[Special Stock] Hansol Home Deco Strengthens Carbon Neutrality of Presidential Candidates... EU Also Obliged to Purchase Carbon Emission Permits

[Asia Economy Reporter Park Hyungsoo] Hansol Home Deco is showing strong performance. This appears to be influenced by expectations for carbon emission rights-related businesses as governments around the world strengthen carbon neutrality policies.

At 10:07 AM on the 29th, Hansol Home Deco was trading at 2,415 KRW, up 12.85% from the previous day.

The European Union (EU) Commission unveiled a draft of the Carbon Border Adjustment Mechanism (CBAM) on the 14th. CBAM is a system that requires the purchase of certificates (emission rights) based on the amount of carbon emitted during the production process when importing products into the region, which must be submitted to the competent authorities. It is one of the legislative proposals announced on the same day as the European climate change policy package (Fit For 55). The EU prepared this through a series of policy packages covering transportation, energy, and emission trading systems to prevent carbon leakage and to reduce carbon emissions by 55% compared to 1990 levels by 2030, aiming to achieve climate neutrality by 2050.

The Commission plans to enact the Carbon Border Adjustment Mechanism on January 1, 2023, with a three-year transition period, and to fully implement it from 2026. Adoption of the legislation requires approval from the European Parliament and the EU Council.

It is projected that the carbon border tax will secure annual revenues exceeding 9 billion euros starting from 2030. The EU announced that most of these funds will be used to repay debts of the European economic recovery fund (NextGenerationEU). There is significant criticism that using amounts collected from outside the region for the internal budget is unfair.

Park Ki-hyun, a researcher at SK Securities, explained, "It is still uncertain whether the carbon border tax will successfully settle in the global trade market," but added, "In the long term, if major trading partners successfully introduce the carbon border tax, South Korea's export costs will increase significantly."

He continued, "The US carbon border tax is also likely to be linked to the global carbon emission rights system, similar to the EU," and added, "Since South Korea has already completed the introduction of a nationwide ETS, there is room to address the carbon emission burden within the domestic system."

Domestically, there are also moves to strengthen regulations on carbon neutrality. On the 27th, six presidential candidates from the Democratic Party of Korea held a 'Carbon Neutrality Pledge Announcement' event, presenting pledges such as banning the sale of internal combustion engine vehicles, establishing a Ministry of Climate and Energy, introducing a carbon tax, and increasing the proportion of renewable energy generation. The industry expressed concerns that these contain much more radical content than the current government's carbon neutrality plan, which is criticized as being 'overly fast.'

Hansol Home Deco is promoting afforestation projects. Utilizing afforestation carbon emission rights approved by the New Zealand government, it expects carbon emission rights revenue of approximately 7.2 million New Zealand dollars from the New Zealand Carbon Emission Rights Leasing Company (NZFLC) until 2031.