The Ministry of Climate, Energy and Environment said on the 23rd it will hold a "greenhouse gas emissions allowance market advancement roundtable and memorandum of understanding ceremony" at the Seoul headquarters of the Korea Exchange (KRX) in Yeongdeungpo-gu, Seoul, on the morning of the 24th.
On that day, the ministry and the exchange plan to discuss the outlook for the Phase 4 emissions allowance market and the future direction of market development, including building infrastructure for an emissions allowance futures market.
The event was prepared to discuss the medium- to long-term policy direction of Korea's greenhouse gas emissions allowance market (K-ETS). It is to proactively create a cooperative framework among related institutions to build the IT system that will serve as the foundation for the futures market to be introduced in the future.
The domestic emissions allowance trading market has so far been operated mainly with spot transactions, making it difficult for corporations to hedge against long-term price volatility risks. Experts analyzed that if a futures market for emissions allowances is introduced in line with advanced examples such as the European Union, it would provide corporations with an efficient hedging tool and further enhance market stability through a future price discovery function.
At the first-session roundtable that day, experts from finance, industry, and related institutions will gather to focus on the future tasks of the emissions allowance market. Ha Sang-seon, division head at ECOEYE, will present "characteristics of the Phase 4 emissions trading market and future outlook." Professor Yu Jong-min of Hongik University will, from a long-term perspective, propose the "need for and expected effects of introducing an emissions allowance futures market." In the subsequent discussion, participants plan to address the need to introduce a futures market to help corporations manage price volatility risks and ways to support it through market design and securing system stability.
At the memorandum of understanding ceremony, which will be held as the second session that day, four institutions—the ministry, the exchange, the Greenhouse Gas Inventory and Research Center, and Koscom—will join to cooperate on "initial system infrastructure development" essential before introducing the futures market.
Specifically, the parties plan to agree to actively cooperate on: ▲ seamless linkage development among systems held by each institution ▲ building human and physical resources for operating futures transactions ▲ sharing information to foster a sound emissions allowance finance market.
O Il-young, director general for climate and energy policy at the ministry, said, "For the stable introduction of an emissions allowance futures market, a robust system and a cooperative framework among related institutions are essential," adding, "We will use this memorandum of understanding as an opportunity to lay the groundwork for market advancement."
Lee Kyung-sik, vice president of the exchange, said, "Building the trading system that will underpin the emissions allowance futures market will be a turning point that strengthens the market's transparency and efficiency by one step," adding, "We will pool the exchange's operational know-how and devote our full efforts to building a stable infrastructure."