[Carbon Market Trends Brief] Government, Private Sector to Overhaul Carbon Market Rules > 게시글

Korea Moves Toward Expansion of Carbon Pricing and Emissions Market

President Lee Jae-myung, during his first cabinet meeting, highlighted the need to expand Korea’s Emissions Trading Scheme (K-ETS). Citing the Ministry of Environment’s policy report, he called for increasing the current 10% paid allocation ratio and suggested the necessity of strengthening the system overall. He also raised concerns about inflationary impacts and instructed the Ministry of Strategy and Finance to explore potential fiscal support mechanisms.

Further, he proposed examining Switzerland’s carbon tax system, which redistributes two-thirds of tax revenue to citizens and businesses while using the remainder for national climate initiatives. The upcoming Fourth Allocation Plan, expected in September, is likely to reflect these directions, signaling a stronger price signal in Korea’s carbon market.¹⁾

Domestic Market Infrastructure Strengthens with Voluntary Credit Rating Council

On July 9, the Korea Voluntary Carbon Credit Rating Council (KVCRA) was launched to establish a domestic credibility framework for voluntary carbon credits.²⁾ Spearheaded by Law firm Lin and comprising five expert institutions, the council uses the K-VCCRM™ rating model, evaluating credits across five key sectors: Basic Sector, Market Sector, Project Sector, Valuation Sector, Risk Sector

Until now, Korean entities largely relied on foreign institutions for credit assessments. This initiative enables a localized, transparent, and multi-dimensional evaluation system, reinforcing trust in Korean-issued voluntary credits and supporting broader ESG, RE100, and NDC-linked initiatives.

Key Implications

• Institutional momentum for reform in Korea’s carbon pricing and tax policy
  → Government plans show an integrated approach, combining stronger market signals with public support and international policy benchmarking.

• Increased credibility in voluntary markets through localized rating systems
  → The establishment of KVCRA reduces dependence on external actors, aligning Korea’s voluntary carbon infrastructure with global best practices.

Korea is enhancing its carbon pricing and voluntary carbon market through more paid allocations and a potential carbon tax to promote emission reductions. The launch of the KVCRA will ensure transparency and encourage private sector participation.

Related Articles and Reference Materials :
1. President Lee Jae-myung said, "Expanding carbon emission rights...Swiss Carbon Tax Review" - Hankyung ESG News, July 17, 2025

2. Korea's First 'Korea Voluntary Carbon Credit Rating Council' Launched - FNTday, July 15, 2025