ACT ON THE ALLOCATION AND TRADING OF GREENHOUSE-GAS EMISSION PERMITS

Article 1(Purpose) #

The purpose of this Act is to achieve national targets for reducing greenhouse gas effectively by introducing a system for trading greenhouse-gas emission permits through market mechanisms pursuant to Article 25 of Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis. <Amended on Sep. 24, 2021>

Article 2(Definitions) #

The terms used in this Act are defined as follows: <Amended on Sep. 24, 2021; Oct. 28, 2025>

1. The term "greenhouse gases" means greenhouse gases defined in subparagraph 5 of Article 2 of the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis (hereinafter referred to as the "Framework Act");

2. The term "greenhouse-gas emissions" means greenhouse-gas emissions defined in subparagraph 6 of Article 2 of the Framework Act;

3. The term "emission permit" means an amount of greenhouse-gas emissions permitted and allocated to an individual business entity producing greenhouse gases within the scope of total allowances for greenhouse gas emissions set under Article 5 (1) 1 in order to achieve 2050 Carbon Neutrality Vision (hereinafter referred to as "2050 Vision“) under Article 7 (1) of the Framework Act and the mid- to long-term targets for reducing greenhouse gases under Article 8 (1) of that Act (hereinafter referred to as "national greenhouse-gas reduction targets");

4. The term "commitment period" means a period set to allocate emission permits to business entities producing greenhouse gases and to manage their outcomes of compliance every five years in order to achieve national greenhouse-gas reduction targets;

5. The term "compliance year" means each year during a commitment period set to allocate emission permits to business entities producing greenhouse gases and to manage their outcomes of compliance every year in order to achieve national greenhouse-gas reduction targets for the commitment period;

6. The term "one ton of comparable CO2 equivalents (tCO2-eq)" means one ton of carbon dioxide or an amount of other greenhouse gases specified in subparagraph 5 of Article 2 of the Framework Act as greenhouse gases, the impact of which on global warming is equivalent to the impact of one ton of carbon dioxide.

7. The term "total free allocation ratio" means the ratio of emission permits allocated gratuitously out of the total amount of greenhouse gas emission allowances set under Article 5 (1) 1.

Article 3(Fundamental principles) #

The Government shall comply with the following fundamental principles when it establishes or implements a system for the allocation and trading of emission permits (hereinafter referred to as "emissions trading system"):

1. The Government shall comply with the principles set forth in the United Nations Framework Conventions on Climate Change and relevant protocols and shall consider international negotiations on climate change;

2. The Government shall consider the impact of an emissions trading system on the international competitiveness of economic sectors;

3. The Government shall make the most of market mechanisms to achieve national greenhouse gas reduction targets effectively;

4. The Government shall ensure that emission permits are traded in a fair and transparent manner in accordance with general trading rules;

5. The Government shall implement policies in conformity with international standards, considering the link with international carbon markets.

Article 4(Establishment of master plans for emissions trading system) #

(1) The Government shall establish a ten-year master plan for the emissions trading system (hereinafter referred to as "master plan") every five years, which shall define the objectives of, and basic direction for, medium- to long-term policies on the emissions trading system.

(2) The master plan shall include the following: <Amended on Feb. 6, 2024>

1. Matters regarding the current status and projections for the domestic and international markets for the emissions trading system;

2. Matters regarding the basic direction for the operation of the emissions trading system;

3. Matters regarding the operation of commitment periods for the emissions trading system, considering national greenhouse gas reduction targets;

3-2. Matters regarding the direction of paid allocation of emission permits for each commitment period, considering the emissions trading market and trends in domestic industry (hereinafter referred to as "direction of paid allocation of emission permits for each commitment period");

4. Matters regarding projections for greenhouse gas emissions produced as a consequence of economic growth, new investment in each sector and type of business, and the expansion of facilities (referring to places of business producing greenhouse gases or part of such places of business; hereinafter the same shall apply);

5. Matters regarding economic implications, such as the fluctuation of prices of energy and other commodities following the operation of the emissions trading system;

6. Matters regarding measures for supporting domestic industries, considering international trade intensity, carbon intensity, etc.;

7. Matters regarding schemes for the link with international carbon markets and international cooperation;

8. Other matters regarding the effective operation of the emissions trading system, including financing, the nurturing professional human resources, education, and public relations, etc.

(3) When the competent authority under Article 8 demands the Government to revise a master plan or the Government deems it necessary to revise the master plan in accordance with international negotiations, etc. on climate change, the Government may review the validity of the proposed revision to revise the master plan.

(4) When the Government intends to establish or revise a master plan, it shall gather opinions from relevant central administrative agencies, local governments, and interested parties.

(5) The establishment of and revision to a master plan shall be finalized through deliberation by the 2050 Carbon Neutrality and Green Growth Committee established under Article 15 (1) of the Framework Act (hereinafter referred to the "Carbon Neutrality and Green Growth Committee") and the State Council, as prescribed by Presidential Decree; provided, the foregoing shall not apply to modifications to minor matters prescribed by Presidential Decree.

Article 5(Establishment of plans to allocate national emission allowances) #

(1) The Government shall establish a plan to allocate national emission allowances for each commitment period (hereinafter referred to as "allocation plan") by no later than six months prior to the beginning of each commitment period in order to effectively achieve national greenhouse-gas reduction targets, which shall include the following: <Amended on Feb. 6, 2024; Oct. 28, 2025>

1. Matters regarding the total amount of greenhouse gas emission allowances (hereinafter referred to as "total emission allowances") set to achieve 2050 Vision and national greenhouse-gas reduction targets;

2. Matters regarding the total number of emission permits for the pertinent commitment period and for each compliance year based on total emission allowances;

3. Matters regarding sectors and types of business eligible for allocation of emission permits;

4. Matters regarding the standards for the allocation of emission permits for each sector and type of business and the amount allocated to each sector and type of business;

5. Matters regarding the standards for the allocation of emission permits for each compliance year and the amount allocated for each compliance year;

6. Matters regarding the standards and methods for the allocation of emission permits to business entities eligible for allocation under Article 8;

7. Matters regarding the target ratio of onerous allocation of emission permits for each compliance year, sector, and business type in accordance with Article 12 (3) and the direction of onerous allocation of emission permits for each commitment period;

7-2. Matters regarding the method for the onerous allocation of emission permits under Article 12 (3);

8. Deleted. <Oct. 28, 2025>

9. Matters regarding the number of emission permits in reserve under Article 18 and the criteria for distribution of emission permits in reserve;

10. Matters regarding the carryover and borrowing of emission permits under Article 28 and matters regarding the guidelines for offset and the operation thereof under Article 29;

11. Other matters prescribed by Presidential Decree necessary for the allocation and trading of emission permits for the pertinent commitment period.

(2) When the Government prescribes the matters under subparagraphs of paragraph (1), it shall consider the situation of each sector and type of business for the application of the emissions trading system, the impact on international competitiveness, etc.

(3) The Government shall consider the quantity of emission permits that were not submitted in the immediately preceding plan period and that have been or are expected to be carried over to the next plan period pursuant to Article 28 (1) when establishing the emission permits in reserve under Article 18. <Added on Oct. 28, 2025>

(4) If the national greenhouse gas reduction target is changed during the commitment period, the Government shall promptly revise the allocation plan to reflect such change, and if it deems it necessary to revise the allocation plan due to sudden changes in domestic or international economic conditions, technological advancements, etc., it may examine the validity of the revision and revise the allocation plan accordingly. <Amended on Oct. 28, 2025>

(5) When the Government intends to establish or revise an allocation plan, it shall hold a public hearing to gather opinions from interested parties and shall reflect opinions presented in the public hearing in the allocation plan, if it finds such opinions are rational. <Amended on Oct. 28, 2025>

(6) An allocation plan shall be finalized through deliberation by the Carbon Neutrality and Green Growth Committee and the State Council, as prescribed by Presidential Decree; provided, the foregoing shall not apply to modifications to minor matters prescribed by Presidential Decree. <Amended on Sep. 24, 2021; Oct. 28, 2025>

Article 6(Establishment of emission permits allocation committee) #

An Emission Permits Allocation Committee (hereinafter referred to as "Allocation Committee") shall be established within the Ministry of Planning and Budget Office to deliberate on and adjust the following in relation to the emissions trading system: <Amended on Oct. 1, 2025>

1. Matters regarding allocation plans;

2. Matters regarding measures for market stabilization under Article 23;

3. Matters regarding the adjustment to, and the assistance in, policies relating to the certification of emissions under Article 25 and offset under Article 29;

4. Matters regarding the link with international carbon markets and international cooperation under Article 36;

5. Other matters the Committee Chairperson deems it necessary to bring to the Allocation Committee for deliberation and adjustment in relation to the emissions trading system.

Article 7(Organization and operation of Allocation Committee) #

(1) The Allocation Committee shall be comprised of one Chairperson and not more than 20 members.

