(1) Reasons for Proposal

With amendments to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (the “Act”) and the Enforcement Decree thereof (the “Decree”) (June 1, 2020 and August 18, 2020, respectively), this Whole Amendment aims to reflect all amendments.

(2) Major Provisions

A. Reflect the changed unit for the allocation of emission permits (delegated from §13 of the Act and §20 of the Decree)

• (Concept) Create definitions for business entities establishing or expanding facilities (Article 2 subparagraph 5, subparagraph 5, and subparagraph 21).
• (Preliminary allocation) Calculate emission permits per business entity (Article 12 paragraph 2, Article 13 paragraph 4, and Article 19 paragraph 1 subparagraph 1).
• (Additional allocation) Applicable when emissions have increased in the compliance year compared to emission permits allocated to the business entity when the business entity is newly established or facilities are established or expanded in the business entity (Article 15 paragraph 1 subparagraph 1).

- Consider to be a newly established business entity or established facilities the business entity or facilities whose greenhouse-gas emissions are reported in a statement in the year before the planned period or during the planned period as no emission permits have been allocated since they are excluded from a statement or closed during the reference period (Article 15 paragraph 1 subparagraph 1 item (a)).

- Consider to be a newly established business entity or established facilities the business entity or facilities whose greenhouse-gas emissions are reported in a statement in the year before the planned period or during the planned period for re-operating them for which no emission permits have been allocated since they are closed or for other reasons (Article 15 paragraph 1 subparagraph 1 item (b)).

• (Allocation cancellation) Prepare standards to close down, suspend, and stop a business entity.

- Prescribe that a business entity shall be deemed to be closed down wholly or partially if greenhouse-gas emissions are not reported in a statement for the compliance year for physically removing or stopping the use of the business entity allocated emission permits (Article 23 subparagraph 5).

- Prescribe that a business entity shall be deemed to be closed down wholly or partially if the business entity eligible for allocation is split off or any part of the business entity is transferred or leased to any business entity not eligible for allocation and becomes part of such a non-eligible entity (Article 23 subparagraph 6).

- Consider emission facilities in a business entity to be suspended, stopped, or closed down if greenhouse-gas emissions are no more than 50 out of 100 of the emission permits allocated to the business entity for the compliance year as its operating performance has been reduced by temporarily and intermittently suspending the entity’s facilities in whole or in part, continuously suspending them due to whole or partial close-down, or removing facilities from its organizational boundaries in whole or in part (Article 24 paragraph 1).

B. Prepare a specific procedure for the designation and cancellation of business entities eligible for allocation (delegated from Article 8 of the Act and Articles 9 and 10 of the Decree)

• (Preliminary notice) Prepare a procedure that submits opinions about the designation of a business entity eligible for allocation (Article 9 paragraph 3) and prepare a procedure that sends a preliminary notice for designation cancellation and submits opinions (Article 5 paragraph 2).
• (Main notice) Define the procedure that notifies designation cancellation (Article 5 paragraph 3). 

C. Delete allocation adjustment (reflect §16 of the Act)

• With the amendment of the Act, which consolidates additional allocation of emission permits and adjustment of emission permits into an additional allocation, delete related provisions under these Guidelines (Chapter 7 Articles 19 through 24).

D. Other revisions

• (Terminologies) Reflect changed terms from the Act and Decree* and foreign language expressions** (Article 2, Article 4 paragraph 2, Article 7 paragraph 1, Article 10, and Article 11).

* Reference year → Reference period; ** Benchmark → Emission efficiency standards 

• (Form creation/revision) Preliminary Notice (Form 6), Opinion Submission Form (Form 7), and Notice (Form 8) for Designation Cancellation of Business Entity Eligible for Allocation