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Enforcement Decree of the Act on the Allocation and Trading of Greenhouse Gas Emission Permits
  • Date2023-07-07 11:02
  • TypeLaw
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ENFORCEMENT DECREE OF THE ACT ON THE ALLOCATION AND TRADING OF GREENHOUSE GAS EMISSION PERMITS

 

 

 


Wholly Amended by Presidential Decree No. 30944, Aug. 18, 2020

Lastly Amended by Presidential Decree No. 32557, Mar. 25, 2022

 

 

 

CHAPTER I GENERAL PROVISIONS

 

Article 1 (Purpose)

The purpose of this Decree is to prescribe matters mandated by the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits and matters necessary for the enforcement thereof.

 

CHAPTER II FORMULATION OF MASTER PLAN FOR EMISSIONS TRADING SYSTEM

 

Article 2 (Formulation of Master Plan for Emissions Trading System)

(1) The Minister of Economy and Finance and the Minister of Environment shall jointly formulate a master plan for the emissions trading system (hereinafter referred to as "master plan") under Article 4 of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (hereinafter referred to as the "Act") not later than one year prior to the beginning of each commitment period.

(2) Where the Minister of Economy and Finance and the Minister of Environment formulate or modify a master plan under Article 4 (1) and (3) of the Act, they shall hold public hearings, etc. under paragraph (4) of that Article to collect the opinions of the relevant central administrative agencies, local governments, and interested parties and reflect their opinions in the master plan, if the presented opinions are deemed reasonable.

(3) Where the Minister of Economy and Finance and the Minister of Environment formulate or modify a master plan under Article 4 (1) and (3) of the Act (excluding matters under paragraph (4)), the Ministers shall collect opinions under paragraph (2) and then refer the matter to the 2050 Carbon Neutrality and Green Growth Committee (hereinafter referred to as the "Carbon Neutrality Committee") under Article 15 of the Framework Act on Carbon Neutrality and Green Growth For Coping with Climate Crisis (hereinafter referred to as the “Framework Act“) and the State Council for deliberation pursuant to the main clause of Article 4 (5) of the Act.

(4) "Minor matters prescribed by Presidential Decree" in the proviso of Article 4 (5) of the Act means any of the following:

1. Matters regarding international cooperation under Article 4 (2) 7 of the Act;

2. Matters regarding the nurturing professional human resources, education, public relations, etc. under Article 4 (2) 8 of the Act.

(5) The Minister of Economy and Finance and the Minister of Environment may request that the Greenhouse Gas Inventory and Research Center (hereinafter referred to as the "GIR") under Article 36 (1) of the Framework Act conduct surveys and research for formulating a master plan.

 

Article 3 (Formulation of Plans to Allocate National Emission Allowances)

(1) Pursuant to Article 5 of the Act, the Minister of Environment shall formulate a plan to allocate national emission permits (hereinafter referred to as "allocation plan"), in consideration of consistency with a national medium- and long-term greenhouse gas reduction target (hereinafter referred to as "mid-to long-term reduction targets") under Article 8 (1) of the Framework Act.

(2) Where the Minister of Environment formulates or modifies an allocation plan under Article 5 (1) and (3) of the Act, the Minister shall consult with the heads of relevant central administrative agencies and refer such plan to the Emission Permits Allocation Committee (hereinafter referred to as the "Allocation Committee") under Article 6 of the Act for deliberation and coordination.

(3) The Minister of Environment may request relevant data from the head of a relevant central administrative agency if necessary for formulating or modifying allocation plans, and the head of the agency, upon receipt of such request, shall render cooperation, unless there is a compelling reason not to do so.

(4) "Matters prescribed by Presidential Decree" in Article 5 (1) 11 of the Act means the following:

1. Matters regarding the classification of sectors and business types eligible for allocation of emission permits;

2. Matters regarding the additional allocation of emission permits under Article 16 of the Act;

3. Matters regarding the revocation of emission permits allocated or additionally allocated under Article 17 of the Act;

4. Matters regarding the ratio of emission permits gratuitously allocated after the third commitment period following the enforcement of the Act (hereinafter referred to as "third commitment period") pursuant to Article 18 (3);

5. Matters regarding limits on the number of offset emission permits that can be surrendered under Article 47 (3);

6. Matters necessary to facilitate the trading of emission permits such as the number of emission permits carried over to the following commitment period, which affect the standards for the allocation of emission permits under Article 5 (1) 4 and 5 of the Act;

7. Other matters necessary for allocating and trading emission permits during the pertinent commitment period, on which a resolution was passed by the Allocation Committee.

(5) The Minister of Environment may modify an allocation plan in any of the following cases:

1. Where a significant reason arises to modify an allocation plan due to a sudden change in domestic or international economic conditions, technological advancement, and unexpected fluctuations in domestic power demand;

2. Where it is necessary to modify an allocation plan according to the outcomes of international negotiations on climate change.

(6) Where the Minister of Environment formulates or modifies an allocation plan (excluding matters under paragraph (7)), the Minister shall gather opinions under Article 5 (4), consult with the heads of relevant central administrative agencies under paragraph (2), and refer the relevant matter to the Allocation Committee for deliberation and coordination, and eventually to the Carbon Neutrality Committee and the State Council for deliberation, pursuant to the main clause of Article 5 (5) of the Act.

(7) “Minor matters prescribed by Presidential Decree" in the proviso of Article 5 (5) of the Act means any of the following:

1. Matters regarding the carryover and borrowing of emission permits, and the guidelines for offset and the operation thereof under Article 5 (1) 10 of the Act;

2. Matters on which a resolution was passed by the Allocation Committee pursuant to paragraph (4) 7.

(8) The Minister of Environment shall publicly announce an allocation plan finalized under Article 5 (5) of the Act in the Official Gazette, on the website of the Ministry of Environment, etc.

(9) The Minister of Environment may have the GIR conduct surveys and research for formulating an allocation plan.

 

Article 4 (Organization and Operation of Allocation Committee)

(1) "Relevant central administrative agencies prescribed by Presidential Decree" in Article 7 (2) 1 of the Act means the Ministry of Foreign Affairs, the Ministry of the Interior and Safety, the Ministry of Oceans and Fisheries, and the Korea Forest Service.

(2) Members of the Allocation Committee under Article 7 (2) 2 of the Act shall be commissioned by the Minister of Economy and Finance upon the recommendation of the heads of relevant central administrative agencies.

(3) The Vice Minister of Environment shall become the secretary of the Allocation Committee under Article 7 (5) of the Act (hereinafter referred to as "secretary”).

(4) The secretary of the Allocation Committee shall handle the following administrative affairs under the command of the chairperson of the Allocation Committee:

1. Preparation of agenda items to be deliberated upon by the Allocation Committee (including preparation of a review report);

2. Consultation with the heads of relevant central administrative agencies on agenda items to be deliberated upon and collection of the opinions of relevant experts, etc.;

3. Other matters regarding preparation for meetings of the Allocation Committee.

 

Article 5 (Exclusion of, Challenge to, or Recusal of, Members of Allocation Committee)

(1) Where any member of the Allocation Committee (including the chairperson of the Allocation Committee; hereafter in this Article the same shall apply) falls under any of the following cases, such member shall be excluded from deliberation and coordination by the Allocation Committee:

1. Where the member or his or her current or former spouse becomes a party to the agenda item (if the party is a corporation, organization, etc., referring to the executive officer of such corporation, organization, etc.; hereafter in this subparagraph and subparagraph 2 the same shall apply) or where the member shares certain rights and obligations with the party to the agenda item;

2. Where the member is or was a relative of the party to the relevant agenda item;

3. Where the member gives testimony, makes statements, provides advice, conducts research, or provides services or appraisals on the relevant agenda item;

4. Where the member or a corporation to which the member belongs is a current or former agent of the party to the relevant agenda item.

(2) If the grounds for exclusion under paragraph (1) exists, or if the circumstances indicate that it would be impracticable to expect fair deliberations and coordination from a member of the Allocation Committee, any party may file a request for a challenge to the member with the Allocation Committee, and the Allocation Committee shall determine whether to accept the request by resolution. In such cases, the member against whom a request for challenge is filed shall not participate in such resolution.

(3) Where the grounds for exclusion specified in any subparagraph of paragraph (1) apply to a member of the Allocation Committee, he or she shall recuse himself or herself from deliberation and coordination on the relevant agenda item.

 

Article 6 (Dismissal of Members of Allocation Committee)

Where a member of the Allocation Committee under Article 7 (2) 2 of the Act falls under any of the following, the Minister of Economy and Finance may dismiss the relevant member:

1. Where the member becomes incapable of performing his or her duties due to a mental or physical disability;

2. Where the member engages in misconduct in connection with his or her duties;

3. Where the member is deemed unsuitable to serve as a member of the Allocation Committee due to neglect of duty, loss of dignity, or for other similar reasons;

4. Where the member voluntarily admits that it is difficult to perform his or her duties;

5. Where the member fails to recuse himself or herself, despite falling under any subparagraph of Article 5 (1).

 

Article 7 (Meetings of Allocation Committee)

(1) Meetings of the Allocation Committee shall be held where deemed necessary by the chairperson of the Allocation Committee or at the request of at least 1/3 of all incumbent members.

(2) A majority of the members of the Allocation Committee shall constitute a quorum, and any resolution thereof shall require the concurring vote of a majority of those present.

(3) If necessary, the chairperson of the Allocation Committee may require the public officials of relevant central administrative agencies or experts in the relevant field to attend the meetings and express their opinions.

(4) Except as provided in Articles 4 and 5, and paragraphs (1) through (3) of this Article, detailed matters necessary for the operation of the Allocation Committee shall be determined by the chairperson of the Allocation Committee by resolution thereof.

 

Article 8 (Organization and Operation of Consultative Body on Emissions Trading System)

(1) The Minister of Environment shall organize and operate a consultative body on the emissions trading system in order to consult on the following matters:

1. Matters regarding the formulation of a master plan, etc.;

2. Matters regarding the formulation of an allocation plan, etc.;

3. Detailed matters regarding the methods, etc. for calculating the number of emission permits to be allocated under Article 17 (2);

4. Detailed matters regarding the procedures for submitting and examining an application for allocation under Article 20 (4), and the verification of activity data;

5. Matters regarding additional allocation under Article 26;

6. Detailed matters regarding the additional allocation of emission permits under Article 28 (8);

7. Detailed matters regarding the revocation of emission permits allocated under Article 29 (13);

8. Detailed matters regarding the standards, procedures, etc. for certifying emissions under Article 42 (5);

9. Detailed matters regarding the standards and procedures for the approval and revocation of approval of external projects under Article 48 (8);

10. Detailed matters regarding the certification of greenhouse gas reductions from an external project and the revocation of the certification under Article 49 (8);

11. Other matters on which the opinions of the relevant central administrative agencies are deemed necessary by the Minister of Environment.

