Tokyo, March 11, 2011 Ministry of Environment of KOREA

Transcription

1 Latest Allocation Plan for Korean ETS Tokyo, March 11, 2011

2 C O N T E N T S 1. Korean Way : Low-Carbon, Green Growth 2. Target Management Scheme as a Precursor to ETS 3. Debates around the Introduction of ETS in Korea 4. Allocation Principles 5. Conclusion

3 1. Korean Way : Low-Carbon, Green Growth

4 Korean Economy under a broad perspective <Outperforming Countries> <Korean Economy> Korean Economy is - 15 th in GDP (IMF 2010) - 7 th Exporter [from International Monetary Fund, 2010] 4 [Korea Bank, 2011] and still has potential to grow

5 Economic Growth vs. GHG emission Korea wants to maintain economic growth, while curbing the GHG emissions (Million ton CO 2 ) BAU % CUT from BAU Scenario* * finalized( 09.11), submitted to UN( 10.1), and specified in the legislation 5

6 Korean Way : Low-Carbon, Green Growth It all started with the clear vision of the leadership, and has been finalized with the enactment of Framework Act on Low-Carbon, Green Growth. 6

7 Framework Act on Low-Carbon, Green Growth Comprehensive legislation to fight climate change while promoting new growth engines and creating clean energy jobs Purpose To lay institutional foundation for the Low-carbon Green Growth national vision Enacted as a law on green growth that incorporates climate change, energy, and sustainable development comprehensively(jan. 2010) Key Policies Focus on promoting green technology/industry as new growth engines Organically connect and harmonize climate change and energy measures Suggest the direction of environmentally friendly taxation Secure statistical data such as GHG emissions and energy production and establish the foundation for promoting green management by corporations Introduce the Target Management System for GHG mitigation and energy saving 7

8 2. Target Management Scheme as a Precursor to ETS

9 What is Target Management Scheme (TMS)? Regulating scheme for Large Emitters (mainly power plants & industrial facilities) - Covered Emission : nearly 70% of total national emission - Covered Entities : % 70% % 468 Can be viewed as a Precursor to Emissions Trading Scheme 9

10 How does it work? (overall) Through close collaboration between Government and Regulated Entities 10

11 Who are regulated? Large emitters : over 125,000 tco2(corp.) or 25,000 tco2(site) Criteria : Corporation criteria first Until ~ From Corp. Site Corp. Site Corp. Site GHG (CO2 ton) 125,000 25,000 87,500 20,000 50,000 15,000 Energy (TJ) Corporation Criteria Site Criteria 11

12 Who are regulated? (continued.) Finally 468 Regulated Entities have been confirmed Agri./Forestry (MIFAFF) Industry/Power (MKE) Building/Transp. (MLTM) Waste (MOE) (Unit : EA, 1000CO2ton, TJ) # of Entities # of Sites GHG Energy Ratio(%) Ratio(%) Ratio(%) Ratio(%) Agri./Forestry , , Industry , ,770, Power , ,664, Waste , , Building/Transp , , Total , , ,592,

13 How is the Target set? Take into account reduction potential & BAU concept (to be elaborated later) For Existing Facilities For New or Expanded Facilities Benchmark Past Emission Benchmark(100%) Baseline Setting of Targets for Entities Targets for Entities Targets for Facilities 13

14 How do I report? Through clearly defined MRV guideline, with the verification of 3 rd party verifiers Most of the Principles are from the existing MRV guidelines, like IPCC, EU-ETS, US MRR, and Australian NGER, etc. TMS or Calculation? Hybrid method to exploit the advantages of TMS and Calculation methods TMS will be mandatory for waste incineration, and other facilities using solid fuel with closed process Include all the emissions? Exclude minor emission sources, like fugitive emissions in the use stage Include emission from incinerating the biomass? Emission from biomass will not be counted. Emission from waste incineration will be counted, but will be exempted from target-setting. 14

15 What about Early Actions? Confined to previously verified reduction activities only Criteria Domestic actions only Actions within the boundary of the Regulated Entity Project-based reductions will also be eligible Limitation on total amount of early action Confined to purely additional reduction other than conventional managerial activities Exceptions Natural reductions due to facility change, Governmental aid, etc Period Jan ~ Designation as a regulated entity Major types KCER by MKE, Pilot Energy Target Management Schemeby MKE, Pilot ETS Scheme by MOE 15

16 What are the consequences? Disclosure of performances & non-compliance penalty upto 10,000,000 For General Public For Public Institutions For Public Announcement Put on the emission data on the webpages of governing ministries or GIR information system Provide the data to public institutions upon request after the review of Green Growth Committee Provide emission data upon request of FSC(Financial Services Commission) and KRX(Korea Exchange) Request for Nondisclosure Regulated Entity Require Additional Data or Explanation Review Notification of Result Public Announcement GIR Review Board GIR GIR 16

