South Korea Expands Greenhouse Gas Emission Trading to Financial Institutions
South Korea is set to significantly broaden its greenhouse gas emission permit trading system this week, a move designed to enhance the nation's climate action efforts. Beginning Monday, November 24th, 2025, the country's carbon market will become more accessible, allowing various financial institutions to participate in permit transactions in a manner similar to traditional stock trading.
Opening the Carbon Market to New Players
This crucial change, announced by the Ministry of Climate, Energy and Environment, represents a shift from the previous system where only specific companies were permitted to trade emission permits directly via the Korea Exchange. Under the updated regulations, prominent financial entities – including banks, insurance firms, and pension funds – will now be authorized to establish accounts with securities companies. These institutions can then conduct emission permit trades through their existing trading platforms, aiming to foster a more dynamic and liquid market.
New Trading Mechanisms and Hours
The expanded trading framework introduces specific operational schedules to facilitate these new transactions. Active trading sessions will take place daily from 10 a.m. to 12 p.m. Following this, permit auctions are slated for a one-hour period beginning at 2 p.m. Additionally, over-the-counter (OTC) trading opportunities will be available for three hours, also commencing from 2 p.m., providing flexibility for participants.
Anticipated Benefits and Future Outlook
Officials anticipate that this modernized system will yield several key advantages. Companies currently operating under the emission cap-and-trade program are expected to experience improved convenience in managing their permit portfolios. Crucially, the participation of financial institutions is projected to significantly boost overall trading volumes, injecting greater liquidity and efficiency into the market. The ministry also highlighted that this strategic expansion serves as fundamental groundwork for the eventual introduction of a futures market for emissions trading, along with the development of various related financial products, underscoring South Korea's long-term commitment to robust environmental economic strategies.