Peer-reviewed Article
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GHG Emission Trading Schemes in Northeast Asia: An Overview and Analysis of Current Scenarios

In Critical Issues in Environmental Taxation Volume Ⅺ 2012-01

This paper provides an integrative overview of the progress of the GHG emissions trading scheme (ETS) in Japan, China and the Republic of Korea and identifies and analyses the obstacles hindering policy introduction in this region. Japan has practiced experimental and voluntary ETS in recent years, but its intermediate proposal for domestic ETS leaves critical questions unanswered, in particular with regards its approach to emission quotas allocation. The Republic of Korea launched a domestic voluntary carbon market in 2005, and the related legislation, documenting the implementation of ETS from 2015, was recently submitted to parliament. Pilot ETS projects are organised by the related ministries in Korea. Paving the way for introduction of ETS in Korea is the Target Management Scheme (TMS), an ongoing mandatory regulation limiting the GHG emissions of large energy users. China’s central government has started pilot discussions for establishing a nationwide carbon market. Nevertheless, both proposals from Japan and Korea were blocked due to strong resistance from industry. Therefore, this paper provides a proposal of ways to overcome the existing barriers, which are mainly linked to the collective behaviour of industry in terms of what it finds acceptable. Various issues related to the design of GHG ETS shall be examined in detail to ensure the efficacy of this policy.

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