Both industry and environmental groups have criticized the government’s latest road map for emissions reduction.

The government said Tuesday that it would begin its carbon emissions trading scheme from next year as planned, but would delay the incentive system for low-emission cars by a few years.

Under the government’s emissions reduction scheme, the low-carbon vehicle incentive system, which had initially been slated to go into effect in January 2015, will be put on hold until 2020, apparently to ease the burden on Korean carmakers.

Carmakers here have argued that penalizing cars that do not meet emissions rules would put them at a disadvantage with foreign competitors that have more experience making fuel-efficient, diesel-driven cars.

The nation’s environmental groups have criticized the government’s revised growth plan.

“It seems to be difficult for Korea to achieve its target of cutting greenhouse gas emissions by 2020 to 30 percent (from projected levels) with the eased scheme,” said Song Sang-seok, secretary-general of Green Transport, a local nonprofit organization promoting green transportation.

The emissions cut target, set by the previous government under its “green growth” initiative, attracted global attention in 2009.

“The target is not binding but the revision of the plan will deal a blow to Korea’s credibility,” Song said.

Despite the delay of the incentive system, manufacturers are also unhappy, due to the launch of the carbon-trading scheme.

The emissions-trading system, or ETS, is designed to cut pollution by providing economic incentives to the industries that achieve emissions reductions.

The government sets a cap on the amount of emissions, and the limit is allocated to firms in the form of emissions permits that grant the right to emit a specific volume of greenhouse gases.

From next year, companies whose emissions exceed their limits will have to pay fines of 100,000 won ($98) per ton. Industries strongly oppose the move on account of the high cost of reducing emissions.

Corporate lobby groups such as the Federation of Korean Industries and the Korea Chamber of Commerce and Industry said the ETS would invariably hurt the profitability of manufacturers, raise production costs, and lead to more losses on investments.

“This could adversely influence investment and hiring and even lead to a significant drop in sales,” an FKI official said.

There have been reports indicating that annual manufacturing sector sales could shrink by up to 29.6 trillion won.

In particular, oil refineries and steelmakers are bracing for hard times.

“Steelmakers will likely be given insufficient emissions rights that will force them to buy such rights on the market,” an industry insider said.

“The government’s estimates of the total amount of emissions that the industries need are very conservative,” said Yoo Hwan-ik, a manager of the Industry Division at the Federation of Korean Industries.

The FKI said companies will have to shoulder the extra cost of up to 5.7 trillion won to buy emissions permits for the three years from 2015 to 2017.

The government, however, estimated the total emissions from 17 major industries including power generation, steel and petrochemistry to be 1.4 billion tons, far less than the industries’ estimates of 1.7 billion tons, according to Yoo.

“As South Korea implements environmental laws earlier than its rivals, the government should take complementary measures to minimize the burden on the industries and avoid weakening their global competitiveness,” a KCCI official said.

By Shin Ji-hye and news reports 
(shinjh@heraldcorp.com)