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Carbon trading system, a financial tool to reduce greenhouse gas, could cut CO2 emissions from manufacturers and utility firms, but it also raises their costs, officials said yesterday.
According to the Korea Power Exchange, a nonprofit organization that controls the country’s power flow, greenhouse gas emissions by utility firms and major firms including POSCO have reduced 6.1 percent after a trial operation of the carbon trading system last month.
However, the cost of electricity generation has surged 20-24 percent to make up for spending on ‘eco-friendly’ utilities that emit less pollutants, it said.
The KPE has been operating a trial cap-and-trade system starting from Aug. 10 to Sept. 4. It plans to run a second-round of trading simulation by next month. Futures trading on carbon emissions will be tested, the KPE said.
The cost of power generation surged because utility companies spent more on liquefied natural gas instead of using non-coking coal that emits much more carbon gas.
The power generated by burning coal releases greenhouse gas 2.3 times more than the method by using LNG.
Korea plans to create a carbon trading market soon after reviewing legal and systematic frameworks. The government has been encouraging domestic plants to register their voluntary greenhouse gas reduction projects.
The electricity-related industry emits 26 percent of the total amount of greenhouse gas recorded in Korea. Korea’s emissions amounted to 600 million tons in 2006.
By Cho Chung-un
