Corporate Influence on the Korea Emissions Trading Scheme

우측 상단의 언어 탭에서 한국어로 전환할 수 있습니다.

Executive Summary

• This research finds that two key corporate forces in South Korea — the steel sector (led by POSCO) and the Korea Chamber of Commerce and Industry (KCCI) — have continuously weakened the Korea Emissions Trading Scheme (K-ETS) since its conception as a key pillar of South Korea’s climate policy framework in 2010.
• The study reveals that while other sectors and companies have shown only marginal engagement with the K-ETS, the heavy-emitting sectors, such as the steel sector, have had a disproportionate influence on its evolution. POSCO, as South Korea’s leading steel company, along with KCCI, which represents a broad range of South Korean industry, have played dominant roles in shaping climate regulation outcomes, often in ways that reduce the ambition of these policies.
• This influence has culminated in the progressive weakening of the K-ETS through its three Allocation Phases. Originally envisioned in 2010 as a stringent cap-and-trade system aligned with international best practices, the K-ETS now allows for significantly increased emissions allowances and lower carbon prices than initially proposed. Notably, the average annual pre-allocation was raised by nearly 10%, free allowances remain generous — 10% of the paid allowances, while some sectors, such as steel and cement, continue to benefit from exemptions — and carbon prices have remained below levels needed to incentivize deep decarbonization, undermining the scheme’s effectiveness.
• The K-ETS remains South Korea’s flagship climate policy instrument and is expected to undergo further revisions ahead of the country’s updated Nationally Determined Contribution (NDC), to be presented at the COP30 climate summit in Brazil. However, prevailing resistance to a more robust K-ETS — particularly from industrial incumbents — poses a significant risk to South Korea meeting its Paris Agreement commitments.
• Moreover, this resistance undermines economic opportunities for sectors that stand to benefit from a strong carbon price, such as electric vehicles, renewable energy, and battery storage. A weakened K-ETS disincentivizes innovation and investment in South Korea’s green economy.
• This study is based on over 230 documented instances of corporate influence on policymaking over the past 15 years, sourced primarily from government records of meetings with corporate stakeholders and public corporate disclosures (e.g., press releases and policy statements on corporate websites). While comprehensive, this dataset likely captures only a portion of actual influence activities, as many interactions — such as private meetings or informal consultations — are not publicly disclosed.
• Using InfluenceMap’s robust methodology, which benchmarks corporate policy influence against government ambition levels and IPCC-recommended pathways to 1.5°C, the research found that 20% of the evidence originated from the steel sector – with 10% from POSCO alone – and 17% from KCCI. KCCI’s Environment & Climate Committee supports companies in responding to environmental and climate issues and has been actively proposing regulatory reforms and policy recommendations. POSCO has been a member of the committee since before 2010.
• To garner more positive corporate support for a science-aligned and ambitious K-ETS, leading South Korean companies in sectors such as technology, retail, construction, business services, and finance are likely to take a more proactive role as the Fourth Allocation Phase approaches. Additionally, these companies may begin to express their perspectives more clearly through industry associations, including cross-sector organizations such as KCCI and the Federation of Korean Industries (FKI), both of which have thus far engaged relatively negatively with the K-ETS.