Allowing financial institutions will have no impact on prices

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.