World Economy

S. Korea Launches World’s 2nd-Biggest Carbon Market 

S. Korea Launches World’s 2nd-Biggest Carbon Market S. Korea Launches World’s 2nd-Biggest Carbon Market 

Trading started on Monday in South Korea's new emissions trading scheme, which will impose caps on emissions from 525 of the country's biggest companies and becomes the world's second biggest carbon market.

The new market is a key component in the government's plan to meet a target of limiting climate-changing greenhouse gas emissions in 2020 to 30 percent below current levels, ETMarkets reported Monday.

Under the scheme, South Korea's power generators, petrochemical firms, steel producers, car makers, electro-mechanical firms and airlines have been given a fixed amount of permits to cover their emissions for the next three years.

The government has set the total amount of allowed emissions for the 2015 to 2017 period at 1.687 million tons of carbon dioxide equivalent. Any company emitting more than they have permits to cover must buy allowances from others in the market.


In Monday's trading, a first batch of permits went through at 7,860 won ($7.26) each before the price climbed to 8,640 won ($7.97), similar to price levels in the European market, the world's biggest.

A late trade was registered by the Korea Exchange (KRX) just after the market closed at midday, meaning that five deals for a total of 1,190 permits went through on the first day.

"We expect modest volumes initially, probably for the first six months," Anders Nordeng, a senior analyst with Thomson Reuters Point Carbon, said.

"Partly because the mechanism is new and relatively unfamiliar for the participants, partly because we think many Korean industrials will avoid acting in a manner that would give their competitors any indications on their growth rate."

The Korean trading scheme has no links to the international carbon market and participation is restricted to companies directly covered by the scheme, with the exception of three policy banks. Commercial banks and trading houses are excluded.

Although the market is expected to have a surplus of permits during the first three years, analysts say power generators will be short of some 75-90 million permits.

Price forecasters at Thomson Reuters Point Carbon and ICIS had estimated that the permit price would start at less than $10 but rise to around $30 in 2017.

South Korea is the second country in Asia after Kazakhstan to launch a nationwide emissions market. Regional schemes are in operation in China and Japan.

The EU market will be dwarfed by the eventual national scheme in China, which should be fully operational in 2020.

Carbon Fiber Market

In a new report, titled ‘Carbon Fiber Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014 - 2020’, Transparency Market Research has stated that the global carbon fiber market will grow at a CAGR of 9.9% upon its value of $1.94 billion in 2013 during the report’s forecast period and reach an estimated value of $3.73 billion.

The study classifies the global carbon fiber market by product segment into three types: PAN-based carbon fibers, pitch-based carbon fibers, and other types of carbon fibers. PAN-based carbon fiber is the dominant product category, with an 85% share in the global carbon fiber market.

The report classifies the global carbon fiber market by end user into six categories: wind energy, which is the dominant user with a 24% market share, automotive industry, which is expected to be the fastest growing segment, aerospace and defense, sports, construction, and other industries.

Geographically the carbon fiber market is divided into four categories: North America, Europe, Asia Pacific, and Rest of World. Europe, with a 37% share, is the leading regional carbon fiber market due to its increasing acceptance of wind energy and the strong profile of the European automotive industry. Increasing demand from the automotive and construction industries is expected to drive the global carbon fiber market and create numerous opportunities. Carbon fiber is already employed in the automotive industry but it is still not universally used. It is in demand thanks to its low weight and high durability, a combination that makes it the perfect material for car construction.