South Korea carbon permit prices surge 147% in six months, pressure builds on electricity rates

South Korean carbon emission permit prices have more than doubled since January, with the June auction hitting 26,450 won per ton. That is a 147% increase from January's 10,700 won. The government cut total allowances by 16.8% for the fourth planning period starting 2026 and reduced free allocations, especially for power generators. Companies are holding surplus permits expecting further price gains, tightening supply further. The rising cost of permits is expected to feed into electricity rates through the climate environment charge. Industry groups warn that the cost of purchasing permits over the next five years could reach 26.9 trillion won. The government is monitoring prices and plans to set a price range by August, with a market stabilization reserve system starting in September to manage volatility.