Adopted at the UNFCCC COP21, the Paris Agreement is recognized as the most significant international environmental agreement since the United Nations Framework Convention on Climate Change in 1992. Laying the foundation for the post-2020 climate regime, the Paris Agreement emphasizes GHG mitigation efforts by all parties, including developed and developing countries. Korea decided to cut the national greenhouse gas emission by 37% in 2030 compared to the business-as-usual emission estimate and included the statement in its Intended Nationally Determined Contribution. In achieving the target, Korea stated that 11.3%p of greenhouse gas reduction will be achieved through international carbon market mechanism while the remaining 25.7% will come from domestic source.
  Nevertheless, the international community is in the process of developing consensus around the details of trans-boundary carbon market mechanism that is environmentally sound and sustainable enough to be recognized under the Paris Agreement. In this regard, the study aims to present ways for Korea to properly respond to the issue by observing the progress in the climate discussions and analyzing major carbon programs. Particularly since the Korean government is considering the use of cross-border carbon offset programs, the study comprehensively reviews a number of international carbon offset programs and thus seeks to provide implication for Korea. The study considers key principles highlighted in the international community and develops a Mitigation Cooperation Index (MCI), applicable to identifying prospective regions and fields for carbon offset programs. The study also looked at constraints to private participation in implementing international carbon projects and suggests ideas to increase private participation.
  In order to identify potential carbon partner countries for Korea, the study devised a set of index, namely ‘Mitigation Cooperation Index.’ The study deemed the following elements as essential: GHG emission level and intent for international carbon transfer, economic ties with Korea, and national development potential. By sub-categorizing and indexing the above-mentioned elements (emission level index, economic exchange index, and national capacity index) and varying the weight among the elements, the study induced values between 0 and 1, with 0 being less prospective and 1 being more prospective.
  When placing most weight on emission environment, India, Iran, Kazakhstan, Mongolia, and Vietnam were analyzed as the most potential partners. Nine out of thirty most potential partners were Asian countries. In terms of economic exchange, Vietnam, Indonesia, the Philippines, Bangladesh, Cambodia, Myanmar and several other Asian countries were included in the more prospective group. In regards to national development capacity, countries with higher income levels while classified as developing countries in the UNFCCC (i.e. Singapore, Israel, Chile, Qatar, etc.), were in the top tier. However, through a MCI analysis, we were able to conclude that it is most effective when national capacity support is provided along with cooperation in carbon reduction in a number of Asian countries.
  On the Korean side, while private companies are willing to participate in overseas reduction projects, many of them lack local network and capacity. Therefore, it is necessary to enhance private sector competitiveness through adequate institutional and policy design. In terms of finance, Korea must seek a linkage between ODA resources and international carbon reduction programs. Given the financial constraints of low-carbon projects, ODA resources can be linked to lowering entry barriers and inducing private capital inflows. Also, active participation in international carbon finance initiatives by multilateral banks and organizations should be considered.
  In conclusion, the study suggests the followings to facilitate Korea’s participation in international GHG reduction. First, the government should set up and implement a mid- to long-term plan to assist the private sector participation in climate change mitigation. There is a need for a powerful inter-agency control tower beyond the current level to perform and coordinate relevant action plans established by each ministries.
  Secondly, active support from the government is needed to promote private participation in climate change projects overseas. For example, establishing a one-stop support organization for Korean companies to successfully launch business in overseas green industry sector, building a system for companies to transfer overseas carbon credits to domestic reduction, and supporting private sector competency and experience through domestic institution building.
  In addition, resource mobilization must be considered. In this respect, Korea may consider supporting GHG mitigation projects in connection with ODA, multilateral funds, and various other financial instruments. Particularly, enhanced efforts to access the Green Climate Fund is necessary. Access to the Fund can be highly potential through a well-devised project plan.
  Finally, efforts are needed for Korea to engage and collaborate in various international carbon partnership programs. Through participation in the discussions with major international organizations, donors and recipients, Korea will be able to access first-hand information and also cultivate climate capabilities while engaging in actual business. Engagement in such activities will also increase business opportunities and partnership with interested parties.