(2) The Minister of Planning and Budget Office shall be the Chairperson of the Allocation Committee, and members shall be appointed from among the following persons: <Amended on Mar. 23, 2013; Jul. 26, 2017; Oct. 1, 2025>

1. Public officials appointed by the head of each relevant ministry or agency from among public officials at the level of Vice Minister in the Ministry of Science, and ICT, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Trade, Industry and Resources, the Ministry of Climate, Energy and Environment, the Ministry of Land, Infrastructure and Transport, the Ministry of Planning and Budget Office, the Office for Government Policy Coordination, the Financial Services Commission, and other relevant central administrative agencies prescribed by Presidential Decree;

2. Persons commissioned by the Minister of Planning and Budget Office from among persons who have abundant knowledge and experience relating to low carbon, green growth, including climate change, energy, resources, and emission trading systems.

(3) The Chairperson of the Allocation Committee shall represent the Committee and shall administer all affairs of the Committee.

(4) The term of office for each member commissioned under paragraph (2) 2 shall be two years and the term of office may be renewed only once.

(5) The Allocation Committee shall have one secretary, as prescribed by Presidential Decree.

(6) The secretary shall carry out administrative affairs of the Allocation Committee, including preparation for the establishment of allocation plans, in compliance with the Chairperson's orders.

(7) Except as provided in this Act, matters regarding the organization, operation, etc. of the Allocation Committee shall be prescribed by Presidential Decree.

Article 8(Designation of business entities eligible for allocation and revocation of designation) #

(1) The head of the central administrative agency prescribed by Presidential Decree (hereinafter referred to as "competent authority") shall designate and publicly notify business entities that fall under either of the following as business entities eligible for allocation of emission permits (hereinafter referred to as "business entities eligible for allocation"), from among business entities producing greenhouse gases and that belongs to a sector, or engages in a type of business, eligible for allocation of emission permits specified in the relevant allocation plan under Article 5 (1) 3, by no later than five months prior to the beginning of each commitment period: <Amended on Mar. 24, 2020; Sep. 24, 2021; Feb. 6, 2024>

1. A business entity from which the average total amount of greenhouse gas emissions produced during the preceding three years is not less than 125,000 tons of comparable CO2 equivalents (CO2-eq) or any of the following business entities with at least one place of business that has produced 25,000 tons of comparable CO2 equivalents (CO2-eq) during the preceding three years:

(a) A business entity eligible for allocation as of the immediately preceding commitment period;

(b) A controlled entity under Article 27 (1) of the Framework Act (hereinafter referred to as "controlled emitter");

2. A controlled entity which files an application for designation as a business entity eligible for allocation, from among entities that do not fall under subparagraph 1, and which meets the standards prescribed by Presidential Decree.

(2) Where a business entity designated and publicly notified as a business entity eligible for allocation under paragraph (1) falls under any of the following, the competent authority may revoke the designation: <Amended on Mar. 24, 2020; Oct. 28, 2025>

1. Where the business entity eligible for allocation ceases to exist due to business closure, dissolution, etc.;

2. Where the business entity eligible for allocation ceases to possess a place of business due to division, transfer of its place of business or facility, or any other reason;

3. Where the greenhouse gas emissions of a business entity eligible for allocation have significantly decreased and fall below the standards prescribed by Presidential Decree;

4. Other cases prescribed by Presidential Decree where the business entity eligible for allocation is no longer eligible for the application of this Act.

(3) Where a business entity designated as a business entity eligible for allocation is subject to revocation of designation or is not re-designated as a business entity eligible for allocation for the following commitment period, the relevant business entity or its place of business shall be deemed designated as a controlled emitter. In such cases, a statement reported by the relevant business entity or its place of business to the competent authority under Article 24 (1) shall be deemed a statement submitted to the Government under Article 27 (3) of the Framework Act. <Added on Mar. 24, 2020; Sep. 24, 2021>

(4) Matters necessary for the designation and public notice of business entities eligible for allocation, application for designation, revocation of designation, etc. under paragraphs (1) through (3) shall be prescribed by Presidential Decree. <Added on Mar. 24, 2020>

[Title Amended on Mar. 24, 2020]

Article 8-2(Succession to rights and obligations) #

(1) Where a business entity eligible for allocation is merged or divided, or transfers or leases the relevant place of business or facilities, the rights and obligations of the business entity eligible for allocation prescribed by this Act shall also be succeeded to when the place of business or facilities belonging to the relevant business entity are transferred; provided, the foregoing shall not apply where a business entity that is obliged to succeed to such rights and obligations due to division, acquisition by transfer, lease, etc. is not a business entity eligible for allocation and does not fall under Article 8 (1) 1 even if it succeeds to the rights and obligations.

(2) A business entity eligible for allocation which fully or partially transfers its rights and obligations pursuant to paragraph (1) shall report such transfer to the competent authority within 15 days from the date the ground for the transfer arises; provided, where a business entity eligible for allocation which has transferred its rights and obligations no longer exists, a report shall be filed by the succeeding business entity.

(3) The competent authority in receipt of a report under paragraph (2) shall verify whether such report is true and take measures to transfer emission permits corresponding to the rights and obligations succeeded to between the relevant business entities eligible for allocation (including revoking the allocation of the corresponding emission permits, in cases falling under the proviso of paragraph (1)).

(4) Where the competent authority becomes aware of the fact that the rights and obligations of a business entity eligible for allocation are succeeded to, it may transfer or revoke emission permits corresponding to such rights and obligations ex officio, irrespective of whether a report is filed under paragraph (2).

(5) Matters necessary for succession to the rights and obligations of a business entity eligible for allocation provided for in paragraphs (1) through (4) and other matters shall be prescribed by Presidential Decree.

[This Article Added on Mar. 24, 2020]

Article 9(Designation of new entrants as business entities eligible for allocation) #

(1) The competent authority may designate and publicly notify business entities that newly fall under Article 8 (1) 1 (hereinafter referred to as "new entrants") during a commitment period due to the establishment of a new facility or the alteration or expansion of a facility, as business entities eligible for allocation.

(2) Detailed matters necessary for the designation and public notice of new entrants as business entities eligible for allocation under paragraph (1) shall be prescribed by Presidential Decree.

Article 10(Exclusion from application of target management system) #

The provisions of Article 27 (1) and (2) and the former part of Article 27 (3) (limited to matters concerning compliance with the targets), Article 27 (6), and Article 83 (1) 1 and 3 of the Framework Act shall not apply to a controlled emitter designated and publicly notified as a business entity eligible for allocation pursuant to Articles 8 (1) and 9 (1) for the year in which emission permits are allocated pursuant to Article 12 (1). <Amended on Sep. 24, 2021>

Article 11(Emission permits register) #

(1) The competent authority shall maintain a register for the trading of emission permits (hereinafter referred to as "emission permits register") to register and manage the allocation and trading of emission permits, greenhouse gas emissions from each business entity eligible for allocation, etc.

(2) The emission permits register shall be managed and operated by the competent authority.

(3) The following matters shall be registered in the emission permits register:

1. Total number of emission permits by commitment period and compliance year;

2. The account of emission permits under the name of each business entity eligible for allocation and other private person or corporation and the number of emission permits they each hold;

3. The account for the management of emission permits in reserve under Article 18 and the number of such emission permits in inventory;

4. Greenhouse gas emissions certified by the competent authority under Article 25;

5. Matters prescribed by Presidential Decree necessary for the effective and stable allocation and trading of emission permits.

(4) The emission permits registers shall be managed electronically so that they can be organically linked to the National Greenhouse Management System for greenhouse gases under Article 36 of the Framework Act. <Amended on Sep. 24, 2021>

(5) A person who has obtained registration of his or her account for trading emission permits in the emission permits register, in accordance with Article 20 may request the competent authority to issue a certificate of the registered facts prescribed by Presidential Decree, such as the number of emission permits held by him or her.

(6) Detailed matters necessary for the methods for the management and operation of the emission permits register shall be prescribed by Presidential Decree.

Article 12(Allocation of emission permits) #

(1) The competent authority shall allocate all emission permits for a commitment period and emission permits for each compliance year to each business entity eligible for allocation for each commitment period in accordance with the allocation plan; provided, the competent authority shall allocate emission permits to a new entrant for the remaining commitment period commencing from the compliance year following the year in which the new entrant is designated and publicly notified as a business entity eligible for allocation.

