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South Korea's Bold Move: Emission Permits Now Trade Like Stocks

South Korea is revolutionizing how companies trade greenhouse gas emission permits. Starting this week, financial institutions can trade these permits through securities platforms just like stocks. The government expects this move to significantly boost trading volumes and convenience for businesses. This expansion comes alongside ambitious national targets to slash emissions by over half within the next decade.

Key Points: South Korea Expands Greenhouse Gas Emission Permit Trading

  • Financial institutions can now trade emission permits through securities platforms
  • Trading hours set from 10 AM to 12 PM with afternoon auction periods
  • System enables future development of emissions trading futures market
  • South Korea targets 53-61% emissions reduction from 2018 levels by 2035
2 min read

Greenhouse gas emission permits to trade like stocks in S. Korea

South Korea launches stock-style trading for greenhouse gas emission permits, allowing financial institutions to participate and paving way for futures market development.

"The new trading system for emission permits is expected to make transactions more convenient for companies and increase trading volumes - Ministry of Climate, Energy and Environment"

Seoul, Nov 23

South Korea will expand its greenhouse gas emission permit trading system this week, allowing transactions like stocks, the climate ministry said on Sunday.

Starting Monday, financial institutions, such as banks and insurance firms, and pension funds will be allowed to open accounts with securities firms and conduct emission permits trading through their trading platforms, according to the Ministry of Climate, Energy and Environment.

Until now, emission permits have only been allowed to be traded directly through the Korea Exchange, the main stock market operator, and only by designated companies, reports Yonhap news agency.

Trading hours will be from 10 a.m. to 12 p.m., while permit auctions will run for an hour from 2 p.m. and over-the-counter trading for three hours starting from 2 p.m.

The ministry said the new trading system for emission permits is expected to make transactions more convenient for companies and increase trading volumes through the participation of financial institutions.

The new system will also pave the way for the introduction of a futures market for emissions trading and related financial products, it added.

Meanwhile, a presidential commission said it has approved a goal to reduce South Korea's greenhouse gas emissions by 53-61 percent from 2018 levels by 2035 in a bid to accelerate the transition to carbon neutrality while enhancing industrial competitiveness.

The Presidential Commission on Carbon Neutrality and Green Growth said it endorsed the nationally determined contribution (NDC) target for 2035, slightly higher than the government's initial proposal to cut the emissions by 50-60 percent.

The government will finalise the emissions goal at a Cabinet meeting Tuesday and officially announce the plan at the 30th United Nations Climate Change Conference (COP30) in Belem, Brazil, which begins on Tuesday and runs through Nov. 21, the commission said in a release.

Under the Paris Agreement, each country is required to submit and update its NDC every five years, outlining efforts to curb greenhouse gas emissions.

- IANS

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Reader Comments

R
Rohit P
Interesting move, but I hope they have strong regulations in place. Financializing emissions could lead to speculation that defeats the environmental purpose. We've seen what happened with carbon credits elsewhere.
A
Arjun K
The 53-61% reduction target is quite ambitious! Meanwhile in India, we're still struggling with basic pollution control in many cities. We need to balance development with environmental responsibility.
S
Sarah B
As someone working in finance, this opens up interesting investment opportunities. Carbon markets are becoming mainstream globally. Indian investors should pay attention to these emerging asset classes.
V
Vikram M
Good initiative, but I'm concerned about the limited trading hours (only 2 hours for regular trading). For a liquid market, they might need to extend this. Still, a step in the right direction for climate action.
M
Michael C
The futures market development mentioned here is crucial. It will help companies hedge their carbon price risks. Indian regulators should study this model for our own carbon market development.

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