Experts advise Korea to create own carbon system

DATE : 2012-10-19

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Experts advise Korea to create own carbon system

Experts on carbon credit trading say the Republic of Korea will benefit more from creating its own forest carbon trading system than following international models, including the troubled European Union’s.

In the “REDD+ Workshop: Sharing Knowledge and Experience” hosted by the Korea Forest Service on October 18, the experts and consultants from international carbon trading firms said Korea has a high potential for carbon trading, based on its strong economic growth and technological prowess and lessons learned from international carbon schemes.

“Why should Korea join the EU ETS? I don’t think it would benefit Korea,” Kimmo Siira, the Asia representative for the Nordic Environment Financial Corporation, a joint institution established by Denmark, Finland, Iceland, Norway and Sweden, said at the workshop held at the Korea International Exhibition Center (KINTEX) in Goyang, Gyeonggi Province.

Although the European Union’s Emissions Trading System is the world’s largest carbon market, the deepening economic woos in the region have weighed heavily. The EU ETS is now oversupplied with emissions allowances, prompting the meltdown of carbon prices. Lack of oversight further spoiled the market, he said.

“Rules and regulations will need to be clear to the participants right from the start --  no more learning by doing like UNFCCC and the EU” did, he said, referring to the U.N. Framework Convention on Climate Change.

The carbon market volume in the EU ETS had decreased by 50 percent in 2010, Siira, who is based in Singapore, said.
Speakers at the workshop also included Frederic Jacquemont, the president of Ecosystem Restoration Associates Inc., a carbon offset program developer based in Canada; Greg Fahey, a lawyer and carbon credit consultant with Venture Partners in New Zealand; and Ma Hwan-ok, a project manager on tropical forests management with the International Tropical Timber Organization in Japan. The workshop, participated by about 70 people from government, industry and academia, was designed to enhance the participants’ understanding of REDD+ (Reducing Emissions from Deforestation and Degradation plus sustainable forest management and other conservation measures) and explore ways of creating a domestic carbon credit market in Korea.

The experts agreed that forest carbon has a high commercial potential but there are many challenges faced by the market.

Fahey presented the dramatic drop of carbon prices in the New Zealand ETS in recent years. A unit price topped $20 in early 2009 but fell to near $3 in September this year.

He suggested Korea seek a carbon price floor, which puts a minimum price on emissions, to prevent a price meltdown and encourage investment in the market. Also, a successful system would need a comprehensive information system with inputs of forest data, aerial imagery and land ownerships, as well as efforts to share benefits with small forest owners, he said.

For irregular activities, Korea should introduce its own domestic assessment, audit and penalty system rather than invite a third party to do the job, Fahey said.

Ma of ITTO, which promotes REDD+ projects in Indonesia, said local communities now understand purposes of sustainable forest management and actively participate. However, he also acknowledged the difficulty of meeting expectations from the local community to receive quick and tangible financial benefits.

Jacquemont shared his firm’s experience of building a REDD+ project in the Democratic Republic of Congo.

The African nation has the world’s second largest rain forest after the Amazon. Lands allocated for the project were state-owned, so the firm could avoid hassles with private owners, he said. At first, local tribes didn’t even understand the concept of carbon, and there were protests from the local timber industry, but such issues could be settled through mediation of the local authorities and tribal chiefs.

His firm established a reward scheme, in which part of the profits from carbon credit trading would go to building schools and other projects to support the local livelihoods. Local politicians were also eager to capitalize on the foreign initiative ahead of the election season, he said. Last year, the ERA secured 300,000 ha of land in the Bandundu Province, western DRC, for the period of 25 years for its REDD+ project.

 “They receive payments when we sell credits,” Jacquemont said. “It can be seen as a development tool, but don’t ask too much!”

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