(2) Criteria for the allocation of emission permits under paragraph (1) shall be prescribed by Presidential Decree, considering the following matters: <Amended on Sep. 24, 2021; Oct. 28, 2025>

1. Demand for emission permits by each business entity eligible for allocation for each compliance year;

2. Deleted. <Oct. 28, 2025>

3. Emission permits surrendered in accordance with Article 27 by each business entity eligible for allocation;

4. Trade intensity and carbon intensity of allocation targets (referring to the units that serve as the basis for emission permit allocation standards prescribed and publicly notified by the Minister of Climate, Energy and Environment; this shall apply hereinafter in this Article);

5. Fairness in the numbers of emission permits allocated between allocation targets;

6. Level of greenhouse gas reducing technology and international competitiveness of each sector and type of business;

7. Degree of contribution of each business entity eligible for allocation to the achievement of national greenhouse gas reduction targets, such as investment by each business entity eligible for allocation in facilities;

8. Outcomes of compliance with targets of each controlled entity under Article 27 (1) of the Framework Act.

(3) Allocation of emission permits under paragraph (1) shall be made onerously, but may be allocated gratuitously within the limit of the ratio prescribed by Presidential Decree. In such cases, the ratio of emission permits allocated gratuitously (hereinafter referred to as the "free allocation ratio") shall be determined in consideration of the impact on the international competitiveness of domestic industries, international trends in response to the climate crisis such as pricing carbon emissions, conditions for greenhouse gas reduction by sector and industry, the impact on the national economy such as prices, and the evaluation of the immediately preceding commitment period; provided, the free allocation ratio shall not exceed the free allocation ratio of the immediately preceding commitment period. <Amended on Feb. 6, 2024; Oct. 28, 2025>

(4) When the Government determines the free allocation ratio pursuant to paragraph (3), it shall endeavor to comply with the direction of paid allocation of emission permits for each commitment period under the basic plan for the emission trading system and the national emission allowance allocation plan, as well as the target ratio of paid allocation for each compliance year. <Added on Feb. 6, 2024>

(5) Notwithstanding paragraph (3) and (4), all emission permits may be allocated gratuitously to the allocation targets in any of the following cases: <Amended on Mar. 24, 2020; Feb. 6, 2024; Oct. 28, 2025>

1. A business entity that engages in a type of business whose its trade intensity and carbon intensity due to the reduction of greenhouse gases as a result of the enforcement of this Act meets the standards prescribed by Presidential Decree;

2. Where an institution, organization, or non-profit corporation established for the public interest is prescribed by Presidential Decree.

Article 13(Application for allocation of emission permits) #

(1) A business entity eligible for allocation shall prepare an application for allocation of emission permits (hereinafter referred to as "application for allocation") for all of its places of business, stating the following matters, and shall file it with the competent authority by no later than 4 months prior to the beginning of each commitment period (or by no later than 4 months prior to the beginning of the compliance year in which emission permits are allocated, if a business entity eligible for allocation is a new entrant): <Amended on Mar. 24, 2020; Feb. 6, 2024>

1. An amount of emission permits applied for allocation for each compliance year, which are calculated by the method prescribed by Presidential Decree based on the amount of greenhouse gas emissions or emission efficiency for three years immediately preceding the year in which the business entity is designated as a business entity eligible for allocation;

2. Documents verifying that the business entity falls under either of the subparagraphs of Article 12 (5).

(2) When filing an application for allocation pursuant to paragraph (1), a business entity eligible for allocation shall prepare a plan for calculating the amount of greenhouse gas emissions, specifying methods for collecting, measuring, and assessing all the materials for the calculation of the actual amount of greenhouse gas emissions during a commitment period (hereinafter referred to as "plan for calculating the amount of emissions"), and shall submit the plan to the competent authority along with the application. <Amended on Mar. 24, 2020>

(3) Matters necessary for preparing applications for allocation and plans for calculating the amount of emissions, procedures related thereto, and other matters shall be prescribed by Presidential Decree. <Added on Mar. 24, 2020>

[Title Amended on Mar. 24, 2020]

Article 14(Notice of allocation) #

(1) When the competent authority has allocated emission permits to business entities eligible for allocation under Article 12, the authority shall notify each business entity eligible for allocation thereof, without delay, and shall register relevant details thereof in the account for each business entity in the emission permits register.

(2) Detailed matters necessary for giving notices of allocation and the registration of details of allocation under paragraph (1) shall be prescribed by Presidential Decree.

Article 15 #

Deleted. <Oct. 28, 2025>

Article 16(Additional allocation of emission permits) #

(1) In any of the following cases, the competent authority may, ex officio or upon receipt of an application, allocate additional emission permits to a business entity eligible for allocation: <Amended on Mar. 24, 2020; Feb. 6, 2024; Oct. 28, 2025>

1. Where total emission allowances increase following a revision to an allocation plan under Article 5 (4);

2. Where greenhouse gases are emitted in the relevant compliance year as a place of business is established in the year immediately preceding the start of a commitment period or during a commitment period;

3. Where the amount of greenhouse gas emissions in the relevant compliance year increases above the standard prescribed by Presidential Decree due to the establishment, expansion, etc. of facilities in a place of business in the year immediately preceding the start of a commitment period or during a commitment period;

4. Where a business entity eligible for allocation receives an allocation less than the amount determined according to the allocation of emission permits under Article 12 or the additional allocation of emission permits under subparagraphs 1 through 3 and subparagraph 5, in cases prescribed by Presidential Decree;

5. Other cases prescribed by Presidential Decree where the amount of greenhouse gas emissions increases because a business entity eligible for allocation complies with obligations under other statutes or conducts activities to contribute to achieving the national greenhouse-gas reduction targets during a commitment period.

(2) Matters necessary for the standards, procedures, etc. for the additional allocation of emission permits under paragraph (1) shall be prescribed by Presidential Decree. <Amended on Mar. 24, 2020>

[Title Amended on Mar. 24, 2020]

Article 17(Revocation of allocation of emission permits) #

(1) In any of the following cases, the competent authority may revoke all or some of emission permits allocated or additionally allocated under Articles 12 and 16 (limited to emission permits allocated gratuitously): <Amended on Mar. 24, 2020; Feb. 6, 2024; Oct. 28, 2025>

1. Where total emission allowances decrease following a revision to an allocation plan under Article 5 (4);

2. Where a business entity eligible for allocation closes all or part of its place of business;

3. Where the amount of greenhouse gas emissions produced from the place of business where the relevant facilities are installed is reduced to the level equivalent to or higher than that prescribed by Presidential Decree, due to discontinuance, suspension, or closure of operation of, or a fall in operational performance of such facilities, closure thereof, or any other reasons;

4. Where emission permits are allocated after filing an application for allocation or additional allocation of emission permits that contains false details;

5. Where designation as a business entity eligible for allocation is revoked pursuant to Article 8 (2);

6. Where a business entity eligible for allocation receives an allocation less than the amount determined according to the allocation of emission permits under Article 12 or the additional allocation of emission permits under Article 12, in cases prescribed by Presidential Decree.

(2) A business entity eligible for allocation that has any ground for revoking the allocation of emission permits under paragraph (1) 2 or 3 shall report such fact to the competent authority within one month from the date the relevant ground arises. <Amended on Mar. 24, 2020>

(3) Where a business entity eligible for allocation that is subject to revocation of allocation of emission permits under paragraph (1) holds less emission permits than the amount of allocation revoked, the competent authority may order it to surrender the shortfall within a prescribed period. <Added on Mar. 24, 2020>

(4) Matters necessary for the standards, procedures, etc. for revoking the allocation of emission permits under paragraphs (1) through (3) shall be prescribed by Presidential Decree. <Added on Mar. 24, 2020>

Article 18(Emission permits in reserve) #

The competent authority shall hold a certain amount of emission permits in reserve to conduct the following affairs. In such cases, it may hold emission permits by classifying them based on their uses, purposes, etc.: <Amended on Oct. 28, 2025>

1. Additional allocation of emission permits under Article 16;

2. Market-making activities conducted by makers of emission permit markets under Article 22;

3. Activities for taking measures for market stabilization under Article 23;

4. Handling objections filed under Article 38 (1) 2 through 4;

5. Other affairs prescribed by Presidential Decree as necessary for holding emission permits in reserve.

[This Article Wholly Amended on Mar. 24, 2020]

Article 19(Trading of emission permits) #

(1) A person falling under any of the following subparagraphs (hereinafter referred to as a "market participant") may trade emission permits by sale, purchase, or other methods. <Amended on Feb. 6, 2024>

1. Business entities eligible for allocation under Article 8;

2. Market makers under Article 22-2;

3. Emission permits brokers under Article 22-3;

4. Other persons prescribed by Presidential Decree who may participate in the market for trading emission permits.

(2) Emission permits may be traded by unit of greenhouse gases converted into tons of comparable CO2 equivalents (CO2-eq), as prescribed by Presidential Decree.

