Legal Issues Regarding the Legislation for an Emission Trading System in Korea

Abstract

This paper will study the potential legislative issues that can be raised in the process of creating an emission trading system.

First, the constitutionality of carbon credits can be questioned in relation to the freedom to choose an occupation and property rights. Second, Emission trading might be regarded as a way of granting the right to pollute, which is a violation of environmental rights. Third, the polluter pays principle (PPP), stipulated under the Framework Act on Environmental Policy, might be inconsistent with an ETS targeting only the upstream pollution sources. Fourth, the problem of determining the period(short-term or long-term) and the reduction amount and the target gases. Fifth, to whom the emission credits should be allocated. Sixth, to choose between different methods to allocate emission allowances: free allocation (grand-fathering and benchmarking (baseline and credit)) and paid allocation (auctioning). Seventh, given the regulatory gap on emissions among countries, Korea should come up with countermeasures against the negative impact on the international competitiveness of its domestic industry and potential carbon leakage in the world that could be caused by domestic regulations. Eighth, it is crucial to be open to other various policy tools such as command-and-control, environmental taxes, subsidies, support for technology development and the readjustment of the social infrastructure, and to adopt a policy-mix method that uses a combination of these various tools. Ninth, the regulatory consequences of implementing an ETS can be a huge burden on those in the industry. To minimize the regulatory burden, the following legal basis will be needed to allow a gradual implementation of the regulation.