Tesla Granted South Korean Emission Credit Trading Rights by Environmental Ministry

Ministry of Environment's green light for Tesla to trade emission credits in South Korea marks a significant milestone, enabling the electric car giant to tap into a potentially lucrative market. With estimated credits valued at 200 billion won, Tesla's entry heralds both financial gains and environmental policy changes in the country

Tesla's Breakthrough: Ministry Authorization Signals Entry into South Korean Emission Credit Market

In a recent report by Teslarati, The Ministry of Environment has granted Tesla significant authorization ability to sell automobile emission credits domestically in South Korea, effective this year. This is a major milestone for the electric car manufacturer, as it boosts their income in the South Korean market and marks a significant shift in the country's automotive and environmental policies.

According to a report from Korea Economy TV, Tesla is estimated to hold a substantial amount of tradable emission credits in South Korea, approximately 4 million grams/km. At the current penalty rates, this could translate to a staggering value of up to 200 billion won (about $145 million), underscoring the significant financial potential for Tesla in this market.

Automakers in Korea must ensure that their vehicles' average greenhouse gas emissions are lower than the national norm. If they exceed the limit, they must pay a fine of 50,000 won per gram/km ($36) or buy emission credits from other enterprises.

Regulatory Hurdles Overcome: Tesla's Journey to Secure South Korean Emission Credit Market Entry

Due to regulatory constraints, Tesla could not engage in South Korea's emission credit market. When the country passed the law on pollution credits trading in 2011, the regulations only permitted the trade of emission credits for automakers that sold more than 4,500 vehicles per year in 2009. Tesla did not satisfy this benchmark.

Government authorities have underlined that Tesla Korea has repeatedly raised concerns. In 2021, domestic legislation was changed to allow Tesla to lawfully participate in the emission credit market. While legal clearance was obtained at the time, final approval from the Ministry of Environment was still required before beginning actual trading. The final approval was received early this year.

"(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 noted.

Tesla has gained some traction in South Korea. Tesla overtook Mercedes-Benz to become the country's second-largest vehicle importer in March 2024 due to the Model Y's performance. According to the Korea Automobile Importers & Distributors Association, Tesla registered 6,025 vehicles in March 2024, compared to 4,197 for Mercedes-Benz.

Photo: Tesla Fans Schweiz/Unsplash