(3) No person shall engage in any act of manipulating or fixing the market price of emission permits for the purpose of obtaining unjust profits or causing a third party to obtain unjust profits in connection with the sale or other transactions of emission permits. <Added on Oct. 28, 2025>

(4) Detailed matters necessary for the trading of emission permits, including the minimum unit of tradable emission permits, shall be prescribed by Presidential Decree. <Amended on Oct. 28, 2025>

Article 20(Registration of accounts for trading emission permits) #

(1) A person who intends to trade emission permits shall register an account for trading emission permits in the emission permits register as prescribed by Presidential Decree; provided, when an emission permit brokerage company under Article 22-3 first registers the emission permits of a market participant who has entrusted trading in the manner provided in Article 22-3 (1) 2 (hereinafter referred to as the "consignor") in the emission permits register, the consignor shall be deemed to have registered the trading account regardless of the name of the trading account. <Amended on Oct. 28, 2025>

(2) The competent authority may determine the maximum quantity of emission permits that a person falling under subparagraphs 2 to 4 of Article 19 (1), who intends to trade emission permits pursuant to paragraph (1), may hold in their emission permit trading account. <Added on Feb. 6, 2024>

(3) A foreign corporation or individual may file an application for registration under paragraph (1) only in cases where prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

(4) Notwithstanding paragraph (1), if the demand for emission permits by market participants other than business entities eligible for allocation rapidly increases, resulting in a significant short-term increase in the amount of emission permits held by such market participants that undermines market stability or raises suspicion of unfair trading, and if such cases fall under the reasons prescribed by Presidential Decree, the competent authority may refuse the application for registration of a trading account. <Added on Oct. 28, 2025>

Article 21(Reporting on trading of emission permits) #

(1) A person who trades emission permits shall report to the competent authority on transactions, as prescribed by Presidential Decree.

(2) In receipt of a report under paragraph (1), the competent authority shall register the details thereof in the emission permits register without delay.

(3) The transfer of emission permits following a transaction of emission permits shall take effect as at the time the details of the transaction of the emission permits are registered in accordance with paragraph (2).

(4) Paragraphs (1) through (3) shall apply mutatis mutandis to cases where emission permits are transferred not by trading, but by inheritance or a merger of corporations.

Article 22(Emission permits exchange) #

(1) The competent authority may designate, or establish and operate an emission permits exchange in order to promote the setting of a fair price of emission permits, fair trade of emission permits, and the stability and efficiency in trading emission permits.

(2) If an emission permits exchange is designated in accordance with paragraph (1), such emission permits exchange (hereafter referred to as “emission permits exchange”) shall formulate operating regulations, which include the following, and shall obtain approval thereof from the competent authority by no later than the opening date of the exchange. When the exchange intends to revise important matters prescribed by Presidential Decree, among approved matters, it shall also obtain approval thereof from the competent authority, as prescribed by Presidential Decree: <Amended on Oct. 28, 2025>

1. Matters regarding membership in the emission permits exchange;

2. Matters regarding methods for trading emission permits;

3. Matters regarding clearing of, and payment for, transactions of emission permits;

4. Matters regarding the disclosure of information about transactions of emission permits;

5. Matters regarding the monitoring of markets for trading emission permits;

6. Matters regarding the mediation of disputes over transactions of emission permits;

7. Other matters prescribed by Presidential Decree necessary for the operation of markets for trading emission permits.

(3) Article 176 (1), (2), and the part other than the subparagraph of (3), Articles 177 of the Financial Investment Services and Capital Markets Act (limited to cases where Article 176 (1), (2), and the part other than the subparagraph of (3) of the Financial Investment Services and Capital Markets Act is violated) 178, 178-2, 179, and Article 383 (1) and (2) shall apply mutatis mutandis, respectively, to prohibition of, and liability for, market price manipulation, prohibition of, and liability for, fraudulent transactions, market order disturbance, and prohibition of use of information in relation to transactions in an emission permits exchange. In such cases, the term "listed securities or exchange-traded derivatives" shall be construed as "emission permits", the term "investors" as "market particpants', the term "exchange" as "emission permits exchange", and the term "financial investment business entities and institutions involved in financial investment business" as "members of an emission permits exchange", respectively. <Amended on Feb. 6, 2024>

(4) The competent authority may cancel the designation of an emissions trading exchange under paragraph (1) in any of the following cases. <Amended Feb. 6, 2024>

1. Where it has obtained designation by fraud or other improper means;

2. Where supervision by the competent authority finds that the operation of the exchange is impossible, as prescribed by Presidential Decree;

3. Where, after the designation under paragraph (1), bankruptcy, suspension of business, tax evasion, or similar illegal acts occur;

4. In other cases that fall under any ground prescribed by Presidential Decree.

(5) The competent authority may issue a warning to an emission permits exchange or suspend its trading operations within the emission permits exchange (hereinafter referred to as "exchange-trading of emission permits") for up to 6 months if the emission permits exchange falls under any of the following: <Added on Feb. 6, 2024>

1. Where it has obtained designation by fraud or other improper means;

2. Where it performs its business during a business suspension period for exchange-trading of emission permits;

3. Where the operating regulations has not been approved in violation of paragraph (2);

4. A person who, in violation of paragraph (3), divulges or uses secrets, or otherwise has a special interest related to business;

5. Where an assessment institution fails to comply with the measure under paragraph (6);

6. In other cases that fall under any ground prescribed by Presidential Decree.

(6) The competent authority may, if it is recognized that normal trading cannot be conducted due to natural disasters, war, armed conflict, sudden changes in economic conditions, or other similar incidents, order the emission permits exchange to change its opening hours, suspend transactions, or close the market, or take other necessary measures. <Added on Feb. 6, 2024>

(7) No person shall use the name or trade name "emission permits exchange" or a similar name other than the emission permits exchange designated under paragraph (1), nor shall they open or operate a market for trading emission permits. <Added on Feb. 6, 2024>

(8) Other details concerning the procedures for designating or establishing an emission permits exchange, cancellation of designation, prohibited acts related to transactions at the emission permits exchange, the business affairs and supervision of the emission permits exchange, etc. shall be prescribed by Presidential Decree. <Added on Feb. 6, 2024>

Article 22-2(Makers of emission permit markets) #

(1) The competent authority may designate any of the following persons as a maker of emission permit markets (hereinafter referred to as "market maker") for stable management of markets for trading emission permits such as encouraging the trading of emission permits in markets established by emission permits exchanges designated under Article 22:

1. The Korea Development Bank established under the Korea Development Bank Act;

2. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;

3. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act.

4. Other persons prescribed by Presidential Decree as recognized to have expertise in work related to market making and public nature.

(2) Where a person designated as a market maker under paragraph (1) is no longer unable to perform the roles of a market maker, the competent authority may revoke the designation.

(3) A person designated as a market maker under paragraph (1) shall regularly report the records of market-making activities to the competent authority.

(4) Where the competent authority evaluates the records reported under paragraph (3) and finds that the activities conducted as a market maker are inappropriate, it may demand the market maker to take corrective measures. In such cases, the market maker in receipt of a demand to take corrective measures shall comply therewith unless there is good cause.

(5) Where the designation of a market maker is revoked pursuant to paragraph (2), the market maker shall dispose of the emission permits held as prescribed by Presidential Decree. <Added on Feb. 6, 2024>

(6) Where a market maker does not dispose of emission permits under paragraph (5), the competent authority may, ex officio, transfer or revoke such emission permits as prescribed by Presidential Decree. <Added on Feb. 6, 2024>

(7) Matters necessary for designation of market makers, revocation of designation thereof, submission and evaluation of the records of market-making activities, disposal of emission permits, demands to take corrective measures, compliance with such demands, etc. under paragraphs (1) through (6) shall be prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

[This Article Added on Mar. 24, 2020]

Article 22-3(Companies brokering emission permit transactions) #

(1) A business brokering emission permits refers to the following businesses related to the trading of emission permits in the emission permit market, conducted continuously or repeatedly for the purpose of profiting.

1. Engaging in the business of selling or purchasing emission permits on one's own account;

2. Engaging in the business of selling, purchasing, or brokering emission permits on one's own account.

(2) A company engaged in the business of brokering emission permits (hereinafter referred to as "emission permits broker") shall, after obtaining a license for investment brokerage under Article 12 of the Financial Investment Services and Capital Markets Act, fulfill the following requirements and register with the competent authority.

1. Personnel, computer facilities, and other physical facilities necessary for performing the affairs of selling, buying, and brokering emission permits;

2. Standards and procedures to be observed by executives and employees in the performance of their duties (hereinafter referred to as "internal control standards"), methods for preventing unfair trading, and the establishment of an organizational system and other internal control devices;

3. A system to prevent conflicts of interest among market participants;

4. Other requirements prescribed by Presidential Decree for conducting emission permits brokerage business.

(3) Where an emission permit brokerage company falls under any of the following, the competent authority may revoke its designation or order it to suspend the whole or part of its work for up to 6 months, or revoke the registration; provided, where it falls under any of subparagraphs 1 through 3, the competent authority shall revoke its registration:

1. Where the company registers its business by fraud or other improper means;

2. Where the authorization for investment brokerage under Article 12 of the Financial Investment Services and Capital Markets Act is revoked;

3. Where it fails to maintain the registration requirements under paragraph (2) while being engaged in emission permits trading brokerage business;

4. Where the Financial Investment Services and Capital Markets Act or orders or dispositions under that Act is violated;

5. Where it violates any of the provisions under paragraphs (6) through (8);

6. Where it violates Article 22 (3);

7. In other cases prescribed by Presidential Decree where it is difficult to normally perform the role of an emissions trading brokerage company.

