Front view of the carbon emissions trading exchange. The carbon emissions trading exchange is a market that brokers and operates transactions of emission allowances allocated by the government between companies. In South Korea, the Korea Exchange has been designated to operate this emissions trading market. (Yonhap)
SEOUL, Dec. 4 (Korea Bizwire) — South Korea’s major business lobby warned that companies may face nearly 27 trillion won (US$20.4 billion) in carbon-credit purchasing costs over the next five years under the government’s newly announced emissions trading allocation plan.
The climate ministry swiftly rejected the estimate, calling it an exaggerated projection based on flawed assumptions.
In a report released Wednesday, the Federation of Korean Industries (FKI) said corporate obligations under the fourth phase of the Emissions Trading Scheme (2026–2030), combined with the nation’s 2035 greenhouse gas reduction targets, could require companies to purchase 26.9 trillion won worth of carbon allowances.
Power generators would shoulder the largest burden—about 21 trillion won—followed by steel, semiconductor, refining, petrochemical and cement producers.
The group warned the cost could eventually push up electricity prices through climate-related surcharges, adding what it called a “double burden” on manufacturers.
The Ministry of Climate, Energy and Environment rejected the projections as inflated, saying the FKI assumed corporate emissions would remain at the 2021–2024 average despite steady annual declines. Emissions by companies participating in the trading scheme fell an average of 3.4 percent annually over that period, the ministry said, with power-sector emissions dropping nearly 6 percent.
The ministry also criticized the report for assuming carbon-credit prices would quadruple to 40,000 won per ton next year, even though current prices remain in the 10,000-won range.
The FKI report urged the government to expand “transition finance”—funding to help carbon-intensive sectors shift toward cleaner energy—citing examples from Japan and the European Union.
It proposed a public-private financing ecosystem, early-stage government-led lending programs and sector-specific clean-energy road maps to guide investment. The group also suggested using part of the government’s revenue from paid carbon-allowance auctions to fund transition finance.
“High-emitting industries face mounting costs from climate-policy compliance,” said Lee Sang-ho, head of the FKI’s economic and industrial division. “Policy support is needed so Korean companies can continue developing innovative technologies and safeguard their global competitiveness.”
The climate ministry said it plans to publish guidelines for transition finance and finalize a national “K-Green Transition Strategy” by mid-2025, incorporating industry feedback.
M. H. Lee (mhlee@koreabizwire.com)
