22 January 2015
The South Korean carbon market is the world’s second-largest, after the EU Emissions Trading System (EU ETS). Francisco Ascui, from the Business School’s Centre for Business and Climate Change, was interviewed on Primetime, South Korea’s no. 1 foreign language radio station current affairs programme, about the significance of this new scheme, the outlook for future trading activity, and his advice for improvements to the design of the market.
“The launch of this new scheme has significance well beyond the borders of South Korea,” Francisco said. “Climate change is the biggest collective action problem humanity has ever faced, and the launch of this new market shows the world that South Korea is contributing to the international effort to tackle climate change. Every step that a country takes in the right direction encourages other countries to move together. This is particularly important this year, because of the critical climate change summit taking place in Paris at the end of this year.”
However, Francisco cautioned that trading volumes could remain low until the reporting and compliance period in the second quarter of 2016, due to the lack of pure traders in the market and the fact that free allocations to most heavy industry would discourage them from actively trading any surplus until they were absolutely certain about their own compliance. He advised policy-makers to consider allowing commercial banks and other non-emitting entities to participate in the scheme to improve liquidity and avoid undue price volatility.
Download the interview (2015-01-19 Hour 1).