SK Group said Sunday it has formed an alliance with Korean energy firms and business groups to expand the voluntary carbon market, which allows carbon emitters to offset their emissions by purchasing carbon credits.

On Friday, a total of 11 institutions and enterprises signed a multilateral memorandum of understanding to form an alliance for the "Environmental Protection Credit Market," on the sidelines of the 2023 United Nations Climate Change Conference, also called COP28, which takes place in Dubai, United Arab Emirates, until Tuesday.

Participants in the agreement include SK Inc., SK E&S, EcoSecurity, Shinhan Investment Corp, PwC Consulting, the Carbon Reduction Certification Center of the Korea Chamber of Commerce and Industry, Korea Hydro & Nuclear Power and Korea South-East Power Co.

The Environmental Protection Credit Market features a pretrading system where certification centers issue carbon credits based on the carbon reduction technologies by technology firms, and demanders -- carbon-emitting companies -- purchase these credits. The traditional voluntary carbon market has issued carbon offset credits only after authenticating the reduction results, such as reforestation and forest conservation.

According to SK Group, this new mechanism will allow tech firms to secure funding in advance for commercializing their carbon reduction technologies, and demanders to have the advantage of offsetting carbon emissions or gaining profit from trading the credits they acquired beforehand.

At the signing ceremony, the signatory members announced a collective effort to issue the first Environmental Protection Credits in 2024 through COP28, while planning to officially launch this initiative at COP29 next year.

In addition, SK revealed its vision to promote early commercialization of carbon reduction technologies and invigorate the voluntary carbon credit market by facilitating trading of the Environmental Protection Credits.

"The EPCM will play a crucial role in accelerating the advent of technology-based carbon reduction by incentivizing companies with innovative technologies," said Kim Moo-hwan, head of SK Inc.’s Green Investment Center.

"The EPCM coalition is dedicated to engaging in robust carbon reduction efforts to address the global climate change challenge."