South Korean manufacturers have stated to the European Union (EU) that the latter’s carbon border adjustment mechanism (CBAM) may lead to double taxation since the country already has a cap-and-trade system in place to curb emissions.
South Korea’s central bank BOK noted to the media on Aug 2, that the planned changes by the Union and the United States will potentially reduce imports by 1.1pc or $7.1bn annually.
BOK reiterated that the new tariffs are likely to impact domestic shipbuilding the most, followed by steel manufacturing. According to the bank, if both the EU and the US consider South Korea’s carbon trading scheme or the cap-and-trade system, the carbon cost would effectively be more than $50/mt of CO2 emissions under the CBAM revisions by the former.
Cho Gyeong-lyeob, chief economist at the country’s economic research institute, stated on Monday that the pace of cutting greenhouse gas emissions needs to be in tandem with the development of sustainable technology. This makes carbon neutrality goals more affordable.
South Korea is the second country in Asia to voice its opinion on the new carbon tax after China stated its limitations in late July.