Emissions under the South Korean emission trading scheme (ETS) have decreased by 2% in 2019 to 589 MtCO2, representing the first drop since the ETS entered into operations in 2015. Emissions have been driven down by the power sector (-8.6%) to 245 Mt due to temporary shutdowns of coal-fired power plants combined with a shift from coal to LNG. Conversely, emissions from the steel sector grew by 7.1% to 113 Mt fostered by higher production.
Due to the drop in emissions, the market could be slightly over-supplied in 2020 with a surplus of 2.5 MtCO2. The Ministry of Environment will take into account the effects of COVID-19 when deciding allocations levels for 2020. The ETS covers around 70% of South Korea’s total CO2 emissions, according to the Ministry of Environment.
Earlier in May 2020, South Korea unveiled a long-term energy plan (basic energy policy for the years 2020-2034) shifting from thermal and nuclear power generation to renewable energies. The plan aims to raise the share of renewables in the power capacities from the current 15% to 40% by 2034, while keeping the share of LNG-fired power plants from around 31-32% and closing all the coal-fired power plants whose 30-year operational life expire by 2034.
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