KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

Ⅰ. Backgrounds and Purposes

▶ In accordance with the Paris Agreement, Korea has submitted an updated and enhanced ‘nationally determined contribution (NDC).’The government plans to reduce greenhouse gas emissions by 40% of the 2018 level by 2030 and secure 33.5 million tons of CO2eq reduction through international greenhouse gas emissions reduction.

▶ In order to achieve the NDC target, it is necessary to consider a method for securing a large amount of international greenhouse gas emissions reduction by activating international mitigation projects, as well as methods for selecting and systematically managing international reduction that could be recognized in the international community. Based on review outcomes, revision of existing legislations may follow in order to efficiently and rationally increase the proportion of international mitigation outcomes in NDC and manage it. 

 

Ⅱ. Major Content 

▶ Article 6 of Paris Agreement stipulates internationally transferred mitigation outcomes to achieve NDC. In particular, paragraph 2 of article 6 of the Paris Agreement provides for mitigation outcomes through a voluntary and cooperative approach between the parties, and paragraph 4 states emission reductions resulting from mechanisms overseen by an international supervisory body.

○ Emission reduction provided in paragraph 2 of article 6 of Paris Agreement could be achieved through voluntary cooperation of parties. Keys of emission reduction are to promote sustainable development, ensure environmental integrity and transparency, including in governance, and apply robust accounting to ensure the avoidance of double counting. 

○ Mitigation outcomes provided in paragraph 4 of article 6 would be established by a mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to this Agreement for use by Parties. Aims of the mechanism are to promote the mitigation of greenhouse gas emissions while fostering sustainable development, to incentivize and facilitate participation in the mitigation of greenhouse gas emissions by public and private entities authorized, to contribute to the reduction of emission levels which will benefit from mitigation activities resulting in emission reductions that can also be used by another Party to fulfil its nationally determined contribution, and to deliver an overall mitigation in global emissions. 

▶ Strengths and weakness of and differences of each global emission reduction projects of paragraph 2 and paragraph 4 of article 6 

○ A key element of emission reduction project under the paragraph 2 is prior agreement between parties. If they do not reach an agreement, the reduction project itself would not be initiated. For this reason, uncertainty remains until the agreement is reached between parties as the specific project approval standards and procedures, performance appraisal standards, and corresponding adjustment methods may vary with each agreement.

○ On the other hand, since project under paragraph 2 only needs to be planned and implemented according to the guidelines, certainty is relatively low compared to the mechanism under the paragraph 2. However, problems lie in the fact that some expected profits are lower than in the past because they have to receive uniform and rigid management from the international supervisory body and share administrative costs and climate adaptation funds for vulnerable countries.

▶ Korean legislations related to international emission reduction projects in Paris Agreement 

○ Pursuant to Framework Act On Carbon Neutrality And Green Growth For Coping With Climate Crisis, those who have obtained prior approval for reduction project should monitor to objectively prove the amount of greenhouse gas emission reductions from the relevant project, and should prepare a monitoring report in a measurable, reportable, and verifiable manner, obtain verification from a verification institution, and report it to the Government.

▶ Problems of implementing the mitigation project under the Korean Law

○ In fact, Korean Framework Act on Carbon Neutrality And Green Growth For Coping With Climate Crisis contains provisions overlapping with Paris Agreement, for example, approval and registration of the implement method of projects and transfer of international reduction outcomes. For project implementers, they have to repeat same procedures twice and confusion may arise if the international reduction project approval standards according to the Paris Agreement are inconsistent with the domestic approval standards.

○ In the case of a project of , the parties shall determine in advance the type of international reduction project and the method of performance management. Accordingly, the Parties set these matters using the Annex, etc., and manage the reduction project according to the Annex. Therefore, the question arises as to whether it is necessary to obtain prior approval from the government according to domestic law.

○ Projects under paragraph 4 shall be supervised by a body designated by the Conference of the Parties serving as the meeting of the Parties to the conference. It is true that the international reduction outcomes shall be recognized in international community. However, it is necessary to consider whether it is required to review again the adequacy of performance through pre-approval and monitoring in accordance with domestic law.

▶ Duplicating procedures causing unnecessary confusion could be an obstacle to securing international reduction outcomes for NDC achievement. 

○ When revising the relevant provisions of the Carbon Neutrality Framework Act or preparing a notice that sets out specific details on international reduction projects, measures to minimize these problems should be drawn up. 

○ In the case of the current emission trading system, similar procedures are duplicated with those of Clean Development Mechanism (CDM) project. However, it is required to eliminate the possibility that the so-called transferring low-quality mitigation outcomes flow into the domestic emission permit market in large quantities, because those outcomes cause market confusion. Therefore, some duplication of procedures is tolerated.

▶ On the other hand, parties shall set NDC target by 2030 in accordance with Paris Agreement. So the international mitigation outcomes shall be established to set by 2030 according to the Paris Agreement. as they are different from the offset system through the external reduction performance in the existing emission trading system.

○ Korea has to secure considerable amount of international mitigation outcomes so that it achieves the updated and more ambitious NDC target by 2030. The international mitigation project is quite different from the offset system.

▶ Therefore, it is necessary to manage the international mitigation outcomes separately from the external outcomes under the offset system according to the emission trading system to achieve the NDC, and to simplify the domestic approval procedure for the international reduction project to achieve the NDC.

○ The project under paragraph 4 of article 6 shall be supervised by international supervisory body and mitigation outcomes are publicized, so there is no need to review it domestically. Projects under paragraph 2 of article 4 shall be registered and managed in accordance with internationally accepted standards upon reaching agreement between parties. Parties shall determine a method for recognizing emission reduction in advance. However, since there is no choice but to determine the method for certification, it is questionable whether it is necessary to review the certification again domestically.

▶ In addition, the trading market for international mitigation outcomes should be separate from the emission trading market. However, only international mitigation outcomes that meet certain requirements should be allowed to be traded in the market. In this regard, It is necessary to prevent confusion in the emission trading markets by separating them for trading emission and for transferring mitigation outcomes. To this end, related legislations should be revised.

 

Ⅲ. Expected Effects

▶ The study presents suggestions to secure and manage international mitigation outcomes so that the government achieve NDC target in more effective and rational way. With suggestions, the study may facilitate for the government to realize 2030 national mid and long term greenhouse gas emission reduction and carbon neutrality by 2050.