(4) The competent authority shall order an emission permits trading brokerage company whose registration has been canceled pursuant to paragraph (3) to dispose of the emission permits it holds within a period not exceeding 6 months.

(5) Where the emission trading brokerage company does not dispose of emission permits under paragraph (4), the competent authority may, ex officio, transfer or revoke such emission permits as prescribed by Presidential Decree.

(6) An emissions trading brokerage company shall comply with the following matters as prescribed by Presidential Decree: <Amended on Oct. 28, 2025>

1. To conduct a carbon emission trading brokerage business fairly in accordance with the duty of good faith;

2. To manage as prescribed by the internal control guidelines established to prevent conflicts of interest among market participants;

3. To properly block the exchange of information (hereinafter referred to as "material non-public information") that may significantly affect the decision of market participants to buy, sell, or otherwise trade before it is disclosed to unspecified many persons;

4. To keep and maintain data related to the operation of emission permit brokerage by type of data for the period prescribed by Presidential Decree;

5. To notify market participants of details of a transaction where emission permits is concluded;

6. To deposit the deposit money of market participants (referring to money deposited by market participants in connection with the trading of emission permits and other transactions; hereinafter this shall apply) separately from proprietary property and with a securities finance company (hereafter referred to as “securities finance company”) under Article 74 of the Financial Investment Services and Capital Markets Act;

7. Not to engage in the following acts to maintain the sound order of the market for trading emission permits:

a. Using information learned in the course of duty that has not been disclosed externally for the benefit of oneself or a third party without justifiable cause;

b. Using undisclosed important information or other information subject to blocking of information exchange without justifiable reason for oneself or allowing a third party to use such information;

c. Acts such as compensating for losses or guaranteeing profits related to the sale or other transactions of emission permits without justifiable causes;

d. Trading of emission permits with property deposited by a market participant without receiving an order for the sale or purchase of emission permits from the market participant;

e. Acts of manipulating or fixing the market price of emission permits for the purpose of obtaining unjust profits or enabling a third party to obtain unjust profits in the trading of emission permits and financial investment products based on emission permits;

f. Other unfair business practices prohibited by Presidential Decree for the sound operation of the emission permits trading market.

(7) An emission permit brokerage company shall explain to the counterparty, before concluding an emission permit transaction contract, the matters prescribed by Presidential Decree regarding the content and conditions of the transaction, such as the details of the emission permit transaction, risks arising from the emission permit transaction, and fees, in a manner that the counterparty can understand.

(8) The emission permit brokerage company shall report to the competent authority on a quarterly basis each year the matters provided in the following subparagraphs as prescribed by the Presidential Decree.

1. Operating revenue;

2. Trading performance by type of emission permit;

3. Other matters prescribed by Presidential Decree.

(9) No one shall offset or seize (including provisional seizure) the market participant's deposit placed with a securities finance company pursuant to paragraph (6) 6, and the emission trading brokerage company that has deposited the relevant deposit shall not transfer or provide the deposit as collateral except as otherwise notified by the Minister of Climate, Energy and Environment as necessary. <Added on Oct. 28, 2025>

(10) A securities finance company shall, if a emissions trading brokerage company falls under any of the following subparagraphs, preferentially pay the deposited funds to the market participant upon the market participant’s request in accordance with the method and procedure prescribed by Presidential Decree. <Added on Oct. 28, 2025>

1. Where registration is revoked;

2. Where a resolution for dissolution has been adopted;

3. Where it is declared bankrupt;

4. Where approval is granted for the complete transfer or complete discontinuation of the investment trading business under Article 6 (1) 1 of the Act on Capital Markets and Financial Investment Business; or where approval is granted for a complete transfer or a complete discontinuation, or where an order is issued for a complete suspension of the investment brokerage business under Article 6 (1) 2 of that Act;

5. In other cases equivalent to those provided in subparagraphs 1 through 4 occurs.

(11) If any cause falling under any subparagraph of paragraph (10) occurs, notwithstanding Article 4 (1) of the Act on Real Name Financial Transactions and Confidentiality and Articles 32 and 33 of the Credit Information Use and Protection Act, an emissions trading brokerage company may provide information or data on the details of financial transactions under Article 4 of the Act on Real Name Financial Transactions and Confidentiality and personal credit information under subparagraph 2 of Article 2 of the Credit Information Use and Protection Act for the purpose of having a securities finance company use it for payment of deposits in accordance with the methods and procedures prescribed by Presidential Decree with respect to the following matters: <Added on Oct. 28, 2025>

1. Scope of information provided;

2. Methods of processing such as encryption of information on market participants;

3. Separate storage of information on market participants;

4. The period of use and purpose of use of information on market participants;

5. Deletion of information on market participants after the period of use expires;

6. Other matters prescribed by Presidential Decree to ensure strict management of information on market participants.

(12) The Minister of Climate, Energy and Environment, securities finance companies, and emission permits trading brokerage companies may process data containing individual identification numbers under subparagraph 1-2 a2) of Article 2 of the Act on the Use and Protection of Credit Information if it is unavoidable to carry out the duties related to the payment of deposits under paragraph (10). <Added on Oct. 28, 2025>

(13) Where a securities finance company directly pays deposits to market participants pursuant to paragraph (10), the securities finance company’s obligation to pay deposits to the emissions trading brokerage company and the emissions trading brokerage company’s obligation to pay deposits to the consignor shall be deemed to have expired, respectively, within the scope thereof. <Added on Oct. 28, 2025>

(14) No person other than an emission permits brokerage company registered pursuant to paragraph (2) may use the name or trade name "emission permits brokerage company" or a similar name. <Amended on Oct. 28, 2025>

(15) Other matters necessary for the business of an emission permit brokerage company, registration requirements, cancellation of registration and suspension of business, obligations, submission of business reports, disposal of emission permits, supervision, and others shall be prescribed by Presidential Decree. <Amended on Oct. 28, 2025>

[This Article Added on Feb. 6, 2024]

Article 22-4(Supervision and inspection) #

(1) The competent authority shall manage and supervise market participants and emission permits exchanges to prevent violations of this Act in order to ensure the sound operation of the emission permits trading market. <Amended on Oct. 28, 2025>

(2) The competent authority may, when necessary for the sound operation of the emission permits trading market or financial supervision, order market participants and the emission permits exchange to submit or report materials concerning duties under this Act. <Amended on Oct. 28, 2025>

(3) The competent authority may inspect market participants and emission permits exchanges regarding the duties and transactions under this Act, if necessary for the stability of the emission permits trading market or the maintenance of sound trading order. <Added on Oct. 28, 2025>

(4) The competent authority may, when necessary for the management, supervision, and inspection of market participants and emission permits exchange, request cooperation from the Financial Supervisory Service established under Article 24 of the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the "Financial Supervisory Service") and the head of an institution prescribed by the Presidential Decree as prescribed by the Presidential Decree. <Amended on Oct. 28, 2025>

(5) The Governor of the Financial Supervisory Service may, when necessary for financial supervision, have an employee belonging thereto inspect the business of emissions trading brokerage companies and the emission permits exchange. <Amended on Oct. 28, 2025>

(6) Other details necessary for methods and procedures related to the supervision, inspection, and investigation of market participants and emission permits exchange shall be prescribed by the Presidential Decree. <Amended on Oct. 28, 2025>

[This Article Added on Feb. 6, 2024]

Article 23(Stabilization of markets for trading emission permits) #

(1) If any of the following events occurs or is highly likely to occur, the competent authority may take measures for stabilizing markets through deliberation by the Allocation Committee, as prescribed by Presidential Decree, to facilitate the stable setting of a price for trading emission permits: <Amended on Oct. 28, 2025>

1. In cases prescribed by Presidential Decree where it is necessary for the stable formation of prices of emission permits;

2. Where the volume of emission permits traded in the relevant compliance year changes significantly due to a sudden surge in demand for emission permits;

3. If it is deemed necessary to take market-stabilizing measures due to any other cause or event prescribed by Presidential Decree in order to maintain order in markets for trading emission permits or protect the public interests.

(2) Market-stabilizing measures under paragraph (1) shall be taken in the following manner: <Amended on Oct. 28, 2025>

1. Utilization of emission permits in reserve under Article 18;

2. Setting a minimum or maximum amount of holdings of emission permits in the manner prescribed by Presidential Decree;

3. Adjustment of the supply volume of emission permits allocated onerously under Article 12 (3);

4. Applying any other method prescribed by Presidential Decree as an internationally acceptable method.

Article 24(Reporting and verification of amounts of emissions) #

(1) A business entity eligible for allocation shall prepare a statement on the amount of greenhouse gas emissions actually produced from all of its places of business during a compliance year based on a plan for calculating the amount of emissions and submit the statement to the competent authority within three months from the date of the end of the compliance year, as prescribed by Presidential Decree. <Amended on Mar. 24, 2020>

(2) Article 27 (3) of the Framework Act shall apply mutatis mutandis to reporting under paragraph (1). In such cases, "controlled emmitter" shall be construed as "business entity eligible for allocation" and "Government" as "competent authority." <Amended on Sep. 24, 2021>

(3) Except as otherwise prescribed by paragraphs (1) and (2), detailed matters necessary for reporting and verification of amounts of greenhouse gas emissions shall be prescribed by Presidential Decree.

