL (Reuters) - South Korea’s ruling and opposition parties have agreed to approve an emissions trade bill in a upcoming parliamentary review, which is expected later this year, the chairman of the Presidential Committee on Green Growth said on Wednesday.

Soogil Young also told the Reuters Energy and Climate Summit that South Korea should implement a carbon tax and raise power prices as current prices drive excessive demand.

After strong opposition from industry, the government in April finalized the draft of the carbon emissions trading scheme bill by increasing free carbon allowances and softening penalty rules for non-compliance. The government wants to get the bill passed before September to start the scheme from 2015.

Green growth is a central policy of the administration of South Korean President Lee Myung-bak as Asia’s fourth-largest economy aims to reduce greenhouse gas emissions voluntarily by 30 percent by 2020 from projected levels.

“Both the ruling and opposition parties have agreed (to approve the bill). By late Autumn, the bill is expected to be approved in the parliament ... there was a bipartisan agreement,” Young said.

“If the parliament review is delayed to next year, no progress will be made due to April’s general election. We aim to get the approval this year.”

On top of the emission trading scheme, Young said South Korea should implement a carbon emission tax to cut pollution, while also raising power prices. He said present power rates were being charged at below cost, driving inefficient consumption.

“To reduce emissions, economic incentives should be provided ... such as raising power prices and implementing a carbon tax. The committee will focus to work to introduce a carbon tax,” Young said.

South Korea’s economy minister Choi Joong-kyung told the Energy and Climate Summit on Tuesday the plan is to slowly increase electricity tariffs to slow power demand growth, despite the risk of adding to inflationary pressures.

South Korea, heavily dependent on energy imports, should raise electricity prices at least 15 percent this year to reflect higher fuel costs and reduce demand, the head of the influential Korea Energy Economics Institute said last month.

Editing by David Fogarty