South Korea's power generation companies face a sharp rise in carbon costs next year as the government expands the share of emissions allowances they must buy. Four KEPCO subsidiaries plan for a permit price of 24,000 won per ton in 2026, but the market is already trading around 30,350 won. Based on their expected purchases of 40.93 million tons, buying at current prices would add roughly 260 billion won in extra costs. The government is raising paid allocation from 15% this year to 20% next year and to 50% by 2030. That means the same coal output becomes more expensive even without higher emissions. The affected companies already carry debt ratios between 86% and 180%, and they still need capital to replace coal plants. The gap between planned and market prices shows how fast Korea's carbon pricing is tightening, and how exposed the power sector is to the transition.