Article 24-2(Verification institution) #

(1) The competent authority may designate an independent verification institution (hereinafter referred to as "verification institution") upon recommendation of a person meeting the standards prescribed by Presidential Decree, to verify the following matters objectively and professionally. In such cases, it may designate such institution by classifying the scope of work and specifying a period, as prescribed by Presidential Decree: <Amended on Feb. 6, 2024>

1. A plan for calculating the amount of emissions;

2. A statement under Article 24 (1);

3. Greenhouse gas reductions from an external project under Article 30;

4. Other greenhouse gas reductions by business entities eligible for allocation.

(2) Deleted. <Sep. 24, 2021>

(3) A verification institution shall comply with the work standards prescribed by Presidential Decree.

(4) Notwithstanding paragraph (1), the competent authority may refuse to designate a verification institution if the applicant for designation as a verification institution falls under any of the following subparagraphs: <Added on Feb. 6, 2024>

1. If there is an executive officer who is under adult guardianship;

2. Where 3 years have not yet passed from the date on which the designation was revoked pursuant to paragraph (5);

3. Where the applicant has been sentenced to a fine or a heavier punishment under Article 18 of the Unfair Competition Prevention and Trade Secret Protection Act within the past 3 years;

4. In other cases where the applicant is the same with the business entity eligible for allocation corporation (including individuals and public institutions, etc.);

5. Where part of the authority or duties under this Act are delegated or entrusted under Article 40;

6. Where the applicant is a corporation or an individual engaged in consulting related to greenhouse gases or energy, installation and management of reduction facilities and other related affairs.

(5) Where a verification institution falls under any of the following, the competent authority may revoke its designation or order it to suspend the whole or part of its work for up to one year; provided, where it falls under any of subparagraphs 1 through 4, the competent authority shall revoke its designation: <Amended in Feb. 6, 2024; Oct. 28, 2025>

1. Where the verification institution is designated by fraud or other improper means;

2. Where the verification institution effectively ends its business operation due to business closure, dissolution, or any other reason;

3. Where the verification institution poorly performs the work related to verification by intention or gross negligence;

4. Where it has conducted verification affairs during a period of business suspension, in violation of an order to suspend business;

5. Where the verification institution violates this Act or other statutes;

6. Where the verification institution fails to meet the standards for designation prescribed in paragraph (2).

(6) A verification institution shall report to the competent authority in the event of any of the following reasons. <Added on Feb. 6, 2024>

1. Changes in the location, corporation, and representative, verification auditors, and designated verification fields of the verification agency's office;

2. Suspension or closure of business, or resumption of operations.

(7) The verification institution shall regularly submit the results of performing the work related to verification to the competent authority, as prescribed by Presidential Decree. In such cases, the competent authority may evaluate the results submitted and disclose them on its website, etc. <Amended on Feb. 6, 2024>

(8) Matters necessary for designation of verification institutions, revocation of designation thereof, orders to suspend their work and to take corrective measures, etc. under paragraphs (1) through (7) shall be prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

[This Article Added on Mar. 24, 2020]

Article 24-3(Verification examiners) #

(1) The work related to verification of verification institutions shall be performed by verification examiners who meet qualification requirements for each specialized area and have qualification certificates issued by the competent authority (hereinafter referred to as "verification examiner").

(2) A verification examiner shall comply with the work standards when performing the work related to verification.

(3) Notwithstanding paragraph (1), the competent authority may refuse to issue a certificate of qualification to any of the following persons: <Added on Feb. 6, 2024>

1. A person under adult guardianship;

2. A person in whose case 3 years has not elapsed since the qualification certification of a verification examiner was canceled under paragraph (4);

3. A person who has been punished under Articles 18, 18-2, or Article 18-3 of the Unfair Competition Prevention and Trade Secret Protection Act for the past 3 years.

(4) Where a verification examiner falls under any of the following, the competent authority may revoke its designation or order it to suspend the whole or part of its work for up to one year; provided, where it falls under any of subparagraphs 1 through 3, the competent authority shall revoke its designation: <Amended in Feb. 6, 2024; Oct. 28, 2025>

1. Where he or she acquires the qualification by fraud or other improper means;

2. Where he or she poorly performs the work related to verification by intention or gross negligence;

3. Where it has conducted verification affairs during a period of suspension of qualification, in violation of a disposition to suspend qualification;

4. Where the verification institution violates this Act or other statutes;

5. Where he or she fails to attend required education programs without good cause; the results of evaluating such programs are substantially poor; or he or she fails to perform the work related to verification for a long period.

(5) Matters necessary for qualifications for verification examiners, their qualification requirements for each specialized area, work standards, requirements and procedures for revocation or suspension of qualifications, etc. under paragraphs (1) through (4) shall be prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

[This Article Added on Mar. 24, 2020]

Article 24-4(Greenhouse Gas Verification Association) #

(1) Persons engaged in work related to verification institutions and verification auditors may establish a Greenhouse Gas Verification Association (hereinafter referred to as the "Association") for the surveys, research, education, and publicity on the verification of greenhouse gas emissions and reductions, and for the sound development of other work related to the verification of greenhouse gas emissions and reductions.

(2) An association shall be a juristic person.

(3) The establishment of an association is subject to permission from the competent authority.

(4) Where an association that has obtained establishment approval pursuant to paragraph (3) intends to amend its articles of association, it shall obtain approval from the competent authority. <Added on Oct. 28, 2025>

(5) The competent authority may, if necessary for the guidance and supervision of the Association, require the Association to submit materials or to report on matters related to its business. <Added on Oct. 28, 2025>

(6) If the competent authority deems that the operation of the association violates Acts or the articles of incorporation, it may order the alteration of the articles of incorporation or business plans or the replacement and appointment of executives. <Amended on Oct. 28, 2025>

(7) The permission, operation, and other necessary matters of the Association shall be prescribed by Presidential Decree to the extent necessary for achieving the objectives of its establishment. <Amended on Oct. 28, 2025>

(8) Provisions applicable to incorporated associations in the Civil Act shall apply muntatis muntandis to matters regarding the Association, if not provided for in this Act. <Amended on Oct. 28, 2025>

[This Article Added on Feb. 6, 2024]

Article 25(Certification of amounts of emissions) #

(1) In receipt of a report under Article 24, the competent authority shall evaluate the validity of the details in the report and shall certify the actual amount of greenhouse gas emissions produced by the business entity eligible for allocation.

(2) If a business entity eligible for allocation fails to submit a report on emissions in accordance with Article 24, the competent authority may conduct a fact-finding survey under Article 37 and certify ex officio the actual amount of greenhouse gas emissions produced by the business entity in accordance with the guidelines prescribed by Presidential Decree.

(3) The competent authority may establish and operate an electronic processing system for the conformity assessment for emission certification under paragraph (1) or (2). <Added on Feb. 6, 2024>

(4) When the competent authority certifies an actual amount of greenhouse gas emissions under paragraph (1) or (2), it shall notify the business entity eligible for allocation, without delay, of the results thereof and shall register the details thereof in the emission permits register within 5 months from the end of the compliance year. <Amended on Feb. 6, 2024>

(5) Methods and procedures for certification of the amount of emissions under paragraphs (1) through (4) and detailed matters necessary for notification and registration of the amounts of emissions shall be prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

Article 26(Emissions Certification Committee) #

(1) The competent authority shall establish an Emissions Certification Committee (hereinafter referred to as "Certification Committee") in order to deliberate on and adjust technical matters regarding evaluation of validity and the certification of amounts of actual greenhouse gas emissions under Article 25 and the offset under Article 29.

(2) Matters necessary for the organization, operation, etc. of the Certification Committee shall be prescribed by Presidential Decree.

Article 27(Surrender of emission permits) #

(1) A business entity eligible for allocation shall surrender emission permits equivalent to the amount of greenhouse gas emissions certified under Article 25 (referring to the emission permits for a lapsed compliance year) within 8 months from the end of each compliance year, as prescribed by Presidential Decree. <Amended on Feb. 6, 2024>

(2) In receipt of emission permits surrendered in accordance with paragraph (1), the competent authority shall register, without delay, the details thereof in the emission permits register.

Article 28(Carryover and borrowing of emission permits) #

(1) A person who holds emission permits shall carry over the emission permits held by him or her to the following compliance year in the same commitment period or to the first compliance year in the following commitment period with approval from the competent authority.

