Signal Korea's emissions trading scheme enters its fourth phase in 2026 with carbon prices too low to drive abatement

Summary

Korea introduced its emissions trading scheme in 2015 and has run it through the third allocation period from 2021 to 2025. A strengthened fourth period begins in 2026. The scheme has given the country a framework for managing industrial greenhouse gas emissions. Yet the report finds that low carbon prices leave firms with too little incentive to invest in abatement. Planned reinforcements such as a larger share of auctioned allowances, including a rise to 50 percent in the power sector, will need complementary measures for industrial cost burdens and support for carbon-neutral technologies. From this diagnosis the report derives the task of refining carbon pricing so that climate action and competitiveness advance together.