{"id":2201692,"date":"2023-07-13T18:42:58","date_gmt":"2023-07-13T09:42:58","guid":{"rendered":"https:\/\/koreapro.org\/?p=2201692"},"modified":"2023-07-14T18:39:54","modified_gmt":"2023-07-14T09:39:54","slug":"south-korea-struggles-to-adapt-to-europes-new-emission-rules","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/07\/south-korea-struggles-to-adapt-to-europes-new-emission-rules\/","title":{"rendered":"South Korea struggles to adapt to Europe\u2019s new emission rules"},"content":{"rendered":"
A group of South Korean governmental bodies recently wrapped up their <\/span>second meeting<\/span><\/a> analyzing the effects of the EU\u2019s Carbon Border Adjustment Mechanism (<\/span>CBAM<\/span><\/a>) on Korean enterprises. The South Korean government\u2019s standpoint remains consistent \u2014 to <\/span>mitigate<\/span><\/a> the repercussions of CBAM on Korean exporters to the EU.\u00a0<\/span><\/p>\n But questions remain as to how effective Seoul\u2019s response will be, as complying with the EU\u2019s new rule will create new operational costs and attempting to reduce the impact on domestic firms could conflict with international trade law.<\/span><\/p>\n As it enters a transitional phase in <\/span>Oct. 2023<\/span><\/a>, CBAM will require firms within the EU to disclose embedded greenhouse gas (GHG) emissions arising from suppliers or trade partners outside of the union. This will cover sectors identified as posing high carbon leakage risks, such as cement, iron and steel, aluminum, fertilizers, electricity and hydrogen. Accounting for indirect GHG emissions can require disclosures for all imported products, materials and services, such as offshored manufacturing processes.<\/span><\/p>\n Instituted through the EU\u2019s Emissions Trading System, CBAM is a regulation designed to counteract carbon leakage related to products imported into or supply chains that extend outside the EU.<\/span><\/p>\n Carbon leakage refers to GHG emissions attributed to a specific nation but not included in its national carbon accounting due to the emissions\u2019 origination beyond its territorial borders. This typically occurs when industries shift their operations abroad, frequently to regions with lower energy costs or less stringent environmental regulations. Another typical scenario includes EU companies receiving or importing intermediate goods from outside the EU.<\/span><\/p>\n It is crucial to account for carbon leakage to understand a nation\u2019s total emissions comprehensively, particularly in implementing carbon taxation. This practice can aid in developing more accurate and equitable strategies for global carbon management.<\/span><\/p>\n A standard reporting method for emissions that fall under the remit of the CBAM will be imposed from Jan. 2025. Subsequently, from Jan. 2026, EU firms will be expected to surrender their CBAM certificates for GHG emissions, which are to be priced based on the weekly average auction price of emission allowances.<\/span><\/p>\n The EU seeks to comprehensively account for direct and indirect GHG emissions across supply chains by adopting these strategies. This effort is a significant step toward achieving the goals outlined in its <\/span>Fit for 55<\/span><\/a> climate legislation. The law mandates the reduction of net GHG emissions by 55%, using 1990 levels as the baseline, to be achieved by 2030.<\/span><\/p>\n