17 Who are other key players? Verifiers & Verification Agencies Qualifications for Verification Agency : More than 5 full-time verification experts Preparation of Operational Manuals, Security Measures, etc Qualifications for Verification Expert : Deputy Verifier : after completing training courses at EHRD Verifier : after working deputy verifier for 2 years and for more than 5 verification projects Sectoral Specialties : applied from Jan. 1, 2013 Sectors General Mineral Chemical Iron/Metal Electric/Electronic Sub-Category Fuel Incineration, Fugitive Emission, Waste, Electricity Heat Steam Cement, Lime, Glass Ammonia Nitric Acid Adific Acid Carbide Lime Products Iron, Iron Alloys, Zinc Refinery Electric/Electronic Industry, Substitutes for ODCs 17

18 3. Debates Around the Introduction of ETS in Korea

19 Debates around the Introduction of ETS in Korea The Framework Act specified spin-off legislation to introduce ETS(Dec. 2009) Pre-Announcement of ETS bill (Nov. 2010) Vigorous Refutation by the Industry (~Feb. 2011) Huge burden on Korean economy Compared to TMS : Carbon emission is not free, transaction cost, possibility of speculation by external brokers, intense penalties etc Too fast, Double regulation with TMS, Industry is not ready, etc US, Japan, and China are not moving, why should we do it? 2 nd Pre-Announcement of ETS bill (Feb 28 ~ March 3) Implementation : Free allocation : 90% 95% Easing of non-compliance penalties : 5 times 3 times of the market price Target sectors will be adjusted to incorporate international trends (in allocation plan) 19

20 For the time being According to the proposed ETS bill, the first allocation period will start from For the time being( ), TMS will still be the standard in regulating GHGs, including allocation and MRV processes. Ultimately, TMS will pave the way for, and give way to, ETS. Ministry of Environment has been operating a pilot ETS program with local governments and voluntary companies, and is now planning to redesign and expand it. 20

21 4. Allocation Principles

22 Top-down + Bottom-up Approach The goal is to ensure the national schedule which will be established by GIR. Top-down (National Schedule) Industry A total emission Regulated Entities total Final Allocation Bottom-up Sum of final allocations for REs RE A RE B RE C RE D RE A RE B RE C RE D Sum of primary allocation Adjustment Coefficien t 22

23 Bottom-up Approach (overall) - Revisited For Existing Facilities For New or Expanded Facilities Benchmark Past Emission Benchmark(100%) Baseline Setting of Targets for Entities Targets for Entities Targets for Facilities 23

24 Bottom-up Approach (1) Baseline Method (~2012) For existing installations : Emission allowance for installation k within the regulated entity j, within the industry i (tco2/y) Historical emission (or baseline emission) for facility k (tco2/y) Growth factor for facility k Cutting factor (or reduction factor) for industry i For newly built or expanded installations : Emission allowance for newly built or expanded installation k (tco2/y) Designed capacity for installation k (MW, ton/h, etc) Maximum operation hours for installation k (hr/day) Operation days for installation k (day) Emission per unit activity for the installation k (tco2/t, tco2/tj, etc) 24

25 Bottom-up Approach (2) Benchmark Method (2013~) For existing installations : Emission allowance for installation k within the regulated entity j, within the industry i (tco2/y) Emission allowance for installation k (tco2/y) Historical (or baseline) emission for installation k (tco2/y) Ratio of the portion that is subject to the historical emission (<=1) Benchmark coefficient for installation k (tco2/ton, tco2/tj, etc) Growth factor (or Operation rate) for installation k (tco2/y) For newly built or expanded installations : Emission allowance for installation k (tco2/y) Designed capacity for installation k (MW, t/h, etc) Maximum daily operation time (hr/day) Emission allowance for installation k (tco2/y) Benchmark coefficient for installation k (tco2/ton, tco2/tj, etc) Cutting factor (or reduction factor) for industry i 25

26 Additional points Baseline emissions will be given as the average of the 3 years prior to the year. Benchmark coefficients will be developed from the BATs(Best Available Technologies) and MOE will be collaborating with other ministries. Electricity Generation and Railroad Transportation will be treated with different approaches. The government and the industry will be in close collaboration through the Target Setting Committee. 26

27 5. Conclusion

28 Conclusion Korean economy has huge potential for economic growth, but it should happen without increasing GHG emission. To make this possible, the Korean government proposed a Low-carbon, Green Growth strategy. At the heart of the LCGG strategy is the regulation scheme for large emitters, namely TMS (or ETS in the future). We should see the total reduction of emissions, while minimizing the negative economic effect of the regulation, and reasonable allocation is the key. Korean allocation scheme tries to balance between guaranteeing net reduction and preserving business competitiveness. With several years of experience with TMS, Korea will be ready to proceed to the next stage : Emissions Trading. 28

29 Thank You