The government on Monday unveiled a detailed plan for its greenhouse gas emissions trading scheme, apparently seeking a smooth start of the program in light of persistent fears from industries about increased environmental costs.

A prior notice was issued on the enforcement ordinance which contains key details of a national carbon exchange system which will launch in January 2015.

It is a follow-up measure after the National Assembly on May 2 passed the legislation for the so-called cap-and-trade scheme with near unanimity.

Under the the passed legislation, the envisioned scheme is projected to cover around 60 percent of the country’s carbon pollution by imposing limits on facilities that produce more than 25,000 tons of carbon dioxide a year. Companies will be granted permits to emit a certain amount of carbon dioxide.

The new ordinance, however, envisions all of the permits being doled out for free in the first two years of the program. The proportion of free giveaways will then be scaled down to 97 percent for the 2018-2020 period and to below 90 percent for the 2012-2025 period.

Steel, semiconductors and some other key export-oriented industries will be made an exception to this reduction, receiving a full 100 percent of the permits for free.

“The ordinance is intended at ensuring a smooth start of the carbon trading system by minimizing the expected burden on industries, while laying the foundation for cost-effective greenhouse gas reduction policies in the mid- to long-term,” the Prime Minister’s Office and the Presidential Committee on Green Growth said in a joint press release.

The fact that 100 percent of carbon-emission permits will be given away for free doesn’t mean that companies will be allowed to emit as much as gases they want, they explained.

“It means that they will be free of the economic burden for the amount allowed by the permits.”

The government plans to solicit opinions from industries, civic groups and experts through public hearings in August, they said. The ordinance is to go into effect on Nov. 15.

Environmental groups on Monday strongly criticized the government for watering down its original plan in the face of industrial resistance.

“The carbon trading scheme has lost its sense from its very inception, because the government accepted much of the demands of interested industries,” said the Korean Federation for Environmental Movement in a statement.

Most of the heavy polluters and big corporations will be granted all the permits for free for the entire span of the program, under the plan to give leniency to export-sensitive industries, it claimed.

“Because carbon-emission permits are to be doled out for free, we fear the carbon market will not take off at all, or if it does, it may be seriously distorted,” the group said.

The carbon market plan, although it passed the parliament without much political debate, has pitted industries against environmentalists.

Local businesses have opposed the government’s move to put a price on carbon, claiming that it would put Korean firms at a disadvantage in the global market because their competitors in bigger economies with bigger polluters ― namely the U.S., Japan and China ― are not subject to such a cap.

Environmentalists, on the other hand, view it essential for Korea to adopt the system to pursue the much-touted zero-carbon, green growth. The country, the world’s eighth-largest emitter of carbon pollution based on 2009 figures from the International Energy Agency, aims to reduce emissions by 30 percent from projected levels by 2020.

By Lee Sun-young (milaya@heraldcorp.com)