American electric vehicle giant Tesla finally obtained the necessary permit to sell emission credits in South Korea starting in 2024, Korea Economy TV reported.
Tesla to sell carbon credits in SK
South Korea’s Ministry of Environment has officially granted Tesla the permission to sell its extra emission credits to other automakers in the country.
The permit is indeed a significant advancement as it presents a new stream of revenue for the Musk-led company in the South Korean market.
Tesla’s tradable emission credits currently stand at approximately 4 million grams/km based on the sales results in 2021 and 2022. These credits equate to up to 200 billion won (about $145 million) per current penalty rates in the country.
South Korea’s emissions standard
Automakers competing in the South Korean market must adhere to the government’s requirement of maintaining their average greenhouse gas emissions below the country’s standard.
According to the report, automakers outmatching the limit must pay a penalty of 50,000 KRW per g/km. In order to avoid the penalty, they can purchase surplus emissions credits from other companies (like Tesla) to offset their excess emissions.
Regulatory process
In hindsight, the Ministry of Environment excluded Tesla from the list of automakers permitted to trade their emissions credits in South Korea due to regulatory limitations.
The initial eligibility criteria set in 2011 only allowed automakers to sell their emission credits if they sold over 4,500 vehicles annually since 2009.
Tesla did not yet sell its electric cars in the South Korean market in 2009, prompting the regulatory body to exclude it from the list.
Tesla’s consistent efforts pushed the government to partially amend the legal limitation in 2021. However, it still needed to gain the final approval of the Minister of Environment.
Tesla finally received the long-awaited approval early this year after a three-year holdup since the amendment in 2021.
“(The Approval of emission permits for Tesla) was a matter that required consultation with the Ministry of Trade, Industry and Energy… The action was delayed compared to the timing of Tesla Korea’s application.”
The Ministry of Environment
This significant feat offers Tesla a new revenue stream in South Korea, adding to the almost 12 trillion KRW (about $8.9 billion) it has earned from global carbon credits since 2009.
