S. Korea to launch 'high-trust' global carbon market next year, eyes digital asset issuance

The South Korean government plans to formally launch the Global Verified Carbon Market, or GVCM, next year. Key information on carbon credits — which represent greenhouse gas reduction outcomes — will be recorded on a blockchain, and the government is also reviewing the possibility of issuing the credits as digital assets. Credits will be classified based on whether the host country of an overseas reduction project has granted transfer approval, broadening their use from voluntary corporate carbon-reduction activities to regulatory compliance.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il unveiled the detailed GVCM implementation plan at the 274th Council of Ministers on External Economic Affairs at the Government Complex Seoul on Monday. The government aims to secure participating countries this year and move into full operation next year, including establishing a credit issuance body and advancing individual projects.

The GVCM is a framework designed to boost the credibility of international carbon markets and invigorate the trading of verified emission reductions.

To reflect its intent to cover both voluntary and compliance markets, the government is renaming the initiative from "Global Voluntary Carbon Market" to "Global Verified Carbon Market."

Central to the plan is how carbon credits are recorded and issued. Key data — including the project operator, the country and region where the project is located, a unique identification number, the emission reduction methodology, and the volume of reductions — will be stored on a blockchain. Full records will be kept in a conventional database, with the blockchain serving to verify the integrity of core information.

In the early stage, credits will be issued through conventional electronic means and traded on a Korean voluntary carbon market exchange to be built by Korea Exchange. The plan draws on Korea Exchange's experience operating an emissions trading platform to build trust among market participants.

The government will later consider issuing credits in parallel as digital assets, taking into account credit issuance and trading volumes, the legislative progress of a basic digital assets law, and market confidence in digital assets. Under the existing exchange framework, round-the-clock trading and participation by individuals and foreign investors are constrained by operating hours, eligible participant rules, and foreign exchange regulations. However, the government said it will take into account each participating country's position, given that digital asset legislation varies across nations.

Credits will be divided into two categories: "GVCM A," which has received transfer approval from the host country, and "GVCM NA," which has not.

Approved credits are intended for use in regulatory compliance — such as meeting a country's nationally determined contribution under the Paris Agreement or satisfying requirements under CORSIA, the international aviation carbon offsetting and reduction scheme — as well as for ESG activities. Non-approved credits will be directed toward ESG activities that contribute to the host country's own emission reduction goals. Credits in the non-approved category can be converted to approved status if the host country subsequently grants corresponding adjustment approval.

The government is also reviewing whether GVCM credits could be used under South Korea's domestic emissions trading scheme and greenhouse gas target management system. Doing so would require meeting conditions related to credit credibility, corresponding adjustments under the Paris Agreement, and eligibility criteria for domestic project operators. Consultations with relevant agencies will also be pursued to enable use under CORSIA.

The issuance body will consist of a board of directors, a technical oversight committee and a secretariat. The board, in which member countries participate, will set policy direction; the technical oversight committee will decide whether to issue credits; and the secretariat will handle issuance and management. Developing countries, where most emission reduction projects take place, will be able to join the board and recommend expert committee members, ensuring their views are reflected in operations.

The government will work with related ministries and the Global Green Growth Institute to secure participating countries and identify reduction projects that combine developing-country development needs with South Korean technology. Examples cited include nature-based projects such as mangrove forest restoration, agricultural waste management, methane capture and energy efficiency improvements.

The government will also discuss converting emission reductions generated through World Bank and Green Climate Fund projects into GVCM credits. It plans to pursue the signing of letters of intent at this year's 31st UN Climate Change Conference of the Parties, and to finalize participating countries, establish the issuance body, and flesh out the project structure next year.