Financial institutions like banks and investment houses are officially allowed to participate in South Korea’s national emission trading system (KETS) as of 7 February, following an official decision by Korean regulators in late January. The move is aimed at tackling the longstanding bearish trend in that market, and is likely to increase liquidity. However, it will not increase allowance prices or the effectiveness of the scheme in decreasing Korea’s emissions, as it does not address the root cause of the KETS market’s stagnation: oversupply.
Background: compliance entities mainly The KETS, which has been in force since 2015, has its legal basis in South Korea’s Act on the Allocation and Trading of GHG Emission Permits (Emissions Trading Act) passed in May 2012. That law allowed mainly co…
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