S.Korea CO2 scheme passes hurdle, awaits parliament vote

  • Special committee meeting approves bill on Wednesday
  • Legal committee to review before plenary session on Feb 16
  • If approved, it will be Asia's third CO2 pricing scheme

SEOUL, Feb 8 (Reuters) - Plans for an emissions trading scheme in South Korea passed a major hurdle on Wednesday after a multi-party committee approved laws governing the programme that could be passed by parliament as early as next week.

If approved by parliament during a plenary session on Feb 16, the scheme to cap South Korea's growing emissions of carbon dioxide from early 2015 would become the third in Asia to put a national price on carbon after Australia and New Zealand.

It would also open the possibility of growing international linkages and trade as part of a global effort to curb the growth of carbon pollution that scientists blame for heating up the planet and triggering more chaotic weather.

Europe has the world's largest programme and California's is due to start in 2013, potentially bolstering future linkages.

But the South Korean scheme, which would cover 60 percent of the nation's greenhouse gas emissions, has been opposed by powerful industry bodies fearing higher costs. The bill has also been stalled in parliament for months because of other political disputes, including a row over last year's free-trade agreement with the United States.

The bill was approved by majority of members of parliament during the committee meeting on Wednesday, a government official said. A legal panel would conduct a review before next week's plenary session.

The government has been pushing hard to get parliamentary approval before April's general election to prevent the bill from being abolished, according to the government and industry sources who declined to be identified because they are not authorised to speak to media.

If parliament failed to pass the bill next week, it would be resubmitted later in the year once new members were elected, the government official said.

"No one in parliament is opposed to the fundamental ideas of the emission trading bill. But we need to closely check reality and effectiveness of the bill once it is passed," a parliament member told the committee before voting.

Under the latest version of the bill, 95 percent or more of the permits, each representing a tonne of carbon emissions, would be awarded free in the scheme's two first phases, spanning 2015-2017 and 2018-2020.

South Korea's top business lobby group has said they would continue to oppose an emissions trading bill, despite several concessions already made to industry.

"For whom and what do we need this bill for?" a business group representative told the committee on Wednesday, noting that South Korea was not obliged to make mandatory emissions cuts under the current international climate pact.

"The emission trading bill will only raise inflation risks, while not creating any jobs," he said.

The South Korean government has set a voluntary target of a 30 percent cut in emissions from projected levels by 2020, with emissions trading a key way to achieve this.

South Korea's total emissions are slightly larger than Australia's.

Australia's parliament last year passed its scheme, which will start from July 1 this year with an initial fixed-price period followed by trading of emissions permits from mid-2015.

China has announced 7 pilot carbon market regions but international links are unclear.

(Reporting by Eunhye Shin and Jack Kim; Writing by Cho Mee-young; Editing by David Fogarty)