South Korea's bourse operator pushes for futures market for carbon emissions

South Korea's bourse operator is pushing to launch a futures market for carbon emissions as part of efforts to get bigger liquidity in the local carbon market, Korea Exchange, or KRX officials said May 12.

"We are considering introducing a futures market for carbon emissions trading in line with the government's drive to reduce emissions," a KRX official said.

Earlier this month, the KRX and the Ministry of Environment opened a bidding for the feasibility study of a carbon emission futures market, on which details would be determined, according to the officials.

"We want to launch a futures carbon market as early as possible, but we can fix dates and other details only after the outcome of the feasibility study comes," the official said.

Spot trading of carbon emission rights has been growing, but it still faces difficulty in drawing enough liquidity and making prices stable, he noted.

South Korea has operated a domestic spot market for trading emission rights since 2015, but suffers from lack of participants and price fluctuations.

The Ministry of Environment also said the government is stepping up efforts to develop a transparent, verifiable carbon trading scheme in line with the international standards in preparation for its potential entry into an envisioned global carbon market.

South Korea has declared it would achieve carbon neutrality by 2050 largely by replacing coal-fired power generation with renewable sources and internal combustion engines vehicles with hydrogen-powered and battery-based electric vehicles.

In October last year, the government unveiled its roadmap for achieving the goal of 2050 carbon neutrality under which South Korea aims to cut greenhouse gas emissions to 40% by 2030 against the national output level in 2018, from 26.3% previously.