Cut Carbon Overseas, Sell as Credits... Government Moves to Establish 'Global High-Integrity Carbon Market'

The government plans to establish the Global High-Integrity Carbon Market (GVCM), an international market where greenhouse gas reductions achieved in developing countries are issued as carbon credits and traded internationally. The initiative aims to build a foundation for international carbon trading that will enhance the credibility of emissions reductions and allow Korean companies to use credits earned by participating in overseas reduction projects for regulatory compliance and environmental, social and governance (ESG) management.

On the 12th, the government discussed detailed plans for the GVCM at a meeting of foreign economic ministers held at the Government Complex Seoul, chaired by Lee Hyungil, Deputy Prime Minister and Minister of Finance and Economy. The GVCM is an international carbon market being developed to address credibility issues raised in existing international carbon markets. The government plans to build a framework covering everything from identifying and supporting emissions reduction projects to issuing and trading credits and establishing cooperation among countries, with the aim of increasing the market's credibility. The international carbon credit market is projected to grow to $7 billion-$35 billion by 2030 and $45 billion-$250 billion by 2050.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyung-il speaks at the inaugural Emergency Economic Headquarters Meeting and Ministerial Meeting on Economic Affairs at Government Complex Seoul in Jongno-gu, Seoul, on Oct. 1, 2026. Photo by Cho Yongjun.

Credits Classified by Host-Country Approval...Usable for ESG and Regulatory Compliance

The GVCM's core feature is to classify credits according to whether the country hosting an emissions reduction project authorizes their transfer. Credits approved for transfer by the host country will be classified as "GVCM A," while those without approval will be classified as "GVCM NA." GVCM A credits are intended for use in meeting the investing country's national greenhouse gas reduction target and for regulatory compliance, including under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). They may also be used for corporate ESG activities. GVCM NA credits are intended for corporate ESG activities, and may be converted to GVCM A if the host country subsequently approves the corresponding adjustment.

Approval from the host country is required to use emissions reductions achieved overseas for domestic or international regulatory compliance. When emissions reductions are transferred to the investing country, they may be counted toward the reduction targets of the investing and purchasing countries. Without approval, however, the reductions are in principle counted toward the host country's national reduction target. The government plans to specify in the operating rules an obligation for participating countries to make efforts to approve credit transfers.

The scope of credit use will also be expanded beyond voluntary markets to include compliance markets. The government will consider linking the credits with the domestic emissions trading system and the greenhouse gas target management system, assessing whether they meet requirements for credit credibility, corresponding adjustments under the Paris Agreement, and business participation under domestic laws and regulations. Overseas, it will consult with relevant agencies to enable the credits to be used for regulatory compliance, including under CORSIA.

Blockchain technology will also be introduced to ensure credit credibility. Key information, including the project operator, the country or region where the project is carried out, a unique identification number, the reduction methodology, and the volume of reductions, will be recorded on the blockchain, while the complete dataset will be stored in a conventional database. The aim is to prevent double counting of emissions reductions and greenwashing during trading, while improving the security of records. Initially, credits will be issued through conventional electronic processes.

The government plans to use the Korea Exchange as the trading platform. It believes the Korea Exchange can help secure the confidence of market participants, given its experience operating an emissions trading exchange since 2015. However, constraints related to operating hours, eligible trading participants, and foreign exchange regulations limit the possibility of 24-hour trading and participation by individuals and foreign investors. The government has therefore left open the possibility of issuing digital assets alongside the existing system in the future.

Issuing Body to Include Developing Countries...Identifying Overseas Emissions Reduction Projects

The GVCM's governing body will consist of a board, a technical supervisory committee, and a secretariat. The board, made up of member countries, will set policy direction and oversee the technical supervisory committee. The technical supervisory committee will decide whether to issue credits, and experts nominated by developing countries will be able to participate so that the needs and policy positions of host countries are reflected. The Global Green Growth Institute (GGGI), an international organization, will temporarily serve as the secretariat, and the government plans to establish a separate secretariat after the GVCM's official launch.

The government plans to secure participating countries through the Indo-Pacific Economic Framework for Prosperity (IPEF), the Asia-Pacific Carbon Markets Roundtable (APCMR), and GGGI's network of member countries. It will also discuss converting emissions reductions generated by projects run by international organizations, including the World Bank (WB) and the Green Climate Fund (GCF), into GVCM credits. The government plans to secure countries interested in participating in 2026 and establish the issuing body in 2027 to begin related projects in earnest. At the 31st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP31), to be held in November 2026, it will confirm the interest of prospective participating countries and proceed with establishing a credit-issuing body together with participating countries.

This content was produced with the assistance of AI translation services.