This introductory market primer covers the Korean Emission Trading System (K-KETS) which was launched in 2015 and has entered the third phase starting 2021. This report describes the key features of this leading East-Asian carbon market, and compares it in size and development to other programs around the world.

During the first two phases (2015-2020), the K-ETS has been a relatively restricted market that only allowed covered entities to trade emission allowances. In 2021, financial entities were allowed to participate in the ETS market, to bring additional demand and liquidity. So far, 20 domestic financial intermediaries have entered the secondary market. As Carbon markets become more interlined around the world by cross-market investors, it will be increasingly important to understand the markets in connection rather than isolation. This report is targeted at that very purpose.

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