POSCO Holdings, one of the corporations that emit the most carbon in Korea, is expected to face a shortage of carbon emission permits starting in 2027, leading to additional expense amounting to hundreds of billions of won a year. Under the national emission allowance allocation plan for the fourth planning period to be implemented next year, the allocation volume is likely to be reduced.
According to the business community on the 29th, starting next year, the allocation of emission permits for the non-power institutional sector, which includes steel manufacturing, the core business of the POSCO Group, will be cut by 15.5% from the previous period. The POSCO Group expects it will have to purchase permits from 2027 and is preparing for that.
To achieve greenhouse gas reduction targets, the government allocates corporations a certain level of greenhouse gas emissions for free. If corporations emit carbon beyond that, they must purchase additional permits. Although company-by-company allocations have not yet been set, because the total cap will be reduced from about 3 billion tons to about 2.5 billion tons in carbon dioxide equivalent (tCO2e), the paid share will rise unless emissions are reduced.
POSCO can get through next year with banked permits, but it sees a high possibility that it will have to buy permits thereafter. POSCO's greenhouse gas emissions last year were 71.07 million tons, holding at a similar level since 2022. The permits allocated to POSCO last year were 77.15 million tons, and it currently has a carryover of 10.41 million tons. If next year's permits fall below 66.74 million tons, it will have to purchase additional permits.
According to the KRX Emissions Trading Market information platform, the price of permits (KOC22-27) usable through 2027 is 11,600 won per ton. If POSCO fails to cut emissions, it will face a shortage of 2.5 million tons of permits from 2027, which at the current price is about 30 billion won. From 2028, the annual shortage will be 6.5 million tons of permits, resulting in an annual expense of about 75 billion won.
If permit prices rise, the burden grows. Energy consulting corporations Namu E&R projected that the permit price in 2030 will reach the 50,000-won-per-ton range.
POSCO plans to respond by cutting carbon emissions. It will operate an electric furnace with annual capacity of 2.5 million tons at the Gwangyang Steelworks to replace blast furnaces, which emit a lot of carbon, and is pursuing measures to reduce emissions in blast furnace processes by using alternative raw materials.
A POSCO official said, "We are drawing up an emissions reduction plan to minimize the expense burden," adding, "However, because the government's allocation plan has not yet been finalized, it is difficult to predict specific reduction targets or the expense to be incurred."