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

South Korea will formally launch the Global Verified Carbon Market, or GVCM, next year — a marketplace where greenhouse gas reduction credits generated overseas can be issued and traded. Key information will be recorded on a blockchain to boost reliability, and the government is also reviewing the possibility of issuing credits as digital assets in the future.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il unveiled the detailed GVCM implementation plan Monday at a meeting of ministers on external economic affairs held at Government Complex Seoul.

The GVCM is a market framework designed to enhance the credibility of overseas greenhouse gas reduction projects and promote international trading of the resulting credits. The government is renaming the initiative from "Global Voluntary Carbon Market" to "Global Verified Carbon Market," reflecting a broader scope that goes beyond voluntary corporate emissions cuts to also support countries in meeting their nationally determined contributions, or NDCs, and complying with emissions regulations.

The centerpiece of the plan is a system for managing the issuance and trading of carbon credits in a way that ensures their integrity. Key data — including the project operator, host country and region, unique identification number, reduction methodology and volume — will be recorded on a blockchain. Full records will be stored in a conventional database, while only core information is written to the blockchain, balancing management efficiency with data reliability.

Initially, credits will be issued through standard electronic means and traded on a Korean voluntary carbon market exchange that Korea Exchange is building. The government plans to draw on its experience operating the emissions trading system to establish a solid trading foundation and build market participants' confidence.

Down the line, the government will consider issuing credits in parallel as digital assets, taking into account the scale of credit issuance and trading, the legislative progress of a basic digital assets act and overall market confidence. Officials noted that the existing exchange framework imposes constraints on round-the-clock trading and participation by individuals and foreign investors due to operating hours, eligible participant rules and foreign exchange regulations. However, the government said it would also take into account the varying levels of digital asset legislation and regulatory readiness among participating countries.

Credits will be classified as either "GVCM A" or "GVCM NA" depending on whether the host country has approved the international transfer of the reduction outcome. Approved credits are intended for use in meeting the investing country's NDC targets, complying with regulatory frameworks such as the Carbon Offsetting and Reduction Scheme for International Aviation, known as CORSIA, and supporting ESG activities. Non-approved credits will be directed toward ESG activities that contribute to the host country's own emissions reduction goals. Credits can later be upgraded to approved status if the host country grants a corresponding adjustment.

The government is also reviewing whether GVCM credits could be used within South Korea's emissions trading system and greenhouse gas target management scheme. Doing so would require meeting conditions beyond credit reliability, including corresponding adjustments under the Paris Agreement and eligibility criteria for domestic project operators. Consultations with relevant agencies on CORSIA compatibility will also continue.

The issuing 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 reduction projects take place, will be able to join the board and nominate technical 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 pair developing-country development needs with South Korean technology. Examples cited include nature-based projects such as mangrove forests, agricultural waste management, methane capture and energy efficiency improvements.

The government will also discuss converting reduction outcomes from 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 Conference of the Parties to the UN Framework Convention on Climate Change, with participating countries and the issuing body to be established next year as the project structure is finalized.

The meeting also discussed external economic risk assessment and response measures, a review of economic deliverables from recent summits, and plans to develop a dedicated industrial complex in India for South Korean companies.

Lee said South Korea's economy has maintained solid export momentum despite a challenging external environment, providing a foundation for growth. "The current account surplus reached $46.11 billion in August, extending a streak of 40 consecutive months of surplus and demonstrating overall stability," he said.

He added that the government would respond to external uncertainties as a unified economic team and turn the challenges into new growth opportunities. "We will prepare without fail so that the tasks discussed today translate into tangible results on the ground," he said.

The government said it would monitor trade issues with major partners and strengthen external communications in response to trade bloc formation, pending trade issues with the United States and the EU's tightening of industrial protection measures. In follow-on negotiations under the Korea-China free trade agreement covering services and investment, the government will pursue substantive outcomes in areas including culture and finance.

To support South Korean companies in winning overseas contracts, the government plans to establish a new overseas construction strategic fund worth a total of 3 trillion won ($2.24 billion), seeding it with 1 trillion won in public funds and drawing in additional domestic and foreign capital. It will also expand package-style project bids that bundle development, construction and maintenance.

Supply chain risks stemming from the prolonged conflict in the Middle East and US-China tensions will be addressed by expanding domestic production and stockpiling of economically sensitive items, building overseas production capacity and diversifying import sources. The government will use summit diplomacy to lay the groundwork for economic and supply chain cooperation with key countries and will periodically review related outcomes. Elevated global interest rates, fiscal risks in major economies and the possibility of a pullback in AI investment were also flagged as potential external risks.