(2) A business entity eligible for allocation may borrow some emission permits allocated for any other compliance year in the same commitment period with approval from the competent authority, if the business entity needs to do so in order to surrender emission permits in accordance with Article 27 and it has a ground prescribed by Presidential Decree.

(3) The maximum emission permits that may be borrowed in accordance with paragraph (2) shall be prescribed by Presidential Decree.

(4) When the competent authority approves carryover or borrowing under paragraph (1) or (2), it shall register the details thereof in the emission permits register without delay. In such cases, emission permits carried over or borrowed shall be deemed allocated for the pertinent year under Article 12.

(5) Detailed procedures for carryover and borrowing of emission permits under paragraph (1) and (2) shall be prescribed by Presidential Decree.

Article 29(Offset) #

(1) When a business entity eligible for allocation holds or acquires greenhouse gas reductions generated from an external project in compliance with international standards (hereinafter referred to as "greenhouse gas reductions from an external project"), it may request the competent authority to convert all or some of such reductions into emission permits.

(2) In receipt of a request under paragraph (1), the competent authority shall convert the relevant greenhouse gas reductions from an external project into emission permits equivalent to the reductions in accordance with the guidelines prescribed by Presidential Decree and shall register the details thereof in the offset register under Article 31.

(3) A business entity eligible for allocation may surrender emission permits registered in the offset register under paragraph (2) (hereinafter referred to as "offset emission permits") in lieu of the emission permits that shall be otherwise surrendered in accordance with Article 27. In such cases, the competent authority may set the maximum number of offset emission permits that may be otherwise surrendered and place a restriction on the effective period of offset emission permits, as prescribed by Presidential Decree, considering the impact of the surrendered offset emission permits on national greenhouse gas reduction targets, trading prices of emission permits, etc.

Article 30(Certification of greenhouse gas reductions from external projects) #

(1) Greenhouse gas reductions from external projects that may be converted into emission permits under Article 29 shall be limited to those projects commenced after December 3, 2016, the domestic entry into force date of the "Paris Agreement," and that fall under any of the following subparagraphs, certified by the competent authority in accordance with the standards and procedures prescribed by Presidential Decree. <Amended on Oct. 28, 2025>

1. Greenhouse gas reductions generated through a greenhouse gas reduction project implemented in any domestic or overseas sector not governed by this Act in a measurable, reportable, and verifiable manner in compliance with international standards;

2. Greenhouse gas reductions generated through projects prescribed by Presidential Decree, including a greenhouse gas reduction project defined in the United Nations Framework Conventions on Climate Change and relevant protocols.

(2) A person who intends to obtain certification under paragraph (1) shall file an application with the competent authority, as prescribed by Presidential Decree.

(3) When the competent authority certifies greenhouse gas reductions from an external project, it shall register the reductions in the offset register specified in Article 31, without delay.

Article 31(Offset register) #

(1) The competent authority shall maintain an emission permits offset register (hereinafter referred to as "offset register") to register and manage greenhouse gas reductions certified under Article 30 as those from external projects.

(2) The offset register shall be managed and operated by the competent authority.

(3) The offset register shall be managed in a manner that can be organically linked to the emission permits register.

Article 32(Termination of emission permits) #

Emission permits allocated for a compliance year, not surrendered to the competent authority in accordance with Article 27 or not carried over to the following compliance year in accordance with Article 28 shall become invalid at the lapse of 8 months from the end of the compliance year. <Amended on Feb. 6, 2024>

Article 33(Penalty surcharges) #

(1) The competent authority may impose a penalty surcharge not exceeding three times the average market price of emission permits for the pertinent compliance year on the business entity per ton of carbon dioxide for the shortfall in either of the following cases: <Amended on Mar. 24, 2020; Oct. 28, 2025>

1. Where emission permits surrendered under Article 27 are less than the amount of greenhouse gas emissions of a business entity eligible for allocation that is certified under Article 25;

2. Where emission permits surrendered within a prescribed period under Article 17 (3) are less than the number of emission permits allocated to a business entity eligible for allocation that is revoked under Article 17 (1).

(2) The competent authority shall provide the person subject to imposition of a penalty surcharge or an interested party with an opportunity to present his or her opinion thereon before imposing the penalty surcharge.

(3) Matters necessary for the guidelines, procedures, etc. for imposition of a penalty surcharge under paragraphs (1) and (2) shall be prescribed by Presidential Decree.

Article 34(Collection of penalty surcharges and disposition of defaulted penalty surcharges) #

(1) If a person obligated to pay a penalty surcharge fails to pay the penalty surcharge by the payment deadline, the competent authority may collect an additional charge prescribed by Presidential Decree from the person for the period from the day immediately after the payment deadline until the day immediately before the penalty surcharge is paid.

(2) If a person obligated to pay a penalty surcharge fails to pay the penalty surcharge by the payment deadline, the competent authority may demand the person to pay it within a specified period and may collect it in the same manner as delinquent national taxes are collected, if the person fails to pay the penalty surcharge and the additional charge under paragraph (1) within the specified period.

(3) Matters necessary for the procedure for the collection of penalty surcharges and the disposition of defaulted penalty surcharges under paragraphs (1) and (2) shall be prescribed by Presidential Decree.

Article 35(Financial support, tax incentives) #

(1) In order to prevent corporate competitiveness from diminishing through the introduction of the emissions trading system, and to encourage the trading of emission permits, the Government may provide financial support and tax incentives, grant subsidies, or provide other necessary assistance for projects prescribed by Presidential Decree, such as projects for the installation of facilities for reducing greenhouse gases and for the development of related technology.

(2) In providing support under paragraph (1), the Government may give priority to supporting projects implemented by small and medium enterprises defined in Article 2 of the Framework Act on Small and Medium Enterprises.

(3) The Government may use all or some revenues generated by allocating emission permits onerously under Article 12 (3), penalty surcharges under Article 33, fees under Article 39, and fines for negligence collected under Article 43 for supporting activities under paragraphs (1) and (2).

Article 36(Link with international carbon markets) #

(1) The Government shall endeavor to link domestic emission permits markets with international carbon markets in accordance with the United Nations Framework Convention on Climate Change and relevant protocols or agreements entered into with countries recognized as countries that measure, report, and verify greenhouse gas emissions in an internationally reliable manner. In such cases, the Government shall take into consideration the protection of trade secrets of business entities eligible for allocation.

(2) The competent authority may designate or establish and operate an institution specializing in surveys, research, technological development and cooperation for the link with international carbon markets as an institution specializing in trading emission permits, as prescribed by Presidential Decree.

(3) The Government may subsidize an institution designated or established and operated under paragraph (2) as an institution specializing in trading emission permits for expenses incurred in conducting its business activities.

Article 37(Fact-finding surveys) #

If it is necessary to verify relevant facts or the appropriateness of any of the following applications or dispositions, the competent authority may request the relevant business entity eligible for allocation, market maker, emission trading brokerage company, verification institution, or verification examiner, or external business operator (hereafter in this Article referred to as "person subject to fact-finding surveys") to submit a report or data or may conduct a field survey or fact-finding survey by other means to the minimum necessary extent. In such cases, the person subject to fact-finding surveys shall comply with such request or survey, unless there is good cause: <Amended on Mar. 24, 2020; Feb. 6, 2024; Oct. 28, 2025>

1. Applications for allocation of emission permits under Article 13;

2. Deleted. <Oct. 28, 2025>

3. Additional allocation of emission permits under Article 16;

4. Revocation of allocation of emission permits under Article 17;

4-2. Designation and cancellation of designation of emission permits exchange under Article 22;

4-3. Designation of market makers, revocation of designation thereof, and demands for corrective measure taken by market makers under Article 22-2;

4-4. Registration and cancellation of registration of emission permit brokerage companies under Article 22-3;

5. Reporting and verification of emission permits under Article 24;

5-2. Designation of verification institutions, revocation of designation thereof, and orders to suspend their work and to take corrective measures under Article 24-2;

5-3. Acquisition, revocation, and suspension of qualifications for verification examiners under Article 24-3;

6. Certification of emission permits under Article 25;

7. Certification of greenhouse gas reductions from an external project under Article 30.

Article 37-2(Hearings) #

The competent authority shall hold a hearing, where it intends to take any of the following dispositions: <Amended on Feb. 6, 2024>

1. Revocation of designation of an emission permits exchange under Article 22 (4);

1-2. Revocation of designation of a market maker under Article 22-2 (2);

1-3. Cancellation of registration of emission permit brokerage companies under Article 22-3 (3);

2. Revocation of designation of a verification institution under Article 24-2 (5);

3. Revocation of qualifications for a verification examiner under Article 24-3 (4).

[This Article Added on Mar. 24, 2020]

Article 38(Special cases concerning objections) #

(1) A person who objects to any of the following dispositions may file an objection with the competent authority, accompanied by evidential materials, within 30 days from the date specified in the relevant subparagraph, as prescribed by Presidential Decree: <Amended on Mar. 24, 2020; Feb. 6, 2024>

