A global carbon emissions watchdog called for the Korean government to go ahead with its plan to introduce a cap and trade system in 2015, despite opposition from businesses and a deepening gloom over the market.

Yang Choon-seung, director of Korea Sustainability Investing Forum(KoSIF), said the government should step up proactive efforts for the development of the burgeoning market in which permits to emit carbon are given to firms and can be traded among them. 

“If we don’t even try to implement the carbon cap-and-trade system, firms and even the entire nation will lose a learning opportunity as well as competitiveness in the world’s carbon market,” he said in an interview with The Korea Herald. 

KoSIF runs a climate change reporting program for companies in Korea in partnership with CDP, an international not-for-profit organization providing the only global environmental disclosure system. 

China, the world’s largest polluter, is said to start a pilot cap-and-trade system this year in regions including Beijing before running the carbon market across the entire nation between 2015 and 2016.

The U.S., the No. 2 carbon emitter, is running the carbon market in 10 states and is planning to expand to others starting this year.

But the European Parliament in April rejected a reform bill to bolster the faltering EU carbon market, the world’s largest.

The development has bolstered skeptical voices in Korea demanding the government consider postponing or even scrapping the scheduled launch in 2015.

He said that a one-year test-run of the carbon market could also be a good option for Korea to find possible problems before implementing the cap-and-trade system in earnest.

Yang has led the CDP’s climate program for Korean companies since 2008. KoSIF and CDP publish an annual report on companies’ climate change governance, risks, opportunities and emissions reduction activities.

The number of participating corporations has grown from 16 in the first year to around 100 in 2012, including some of the nation’s largest firms such as Samsung Electronics, Hyundai Motor Group, POSCO, LG Electronics, Doosan Corp., SK, and SK Hynix.

Yang said the CDP report helps not only investors in making their investment decisions but also companies in setting policy directions for their carbon management.

Even though many big conglomerates are effectively managing their carbon emissions, a large gap still exists between those topping the list and other firms.

“Many small and medium-sized companies that do not run business in foreign markets fall short of the efforts in disclosing emissions data,” Yang said.

And companies in general fall short of the actual efforts to reduce greenhouse gas emissions compared to those in other nations.

The increase in greenhouse gas emissions affects almost all industries including the financial sector, in which the environment becomes more and more important a factor when making an investment decision.

More than half of 93 investment firms that participated in the 2012 Global Investor Survey on Climate Change Report, a global survey of investment practices, said they reflected climate change information in their investment portfolios.

“When a firm fails its management with regard to environmental issues, it might face a steep uphill climb as the U.K.’s British Petroleum did, or could even disappear in just a day,” Yang said.

The Korean government started running a target scheme for carbon reduction in 2012.

In the system, each firm is obliged to reduce carbon emissions by a target amount set by the government.

Yang said, however, the target-based system ― which is thought to be less effective in reducing emissions than the cap-and-trade system ― will do nothing but impose more of a burden on businesses, especially when both the target scheme and cap-and-trade system are run together.

“What worries me the most about the carbon market is the unstable price of carbon credits,” Yang said.

The price, which once stood at 30 euros ($40) per ton, has fallen to a low of around 2 to 3 euros per ton, putting the market on the line.

Some experts forecast the price will likely drop further.

“Despite the volatility, if the government demonstrates its willingness to implement the system, the carbon credit price will be set at a proper level as there will be an increasing demand for carbon credits,” Yang said.

KoSIF is currently working together with CDP’s special project, the Climate Disclosure Standards Board (CDSB), in creating a unified framework to help companies to disclose climate change information in mainstream financial reports.

It also plans to join the United Nations Principles for Responsible Investment, a U.N.-backed organization for a sustainable global financial system.

Censuring the former government’s lack of sincerity in environment policies, Yang emphasized “de-carbonation is the key” to the environmental policies.

“The Park Geun-hye government should show its willingness and genuine efforts to successfully proceed with the carbon market.”

By Kim Young-won (wone0102@heraldcorp.com)