The Inflation Reduction Act: Exploring Carbon Border Adjustment Mechanisms and Carbon Pricing Policy

Climate Policy Developments in the EU and US: Implications for Korea’s Emission Reduction Goals

As Korea strives to meet its Nationally Determined Contribution (NDC) under the Paris Agreement and achieve a 40% reduction in greenhouse gas (GHG) emissions by 2030, significant climate policy developments are taking place in the European Union (EU) and United States (U.S.). These developments have the potential to impact Korea’s climate and energy policies.

The EU Emissions Trading System (EU ETS) is a key component of the EU’s climate policy. It is designed to reduce GHG emissions by placing a cap on the total amount of emissions allowed and requiring companies to purchase allowances for their emissions. The EU is now aiming to achieve a 62% reduction in GHG emissions from 2005 levels by 2030 through the EU ETS, along with the implementation of the EU Carbon Border Adjustment Mechanism (CBAM). The CBAM is a policy that aims to level the playing field for EU industries by imposing a carbon price on imports from countries with less stringent climate policies.

Meanwhile, the United States is also considering the implementation of a CBAM policy. This move is part of a broader effort to address climate change and Reduce Emissions. The U.S. has recently triggered massive investment in clean energy technology through the Inflation Reduction Act (IRA), which aims to accelerate the transition to a low-carbon economy. These policy developments in the EU and U.S. have important implications for Korea’s climate and energy policies.

To better understand the implications of EU and U.S. policies and develop strategies to align Korea’s climate and energy policies, the Asia Society Policy Institute (ASPI), with the support of the Korea Foundation, organized a study tour in July 2023. The study tour brought together seven young Korean leaders in climate and energy policy. The participants had the opportunity to engage in meetings and networking events in the EU and U.S., gaining valuable knowledge, insights, and networks.

The key learning points from the study tour are summarized in a report. The report highlights the need for Korea to align its Korea Emissions Trading System (K-ETS) with more ambitious emission reduction targets to meet its NDC and net zero goals. It also emphasizes the importance of complying with the EU’s CBAM to avoid trade barriers and maintain competitiveness in the EU market. Additionally, the report emphasizes the importance of implementing emission reduction technologies to achieve Korea’s emission reduction goals.

The study tour provided the participants with a deeper understanding of the EU and U.S. climate policies and their implications for Korea. It equipped them with the knowledge and networks to develop strategies that will help Korea achieve its emission reduction goals and contribute to global efforts to combat climate change. As Korea continues to work towards its NDC, the insights gained from the study tour will play a crucial role in shaping Korea’s climate and energy policies for a sustainable future.

Original content source: [Asia Society Policy Institute](https://asiasociety.org/policy-institute/climate-policy-developments-eu-and-us-implications-koreas-emission-reduction-goals)

Original Story at asiasociety.org – 2023-09-01 15:59:50