(2) The chairperson of the consultative body on the emissions trading system prescribed in paragraph (1) shall be appointed by the Minister of Environment from among members of the Senior Executive Service belonging to the Ministry of Environment, and its members shall be appointed by the head of the relevant agency from among public officials of Grade IV or higher belonging to any of the following relevant central administrative agencies:

1. The Ministry of Economy and Finance;

2. The Ministry of Agriculture, Food and Rural Affairs;

3. The Ministry of Trade, Industry and Energy;

4. The Ministry of Environment;

5. The Ministry of Land, Infrastructure and Transport;

6. The Office for Government Policy Coordination;

7. Other relevant central administrative agencies deemed necessary by the Minister of Environment.

 

CHAPTER III DESIGNATION OF BUSINESS ENTITIES ELIGIBLE FOR ALLOCATION AND ALLOCATION OF EMISSION PERMITS

 

SECTION 1 Designation of Business Entities Eligible for Allocation

 

Article 9 (Designation of Business Entities Eligible for Allocation)

(1) The competent authority under Articles 8, 8-2, 9, 11 through 18, 21, 22, 22-2, 23, 24, 24-2, 24-3, 25 through 31, 33, 34, 36, 37, 37-2, 38, 40 and 43 of the Act shall be an institution in accordance with the following classifications:

1. The following matters: The Minister of Environment:

(a) Designation of and revocation of designation of business entities eligible for allocation under Articles 8 and 9 of the Act;

(b) Succession to rights and obligations of business entities eligible for allocation under Article 8-2 of the Act;

(c) Management and operation of a register for the trading of emission permits under Article 11 of the Act (hereinafter referred to as "emission permits register");

(d) Receipt of applications for allocation of emission permits and plans for calculating greenhouse gas emissions, allocation and notification of emission permits, and registration of details of such allocation under Articles 12 through 14 of the Act;

(e) Additional allocation of emission permits under Articles 15 and 16 of the Act;

(f) Revocation of all or some of emission permits allocated under Article 17 of the Act;

(g) Holding of emission permits in reserve under Article 18 of the Act;

(h) Acceptance of reports on the trading of emission permits and registration of the details of the trading of emission permits under Article 21 of the Act;

(i) Designation, establishment or operation of an emission permits exchange, and approval of the operating regulations of the emission permits exchange and of the modification of operating regulations under Article 22 of the Act;

(j) Designation, and revocation of the designation, of a maker of emission permit markets, and receipt and evaluation of the performance of market-making activities, and requests for corrective measures under Article 22-2 of the Act;

(k) Measures to stabilize markets for trading emission permits under Article 23 of the Act;

(l) Receipt of a statement on greenhouse gas emissions under Article 24 (1) of the Act and issuance of an order to make corrections or supplementations under Article 24 (2) of the Act;

(m) Designation of an independent, specialized verification institution (hereinafter referred to as "verification institution"), issuance of orders to revoke such designation, to suspend work and to take corrective measures, and the receipt, evaluation, and disclosure of the results of verification under Article 24-2 of the Act;

(n) Issuance of qualification certificates for verification examiners, and revocation or suspension of their qualification under Article 24-3 of the Act;

(o) Certification of actual greenhouse gas emissions, and notice and registration of the results thereof under Article 25 of the Act;

(p) Establishment and operation of the Emissions Certification Committee under Article 26 of the Act;

(q) Receipt and registration of emission permits surrendered under Article 27 of the Act;

(r) Approval and registration of carryover or borrowing of emission permits under Article 28 of the Act;

(s) Receipt of applications for the conversion of emission permits, conversion of emission permits and registration of details thereof in an emission permits offset register under Article 29 of the Act;

(t) Management and operation of an emission permits offset register under Article 31 of the Act (hereinafter referred to as "offset register");

(u) Imposition and collection of penalty surcharges, collection of additional charges, demand for the payment thereof, and disposition of defaulted penalty surcharges under Articles 33 and 34 of the Act;

(v) Designation, establishment, or operation of an institution specializing in trading emission permits under Article 36 (2) of the Act;

(w) Fact-finding surveys under Article 37 of the Act (excluding subparagraph 7);

(x) Hearings under Article 37-2 of the Act;

(y) Receipt of objections and notification of the results thereof under Article 38 of the Act;

(z) Delegation or entrustment of authority under Article 40 of the Act (limited to the matters under items (a) through (y), and (aa));

(aa) Imposition and collection of administrative fines under Article 43 of the Act;

2. The following matters: the competent agency by sector [referring to the heads of the relevant central administrative agencies determined by sector pursuant to Article 18 (1) of the Enforcement Decree of the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis (hereinafter referred to as the "Enforcement Decree of the Framework Act"); hereinafter the same shall apply]:

(a) Receipt of applications for the certification of greenhouse gas reductions from an external project, certification, and registration of the offset register under Article 30 of the Act;

(b) Fact-finding surveys under subparagraph 7 of Article 37 of the Act;

(c) Delegation or entrustment of authority under Article 40 of the Act (limited to the matter under item (a)).

(2) The latest three years under the provisions, with the exception of the items, of Article 8 (1) 1 of the Act, shall be the period of three years out of the period of four years prior to the beginning of each commitment period (hereinafter referred to as "base period"): Provided, That the period of the immediately preceding three years during which a business entity eligible for the allocation of emission permits (hereinafter referred to as “enterprise eligible for allocation") is designated and publicly notified (hereinafter referred to as “base period for new entrant”) shall apply to a business entity under Article 9 (1) of the Act (hereinafter referred to as "new entrant").

(3) The Minister of Environment shall designate any of the following business entities as a business entity eligible for allocation and publicly notify such designation no later than five months prior to the beginning of each commitment period and notify the relevant business entity and the competent agency by sector of the details thereof:

1. A business entity under Article 8 (1) 1 of the Act (in cases of a controlled entity under item (b) of that subparagraph, limited to a business entity which has submitted a statement under Article 27 of the Framework Act at least once);

2. A business entity under Article 8 (1) 2 of the Act (hereinafter referred to as "voluntary participant").

(4) "Business entities meeting the standards prescribed by Presidential Decree" in Article 8 (1) 2 of the Act means a business entity meeting all the following requirements:

1. A controlled entity under Article 27 (1) of the Framework Act (hereinafter referred to as "controlled entity"), which was neither subject to an improvement order under the former part of paragraph (6) of that Article nor was subject to an administrative fine under Article 83 (1) of that Act;

2. A business entity that submitted a statement under Article 27 (3) of the Framework Act at least once;

3. A business entity which was eligible for allocation during the previous commitment period was not allocated emission permits by falsely filing an application for the allocation or additional allocation of emission permits (limited to cases in which the relevant business entity, which was a business entity eligible for allocation during the previous commitment period, becomes a controlled entity).

(5) A voluntary participant shall prepare an application for voluntary participation no later than six months prior to the beginning of each commitment period and shall submit such application to the Minister of Environment in electronic form (referring to the use of the National Greenhouse Management System under Article 36 of the Framework Act; hereinafter the same shall apply).

(6) Where the Minister of Environment accepts an objection to the designation of a business entity eligible for allocation filed under Article 38 (1) 1 of the Act, the Minister shall publicly notify any modifications no later than three months (referring to two years prior to the beginning of each commitment period, in cases of the extension of a period pursuant to the proviso of paragraph (2) of that Article) prior to the beginning of each commitment period (referring to a compliance year, in cases of an objection against the designation of new entrants as business entities eligible for allocation).

(7) A voluntary participant that does not want to be designated as a business entity eligible for allocation during the following commitment period shall file an application for voluntary withdrawal of participation with the Minister of Environment by electronic means no later than six months prior to the beginning of the following commitment period.

(8) Where the Minister of Environment fails to designate business entity eligible for allocation as the ones for the following commitment period, the Minister shall immediately close the relevant business entity’s account for trading emission permits registered in the emission permits register when the deadline for surrendering emission permits under Article 27 (1) of the Act expires for the final compliance year of the pertinent commitment period.

(9) Except as provided in paragraphs (2) through (8), detailed matters regarding the designation of business entities eligible for allocation shall be determined and publicly notified by the Minister of Environment.

 

Article 10 (Revocation of Designation of Business Entities Eligible for Allocation)

(1) "Cases prescribed by Presidential Decree" in Article 8 (2) 3 of the Act means any of the following:

1. Where the voluntary participant has been designated as a business entity eligible for allocation by fraud or other improper means, despite its failure to meet any of the requirements provided in the subparagraphs of Article 9 (4);

2. Where it is obvious that the business entity cannot continue its business during a commitment period due to bankruptcy, revocation of business license, etc.

(2) Upon revoking the designation of a business entity eligible for allocation under Article 8 (2) of the Act, the Minister of Environment shall publicly notify the details of such revocation without delay, and notify the relevant business entity and the competent agency by sector thereof.

(3) Upon receipt of notice that designation as a business entity eligible for allocation has been revoked under paragraph (2), the business entity shall report to the Minister of Environment a statement under Article 24 (1) of the Act for years until the year immediately preceding the one in which the designation is revoked, and shall surrender emission permits certified under Article 25 of the Act pursuant to Article 27 (1) of the Act.

(4) The Minister of Environment shall revoke emission permits allocated under Article 17 (1) 5 of the Act to a business entity whose designation as a business entity eligible for allocation is revoked under paragraph (2), and shall immediately close the relevant business entity’s account for trading emission permits registered in the emission permits register when the deadline for surrendering emission permits under Article 27 (1) of the Act expires for the year immediately preceding the year in which the designation is revoked.

(5) Except as provided in paragraphs (1) through (4), detailed matters regarding the revocation of designation as business entities eligible for allocation shall be determined and publicly notified by the Minister of Environment.

 

Article 11 (Succession to Rights and Obligations of Business Entities Eligible for Allocation)

(1) A business entity eligible for allocation that transferred rights and obligations shall report the transfer of and succession to rights and obligations to the Minister of Environment by electronic means under Article 8-2 (2) of the Act.

(2) Where changes are made to business entities eligible for allocation designated and publicly notified under Article 8 (1) or 9 (1) of the Act as the rights and obligations of the business entities eligible for allocation are succeeded under the main clause of Article 8-2 (1) of the Act, the Minister of Environment shall publicly notify details of such changes within one month from the date the Minister receives a report on such fact under Article 8-2 (2) of the Act or becomes aware thereof under paragraph (4) of that Article, and shall notify the relevant business entities eligible for allocation and the competent agency by sector of the same without delay.

(3) Where the Minister of Environment takes measures to transfer emission permits under Article 8-2 (3) and (4) of the Act, the Minister shall notify the relevant business entity eligible for allocation of the results of transferring such emission permits within one month from the date the relevant fact is reported to the Minister or he or she becomes aware of such fact under paragraph (2) or (4) of that Article.

(4) Except as provided in paragraphs (1) through (3), detailed matters regarding the succession to the rights and obligations of business entities eligible for allocation shall be determined and publicly notified by the Minister of Environment.

 

Article 12 (Designation and Public Notice of New Entrants as Business Entities Eligible for Allocation)

(1) The Minister of Environment shall designate a new entrant that has submitted a statement verified by a verification institution under Article 27 (3) of the Framework Act more than once as a business entity eligible for allocation under Article 9 of the Act, and shall publicly notify such designation no later than five months prior to the beginning of each compliance year.

(2) Except as provided in paragraph (1), detailed matters regarding the designation of new entrants as business entities eligible for allocation shall be determined and publicly notified by the Minister of Environment.

 

Article 13 (Notification of Designation and Public Notice of Business Entities Eligible for Allocation)

(1) Where the Minister of Environment designates and publicly notifies a business entity eligible for allocation pursuant to Articles 9 and 12, or does not re-designate such business entity as a business entity eligible for allocation for the following commitment period, the Minister shall notify the relevant business entity and the competent agency by sector of such fact without delay.

(2) A business entity designated and publicly notified as a business entity eligible for allocation shall submit its performance in attaining the targets under Article 27 (1) of the Framework Act to the competent agency by sector and the statement under paragraph (3) of that Article not later than March 31 of the year following the year in which it is designated as such pursuant to Article 21 of the Enforcement Decree of the Framework Act.

(3) Except as provided in paragraphs (1) and (2), detailed matters regarding notification, etc. of the designation and public notice of business entities eligible for allocation shall be determined and publicly notified by the Minister of Environment.

