South Korea has established its first verification agency capable of responding to the European Union's Carbon Border Adjustment Mechanism (CBAM). This development is expected to alleviate the burden of verification costs and the risk of sensitive production information leaks for domestic exporters, who previously relied on foreign agencies for carbon emissions verification.
The Ministry of Trade, Industry and Energy and the Ministry of Climate Change, Energy, and Environment announced on November 12 that the Korea Standards Association received recognition as the first domestic EU CBAM verification agency from Italy's national accreditation body, Accredia, on November 5.
CBAM imposes costs based on the carbon emissions generated during the production of carbon-intensive products imported into the EU. It applies to six categories: steel, aluminum, cement, fertilizers, electricity, and hydrogen, and has been in full effect since January after a two-year transition period.
To report actual carbon emissions for products exported to the EU, companies must obtain verification from an accredited agency recognized by a national accreditation body of an EU member state. If a company lacks verified actual emissions, it must use a default value set by the EU, which could lead to higher carbon cost burdens if the default is higher than actual emissions.
Previously, domestic exporters faced challenges in verifying emissions within South Korea due to the absence of recognized CBAM verification agencies. However, with the Korea Standards Association's recognition, domestic companies can now verify their carbon emissions locally without relying on foreign agencies.
The government anticipates that utilizing domestic verification agencies will reduce ancillary costs, such as the expenses associated with foreign auditors' stays in the country, and minimize confusion in the verification process based on a better understanding of local industrial conditions.
There is also an expectation that the burden of providing sensitive production information, such as carbon emissions per process and manufacturing details, to foreign agencies will be eased.
According to the European Commission, CBAM verification agencies must undergo a separate registration process after being recognized by a national accreditation body. These agencies will be able to issue official verification reports starting January 2027, and EU importers must complete their first CBAM report for 2026 imports by September 30, 2027.
This achievement was made possible through the joint support of the Ministry of Climate Change and the Ministry of Industry. The Climate Change Ministry has established a cooperative framework with the Italian national accreditation body to support the participation of domestic technical experts in the recognition review process and has provided capacity-building training for CBAM verification auditors under the domestic emissions trading system. The Ministry of Industry has promoted trade cooperation by requesting expedited recognition reviews for domestic verification agencies during discussions with the EU tax authorities and conveying the requests of domestic agencies to the EU.
Currently, two domestic verification agencies, the Korea Quality Foundation and the Korea Management Certification Institute, are also undergoing additional recognition reviews with government support.
The government plans to support domestic exporters' responses to CBAM through additional recognition of verification agencies, consulting for companies, joint briefings, and training for professionals in international carbon regulation.
Kim Jang-hee, the Ministry of Industry's New Trade Strategy Support Officer, stated, "This recognition is significant as it establishes a foundation for our export companies to quickly verify their emissions domestically," adding, "We will actively support the remaining verification agencies, including those under review, to obtain recognition as soon as possible."
Jeong Seon-hwa, Director of Climate Energy Policy at the Climate Change Ministry, expressed hope that this would help reduce the cost burden on our export companies and facilitate smoother verification, stating, "We will provide necessary information and support to ensure that our companies' carbon reduction efforts are properly recognized in the EU."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.