* Government set to present laws to parliament
* First phase from 2013 to give 90 pct free permits
* Business groups object, saying timing not right
By Ju-min Park
SEOUL, Dec 8 (Reuters) - South Korea's government is expected to introduce emissions trading laws into parliament later this month that are widely expected to pass next year, despite industry opposition, ushering in the second largest national emissions trading scheme outside Europe.
The scheme, expected to start in 2013, would also be the second in Asia after New Zealand, with uncertainty still clouding Japan's efforts to win backing from parliament on emissions trading. [ID:nTOE6B505G]
It could also drive greater efficiency in Asia's fourth largest economy. South Korea imports 97 percent of its energy, ranking as the fifth top oil importer globally. Carbon emissions doubled to 600 million tonnes between 1990 and 2007.
But 18 business groups, including the Korea Chamber of Commerce & Industry and the Korea Iron & Steel Association, filed a petition on Tuesday urging the government to wait as similar efforts in competitors such as the United States, China, Japan and Australia have stalled or been delayed.
"Korea should not run the race with sandbags while the U.S., China and Japan have nothing attached," said Park Tae-jin, president of the Business Institute for Sustainable Development at chamber.
"We do not oppose the purpose of the emissions trading scheme but it is too early versus other countries," Park said.
Major employers such as Samsung Electronics , the worlds biggest electronics firm by revenue, and POSCO , the worlds No.3 steelmaker, are also among the country's top emitters and are expected to lean on President Lee Myung-bak to grant concessions on what the government says is already a business-friendly scheme, analysts said.
"The ruling party has a majority so it will be passed anyway. But the country will inevitably face strong demand for amendment in specifics, such as being more lenient on caps," said Leem Sung-jin, a professor of public administration at Jeonju University.
But green growth is also a centre piece of Lee's administration, as is a pledge to reduce greenhouse gas emissions by 30 percent by 2020 from projected levels.
It is hard to put the brakes on policies under the governments eco-friendly drive since the implementation of the green growth law in April. It is changing an entire paradigm, which baffles many companies, said Park Soon-chul, chief researcher at Korea Carbon Finance.
SOFTENING THE IMPACT
The country plans to launch a three-phase scheme that would cover about 470 firms or operations across all sectors emitting more than 25,000 tonnes of CO2 per year. In total, these produce 60 percent of South Korea's emissions.
Exchange-based trading would start in 2013 during a first phase running to 2015. The government would allocate 90 percent of the carbon allowances for free while auctioning the rest.
Europe's scheme allows member states to allocate a quota of carbon emissions allowances to 11,000 industrial installations. Companies get most permits free now but many electricity generators will have to pay from 2013.
European companies can buy U.N.-backed carbon offsets from developing countries if that works out cheaper than cutting their own emissions and the South Korean scheme is also expected to allow this.
"Our proposition is quite similar to the EU's program," said Park Chun-kyoo, general director of the climate policy division of the Presidential Green Growth Committee, referring to the EU's 100 billion euro (${esc.dollar}134 billion) scheme.
Lee Sun-hwa of the Korea Economic Research Institute estimated the implied carbon price of South Korea's scheme at about 45,000 won (${esc.dollar}40) per tonne. This could result in a 12 trillion won fall in annual sales of major nine industries including steelmaking and oil refinery.
Adding to concerns, the government has announced a separate mandatory scheme for operations that emit between 15,000 tonnes and 25,000 tonnes of CO2 per year. Firms or operations in this bracket will have to meet mandatory targets.
Those with emissions above 25,000 tonnes will have to participate in the trading scheme.
Park of the Presidential Green Growth Committee said the emissions trading laws would only be binding from 2013 while those producing between 15,000 tonnes and 25,000 tonnes of CO2 a year could take part in the carbon trading scheme or abide by the target management system.
One official, however, said the targets may be hard to meet.
"Technically, corporations have little time to prepare themselves for the emissions trading system. We have not estimated how effective it will be, an official at the Ministry of Knowledge Economy said, declining to be named because he is not authorized to speak to the media.
(${esc.dollar}1 = 1,133 won)
(Editing by David Fogarty and Ed Lane)
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