 

Article 14 (Management and Operation of Emission Permits Register)

(2) Any of the following persons may request that the Minister of Environment allow him or her to peruse the information registered in the emission permits register and the Minister of Environment shall comply therewith, unless there is a compelling reason not to do so:

1. The head of the relevant central administrative agency under Article 7 (2) 1 of the Act (only if necessary for formulating policies for greenhouse gas reductions and for managing targets under Articles 8, 26, and 27 of the Framework Act);

2. The head of an emission permits exchange under Article 22 of the Act.

(2) "Matters prescribed by Presidential Decree" in Article 11 (3) 5 of the Act means the following:

1. Emission permits transferred or revoked under Article 8-2 (3) and (4) of the Act;

2. Number of emission permits allocated under Article 12 of the Act;

3. Number of emission permits additionally allocated under Articles 15 (1) and 16 of the Act;

4. Emission permits revoked under Article 17 of the Act;

5. Emission permits transferred under Article 21 of the Act;

6. Number of emission permits surrendered under Article 27 of the Act;

7. Emission permits carried over and borrowed under Article 28 of the Act;

8. Emission permits registered in the offset register (hereinafter referred to as "offset emission permits");

9. A plan for calculating greenhouse gas emissions submitted under Article 21 and a verification report prepared by a verification institution;

10. A statement submitted pursuant to Article 39 and a verification report prepared by a verification institution.

(3) "Registered facts prescribed by Presidential Decree, such as the number of emission permits" in Article 11 (5) of the Act means the following:

1. Matters under Article 11 (3) 1, 2, and 4 of the Act;

2. Matters under the subparagraphs of paragraph (2);

3. Sum of emission permits held, calculated taking into account the matters referred to in the subparagraphs of paragraph (2);

4. Other matters determined and publicly notified by the Minister of Environment regarding the management and operation of the emission permits register referred to in Article 16 (3).

 

Article 15 (Disclosure of Matters Registered in Emission Permits Register)

The following matters among the information registered in the emission permits register shall be disclosed:

1. Matters under Articles 11 (3) 1 and 4 of the Act;

2. Matters under the subparagraphs of Article 14 (2) (excluding subparagraphs 5, 6, 9, and 10).

 

Article 16 (Modification of Matters Registered in Emission Permits Register)

(1) Where any error or mistake is found in any matter registered in the emission permits register, the Minister of Environment may modify such registered matter, ex officio or upon the request of a person who has registered his or her account for trading emission permits under Article 20 of the Act.

(2) Where the Minister of Environment modifies any registered matter pursuant to paragraph (1), the Minister shall give notice thereof to the person who has registered his or her account for trading emission permits.

(3) Except as provided in Articles 14 and 15, and paragraph (1) and (2) of this Article, detailed matters regarding the management and operation of the emission permits register, including matters registered in the emission permits register, the protection of trade secrets of enterprises, and fees under subparagraph 1 of Article 39 of the Act shall be determined and publicly notified by the Minister of Environment.

 

SECTION 2 Allocation of Emission Permits

 

Article 17 (Standards for Allocation of Emission Permits)

(1) Pursuant to Article 12 (2) of the Act, the Minister of Environment shall determine the number of emission permits to be allocated to each business entity eligible for allocation, in consideration of the matters under the subparagraphs of that paragraph and the following matters:

1. Matters regarding the allocation of emission permits determined in the relevant allocation plan under Article 5 (1) 3 through 7 of the Act and Article 3 (4) 1, 4, 6, and 7 of this Decree;

2. Mid-to long-term reduction targets and sectoral greenhouse gas reduction targets under Article 8 (2) of the Framework Act;

3. Ratio of emission permits allocated gratuitously under Article 18 (hereinafter referred to as "free allocation ratio");

4. Past greenhouse gas emissions of the relevant business entity eligible for allocation;

5. Increase or decrease in greenhouse gas emissions caused by changes in places of business or facilities of the relevant business entity eligible for allocation during the base period (in cases of a business entity eligible for allocation which is a new entrant, referring to the base period for a new entrant);

6. Results of evaluating the data on greenhouse gas emissions, etc. per unit activity data, such as production or outsourcing volumes, or heat or fuel consumption (hereinafter referred to as “activity data”) by comparing such data with the data gathered from the domestic places of business, facilities or processes of the same type (hereinafter referred to as "benchmark").

(2) Detailed matters regarding the methods, etc. for calculating the number of emission permits allocated under paragraph (1) when determining the number of such emission permits shall be determined and publicly notified by the Minister of Environment.

 

Article 18 (Free Allocation Ratios of Emission Permits)

(1) All emission permits allocated to each business entity eligible for allocation shall be allocated gratuitously during the first commitment period (hereinafter referred to as "first commitment period") under Article 2 (1) of the Addenda to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 11419).

(2) 97/100 of all emission permits allocated to each business entity eligible for allocation shall be allocated gratuitously during the second commitment period (hereinafter referred to as "second commitment period") under Article 2 (1) of the Addenda to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 11419).

(3) An allocation plan shall include the free allocation ratio determined not to exceed 90/100 after the third commitment period, in consideration of international trends, the assessment, etc. of reductions achieved during the previous commitment periods. In such cases, no free allocation ratio shall exceed the free allocation ratio in the immediately preceding commitment period.

(4) Emission permits allocated to business entities eligible for allocation during a commitment period under Article 12 (3) of the Act shall be sold there by means of auction.

(5) Detailed matters regarding the auctioning of emission permits, such as the time and place of auction under paragraph (4) shall be determined and publicly notified by the Minister of Environment.

 

Article 19 (Standards for Business Types and Business Entities Eligible for Free Allocation)

(1) "Business types meeting the standards prescribed by Presidential Decree" in Article 12 (4) 1 of the Act means a type of business determined under the relevant allocation plan, in which the value obtained by multiplying the level of costs incurred by the trade intensity under attached Table 1 is at least 2/1000.

(2) "Business entity prescribed by Presidential Decree" in Article 12 (4) 2 of the Act means any of the following business entities eligible for allocation:

1. A local government;

2. A school under Article 2 of the Elementary and Secondary Education Act and Article 2 of the Higher Education Act;

3. A medical institution under Article 3 (2) of the Medical Service Act;

4. A public transportation operator under subparagraph 4 of Article 2 of the Act on the Support and Promotion of Utilization of Mass Transit System;

5. A business entity under subparagraph 3 of Article 2 of the Integrated Energy Supply Act (limited to the period from the first compliance year to the third compliance year during the third commitment period).

 

Article 20 (Submission of Applications for Allocation of Emission Permits)

(1) A business entity eligible for allocation shall prepare an application for the allocation of emission permits under Article 13 (1) of the Act (hereinafter referred to as "application for allocation") as per the following unit and submit such application to the Minister of Environment by electronic means:

1. Each business entity eligible for allocation, including its all places of business;

2. Each place of business which belongs to a business entity eligible for allocation.

(2) A business entity eligible for allocation to whom the benchmark applies shall submit an application for allocation accompanied by greenhouse gas emissions and activity data as per the following unit verified by a verification institution (excluding where greenhouse gas emissions and activity data are included in a statement under Article 39 (1), already verified and reported) to the Minister of Environment by electronic means:

1. Each production item or outsourcing service produced or provided at a place of business that belongs to a business entity eligible for allocation;

2. Each facility, process, raw material, or fuel used at a place of business that belongs to a business entity eligible for allocation to produce or provide production items or outsourcing services referred to in subparagraph 1;

3. Each greenhouse gas emission activity in a facility or process undertaken at a place of business that belongs to a business entity eligible for allocation to produce or provide production items or outsourcing services referred to in subparagraph 1.

(3) "Methods prescribed by Presidential Decree" in Article 13 (1) 1 of the Act means the methods for calculating the number of emission permits to be allocated, which are determined and publicly notified by the Minister of Environment under Article 17 (2) when determining the number of such emission permits.

(4) Detailed matters regarding procedures for submitting and examining applications for allocation, verification of activity data, etc. under paragraphs (1) and (2) shall be determined and publicly notified by the Minister of Environment.

 

Article 21 (Submission and Verification of Plan for Calculating Greenhouse Gas Emissions)

(1) A business entity eligible for allocation shall submit a plan for calculating greenhouse gas emissions under Article 13 (2) of the Act (hereinafter referred to as "plan for calculating emissions") to the Minister of Environment by electronic means, accompanied by a verification report prepared by a verification institution.

(2) In any of the following cases, the Minister of Environment may issue an order for correction or supplementation to the relevant business entity eligible for allocation or the verification institution:

1. Where there is a defect or omission in the plan for calculating emissions or in the verification report submitted under paragraph (1);

2. Where the results of reviewing the statement submitted by the business entity eligible for allocation pursuant to Article 39 and the corresponding verification report indicate that inadequate information is contained in the plan for calculating emissions or the verification report.

(3) Where the Minister of Environment issues an order for correction or supplementation pursuant to paragraph (2), the relevant business entity eligible for allocation or the verification institution shall correct or supplement the plan for calculating emissions or the verification report, and submit such plan or report to the Minister of Environment by electronic means within 15 days.

(4) Where the details of the plan for calculating emissions submitted are modified, a business entity eligible for allocation shall modify and submit the plan no later than two months prior to the end of the pertinent compliance year. In such cases, paragraphs (1) through (3) shall apply mutatis mutandis.

(5) Except as provided in paragraphs (1) through (4), detailed matters regarding the submission and verification of a plan for calculating emissions shall be determined and publicly notified by the Minister of Environment.

 

Article 22 (Determination of Number of Emission Permits Allocated to Each Business Entity Eligible for Allocation)

(1) The Minister of Environment shall determine the number of emission permits to be allocated to each business entity eligible for allocation no later than two months prior to the beginning of a commitment period (referring to the compliance year in which emission permits are allocated, in cases of a business entity eligible for allocation which is a new entrant) after having the deliberative committee on allocation determination deliberate on and coordinate such matter under Article 23 (1).

(2) The Minister of Environment shall report to the Allocation Committee on the number of emission permits to be allocated to each business entity eligible for allocation, which is determined under paragraph (1).

 

Article 23 (Deliberative Committee on Allocation Determination)

(1) A deliberative committee on allocation determination (hereinafter referred to as “deliberative committee on allocation determination") shall be established in the Ministry of Environment to deliberate on and coordinate the following matters:

1. Emission permits allocated to each business entity eligible for allocation under Article 22 (1);

2. Additional allocation of emission permits, resulting from modifications to an allocation plan under Article 26 (1);

3. Additional allocation of emission permits under Article 28 (2);

4. Revocation of the allocation of emission permits under Article 29 (1) through (6).

(2) The deliberative committee on allocation determination shall consist of no more than 16 members, including one chairperson.

(3) The Vice Minister of Environment shall serve as the chairperson of the deliberative committee on allocation determination, and the following persons shall become its members:

1. Senior executives appointed by the head of the relevant agency, from among those who belong to the Ministry of Economy and Finance, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Trade, Industry and Energy, the Ministry of Environment, the Ministry of Land, Infrastructure and Transport, the Office for Government Policy Coordination, and other relevant central administrative agencies deemed necessary by the Minister of Environment;

2. Persons commissioned by the Minister of Environment upon the recommendation of the heads of the central administrative agencies prescribed in subparagraph 1, from among those who have extensive knowledge of and experience in climate change, carbon markets, greenhouse gas reductions, and other similar fields.

(4) Each member commissioned under paragraph (3) 2 shall hold office for a term of two years and may be commissioned consecutively only once.

(5) Articles 5 and 6 shall apply mutatis mutandis to exclusion of, challenge to, and recusal and dismissal of members of the deliberative committee on allocation determination. In such cases, "Allocation Committee" shall be construed as "deliberative committee on allocation determination"; "Minister of Economy and Finance" as "Minister of Environment"; and "Article 7 (2) 2 of the Act" as "Article 23 (3) 2.

(6) Article 7 (1) through (3) shall apply mutatis mutandis a meeting of the deliberative committee on allocation determination, its opening and resolution, and hearing of opinions therein. In such cases, "Allocation Committee" shall be construed as "deliberative committee on allocation determination."

(7) Except as provided in paragraphs (4) through (6), detailed matters regarding the operation of the deliberative committee on allocation determination shall be determined by the chairperson thereof after a resolution by the committee.

 

Article 24 (Notification of Number of Emission Permits Allocated to Each Business Entity Eligible for Allocation)

Pursuant to Article 14 (1) of the Act, the Minister of Environment shall without delay register emission permits allocated for free in the account for trading emission permits of the relevant business entity by indicating the pertinent compliance year in which such emission permits are allocated, among the number of emission permits allocated to each business entity eligible for allocation determined following deliberation and coordination under Article 22 (1) of the Enforcement Decree, and shall register the emission permits that are sold under Article 18 (4) in the account for trading emission permits of the relevant business entity by indicating the pertinent compliance year in which such emission permits are allocated by means of auction.

