South Korea – Offset Mechanism to Meet Domestic Emission Reduction Target

Posted on May 27, 2011 by

South Korea is yet another country to launch an offset mechanism that will enable firms to meet their domestic emission reduction targets. The offset mechanism was announced on Tuesday by the Ministry of Knowledge Economy (MKE) and allows large firms to fund the deployment of clean technologies in smaller companies, and use the resulting credits to meet their goals under Seoul’s Target Management Scheme (TMS).

The TMS caps emission at over 1,500 facilities that emits 440 million tonnes of CO2 per year, but does not allow the organizations to trade the credits so the introduction of this new green credit system will make it easier for both TMS covered companies as well as SMEs (not covered under TMS) as it allows them to gain returns from their reduction.

The scheme is due to start in 2012 and was designed to help the country cut emissions 30 per cent below the business-as-usual level by 2020. The cap will be announced in September.

This voluntary green credit would serve as training ground for participating entities which will help them understand the dynamics of a carbon market. This could be useful as South Korea plans to implement its economy wide mandatory emission trading scheme by 2015.

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