Carbon emissions standards for South Korea’s power companies will take a step up in 2026. The government has just approved a new emissions-trading plan in order to speed up efforts to cut greenhouse gases. High emitting sectors like power generation will be affected by the new set of rules through an updated version of the 4th Basic Plan for Emissions Trading.

Carbon Trading Rules and Revisions

The government will also simplify classifications. Instead of the six sectors currently, companies are to be placed in just two: power generation and non-power. This would aim at simplifying the trading system and also make it easy for companies to comply.

Fairer Allocation of Carbon Allowances

One of the most significant changes is how free allowances are distributed. Previously, allowances were allocated based on cost. Under the new plan, free allowances will be determined by carbon intensity, which measures emissions per unit of economic value. Officials say this adjustment will encourage companies to adopt cleaner and more efficient production methods.

Also read: South Korea Pledges 450 Trillion Won for Green Finance by 2030

Emissions Trading Market Reforms

South Korea’s emissions trading system, launched in 2015, has failed to stimulate meaningful emissions reductions. A lack of demand for free allowances has caused the carbon price to remain lower than envisioned. For example, allowance prices reached a high of 40,950 KRW per ton in 2019 but had fallen to about 7,020 KRW in mid-2023.

To address these issues, the government plans to introduce new financial instruments, such as futures contracts. These changes aim to make the market more effective in reducing emissions. Additionally, the government is considering eliminating certain mechanisms by 2031, including indicator-based allowances.

Finding the Balance

Several environmental groups have urged the 100% auctioning of allowances in the power sector. The reasoning behind the urge is to accelerate the pace of emissions reduction. But, the industries are worried about the rise in electricity prices and loss of competitiveness. The government will try to instill balance by reinvesting the auction revenue into corporate emissions reduction initiatives.

In an effort to achieve equilibrium, the government suggested implementing Carbon Contracts for Difference (CCfD). These will include steady returns on businesses’ investments in carbon-cutting technologies, encouraging sustained expenditures on decarbonisation initiatives.

Moving Towards a Greener Economy

South Korea is going to bring its emissions trading system in line with international standards. The country intends to raise efficiency targets for firms, increasing coverage from 60% to at least 75%. This would push companies toward energy efficiency and make South Korea a leader in green innovation.

The 4th Basic Plan is a significant step in South Korea’s climate policy. It reflects the commitment of the government to achieve net-zero emissions while balancing environmental and economic needs.

Freeport LNG, one of the leading firms in the market for liquefied natural gas, marked a recent milestone when its 800th shipment left from its facility based in Freeport, Texas. The operations at Freeport LNG reached one of their defining moments when client JERA took delivery of that shipment.

In a statement, Freeport LNG expressed appreciation for the teamwork that contributed to the milestone, noting that the cargo, lifted by JERA, had safely departed from their dock.

The 800th cargo achievement occurs amidst legal challenges still pending against Freeport LNG. Just last month, a Texas law firm called Hicks Thomas LLP won two cases, filing $1.3 billion in damages against the Freeport LNG project’s builders. The lawsuits result from an explosion that happened last June 2022 and badly damaged the Freeport LNG facility in Texas. Yet, despite all these, the company remains persistent in advancing its operations and boosting its capacity.

Strategic Steps and Investments of JERA in Freeport LNG

JERA is one of the major players associated with the Freeport LNG project. The company has been engaged in the construction of the facility. It signed a liquefaction agreement with FLIQ1 Holdings for Train 1 services and acquired a 25% equity stake. This will further strengthen JERA’s position in the US natural gas market.

JERA also secured pipeline capacity with major operators, allowing it to access US natural gas markets and supply Train 1. Following the purchase of 25.7% interest in Freeport LNG Development by JERA in Freeport LNG, which controls the project, this investment has followed an agreement the company sealed with Global Infrastructure Partners in November 2021.

Also read: Venture Global LNG Exports First Cargo from Plaquemines Plant to Germany

Freeport LNG Current Expansions

Freeport LNG started constructing its liquefaction facility back in 2010, while the first dirt was turned in late 2014. Liquefaction trains at the terminal can liquefy more than 600 MMcf/d of LNG each. Currently, the facility is growing as it is expanding its fourth liquefaction train known as Train 4. The fourth liquefaction train will raise the facility’s total capacity to more than 20 mpta.

In attempts to achieve lower emissions, Train 4 will be driven by electric motors with variable frequency drives both cooling and liquefaction compression. This approach mirrors the environmentally conscious design of the first three trains, which also prioritize emission reductions in their operations.