 

Article 25 (Recognition of Early Action)

(1) "Early action" in Article 15 (1) of the Act (hereinafter referred to as "early action") means any of the following:

1. Deleted;

2. Recognized overachievement by the relevant business entity eligible for allocation of the total reduction targets that from the year following the year in which the entity is designated as a controlled entity and the initial target is set until said entity submits an application under paragraph (2).

(2) A business entity eligible for allocation which intends to have its early action recognized shall submit an application for the recognition of the early action to the Minister of Environment by electronic means, within eight months from the beginning of the second compliance year during the first commitment period.

(3) The Minister of Environment shall additionally allocate emission permits equivalent to the early action recognized after reviewing an application for the recognition thereof submitted under paragraph (2), as emission permits for the second compliance year and the third compliance year during the first commitment period: Provided, That where the overall early action so recognized exceeds the total number of emission permits allocated during the first commitment period, the Minister of Environment shall additionally allocate the number of emission permits equivalent to the value computed by multiplying the total number of emission permits to be allocated for the recognition of the early action to each business entity eligible for allocation whose early action has been recognized, by the contribution coefficient of the early action, computed by the following formula:

Contribution coefficient of the early action = Recognized early action of a business entity eligible for allocation/Sum of recognized early action of all business entities eligible for allocation.

(4) The number of emission permits to be additionally allocated under paragraph (3) shall be determined in accordance with the allocation plan in consideration of the total number of emission permits allocated during the first commitment period.

(5) Emission permits additionally allocated under paragraph (3) shall be used from emission permits in reserve under Article 18 of the Act (hereinafter referred to as "emission permits in reserve").

(6) Except as provided in paragraphs (1) through (5), detailed matters regarding the procedures and standards for recognizing the early action shall be determined and publicly notified by the Minister of Environment.

 

Article 26 (Additional Allocation Resulting from Modifications to Allocation Plan)

(1) Where the total greenhouse gas emission allowances under Article 5 (1) 1 of the Act (hereinafter referred to as “total emission allowances”) increase following a modification to an allocation plan under Article 16 (1) 1 of the Act, the Minister of Environment may additionally allocate emission permits equivalent to the total emission allowances so increased to all business entities eligible for allocation in proportion to the respective existing allocations or additionally allocate all or some of the increased number of emission permits to a specific sector or business type.

(2) The Minister of Environment shall determine additional allocations under paragraph (1) in consultation with the competent agency by sector and through deliberation and coordination by the deliberative committee on allocation determination.

 

Article 27 (Additional Allocation of Emission Permits upon Application)

(1) "Standards prescribed by Presidential Decree" in Article 16 (1) 3 of the Act means increase above the number of emission permits determined and allocated to each place of business among the number of emission permits allocated to the relevant business entity eligible for allocation for the pertinent compliance year.

(2) "Cases prescribed by Presidential Decree" in Article 16 (1) 4 of the Act means any of the following:

1. Where the volume of electricity generated during the pertinent compliance year increases above the annual average volume of electricity generated during the relevant base period (in cases of power facilities newly constructed during the base period, referring to the annual average from the year such facilities are newly constructed), as a business entity eligible for allocation, due to restrictions in operating the electric power system (referring to a power generator failure, failure in electric power transmission lines, restrictions in heat supply, fuel and electric transmission, excluding cases in which such restrictions are attributable to the business entity), follows an instruction from the Korea Power Exchange, which is different from the order of priority determined in the electricity market pursuant to Article 45 (2) of the Electric Utility Act;

2. Where the volume of heat supply (excluding the volume of heat supply between the places of business or the volume of heat supply between integrated energy business entities, the supply of which is not obligatory; hereafter in this subparagraph, the same shall apply) during the pertinent compliance year increases above the annual average volume of heat supply during the relevant base period (in cases of places of business newly constructed during the base period, referring to the annual average from the year such places of business are newly constructed), as a business entity eligible for allocation, which is also a business entity under subparagraph 3 of Article 2 of the Integrated Energy Supply Act (hereinafter referred to as "integrated energy business entity") meets its obligations to supply integrated energy under Article 16 (1) of that Act in its places of business;

3. Where greenhouse gas emissions generated by a business entity eligible for allocation which operates additional aircraft to meet the flight technology standards under Article 77 of the Aviation Safety Act during the pertinent compliance year (referring to activity data, where the benchmark applies; hereafter in this Article the same shall apply) increase above the annual average of greenhouse gas emissions generated during the relevant base period;

4. Where greenhouse gas emissions generated from a public sewage treatment plant under subparagraph 9 of Article 2 of the Sewerage Act (hereinafter referred to as “public sewage treatment plant”) during the pertinent compliance year increase above the annual average of greenhouse gas emissions generated (in cases of plants newly constructed during the base period, referring to the annual average from the year such plants are newly constructed) during the relevant base period, as more rigorous standards for effluent water quality under Article 7 of the Sewerage Act (limited to cases in which standards for effluent water quality under other statutes do not apply to a public sewage treatment plant) applied to a public sewage treatment plant are adopted and a public sewage treatment plant improvement work (excluding the new construction and expansion of a plant) is implemented to meet reduced pollution load allocated for each final discharging outlet or unit period by the Minister of Environment, the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Special Self-Governing City Mayor, and the head of a Si/Gun pursuant to any of the following provisions:

(a) Article 4-5 of the Water Environment Conservation Act;

(b) Article 12 of the Act on Water Management and Resident Support in the Geum River Basin;

(c) Article 12 of the Act on Water Management and Resident Support in the Nakdong River Basin;

(d) Article 12 of the Act on Water Management and Resident Support in the Yeongsan and Seomjin River Basins;

(e) Article 8-4 of the Act on the Improvement of Water Quality and Support for Residents of the Han River Basin;

5. Where greenhouse gas emissions generated by a business entity eligible for allocation during the pertinent compliance year increase above the annual average of greenhouse gas emissions generated during the relevant base period, as any of the following policies or measures is implemented:

(a) Expanded means of public transportation for the revitalization of green transport under Article 32 of the Framework Act;

(b) Compliance with measures for the transportation of large heavy freight under Article 20 of the Sustainable Transportation Logistics Development Act;

6. Where greenhouse gas emissions generated during the pertinent compliance year increase above the annual average of greenhouse gas emissions during the relevant base period, as a business entity eligible for allocation uses combustible wastes as fuel, instead of fossil fuels.

 

Article 28 (Determination of Number of Emission Permits Additionally Allocated upon Application)

(1) A business entity eligible for allocation whose greenhouse gas emissions surpass the number of emission permits allocated to each business entity eligible for allocation for the pertinent compliance year on any ground under Article 16 (1) 2 through 4 of the Act, may file an application for additional allocation of emission permits with the Minister of Environment by electronic means within three months from the end of each compliance year.

(2) Upon receipt of an application filed under paragraph (1), the Minister of Environment shall calculate the number of emission permits to be additionally allocated to the relevant business entity eligible for allocation, in consideration of the following:

1. Increase in greenhouse gas emissions (referring to activity data where the benchmark applies);

2. Mid-to long-term reduction targets and sectoral greenhouse gas reduction targets under Article 8 (2) of the Framework Act;

3. Any remaining emission permits in reserve.

(3) The number of additionally allocated emission permits calculated pursuant to paragraph (2) shall be determined by the Minister of Environment in consultation with the competent agency by sector and through deliberation and coordination by the deliberative committee on allocation determination.

(4) The Minister of Environment shall notify the relevant business entity eligible for allocation of the number of additionally allocated emission permits determined under paragraph (3) within five months from the end of the pertinent compliance year.

(5) Emission permits in reserve shall be used as emission permits additionally allocated under paragraph (3).

(6) Additional emission permits allocated shall be sold to business entities eligible for allocation by means of auction.

(7) Except as provided in Article 27 and paragraphs (1) through (6) of this Article, detailed matters regarding the additional allocation of emission permits shall be determined and publicly notified by the Minister of Environment.

 

Article 29 (Revocation of Allocation of Emission Permits)

(1) Where any reason falling under Article 17 (1) 1 of the Act occurs, the Minister of Environment may revoke emission permits equivalent to reduced total emission allowances allocated to business entities eligible for allocation in proportion to their existing emission permits allocated or revoke all or some of the emission permits reduced for a specific sector or business type.

(2) Where a business entity eligible for allocation closes all or some of its places of business pursuant to Article 17 (1) 2 of the Act (including cases in which the places of business are divided, transferred, or leased but the rights and obligations of which are not succeeded pursuant to the proviso of Article 8-2 (1) of the Act; hereafter in this paragraph, the same shall apply), the Minister of Environment shall revoke the emission permits allocated for each place of business among emission permits for the relevant business entity eligible for allocation in accordance with the following classifications:

1. Emission permits allocated for the pertinent compliance year: emission permits in proportion to the number of days remaining from the date of closing the place of business to the end of the pertinent compliance year;

2. Emission permits allocated for the period from the following compliance year until the final compliance year: all emission permits.

(3) "Standards prescribed by Presidential Decree" in Article 17 (1) 3 of the Act means 50/100 of the number of emission permits allocated to each place of business among the number of emission permits allocated to the relevant business entity eligible for allocation.

(4) In cases falling under any ground specified in Article 17 (1) 3 of the Act (the closure of a facility includes cases in which the facility is divided, transferred or leased, but the rights and obligations are not succeeded pursuant to the proviso of Article 8-2 (1) of the Act), the Minister of Environment shall revoke the number of emission permits, a sum obtained by excluding the number of greenhouse gas emission permits allocated to a business entity eligible for allocation for the pertinent compliance year from the number of emission permits allocated for the relevant place of business, among the emission permits allocated to the business entity for the pertinent compliance year.

(5) Where the grounds specified in Article 17 (1) 4 of the Act apply to a business entity eligible for allocation, the Minister of Environment shall revoke the emission permits, among emission permits allocated to the relevant business entity eligible for allocation.

(6) Where the grounds specified in Article 17 (1) 5 of the Act apply to a business entity eligible for allocation, the Minister of Environment shall revoke the emission permits allocated from the year in which the designation was revoked to the final compliance year, among emission permits allocated to the relevant business entity eligible for allocation.

(7) A business entity eligible for allocation shall report to the Minister of Environment on the occurrence of a ground for revoking the allocation of emission permits by electronic means under Article 17 (2) of the Act.

(8) Where the Minister of Environment intends to revoke emission permits allocated under paragraphs (1) through (6), the Minister shall determine whether to revoke such emission permits in consultation with the competent agency by sector and deliberation and coordination by the Allocation Decision Deliberation Committee.

(9) Where the Minister of Environment determines to revoke emission permits allocated pursuant to paragraph (8), the Minister shall notify the relevant business entity eligible for allocation of such fact without delay.

(10) In order to revoke the allocation of emission permits under paragraphs (1) through (6), the Minister of Environment shall transfer emission permits from the account for trading emission permits of the relevant business entity eligible for allocation to the account for trading emission permits in reserve under Article 32 (5) 2.

(11) Where emission permits are transferred under paragraph (10) and the emission permits held by a business entity eligible for allocation in an account for trading emission permits for the pertinent compliance year are less than the number of emission permits transferred following the revocation of emission permits, the Minister of Environment may transfer emission permits for another compliance year during the pertinent commitment period or the following commitment period.

(12) Where the Minister of Environment orders the surrender of emission permits pursuant to Article 17 (3) of the Act, the Minister shall have the relevant business entity eligible for allocation hold the number of emission permits that fall short in its account for trading emission permits through trading, etc. within one month from the date of the order.

(13) Except as provided in paragraphs (1) through (12), detailed matters regarding the revocation of emission permits allocated shall be determined and publicly notified by the Minister of Environment.

 

Article 30 (Emission Permits in Reserve)

"Matters prescribed by Presidential Decree" in subparagraph 5 of Article 18 of the Act means the following:

1. Allocation of emission permits to business entities eligible for allocation which are new market entrants under the proviso of Article 12 (1) of the Act;

2. Prevention of liquidity constraints caused by persons other than business entities eligible for allocation or makers of emission permit markets under Article 22-2 (1) of the Act who hold emission permits.

