(1) Reasons for Proposal

In accordance with the amendment to the Act on the Allocation and Trading of Greenhouse Gas Emission Permits (Act No. 17104, promulgated on March 24, 2020, to enter into force on June 1, 2020) which provided a legal basis for cancelling the designation of business entities eligible for allocation; prescribed matters regarding the succession of rights and obligations where there have been mergers or spin-offs, etc., of business entities eligible for allocation; enabled entire emission permits to be allocated gratuitously to organizations, groups or non-profit corporations established for public benefit; enabled competent authorities to designate specialized outside verification agencies for specialized and objective verification of emission calculation protocols, etc.; and enabled verifiers to perform verification work of specialized outside verification agencies, etc., this proposal aims to prescribe matters delegated to it under the Act and matters necessary for its enforcement such as grounds and the procedure for cancelling the designation of business entities eligible for allocation; matters regarding the succession of rights and obligations of business entities eligible for allocation; types of business, etc., eligible for gratuitous allocation of emission permits; criteria for the designation of specialized outside verification agencies; and matters regarding qualifications of verifiers.

(2) Major Provisions

A. Cancellation of Designation as Business Entities Eligible for Allocation (Article 10)

1) Prescribe as grounds for cancellation of the designation as a business entity eligible for allocation, being designated as a business entity eligible for allocation despite failing to meet the criteria of voluntarily participating business entities eligible for designation as business entities eligible for allocation through fraud or illegal means.

2) Prescribe that business entities whose designation as business entities eligible for allocation have been cancelled shall report to the Minister of Environment up to the year before the year of cancellation, and shall submit certified emission permits. 

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

1) Prescribe that business entities eligible for allocation shall report facts regarding transfer/succession of rights and obligations to the Minister of Environment through the Integrated Information Management System for Greenhouse Gases according to the Framework Act on Low Carbon, Green Growth.

2) Prescribe that the Minister of Environment shall, where business entities eligible for allocation are changed as a result of succession to rights and obligations of such entities, provide notice of such change within one (1) month from the date he/she receives a report of or otherwise becomes aware of such fact, and notify related business entities eligible for allocation and competent institutions in each field without delay.

C. Types of Business, etc. Eligible for Gratuitous Allocation (Articles 18 (3) and 19 (2))

1) Prescribe that the gratuitous allocation ratio after the third commitment period shall be within 90%, but that the gratuitous allocation ratio may be separately determined according to the type of business.

2) Prescribe that all emission permits may be allocated gratuitously to local governments, schools according to the Elementary and Secondary Education Act and the Higher Education Act, medical institutions according to the Medical Service Act, and mass transit system operators according to the Act on the Support and Promotion of Utilization of Mass Transit System.

D. Additional Allocation of Emission Permits by Application (Article 27 (5))

Prescribe that additional allocation of emission permits may be applied for where business entities eligible for allocation perform construction to improve public sewage treatment facilities as a result of more stringent effluent standards applied to public sewage treatment facilities according to the Sewerage Act or where greenhouse emissions of business entities eligible for allocation have increased as a result of compliance with measures regarding transport of heavy weight cargo according to the Sustainable Transportation Logistics Development Act.

E. Cancellation of Emission Permit Allocation (Article 29 (3))

Prescribe that where greenhouse gas emissions allocated for a place of business of a business entity eligible for allocation have decreased by 50% or more as a result of suspension of operations, suspension of business, closure, etc., of a facility, allocated or additionally allocated emission permits may be wholly or partially cancelled by the competent authorities.

F. Market Makers (Article 37)

1) Prescribe that duties of market makers shall include providing sale or purchase prices of emission permits and trading of emission permits, and prescribe that market makers shall submit their performance results every month to the Minister of Environment for evaluation of their appropriateness.

2) Prescribe that the Minister of Environment may, where market makers have de facto closed their businesses as a result of merger, bankruptcy, closure, etc., or have intentionally or through gross negligence falsely reported their performance results, etc., cancel their designations.

G. Designation of Specialized Outside Verification Agencies, etc. (Article 40)

1) Prescribe that specialized outside verification agencies shall have specialized personnel, facilities, and equipment that enable them to perform specialized calculation, reporting, and verification of greenhouse gas emissions, and shall meet other requirements such as subscribing to liability insurance covering compensation for damages up to 1 billion won in relation to the verification of greenhouse gas emission quantities.

2) Prescribe that the designation of specialized outside verification agencies shall be valid for three (3) years from the date of designation, and may be extended where such designation is deemed appropriate.

3) Prescribe that specialized outside verification agencies shall prepare reports on the results of their verification work every half-quarter and submit such reports to the Minister of Environment, and that the Minister of Environment may evaluate the adequacy, etc., of such verification work performed.

H. Qualifications, etc. of Verifiers (Article 41)

1) Prescribe that specialized fields for verification by verifiers shall include minerals, chemicals, steels and metals, electricals and electronics, waste, agriculture and livestock, and forestry.

2) Prescribe that incompetent persons under adult guardianship, quasi-incompetent persons under limited guardianship, persons whose qualifications as verifiers have been cancelled within the past three (3) years, and persons who have received penalties under the Unfair Competition Prevention and Trade Secret Protection Act within the past three (3) years shall be disqualified as verifiers.