1. Designation under Articles 8 (1) and 9 (1): The day when public notice is made;

2. Allocation under Article 12 (1): The day when emission permits are allocated;

3. Additional allocation of emission permits under Article 16: The day when additional emission permits are allocated;

4. Revocation of allocation of emission permits under Article 17: The day when the allocation of the relevant emission permits is revoked;

5. Measures such as designation, cancellation of designation, warning, or suspension of business of an emission permits exchange under Article 22: the date of notification;

5-2. Designation of market makers and revocation of designation thereof under Article 22-2 (1) and (2): The day when notification is given;

5-3. Measures such as registration, cancellation of registration, or suspension of business of an emission permit trading brokerage company under Article 22-3: the day when notification is given;

6. Designation of verification institutions, revocation of designation thereof, and orders to suspend their work and to take corrective measures under Article 24-1 (1) and (5): The day when notification is given;

7. Granting, revocation, and suspension of qualifications for verification examiners under Article 24-3 (1) and (4): The day when notification is given;

8. Certification of an amount of emissions under Article 25 (1): The day when the amount of emissions is certified;

9. Imposition of a penalty surcharge under Article 33 (1): The day when notice of the imposition is given.

(2) In receipt of an objection filed under Article (1), the competent authority shall notify the petitioner of the results thereof within 30 days from the filing date of the objection; provided, if it is impractical to make a decision within the period due to extenuating circumstances, the period shall be extended by not more than 30 days and the petitioner shall be notified of the extension.

(3) Except as otherwise provided for in paragraphs (1) and (2), matters concerning objections shall be governed by Article 36 of the Framework Act on Administration. <Added on Jan. 30, 2024>

[Title Amended on Jan. 30, 2024]

Article 39(Fees) #

Any of the following persons shall pay fees, as prescribed by Presidential Decree:

1. A person who applies for issuance of a certificate under Article 11 (5);

2. A person who applies for registration of an account for trading emission permits under Article 20 (excluding business entities eligible for allocation).

Article 40(Delegation or entrustment of authority) #

(1) The competent authority may delegate or entrust part of its authority under this Act to the head of another central administrative agency or the head of an affiliated agency, as prescribed by Presidential Decree.

(2) The competent authority may entrust part of the affairs under this Act to a public institution or an institution prescribed by Presidential specializing in the reduction of greenhouse gases, as prescribed by Presidential Decree.

Article 40-2(Legal fiction as public official in application of penalty provisions) #

) Any of the following persons shall be deemed public officials in applying Articles 129 through 132 of the Criminal Act: <Amended on Mar. 24, 2020; Feb. 6, 2024>

1. Persons who are not public officials among the members of the Certification Committee;

2. Verification examiners.

3. Persons who are not public officials among the members of the Allocation Committee;

[This Article Added on Oct. 16, 2018]

Article 41(Penalty provisions) #

(1) Any person who commits an act corresponding to Article 19 (3) in relation to the trading of emission permits shall be punished by imprisonment with labor for a term of not less than 1 year or by a fine equivalent to at least 4 times but not more than 6 times the profit gained or the loss avoided as a result of the violation; provided, where no profit is gained or loss avoided by the violation, or it is impracticable to calculate such profit or loss, or where the amount equivalent to 6 times the profit gained or the loss avoided by the violation does not exceed 500 million won, the upper limit of the fine shall be 500 million won. <Added on Oct. 28, 2025>

(2) Any of the following persons shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 100 million won; provided, if the amount equivalent to three times the profit earned or the loss avoided by such violation exceeds 100 million won, the person shall be punished by a fine not exceeding the amount equivalent to three times the profit or avoided loss: <Amended on Feb. 6, 2024; Oct. 28, 2025>

1. A person who intentionally does an act falling under any subparagraph of Article 176 (1) of the Financial Investment Services and Capital Markets Act, which shall apply to the person mutatis mutandis pursuant to Article 22 (3), to get another person wrongly informed that transactions of emission permits are trading in high volume or to mislead another person to make a wrong decision in trading emission permits, in violation of the said paragraph of the said Article of the said Act;

2. A person who intentionally does an act falling under any subparagraph of Article 176 (2) of the Financial Investment Services and Capital Markets Act, which shall apply to the person mutatis mutandis pursuant to Article 22 (3), to solicit another person to engage in transactions of emission permits, in violation of the said paragraph of the said Article of the said Act;

3. A person who intentionally trades emission permits consecutively or who entrusts, or is entrusted, to trade emission permits consecutively to fix and stabilize the market price of emission permits, in violation of the body other than subparagraphs of Article 176 (3) of the Financial Investment Services and Capital Markets Act, which shall apply to the person mutatis mutandis pursuant to Article 22 (3);

4. A person who does an act falling under any subparagraph of Article 178 (1) of the Financial Investment Services and Capital Markets Act, which shall apply to the person mutatis mutandis pursuant to Article 22 (3), in connection with a transaction of emission permits or any similar transaction, in violation of the said paragraph of the said Article of the said Act;

5. A person who intentionally disseminates a rumor or commits fraud, or assault or intimidate any third person to trade emission permits, make a similar transaction, or manipulate the market price of emission permits, in violation of Article 178 (2) of the Financial Investment Services and Capital Markets Act, which shall apply to the person mutatis mutandis pursuant to Article 22 (3).

6. A person who fails to record or maintain data, in violation of Article 22-3 (6) 4;

7. A person who violates each subparagraph of Article 22-3 (6) 7.

(3) Any of the following persons shall be punished by imprisonment with labor for not more than 1 year or by a fine not exceeding 30 million won: <Amended on Feb. 6, 2024; Oct. 28, 2025>

1. A current or former executive officer or employee of the emission permits exchange who divulges or uses confidential information he or she has learned in the course of performing his or her duties, in violation of Article 383 (1) of the Financial Investment Services and Capital Markets Act, which shall be applied mutatis mutandis under Article 22 (3);

2. A full-time executive officer or employee of the emission permits exchange who has a special interest in a member of the emission permits exchange in regard to the grant of funds, the distribution of profit or loss, or other business affairs, in violation of Article 383 (2) of the Financial Investment Services and Capital Markets Act, which shall apply to the executive officer or employee mutatis mutandis pursuant to Article 22 (3).

3. A person who uses the name "emission permits exchange" or a similar name in the trade name or business name in violation of Article 22 (7);

4. A person who uses the name "emission permits brokerage company" or a similar name in the trade name or business name in violation of Article 22-3 (14).

(4) Any of the following persons shall be punished by a fine not exceeding 100 million won; provided, if the amount equivalent to three times the profit earned or the loss avoided by such violation exceeds 100 million won, the person shall be punished by a fine not exceeding the amount equivalent to three times the profit or avoided loss: <Amended on Mar. 24, 2020; Feb. 6, 2024; Oct. 28, 2025>

1. A person to whom emission permits allocated or additionally allocated under Article 12 (1) or 16 (1) 2 through 5 after applying for allocation or additional allocation of emission permits by fraud or other illegal means;

2. A person who surrenders offset emission permits under Article 29 (3) by applying for conversion of greenhouse gas reductions from an external project into emission permits by fraud or other illegal means;

3. A person who obtains certification of greenhouse gas reductions from an external projects under Article 30 by applying for certification by fraud or other illegal means.

4. Where the designation of a market maker has been revoked pursuant to Article 22-2, a person who has not disposed of emission permits in accordance with paragraph (5) of that Article;

5. A person who has not disposed of emission permits in violation of an order under paragraph (4) of that Article when the registration of an emissions trading brokerage company is canceled under Article 22-3.

Article 42(Joint penalty provisions) #

If the representative of a corporation (including organizations; hereafter the same shall apply in this Article) or an agent, employee, or servant of a corporation or an individual commits a violation under Article 41 in connection with the business of the corporation or individual, not only shall such violator be punished, but such corporation or individual shall be punished by the fine prescribed in the relevant provisions; provided, the foregoing shall not apply to cases where such corporation or individual has not been negligent in giving due attention and supervision concerning the relevant business in order to prevent such violation.

Article 43(Administrative fines) #

(1) The competent authority shall impose and collect an administrative fine not exceeding 10 million won on any of the following persons: <Amended on Mar. 24, 2020; Sep. 24, 2021; Feb. 6, 2024>

1. A person who fails to report within the period prescribed in Article 17 (2) or makes a false report;

2. A person who makes a false report pursuant to Article 21 (1);

3. A person who fails to report or makes a false report pursuant to Article 24 (1);

4. A person who fails to comply with an order for correction or supplementation, in violation of Article 27 (3) of the Framework Act applied mutatis mutandis in Article 24 (2);

5. A verification institution who fails to submit the results of performing the work related to verification under Article 24-2 (7);

6. A person who fails to surrender emission permits under Article 27.

(2) The detailed matters, including the standards for imposing administrative fines under paragraph (1), shall be prescribed by Presidential Decree. <Added on Feb. 6, 2024>