 

CHAPTER IV TRADING OF EMISSION PERMITS

 

Article 31 (Trading of Emission Permits)

(1) Emission permits shall be traded by unit of greenhouse gases converted into tons of comparable CO2 equivalents (tCO2-eq) according to the global warming potentials by greenhouse gas specified in attached Table 2 pursuant to Article 19 (2) of the Act.

(2) One ton of comparable CO2 equivalents (tCO2-eq) converted under paragraph (1) shall be equal to one emission permit, which shall be the minimum unit of trading emission permits.

(3) Emission permits shall be traded in accordance with the following classifications, and a person who has registered an account for trading emission permits under Article 20 of the Act but who is neither a business entity eligible for allocation nor a maker of emission permit markets under Article 22-2 (1) of the Act shall use the method under subparagraph 1 for trading:

1. Trading on an emission permits exchange under Article 22 of the Act (hereinafter referred to as "trading on exchange");

2. Trading at any place other than those specified in subparagraph 1.

 

Article 32 (Registration of Account for Trading Emission Permits)

(1) A person who intends to trade emission permits shall submit an application for registration of an account for trading emission permits to the Minister of Environment by electronic means under Article 20 of the Act.

(2) Upon receipt of an application for registration of an account for trading emission permits under paragraph (1), the Minister of Environment shall review the appropriateness thereof and open an account for trading emission permits in the emission permits register for the applicant.

(3) Notwithstanding paragraphs (1) and (2), the Minister of Environment shall, ex officio, register the account for trading emission permits of the relevant business entity eligible for allocation in the emission permits register.

(4) "Cases prescribed by Presidential Decree" in Article 20 (2) of the Act means where a foreign corporation or individual is permitted to trade emission permits in accordance with a treaty or international agreement aimed at connecting or integrating markets for trading emission permits.

(5) The Minister of Environment may register accounts for trading emission permits in accordance with the following classifications, if necessary:

1. An account for trading emission permits for the allocation of emission permits under Article 12 of the Act;

2. An account for trading emission permits for emission permits in reserve under Article 18 of the Act;

3. An account for trading emission permits for the surrender of emission permits under Article 27 of the Act;

4. Other accounts for trading emission permits for business affairs deemed necessary for stabilizing markets for trading emission permits.

 

Article 33 (Reporting on Trading of Emission Permits)

(1) A person who has traded emission permits shall submit a report on the trading of emission permits including the following matters to the Minister of Environment by electronic means under Article 21 (1) of the Act:

1. Types, quantities and prices of emission permits traded;

2. A notarized document regarding agreements on the trading of emission permits between a transferor and a transferee (excluding the transfer of emission permits, not through inheritance, merger of corporations, or other trading);

3. Other matters necessary for verifying the date of trading, information of persons involved in trading, and other relevant details, which are determined and publicly notified by the Minister of Environment.

(2) Upon receipt of a report on the trading of emission permits under paragraph (1), the Minister of Environment shall verify the following matters without delay and transfer the types and quantities of the reported emission permits from the transferor’s account for trading emission permits to that of the transferee:

1. Whether a person has an account for trading emission permits registered under Article 20 of the Act;

2. Whether the minimum or maximum limit for the holding of emission permits under Article 23 (2) 2 of the Act are met;

3. Whether agreements on the trading of emission permits between a transferee and a transferor are reached;

4. Whether such trading is intended to avoid any of the following:

(a) Transfer and revocation of emission permits under Article 8-2 (3) of the Act;

(b) Revocation of the allocation of emission permits under Article 17 (1) of the Act;

(c) Surrender of emission permits under Article 27 (1) of the Act.

(3) Except as provided in Articles 31 and 32 and paragraphs (1) and (2) of this Article, detailed matters regarding the trading of emission permits, registration of accounts for trading emission permits, registration fees under subparagraph 2 of Article 39 of the Act, reporting on the trading of emission permits, and other matters shall be determined and publicly notified by the Minister of Environment.

 

Article 34 (Establishment and Designation of Emission Permits Exchange)

(1) The Minister of Environment may establish an emission permits exchange under Article 22 (1) of the Act (hereinafter referred to as "emission permits exchange") in consultation with the heads of relevant central administrative agencies or may designate an emission permits exchange after receiving an application from an institution, etc. capable of trading emission permits.

(2) Where the Minister of Environment intends to establish or designate an emission permits exchange pursuant to paragraph (1), the Minister shall refer the relevant matter to the Carbon Neutrality Committee for deliberation.

(3) "Important matters prescribed by Presidential Decree" in the latter part, with the exception of the subparagraphs, of Article 22 (2) of the Act means the matters under subparagraphs 1 through 4 and 6 of that paragraph and the subparagraphs of paragraph (4) of this Article.

(4) "Matters prescribed by Presidential Decree" in Article 22 (2) 7 of the Act means the following:

1. Matters regarding the opening, closure, and suspension of a market for trading emission permits;

2. Matters regarding trading by members of an emission permits exchange under Article 22 (3) of the Act in a market for trading emission permits;

3. Matters regarding the establishment of management guidelines for companies brokering transactions of emission permits under Article 36 that are entrusted to operate transactions of emission permits, and the monitoring thereof;

4. Matters regarding the subject, size, etc. of trading on exchange.

(5) Except as provided in paragraphs (1) through (4), detailed matters regarding the standards for designating an emission permits exchange, the procedures for applying for such designation, etc. shall be determined and publicly notified by the Minister of Environment.

 

Article 35 (Business Affairs and Supervision of Emission Permits Exchange)

(1) An emission permits exchange shall conduct the following business affairs:

1. Establishment and operation of markets for trading emission permits;

2. Sale (including auction) and settlement of emission permits;

3. Hearing on unfair transactions and supervision of members;

4. Self-resolution of disputes arising from the purchase and sale of emission permits (limited to cases in which the parties apply therefor);

5. Other business affairs prescribed by operating regulations under Article 22 (2) of the Act, as deemed necessary by the head of an emission permits exchange.

(2) The provisions of the Financial Investment Services and Capital Markets Act, which pertain to derivatives shall apply to the trading of derivatives, the underlying asset of which is emission permits.

(3) The Minister of Environment shall supervise an emission permits exchange to stabilize a market for trading emission permits and to maintain its sound trading order.

 

Article 36 (Companies Brokering Transactions of Emission Permits)

(1) A company brokering transactions of emission permits under Article 22 (4) of the Act (hereinafter referred to as "emission permits broker") shall be an investment broker under Article 8 (3) of the Financial Investment Services and Capital Markets Act that engages in the business of brokering transactions of emission permits for multiple parties at the same time through the information and communications network or the information processing system.

(2) Detailed matters regarding the information and communications network or the information processing system that emission permits brokers need to be equipped with pursuant to paragraph (1) shall be determined and publicly notified by the Minister of Environment.

 

Article 37 (Maker of Emission Permit Markets)

(1) A maker of emission permit markets designated by the Minister of Environment under Article 22-2 (1) of the Act (hereinafter referred to as "market maker") shall conduct the following business affairs:

1. Offering of buy or sell quotes for emission permits;

2. Trading of emission permits.

(2) "Person prescribed by Presidential Decree" in Article 22-2 (1) 4 of the Act means a person who has obtained authorization to engage in both investment trading business and investment brokerage business under Article 12 of the Financial Investment Services and Capital Markets Act, to deal with equity securities under Article 4 (4) of that Act.

(3) The Minister of Environment may revoke the designation of a market maker under Article 22-2 (2) of the Act, where the market maker falls under any of the following cases:

1. Where the market maker is no longer in operation due to merger, bankruptcy or closure of business, or for any other reason;

2. Where the market maker violates Article 22 (3) of the Act;

3. Where the market maker falsely reports the records under Article 22-2 (3) of the Act by intent or gross negligence or fails to file a report within the deadline;

4. Where the market maker fails to make corrections without good reason despite requests made by the Minister of Environment who have evaluated the records under Article 22-2 (4) of the Act.

(4) A market maker shall submit the records to the Minister of Environment every month under Article 22-2 (3) of the Act.

(5) When evaluating the records submitted under paragraph (4), the Minister of Environment may seek opinions from an emission permits exchange.

(6) Where the Minister of Environment requests a correction under Article 22-2 (4) of the Act, the Minister shall notify the relevant market maker in writing of the grounds for and the period of correction.

(7) The market maker, upon receipt of a notification under paragraph (6), shall take necessary implementation measures within the correction period, unless there is good reason.

(8) Except as provided in paragraphs (1) through (7), detailed matters regarding the procedures for designating a market maker, the submission and evaluation of records, requests for corrections, the implementation thereof, etc. shall be determined and publicly notified by the Minister of Environment.

 

Article 38 (Standards for Market Stabilization Measures)

(1) "Rate prescribed by Presidential Decree" in Article 23 (1) 1 of the Act means three times.

(2) "Cause or event prescribed by Presidential Decree" in Article 23 (1) 2 of the Act means where the average trading volume in the last one month is increased by at least twice the larger of the monthly average trading volumes in the same month in the immediately preceding two years and the average emission price in the last one month is higher than at least twice the average emission price in the immediately preceding two years.

(3) "Cause or event prescribed by Presidential Decree" in Article 23 (1) 3 of the Act means the following:

1. Where the average price of emission permits in the last one month does not exceed 60/100 of the average price of emission permits in the immediately preceding two years;

2. Where it is impracticable for business entities eligible for allocation to trade emission permits because the demand for emission permits far surpasses the supply in a market for trading emission permits, which results from business entities eligible for allocation not engaging in the trading of their emission permits and for other reasons.

(4) Where the Minister of Environment deems it impracticable to achieve the objectives of market stabilization measures under Article 23 (1) of the Act (hereinafter referred to as "market stabilization measures"), other than the measures under Article 23 (2) 2 of the Act, the Minister may establish the minimum or maximum limit for the holding of emission permits under Article 23 (2) 2 after deliberation by the Allocation Committee: Provided, That if the objectives of market stabilization are deemed achieved, the minimum or maximum holding limit shall be withdrawn immediately.

(5) The minimum or maximum limit for the holding of emission permits referred to in paragraph (4) shall be set within the scope classified as follows: Provided, That such maximum holding limit may be set differently for trading participants which hold not more than 25,000 emission permits on average in the immediately preceding six months (excluding business entities eligible for allocation):

1. Minimum holding limit: At least 70/100 of emission permits for the pertinent compliance year, which are allocated to a business entity eligible for allocation;

2. Maximum holding limit: Not exceeding 150/100 of emission permits for the pertinent compliance year, which are allocated to a business entity eligible for allocation (in the case of a trading participant, other than a business entity eligible for allocation, referring to the average number of emission permits held in the immediately preceding six months).

(6) "Method prescribed by Presidential Decree" in Article 23 (2) 3 of the Act means the establishment of a temporary maximum or minimum purchase and sale price of emission permits.

(7) Where the Minister of Environment deems that the objectives of market stabilization are achieved, the Minister may cease market stabilization measures through deliberation by the Allocation Committee: Provided, That the Minister of Environment shall cease market stabilization measures by resolution of the Allocation Committee, requiring the cessation of such market stabilization measures.

(8) Where the Minister of Environment takes or ceases market stabilization measures, the Minister shall immediately publicly announce the main cause for and details of the market stabilization measures, the fact that such measures are ceased, and other similar matters.

(9) Except as provided in paragraphs (1) through (8), detailed matters regarding the methods and procedures for implementing market stabilization measures shall be determined by the Minister of Environment.

