Consignment trading — where firms can transfer unused allowances to a third-party auction platform — will begin in the second half of this year.
South Korea is seeking to improve the effectiveness of its carbon market, which has faced criticism for low participation and price volatility. The introduction of futures is aimed at enhancing market liquidity and providing risk management tools after the nation launched its emissions trading system in 2015.
Korean Allowance Units, tradeable permits allocated to companies under emission-reduction mandates, currently form the backbone of its cap-and-trade system.
South Korea, Asia’s fourth-largest economy, is heavily reliant on fossil fuels but has pledged to reach carbon neutrality by 2050 and cut greenhouse gas emissions by 40% from 2018 levels by the end of this decade.
