A new report, ‘Recipe for Greenwashing’, commissioned
by Korean NGO Plan 1.5 and co-authored by Carbon Market
Watch and Director of the Berkeley Carbon Trading Project
Barbara Haya, has revealed that the climate credentials of
the Korean Emissions Trading Scheme (K-ETS) risk being
significantly undermined by its inclusion of international
carbon credits.
The report analyses a sample of 21
clean cookstove projects that have supplied South Korean
companies with carbon credits for use under the K-ETS,
finding that on average they are likely generating 18.3
times more credits than they should.
The analysis
finds that the 9.7 million credits (representing 9.7 million
tonnes of emissions reductions) likely have a climate impact
of only approximately half a million tonnes of carbon
dioxide equivalent (531,979 tCO2e), the equivalent of 18
times more credits than are justified.
Cookstove
projects constitute the majority of international credits
used by companies complying with the K-ETS. Companies under
the K-ETS are entitled to match their emission reduction
obligations with the purchase of international credits, as
long as they exceed no more than 5% of the company’s
compliance obligation.
Break the mould
The
analysis highlights that reliance on international credits
undermines the effectiveness and credibility of the K-ETS.
It mirrors the now-abandoned practice in the European Union
Emissions Trading System (EU ETS), where such credits led to
an inflation in supply, price crashes, and delayed domestic
decarbonisation.
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While
the EU has banned international credits from its ETS since
2021, the Korean government appears to be taking the
opposite approach. Alarmingly, the government is considering
raising the limit from 5% of a company’s emissions
threshold to 10% in the fourth period of the K-ETS
(2026-2030). Doubling the share of an already problematic
decision will likely have detrimental consequences for the
environmental integrity of the policy.
The South
Korean government also plans to use international credits to
reach its United Nations climate target for 2030 by
including 37.5 million international credits into its
nationally determined contributions.
The projects
analysed in the report use methodologies AMS-I.E and
AMS-II.G to generate carbon credits. Generally, the number
of credits a carbon credit project issues under these two
methodologies is determined by a number of factors,
including actual stove usage, drop-outs, fuel consumption
patterns, and many more.
Research, as well as a
decision by the Integrity Council for the Voluntary Carbon
Market (ICVCM) in March, has determined that both
methodologies lead to over-crediting because these
methodologies rely on outdated assumptions that allow a
high, and inflated, volume of credits to be generated. Both
methodologies were rejected from attaining the ICVCM’s
Core Carbon Principles label.
The wrong
path
The report calls on the South Korean government
to ban international credits from use under the K-ETS,
strengthen caps and focus on domestic emissions
reductions.
