South Korea and the European Union on Friday joined hands to develop the former's greenhouse gas emissions trading system in a way to bolster their bilateral cooperation on climate change, the finance ministry here said.

In a ceremony held in Seoul, the Seoul-Brussels joint emissions trading system cooperation project worth 3.5 million euros ($3.9 million) was launched with Vice Finance Minister Choi Sang-mok and Ambassador of the EU to Korea Gerhard Sabathil attending, according to the Ministry of Strategy and Finance.

"The EU-Korea ETS project will focus on the implementation and operation of the Korea emissions trading system in its initial years of operations, as well as development of the next steps," it said in a Korea-EU joint press release.

"The project, with a budget of 3.5 million euros, is funded under the EU's Partnership Instrument with in-kind contribution from the Korean government and will be steered jointly by the EU and the Korean Ministry of Strategy and Finance."

Seoul's finance ministry said the cooperation with the EU, who has run a cap-and-trade system for more than a decade, will help the country further develop the ETS market and reach the greenhouse gas emission reduction target.

South Korea is planning to curb greenhouse gas emissions by 37 percent from the 2030 business-as-usual levels.

Its bourse operator began the national cap-and-trade system in January last year, with 68 percent of the Korean Allowance Units put at an action. One KAU is equivalent to a ton of carbon dioxide gas.

A total of 568 local companies are supposed to buy extra emission rights when they surpass their own quota.

But trading volume has remained weak as less than one percent of the KAU was traded at the exchange since opening. (Yonhap)