 

CHAPTER V REPORTING, VERIFICATION, AND CERTIFICATION OF EMISSIONS

 

Article 39 (Reporting and Verification of Emissions)

(1) A business entity eligible for allocation shall prepare a statement including the following information in a measurable, reportable, and verifiable manner pursuant to Article 24 (1) of the Act, and shall submit such statement to the Minister of Environment by electronic means, accompanied by a verification report prepared by a verification institution:

1. Comprehensive information, such as business type, sales, process chart, facility layout map, greenhouse gas emissions, and energy consumption of a business entity;

2. Type, size, and load ratio of greenhouse gas emission facilities, greenhouse gas emissions, and energy consumption in each place of business;

3. Methods of calculating and measuring greenhouse gases emitted by each emission facility or emission activity, the basis of such calculation and measurement, and greenhouse gas emissions;

4. Changes in greenhouse gas emission facilities and in the methods of calculating greenhouse gas emissions, and matters to be reported in relation to the exclusion from the calculation of greenhouse gas emissions;

5. Production or outsourcing volumes, or emission efficiency by process in each place of business (in cases of emission permits allocated by the benchmark, greenhouse gas emissions and energy consumption by place of business, facility, process, product, or outsourcing service);

6. Information on the records of using and reducing greenhouse gases and on the sale, purchase, etc. of greenhouse gases and energy;

7. Results of developing the emission coefficient only applicable to each particular place of business;

8. Other matters the Minister of Land, Infrastructure and Transport publicly notifies in consultation with the heads of relevant central administrative agencies.

(2) Where any modification is made to a statement submitted, a business entity eligible for allocation shall modify the statement within 15 days, and submit such statement to the Minister of Environment by electronic means, accompanied by a verification report prepared by a verification institution.

(3) Where there is a defect or omission in the data submitted under paragraphs (1) and (2), the Minister of Environment may order the relevant business entity eligible for allocation or the verification institution to correct or supplement such data.

(4) Where the Minister of Environment orders the correction or supplementation of data pursuant to paragraph (3), the relevant business entity eligible for allocation or the verification institution shall correct or supplement the statement or verification report to submit it to the Minister of Environment by electronic means.

(5) The Minister of Environment shall manage all data submitted under paragraphs (1) through (4) by including them in the emission permits register.

(6) The Minister of Environment may disclose any key information, such as the greenhouse gas emissions by each business entity or place of business, among information included in the data submitted under paragraph (1) through (4): Provided, That a business entity eligible for allocation may request the non-disclosure of such information where the disclosure of information is likely to infringe upon its rights or trade secret.

(7) Upon receipt of a request for the non-disclosure of information under the proviso of paragraph (6), the Minister of Environment shall have an examination committee examine the matter to decide on whether to disclose such information under Article 27 (5) of the Framework Act and notify the relevant business entity eligible for allocation of the results thereof immediately.

(8) Except as provided in paragraphs (1) through (7), detailed matters regarding the submission and verification of statements and the disclosure of information shall be determined and publicly notified by the Minister of Environment.

 

Article 40 (Designation of Verification Institution)

(1) "Standards prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 24-2 (1) of the Act means the following:

1. At least five professional human resources capable of measuring, reporting, and verifying greenhouse gas emissions (referring to verification examiners under Article 24-3 (1) of the Act), and facilities and equipment therefor;

2. Corporations which have purchased a liability insurance policy, the amount of indemnity covered by which is at least one billion won in relation to the verification of greenhouse gas emissions.

(2) The Minister of Environment may determine the work scope of verification institutions under the latter part, with the exception of the subparagraphs, of Article 24-2 (1) of the Act, by classifying the work into categories of work of verifying the matters provided in the subparagraphs of that paragraph.

(3) Where the Minister of Environment designates a verification institution under Article 24-2 (1) of the Act or deems that it has been designated under paragraph (2) of that Article, the Minister shall publicly notify the details without delay and issue a written designation of a verification institution to the relevant institution.

(4) "Work standards prescribed by Presidential Decree" in Article 24-2 (3) of the Act means the work standards specified in attached Table 3.

(5) Where a verification institution verifies a statement of a business entity eligible for allocation, and where any of the following is applicable, it shall give notice to the business entity eligible for allocation, and the business entity eligible for allocation shall correct and supplement the statement based on such notice:

1. Where a statement is not prepared pursuant to Article 39 (1);

2. Where a statement is not prepared based on a plan for calculating emissions;

3. Where actual emissions are different from details of the statement.

(6) The standards for the revocation of designation of a verification institution and other administrative dispositions under Article 24-2 (4) of the Act shall be as specified in attached Table 4.

(7) Where the Minister of Environment revokes the designation of a verification institution under Article 24-2 (4) of the Act, the Minister shall notify the relevant verification institution of such fact and publicly notify the details thereof without delay.

(8) A verification institution notified of the revocation of designation pursuant to paragraph (7) shall return the certificate of designation of a verification institution to the Minister of Environment.

(9) A verification institution shall prepare a report on the results of verification semiannually and submit such report to the Minister of Environment under Article 24-2 (5) of the Act.

(10) The Minister of Environment who receives the results of verification pursuant to paragraph (9) may periodically or occasionally evaluate the appropriateness of the performance of verification.

(11) Except as provided in paragraphs (1) through (10), detailed matters regarding facility and equipment standards to be met by a verification institution, designation and revocation of designation, work suspension or corrective measures, standards and procedures for the verification of a statement, and submission and evaluation of the results of verification shall be determined and publicly notified by the Minister of Environment.

 

Article 41 (Qualifications of Verification Examiners)

(1) The areas of expertise and qualification requirements of verification examiners under Article 24-3 (1) of the Act shall be as specified in attached Table 5.

(2) Where the Minister of Environment grants the qualification to a verification examiner who meets the qualification requirements under paragraph (1), the Minister shall issue a certificate of qualification without delay.

(3) The work standards with which a verification examiner under Article 24-3 (1) of the Act (hereinafter referred to as "verification examiner") shall comply under paragraph (2) of that Article shall be as specified in attached Table 6.

(4) The standards for administrative dispositions, such as the revocation of the qualification of a verification examiner under Article 24-3 (3) of the Act shall be as specified in attached Table 7.

(5) Upon revoking the qualification of a verification examiner under Article 24-3 (3) of the Act, the Minister of Environment shall notify the relevant verification examiner of such fact without delay.

(6) A verification examiner, upon receipt of a notice of the revocation of qualification under paragraph (5), shall return the certificate of qualification under paragraph (2) to the Minister of Environment.

(4) Except as provided in paragraphs (1) through (6), detailed matters regarding the granting and revocation of the qualification of a verification examiner shall be determined and publicly notified by the Minister of Environment.

 

Article 42 (Certification of Emissions)

(1) Where the Minister of Environment certifies the actual greenhouse gas emissions produced by a business entity eligible for allocation under Article 25 (1) of the Act, the Minister shall refer the relevant matter to the Emissions Certification Committee established under Article 26 of the Act for deliberation.

(2) The Minister of Environment may order a business entity eligible for allocation which fails to report its emissions by the deadline under Article 24 (1) of the Act to submit a statement within a specified period not exceeding one month.

(3) Where a business entity eligible for allocation fails to report the emissions within the deadline for the submission of a statement under paragraph (2), the Minister of Environment may, ex officio, calculate and certify the greenhouse gas emissions produced by the business entity eligible for allocation after conducting a fact-finding survey under Article 37 of the Act: Provided, That if it is impracticable to calculate the greenhouse gas emissions by conducting a fact-finding survey, the Minister of Environment may, ex officio, calculate and certify the emissions based on the previous emissions of the relevant business entity eligible for allocation or the emissions of other business entities eligible for allocation of the same type or similar size.

(4) Where the Minister of Environment notifies a business entity eligible for allocation of the results of certifying emissions under Article 25 (3) of the Act, the Minister shall also notify the competent agency by sector of the details thereof.

(5) Except as provided in paragraphs (1) through (4), detailed matters regarding the standards, procedures, etc. for certifying the emissions shall be determined and publicly notified by the Minister of Environment.

 

Article 43 (Emissions Certification Committee)

(1) The Emissions Certification Committee under Article 26 of the Act (hereinafter referred to as the "Certification Committee") shall consist of not more than 16 members, including one chairperson.

(2) The chairperson of the Certification Committee shall be the Vice Minister of Environment, and its members shall be appointed from among the following:

1. Persons appointed by the heads of relevant agencies from among members of the Senior Executive Service of the Ministry of Economy and Finance, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Trade, Industry and Energy, the Ministry of Environment, the Ministry of Land, Infrastructure and Transport, the Ministry of Oceans and Fisheries, the Office for Government Policy Coordination, the Korea Forest Service and other relevant central administrative agencies deemed necessary by the chairperson of the Certification Committee;

2. Persons commissioned by the Minister of Environment from among experts in the relevant industrial, research, or academic fields upon the recommendations of the heads of relevant central administrative agencies.

(3) The Certification Committee shall deliberate on and coordinate the following matters:

1. Results of evaluating the validity of a statement under Article 25 (1) of the Act submitted by a business entity eligible for allocation pursuant to Article 24 (1) of the Act;

2. Results of evaluating the feasibility of external projects under the main clause of Article 48 (1);

3. Results of reviews by the competent agency by sector and results of consultations with the Minister of Environment regarding an application for the certification of greenhouse gas reductions from an external project under Article 49 (3);

4. Others matters on which a resolution was passed by the Certification Committee among technical matters regarding an external project’s compliance with international standards under Article 29 of the Act.

(4) Each member shall hold office for a term of two years under paragraph (2) 2 and may be appointed consecutively only once.

(5) Articles 5 and 6 shall apply mutatis mutandis to exclusion of, challenge to, and recusal and dismissal of members of the Certification Committee. In such cases, "Allocation Committee" shall be construed as "Certification Committee," "Minister of Economy and Finance" as "Minister of Environment", and "Article 7 (2) 2 of the Act" as "Article 43 (2) 2."

(6) Article 7 shall apply mutatis mutandis to a meeting of the Certification Committee, its opening and resolution, and hearing of opinions therein. In such cases, "Allocation Committee" shall be construed as "Certification Committee."

(6) Except as provided in paragraphs (3) through (6), detailed matters necessary for the operation of the Certification Committee shall be prescribed by the chairperson of the Certification Committee after resolution by the Certification Committee.

 

CHAPTER VI SURRENDER, CARRYOVER, BORROWING, AND OFFSET OF EMISSION PERMITS

 

Article 44 (Surrender of Emission Permits)

(1) Each business entity eligible for allocation shall submit a report on the surrender of emission permits (hereafter in this Article referred to as "report") which states the following matters to the Minister of Environment within six months from the end of each compliance year (when an objection is filed for any reason falling under Article 38 (1) 3, 4, and 8 of the Act, within 10 days from the date the results of objection are notified) to surrender emission permits under Article 27 (1) of the Act:

1. Registration numbers of the emission permits register and the offset register of the relevant business entity eligible for allocation;

2. Greenhouse gas emissions certified under Article 25 of the Act;

3. Borrowed emission permits, which are approved under Article 28 (2) of the Act;

4. Number of offset emission permits to be surrendered under Article 29 (3) of the Act.

(2) Upon receipt of a report under paragraph (1), the Minister of Environment may review the report to find any error therein, and if any error is found, the Minister may immediately request that the relevant business entity eligible for allocation make corrections, or may make corrections ex officio.

(3) Where the Minister of Environment reviews and finds no error in the report submitted pursuant to paragraph (1), the Minister shall register the details in the emission permits register without delay and transfer the surrendered emission permits from the account for trading emission permits of the relevant business entity eligible for allocation to the account for trading emission permits under Article 32 (5) 3.

(4) Emission permits that business entities eligible for allocation surrender under Article 27 (1) of the Act shall be any of the following:

1. Emission permits allocated for each compliance year in which greenhouse gases are actually emitted;

2. Emission permits carried over from the previous compliance year;

3. Emission permits borrowed from the following compliance year;

4. Offset emission permits under Article 29 (3) of the Act.

 

Article 45 (Borrowing of Emission Permits)

(1) "Ground prescribed by Presidential Decree" in Article 28 (2) of the Act means cases where it is impracticable to completely fulfill the obligation to surrender emission permits, as the number of emission permits held is less than the number of emission permits to be surrendered at the time of surrendering emission permits under Article 27 (1) of the Act.

