Korea has begun to take concrete steps to deliver on its pledge to voluntarily reduce greenhouse gas emissions. In 2009, the government announced a plan to cut the nation’s carbon emissions in 2020 by 30 percent from the projected business-as-usual level or 4 percent below its 2005 level.

On Monday, it disclosed obligatory emission reduction targets for next year for the nation’s 458 major corporate polluters, the first such move since the Framework Act on Low Carbon, Green Growth went into effect in January 2010. The act signaled Korea’s push for green growth as a new economic development paradigm.

Next year, these companies, which all release more than 125,000 tons of carbon dioxide equivalent per year, will be allowed to emit a combined total of 597.6 million tons of CO2-equivalent. This is a reduction of 8.7 million tons or 1.44 percent from the 606.3 million tons they are expected to discharge under the business-as-usual scenario.

In addition to the carbon emission reduction targets, the government set energy consumption reduction goals for next year. The 458 corporate polluters are required to save 109,000 terajoules of energy or 1.43 percent of their projected energy consumption. One terajoule of energy is equivalent to the amount of gasoline consumed by driving between Seoul and Busan 16 times.

Most of the planned GHG emission cuts will be achieved by companies in the industrial and power generation sectors: They were allocated 8.32 million tons of CO2-equivalent or 95.4 percent of the total, with firms in other sectors, including waste disposal and transport, accounting for the remainder.

According to the government, if the industrial sector attains its reduction target of 4.7 million tons of CO2-equivalent, it will have the effect of replacing 3.5 million cars running on fossil fuel with electric cars. If the power generation sector cuts 3.6 million tons as planned, it will be like building a new 1,000 megawatt nuclear power plant, which costs about 2.4 trillion won.

The government’s action is significant as it makes Korea the first country among emerging economies to take specific steps toward curbing GHG emissions. It will help establish Korea as a model country with regards to coping with climate change and practicing the green growth approach to economic development.

Green growth is a must for Korea as its vibrant economy is based on energy-intensive industries, such as steelmaking and petrochemicals, which emit a large amount of GHG. To keep its economy prosperous, Korea needs to make companies engaged in these sectors more energy efficient and less polluting.

This is so because carbon emission reduction is likely to become a means of regulating international trade. Companies in advanced countries with track records for reducing GHG emissions are expected to demand comparable efforts from their trading partners.

For corporations, however, emission reduction is a costly business. The government’s scheme hence did not go down well with some of the 458 companies. They complained the government has put an extra burden on them at a time when the business environment is worsening.

Yet they have no business complaining about it, given that the government has already made a big concession. In February, it decided to delay the introduction of a cap and trade system by two years from the originally planned 2013 in the face of stiff resistance from the corporate world.

A cap and trade system can be costly for companies that are not ready to curb their GHG emissions. Under it, a company that releases emissions above its given cap is required to purchase extra credits or licenses to pollute from other corporations.

In contrast, under the current system, companies that fail to meet their emission reduction targets will first be told to make improvements and face fines of up to 10 million won should they fail repeatedly. However, a fine of 10 million won is nothing more than a slap on the wrist.

Despite the weak penalties, the government says the system will work because large companies would take failure to meet their targets as a big disgrace. We hope this reasoning proves right.

Domestic corporations should see carbon emission reduction in a positive light. They should endeavor to improve energy efficiency, rationalize production processes, and reduce their reliance on fossil fuels. These efforts will ultimately improve their competitiveness and prepare them for a cap and trade system.