Local companies have little incentive to migrate to clean energy for their electricity needs, as power prices charged by renewable energy producers and suppliers are still higher than the cost of offsetting carbon emissions.

According to Ministry of Trade, Industry and Energy data obtained by Rep. Hong Jung-min of the ruling Democratic Party, purchasing electricity generated by renewables is about 50 percent more expensive than offsetting greenhouse gas emissions through buying carbon credits.

In Korea, renewable energy developers, such as solar farm operators, receive state subsidies called renewable energy certificates, or RECs, for electricity they produce. They can trade these RECs in the open market and generate profits.

Purchasing these RECs is one of many ways companies utilize to validate their carbon reduction efforts. However, increasingly more Korean companies are becoming reluctant to purchase RECs, due to the emergence of a cheaper alternative -- carbon credits.

“To emit 1 metric ton of greenhouse gases with carbon credits, it costs about 31,000 won ($26). In case of RECs, it costs almost double, more than 60,000 won,” Hong said.

According to the data, there were only five companies that purchased RECs in August and September. Those five purchases accounted for just 2 percent of all REC trades.

As there is only a handful of companies wishing to buy RECs, the price of REC has dropped significantly in recent years, compounded by the government’s aggressive push for renewables, triggering an oversupply issue.

The price of REC, which stood at around 123,000 won in 2017, plummeted to 29,981 won in July, falling below a 30,000-won threshold since the subsidy program kicked off in 2012.

The nose-diving price of REC is expected to put a dent in small and midsize renewable energy developers, sources said.