(2) The maximum number of emission permits that may be borrowed under Article 28 (3) of the Act shall be calculated by the following formulas:

1. The first compliance year during the pertinent commitment period: The number of emission permits to be surrendered to the Minister of Environment by the relevant business entity eligible for allocation x 15/100;

2. From the second compliance year during the pertinent commitment period until the compliance year immediately preceding the final compliance year: The number of emission permits that shall be surrendered to the Minister of Environment by the relevant business entity eligible for allocation x [the ratio of the maximum number of emission permits that can be borrowed out of the number of emission permits that shall be surrendered in the immediately preceding compliance year during the pertinent commitment period - (the ratio of the number of emission permits borrowed out of the number of emission permits that shall be surrendered in the immediately preceding compliance year during the pertinent commitment period x 50/100)].

 

Article 46 (Procedures for Carryover and Borrowing of Emission Permits)

(1) A business entity eligible for allocation which intends to carry over or borrow emission permits under Article 28 of the Act shall submit an application for the carryover or borrowing of emission permits, to the Minister of Environment by electronic means within 10 days from any of the following dates, whichever comes later:

1. Where the results of certifying greenhouse gas emissions are notified under Article 25 of the Act, the date of such notification;

2. Where an objection is filed for any reason falling under Article 38 (1) 3, 4, and 8 of the Act, the date that the results of filing the objection are notified.

(2) A person who holds emission permits, other than a business entity eligible for allocation, shall submit an application for the carryover of emission permits, to the Minister of Environment, by electronic means within 10 days from the date one month after the end of each compliance year.

(3) The Minister of Environment shall review an application submitted under paragraphs (1) and (2) to determine whether to approve such application no later than 10 days prior to the deadline for the surrender of emission permits under Article 44 (1) and notify the relevant applicant of the results without delay.

 

Article 47 (Offset)

(1) The standards for converting emission permits under Article 29 (2) of the Act shall be the conversion of one ton of comparable CO2 equivalents (tCO2-eq) of greenhouse gas reductions from an external project under paragraph (1) into one emission permit.

(2) Where the Minister of Environment certifies greenhouse gas reductions achieved through a clean development mechanism project under Article 12 of the Kyoto Protocol to the United Nations Framework Conventions on Climate Change (including any project implemented within the business place of a business entity eligible for allocation; hereinafter referred to as "clean development mechanism project") pursuant to Article 30 (1) 2 of the Act, the Minister shall take necessary measures to prevent unjust enrichment from double sale, etc.

(3) Maximum number of offset emission permits that may be surrendered under the latter part of Article 29 (3) of the Act shall be determined in accordance with an allocation plan within 10/100 of the emission permits that shall be surrendered by a relevant business entity eligible for allocation to the Minister of Environment under Article 27 (1) of the Act.

(4) The offset emission permits neither carried over to the following compliance year under Article 28 of the Act nor surrendered to the Minister of Environment under Article 29 (3) of the Act shall become ineffective with the lapse of six months from the end of each compliance year under the latter part of that paragraph (10 days from the date the results of an objection are notified where the objection is filed for any reason falling under Article 38 (1) 3, 4, and 8 of the Act).

 

Article 48 (Feasibility Evaluation, Approval and Revocation of Approval of External Projects)

(1) If necessary for certifying greenhouse gas reductions from an external project under Article 30 (1) of the Act, the competent agency by sector may approve the external project after the feasibility evaluation of the relevant external project, consultation with the Minister of Environment, and deliberation by the Certification Committee. In such cases, the competent agency by sector may approve the external project by determining the term of its validity.

(2) Where a person who conducts an external project applies for the approval of the external project pursuant to paragraph (1), the competent agency by sector shall evaluate the feasibility of the relevant external project by reviewing the following matters: Provided, That the forest carbon offset project whose feasibility has been recognized pursuant to Article 19 (3) of the Act on the Management and Improvement of Carbon Sink, from among projects falling under paragraph (1) 1 of that Article, shall be deemed to have undergone the feasibility evaluation by the competent agency by sector:

1. Whether any additional efforts are made beyond activities that can be carried out under the general management conditions to reduce greenhouse gases artificially;

2. Whether the effects of greenhouse gas reductions achieved through a greenhouse gas reduction project are sustainable on a long-term basis;

3. Whether a greenhouse gas reduction project can deliver quantifiable greenhouse gas reductions;

4. Whether a greenhouse gas reduction project complies with the standards and methods prescribed in the relevant public notice under paragraph (8).

(3) Where the Certification Committee deliberates on external projects pursuant to paragraph (1), it shall consider the following matters:

1. Sustainability of offset records and possibility of quantifiable verification;

2. Appropriateness of the methods of conducting offset projects and monitoring.

(4) Where any external project approved under paragraph (1) falls under any of the following, the competent agency by sector may revoke such designation after deliberation by the Certification Committee: Provided, That such approval shall be revoked in cases falling under subparagraph 1:

1. Where the project is approved by fraud or other improper means;

2. Where the relevant project remains unimplemented for one year or longer without good reason;

3. Where the project approved as an external project becomes invalid under the United Nations Framework Convention on Climate Change or any relevant treaty for a reason falling under Article 30 (1) 2 of the Act;

4. Where it is difficult to deem that the relevant project is part of the additional efforts that go beyond activities that can be carried out under the general management conditions, due to the amendment of statutes or regulations, technological development, etc.

(5) Where the competent agency by sector approves an external project pursuant to paragraph (1) or revokes the approval thereof pursuant to paragraph (4), it shall notify the person who conducts the external project of such fact without delay.

(6) The competent agency by sector shall register the external projects approved pursuant to paragraph (1) and the external projects, the approval of which is revoked pursuant to paragraph (4), in the offset register for the management thereof.

(7) "Projects prescribed by Presidential Decree" in Article 30 (1) 2 of the Act means clean development mechanism projects and external projects equivalent thereto, and the competent agency by sector shall jointly determine and publicly notify the types of such projects.

(8) Except as provided in paragraphs (1) through (6), detailed matters regarding the standards and procedures for approval and revocation of approval of external projects, such as the term of validity of external projects shall be jointly determined and publicly notified by the competent agency by sector.

 

Article 49 (Certification of Greenhouse Gas Reductions from External Projects and Revocation of Certification)

(1) A person who intends to obtain the certification of greenhouse gas reductions from an external project under Article 30 (2) of the Act shall submit an application prescribed in the public notice of the Minister of Environment to the competent agency by sector, accompanied by the following documents:

1. An emission reductions monitoring report prepared by an external project operator;

2. A verification report prepared by a verification institution;

3. Other data deemed necessary publicly notified by the competent agency by sector as they are deemed necessary for the certification of greenhouse gas reductions.

(2) Where any person who applies for the certification of greenhouse gas reductions from an external project under paragraph (1) is issued a certificate under Article 21 (1) of the Act on the Management and Improvement of Carbon Sink, he or she may request that the Minister of Korea Forest Service submit the results of certification and the matters reviewed for the relevant certification to the competent agency by sector. In such cases, the Minister of Korea Forest Service requested shall comply with such request unless there is a compelling reason not to do so.

(3) The competent agency by sector, upon receipt of an application under paragraph (1), shall certify greenhouse gas reductions from an external project, in consultation with the Minister of Environment and deliberation by the Certification Committee, in consideration of the matters reviewed for the approval of an external project pursuant to Article 48, the results of certification submitted by the Minister of the Korea Forest Service, and the matters reviewed for the relevant certification pursuant to paragraph (2) of this Article.

(4) Where the competent agency by sector grants certification under paragraph (3), it shall not certify greenhouse gas reductions from external projects implemented in foreign countries during the first and second commitment periods: Provided, That the competent agency by sector may certify greenhouse gas reductions, which are generated after June 1, 2016 from clean development mechanism projects under Article 48 (7) that domestic enterprises, etc. directly implement in foreign countries, starting from the second commitment period.

(5) Where the certified greenhouse gas reductions from an external project fall under any of the following, the competent agency by sector may revoke the certification after deliberation by the Certification Committee: Provided, That in cases falling under subparagraph 1, the certification shall be revoked:

1. Where greenhouse gas reductions from an external project are certified by fraud or other improper means;

2. Where greenhouse gas reductions from an external project are generated as a result of performing obligations under this Act or other statutes, or the same overlapping reductions are used in other systems or projects;

3. Where greenhouse gas reductions generated from an approved external project become invalid in accordance with the United Nations Framework Convention on Climate Change or any relevant treaty for a reason falling under Article 30 (1) 2 of the Act;

4. Where it is difficult to deem that greenhouse gas reductions from the relevant external project are generated through additional efforts that go beyond activities that can be carried out under the general management conditions, due to the amendment of statutes or regulations, technological development, etc.

(6) Where the competent agency by sector certifies greenhouse gas reductions from an external project pursuant to paragraph (3) or revokes the certification pursuant to paragraph (5), it shall notify the relevant person who conducts the external project of such fact without delay.

(7) The competent agency by sector shall register, in the offset register, and manage greenhouse gas reductions from external projects, which have been certified under paragraph (3) or whose certification has been revoked under paragraph (5).

(8) Except as provided in paragraphs (1) through (7), detailed matters regarding the certification of greenhouse gas reductions from external projects, such as standards for domestic enterprises, etc. and standards for projects directly implemented in any foreign nation, and the revocation of the certification shall be jointly determined and publicly notified by the competent agencies by sector.

 

Article 50 (Management and Operation of Offset Register)

(1) The Minister of Environment shall manage the offset register by electronic means so that the certification, etc. of greenhouse gas reductions from an external project may be achieved in a consistent and systematic manner.

(2) The following matters shall be registered in the offset register:

1. An external project plan;

2. Certification records of greenhouse gas reductions from external projects;

3. Other matters deemed necessary and then publicly notified by the Minister of Environment.

(3) Articles 14 (1), 15 and 16 shall apply mutatis mutandis to the inspection, disclosure, modification, etc. of information registered in the offset register. In such cases, "emission permits register" shall be construed as "offset register," and "person who has registered his or her account for trading emission permits” as “person who has registered external projects in the offset register.”

 

Article 51 (Penalty Surcharge)

(1) The standard amount of penalty surcharges imposed under Article 33 (1) of the Act shall be three times the average market price of emission permits calculated by dividing the sum of the prices of all emission permits traded on an emission permits exchange by the total trading volume in the compliance year in which the obligation to surrender emission permits is imposed.

(2) The Minister of Environment shall notify business entities eligible for allocation which fail to surrender emission permits equal to the amount of greenhouse gas emissions certified under Article 25 of the Act even after the deadline for the surrender of emission permits under Article 27 (1) of the Act of the ground for imposition, estimated amount, payment due date, etc. of a penalty surcharge, and shall provide such business entities with an opportunity to submit opinions within a specified period not exceeding 10 days. In such cases, the deadline for the payment of a penalty surcharge shall be 30 days from the date such penalty surcharge is imposed.

(3) Where a business entity eligible for allocation fails to submit its opinions within the period of submitting opinions under paragraph (2) or the opinions submitted are unreasonable, the Minister of Environment shall impose the amount of the penalty surcharge on the business entity eligible for allocation by the payment deadline, as previously notified.

(4) Where the results of opinions submitted under paragraph (2) indicate that it is impracticable for a business entity eligible for allocation to pay a penalty surcharge in lump sum by the payment deadline on any of the following grounds, the Minister of Environment may defer the payment of the penalty surcharge not more than one year from the date it is imposed or may allow the business entity to pay the penalty surcharge in up to eight installments within two years from the date it is imposed:

1. Where the business entity sustains substantial property loss due to an act of God or other reasons equivalent thereto;

2. Where the business entity suffers a serious management crisis due to a business loss;

3. Other cases corresponding to those in subparagraphs 1 and 2, where it is deemed necessary to have the penalty surcharge imposed against the business entity deferred or for the business entity pay in installments.

