Chapter 3 Survey on Responses to the ETS and Trading
C. Factors in promoting awareness of consignment auctions
Amid low awareness of consignment auctions, factors that may influence expectations were analyzed. These were divided into three categories to examine their respective impacts – perception of the ETS, adequacy of allocations, and preference for banking.
1) Perception of the ETS and expectations of consignment auctions
When entities are not well informed of consignment auctions, their perception of the ETS, built over the prior three years, may raise their expectations. The correlation between perception of the ETS during phase I and expectations of consignment auctions was analyzed to draw factors with statistically-significant relations (Figure 3-13).
Figure 3-13. Effect of Perception of the ETS on Expectations of Consignment Auctions
배출권 거래제 인식 Perception of the ETS 국가 기후변화 대응을 위해
배출권 거래제는 매우 필요한 제도이다
The ETS is an essential system in responding to national climate change.
산업 경쟁력을 고려할 때 배출권 거래제 시행을 연기했어야 했다
Given Korea’s industrial competitiveness, the government should have postponed implementing the ETS.
배출권 거래제에 대해 우리회사(기관)의 관심은 별로 높지 않다
My company (agency) does not have much interest in the ETS.
우리 회사(기관)은 배출권 거래제 대응에 별 어려움을 겪지 않았다
My company (agency) had little difficulty in responding to the ETS.
배출권 거래제 시행이 우리 회사와 산업계에 미친 영향은 생각보다 크지 않았다
The impact of the ETS on my company (agency) and industries has not been as significant as expected.
위탁경매 기대 Expectations of consignment auctions 배출권 거래제 활성화에 도움
예상
Will help promote allowances trading 배출권시장 불확실성 낮추는데
도움 예상
Will help alleviate uncertainty over the allowances trading market 배출권 거래제 대응 편리에
도움 예상
Will help companies respond to the ETS 실제 효과는 없을 것으로 예상 Will have no effect
배출권 거래제 대응이 더 복잡할 것 예상
Will complicate the process of responding to the ETS 도입되면 적극 활용할 것 Will make active use of them when they are introduced
Analysis also found a correlation between a positive perception of the ETS and positive expectations regarding consignment auctions. For example, the more entities regarded the ETS as essential, the more positive their expectations that consignment auctions would help promote allowances trading (correlation coefficient=0.25, significance level=1%) and alleviate uncertainty in the allowances trading market (correlation coefficient=0.22, significance level=1%). Likewise, the more negative the perception of the ETS, the more negative the view of consignment auctions. The stronger the belief that the ETS should have been postponed, the stronger the view that consignment auctions would not help promote trading (correlation coefficient=-0.19, significance level=5%) and instead would result in setbacks in allowances trading (correlation coefficient=0.17, significance level= 5%).
2) Initial Allocations and expectations regarding consignment auctions
Allocations had a significant impact on participation in allowances trading and perception of the ETS. They may also influence awareness of consignment auctions that may occur in the future. A statistical analysis conducted on the difference in awareness of consignment auctions among those with insufficient, sufficient and adequate allocations to identify the correlation showed no significant correlation between adequacy of allowance allocations and expectations regarding the effects of consignment auctions in phase I (Table 3-8).
Table 3-8. Adequacy of Allowance Allocations & Expectations regarding the Effects of Consignment Auctions Effects of consignment auctions Insufficient
allocations
Adequate allocations
Sufficient allocations
Statistical
difference F value Will help promote allowances trading
Will help alleviate uncertainty over the allowances trading market
Will help companies respond to the ETS
Will have no effect
Will complicate the process of responding to the ETS
Will make active use of them when they are introduced
# of samples
3) Preference for banking and expectations regarding consignment auctions
This survey confirmed the existence of a strong tendency to bank or over-retain surplus allowances, and examined the possibility of this tendency to affect expectations regarding consignment auctions. Respondents who said they preferred to bank surpluses and those who did not were divided to verify statistical significance between this preference and consignment auction expectations. Analysis showed no difference in the two groups’
expectations (Table 3-9). In conclusion, during phase I, a positive perception of the ETS influenced consignment auction expectations, but the preference for banking surpluses had no significant influence on those expectations, which may be attributed partly to low awareness of consignment auctions.
Table 3-9. Preference for Banking of Allowance Surpluses & Consignment Auction Expectations Effects of consignment auctions
Group
preferring to bank surpluses
Comparative group
Statistical
difference F value Will help promote allowances trading
Will help alleviate uncertainty over the allowances trading market
Will help companies respond to the ETS Will have no effect
Will the process of responding to the ETS
Will make active use of them when they are introduced
# of samples
6. Sub-conclusion
As phase I of the ETS ended, this survey analyzed target entity perception of the ETS, their response activities, and participation in allowances trading, and gathered feedback from 150 responding entities (27.0% response rate) in the interest of improving the system. The findings indicated a number of things. First is that these entities generally acknowledge the need for the ETS, but overall, have negative views about its implementation. This is consistent with the results of surveys conducted prior to and during the early phase of its implementation. Second is that, there were more responses to the ETS at the department level (58.0%) than strategic responses at the entire organization level (26.7%), or the environment/energy department (64.7%) in charge of responding to the ETS, underlining that entities regard the ETS simply as a component of environmental regulations. Third is that analysis of potential internal ways to reduce emissions and active use of allowances trading were at the top of the list of response activities, while organization of a response decision-making body and in-house education were carried out infrequently. This indicates that many entities handled the ETS as a task confined to one department. Fourth is that the survey confirmed that the limited means of reducing emissions were the biggest obstacle in responding to the ETS, as entities found it difficult to find dramatic ways to reduce emissions or were reluctant to pursue breakthrough innovation. Uncertainty about government policies and concerns about higher cost of sales were also cited. Fifth is that, contrary to initial concerns, allocations were mostly sufficient during phase I. When dealing with a shortage of allowances, entities tended to purchase more in the market rather than undertake emissions reduction activities. In the event of a surplus, they preferred banking to selling the extra allowances, which was identified as a stumbling block to active trading. Sixth, the survey findings implied that efforts to revitalize allowances trading would need to include alleviating market uncertainties, allow the pricing mechanisms to function in a more transparent manner, and expand the supply of allowances for sale. Lastly, it was found that entities had a very low awareness of consignment auctions (only 32% aware of them) and that many felt consignment auctions would not help promote allowances trading.