(5) Where the Minister of Environment allows a business entity eligible for allocation to have the payment of a penalty surcharge deferred or to pay it in installments pursuant to paragraph (4), but where such business entity falls under any of the following cases, the Minister may revoke the deferment of payment or the payment in installments and may require such business entity to pay such penalty surcharge in lump sum within 30 days from the date of revocation:

1. Where any reason referred to in any subparagraph of paragraph (4) ceases to exist during the period of deferment of payment or payment in installments;

2. Where the business entity fails to pay a penalty surcharge by the installment payment deadline.

 

Article 52 (Additional Charges for Penalty Surcharges)

The Minister of Environment shall collect an additional charge equivalent to 12/1,000 of a defaulted penalty surcharge for every month from the date the payment deadline expires pursuant to Article 34 (1) of the Act: Provided, That the period during which an additional charge is collected shall not exceed 60 months.

 

CHAPTER VII SUPPLEMENTARY PROVISIONS

 

Article 53 (Financial Support and Tax Incentives)

(1) "Projects prescribed by Presidential Decree, such as projects for the installation of facilities for reducing greenhouse gases and for the development of related technologies" in Article 35 (1) of the Act means the following:

1. Projects for developing and distributing technologies, products, facilities, and equipment in relation to greenhouse gas reduction;

2. Projects for measuring greenhouse gas emissions and for constructing systems for the systematic management thereof;

3. Projects for developing greenhouse gas storage technologies and installing storage facilities;

4. Projects for developing greenhouse gas reduction models and advancing statistics on emission levels;

5. Projects for developing technologies to verify and evaluate emission and absorption coefficients of greenhouse gases by sector;

6. Projects for developing and distributing new renewable energy technologies for greenhouse gas reduction;

7. Projects for encouraging energy conservation, energy efficiency, etc., and facility investments for greenhouse gas reduction;

8. Other significant projects related to greenhouse gas reduction deliberated on and recognized by the Allocation Committee.

(2) Where the Minister of Environment and the head of a relevant central administrative agency provide support under Article 35 (1) of the Act, he or she may prioritize support for projects implemented by small and medium enterprises under paragraph (2) of that Article that are eligible for allocation, to which all emission permits are not allocated gratuitously.

 

Article 54 (Institutions Specializing in Trading Emission Permits)

(1) Where the Minister of Environment designates an institution specializing in trading emission permits under Article 36 (2) of the Act (hereinafter referred to as "institution specializing in trading emission permits"), the Minister shall take into account the links with the National Greenhouse Management System established under Article 36 of the Framework Act.

(2) An institution specializing in trading emission permits shall conduct the following affairs:

1. Surveys and research on reporting and verification under Article 24 of the Act;

2. Surveys and research on the certification of emissions under Article 25 of the Act and the certification of greenhouse gas reductions from external projects under Article 30 of the Act;

3. Other affairs regarding surveys, research, technological development, and international cooperation to link with international carbon markets.

 

Article 55 (Objection)

(1) A person who files an objection under Article 38 (1) of the Act shall state the details, etc. of the disposition and the objection in a written objection prescribed in the public notice of the Minister of Environment and shall submit explanatory materials thereon to the Minister of Environment.

(2) Any person who objects to the following dispositions may file an objection with the Minister of Environment, accompanied by explanatory materials thereon under paragraph (1) within 30 days from the dates classified as follows. In such cases, Article 38 (2) of the Act shall apply mutatis mutandis to the notification of the results of the objection and the extension of the period:

1. Where a business entity which has submitted an application for voluntary participation under Article 9 (5) is denied the designation as a business entity eligible for allocation: the date of receipt of notice of such denial;

2. Where a market maker is requested to make corrections under Article 37 (6): the date of receipt of notice of such request.

(3) Any person who objects to the following dispositions may file an objection with the competent agency by sector, accompanied by explanatory materials thereon under paragraph (1), within 30 days from the dates classified as follows. In such cases, Article 38 (2) of the Act shall apply mutatis mutandis to the notification of the results of the objection and the extension of the period:

1. Where the approval of an external project is revoked under Article 48 (4): the date of receipt of notice of such revocation;

2. Where the certification of greenhouse gas reductions from an external project is revoked under Article 49 (5): the date of receipt of notice of such revocation.

(4) Where emission permits are additionally allocated based on the results of handling of the objection under Article 38 (1) 2 through 4 of the Act, emission permits in reserve shall be used.

 

Article 56 (Fees)

A person liable to pay fees under Article 39 of the Act shall pay fees prescribed in the relevant public notice under Articles 16 (3) and 33 (3) to the Minister of Environment.

 

Article 57 (Delegation or Entrustment of Authority or Work)

(1) The Minister of Environment shall delegate the following authority to the head of the GIR under Article 40 (1) of the Act:

1. Surveys and research on schemes for linking with international carbon markets and international cooperation under Article 4 (2) 7 of the Act;

2. Surveys and research on the calculation of the total emission allowances, etc. under Article 5 (1) 1 of the Act;

3. Management and operation of the emission permits register and the offset register under Articles 11 and 31 of the Act;

4. Surveys and research on reports and verification of emissions under Article 24 of the Act;

5. Disclosure of information under Articles 15 and 39 (6) and (7).

(2) The Minister of Environment shall delegate the following authority to the President of the National Institute of Environmental Research under Article 40 (1) of the Act:

1. Designation of verification institutions, revocation of designation thereof, and issuance of orders to suspend work and to take corrective measures under Article 24-2 (1) and (4) of the Act;

2. Receipt and evaluation of the results of verification under Article 24-2 (5) of the Act;

3. Fact-finding surveys under subparagraph 5-2 of Article 37 of the Act;

4. Hearings under subparagraph 2 of Article 37-2 of the Act;

5. Receipt of objections and notification of the results thereof under subparagraph 6 of Article 38 of the Act ;

6. Imposition and collection of administrative fines under subparagraph 5 of Article 43 of the Act.

(3) The Minister of Environment shall entrust the following affairs to the Korea Environment Corporation established under the Korea Environment Corporation Act under Article 40 (2) of the Act:

1. Surveys, analysis, and review of materials necessary to formulate a master plan and an allocation plan under Articles 4 and 5 of the Act;

2. Surveys, analysis, and review of materials related to the following affairs:

(a) Designation, revocation of designation, and succession to rights and obligations, of business entities eligible for allocation under Articles 8, 8-2, and 9 of the Act;

(b) Allocation of emission permits under Article 12 (1) of the Act;

(c) Additional allocation of emission permits under Article 16 (1) of the Act;

(d) Revocation of the allocation of emission permits under Article 17 (1) of the Act;

3. Surveys, analysis, and review of materials to calculate the ratio related to holding emission permits in reserve under Article 18 of the Act;

4. Surveys, analysis, and review of materials to stabilize markets for trading emission permits under Article 23 of the Act;

5. Surveys, analysis, and review of materials to certify greenhouse gas emissions under Article 25 (1) and (2) of the Act;

6. Surveys, analysis, and review of materials to consult with the head of the competent agency by sector during the procedures for approving external projects under Article 48 (1) and the procedures for certifying greenhouse gas reductions from external projects under Article 49 (3).

(4) The competent agency by sector shall entrust the affairs related to the certification of greenhouse gas reductions from external projects under Article 30 of the Act to the following institutions pursuant to Article 40 (2) of the Act, as jointly determined and publicly notified by the competent agency by sector:

1. The Korea Agriculture Technology Promotion Agency under Article 33 of the Agricultural Community Development Promotion Act;

2. The Korea Energy Agency under Article 45 of the Energy Use Rationalization Act;

3. The Korea Forestry Promotion Institute under Article 29-2 of the Forestry and Mountain Villages Development Promotion Act;

4. The Korea Transportation Safety Authority under the Korea Maritime Transportation Safety Authority Act;

5. The Korea Maritime Transportation Safety Authority under the Korea Maritime Transportation Safety Authority Act;

6. The Korea Environment Corporation under the Korea Environment Corporation Act;

7. The Korea Marine Environment Management Corporation under Article 96 (1) of the Marine Environment Management Act;

8. Other institutions determined by the competent authority, which have professional human resources, equipment, etc. necessary to conduct the relevant affairs.

 

ADDENDA

Article 1 (Enforcement Date)

This Decree shall enter into force on the date of its promulgation.

Article 2 (Applicability to Business Types and Business Entities Eligible for Free Allocation)

The amended provisions of Article 19 and of attached Table 1 shall begin to apply where all emission permits are allocated gratuitously under Article 12 (4) of the Act during the third commitment period.

Article 3 (Special Cases concerning Registration of Accounts for Trading Emission Permits)

(1) "Person prescribed by Presidential Decree" in Article 2 (1) of the Addenda to the partially amended Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 17104) means any of the following persons:

2. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;

2. The Korea Development Bank established under the Korea Development Bank Act;

3. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act.

(2) "Date prescribed by Presidential Decree" in Article 2 (1) of the Addenda to the partially amended Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 17104) means December 31, 2020.

(3) "Date prescribed by Presidential Decree" in Article 2 (2) of the Addenda to the partially amended Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 17104) means December 31, 2025.

(4) "Persons prescribed by Presidential Decree, such as financial institutions" in Article 2 (2) of the Addenda to the partially amended Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Act No. 17104) means any of the following persons:

2. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;

2. The Korea Development Bank established under the Korea Development Bank Act;

3. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act;

4. Emission permits brokers under Article 36;

5. Persons under Article 37 (2).

Article 4 (Special Cases concerning Submission and Verification of Plan for Calculating Greenhouse Gas Emissions)

Where a business entity eligible for allocation submits a verification report on a statement for the second compliance year during the second commitment period pursuant to Article 31 (2) of the Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (referring to the Enforcement Decree before being wholly amended by Presidential Decree No. 30944; hereafter in Articles 6 and 7 of the Addenda, referred to as “previous provisions”), as at the time this Decree enters into force, it shall be deemed that a verification report on a plan for calculating emissions under the amended provisions of Article 21 (1) is submitted in applying for the allocation of emission permits for the third commitment period.

Article 5 (General Transitional Measures concerning Administrative Dispositions Following Change in “Central Administrative Agency Prescribed by Presidential Decree” under Article 8 of the Act)

Dispositions, procedures, and other acts made or done by the competent authority pursuant to Article 6 of the previous Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (referring to the provisions of the Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits prior to the amendment made by Presidential Decree No. 28562; hereafter in this Article, the same shall apply) as at the time the partially amended Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Presidential Decree No. 28562) enters into force, shall be deemed dispositions, procedures and other acts made or done by the Minister of Environment pursuant to the amended provisions of Article 6 of the partially amended Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Presidential Decree No. 28562), and applications, reports, and other acts filed with or done toward the competent authority pursuant to Article 6 of the previous Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits shall be deemed applications, reports and other acts filed with or done toward the Minister of Environment pursuant to the amended provisions of Article 6 of the partially amended Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (Presidential Decree No. 28562).

Article 6 (Transitional Measures concerning Standards for Allocation of Emission Permits)

Notwithstanding the amended provisions of Article 17, the previous provisions shall apply to the standards, etc. for the allocation of emission permits for the first and second commitment periods.

Article 7 (Transitional Measures concerning Members of Certification Committee)

Members of the Certification Committee commissioned under the previous provisions as at the time this Decree enters into force shall be deemed commissioned under the amended provisions of Article 43 (2) 2.

Article 8 Omitted.

Article 9 (Relationship to Other Statutes or Regulations)

A citation of the previous Enforcement Decree of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits in other statutes or regulations as at the time this Decree enters into force, shall be deemed a citation of the corresponding provisions of this Decree in lieu of the previous provisions, if such corresponding provisions exist herein.

 

 

ADDENDUM

This Decree shall enter into force on the date of its promulgation.

 

 

ADDENDA

Article 1 (Enforcement Date)

This Decree shall enter into force on March 1, 2022.

Article 2 Omitted.

 

 

ADDENDA

Article 1 (Enforcement Date)

This Decree shall enter into force on March 25, 2022. (Proviso Omitted.)

Articles 2 through 13 Omitted.

 

 

 

Last updated : 2023-01-19



[Source: https://elaw.klri.re.kr/kor_service/lawView.do?hseq=60887&lang=ENG]