[123RF]
[123RF]

South Korea's system of fining companies that exceed their greenhouse gas emission limits has proven largely ineffective, data released Wednesday shows.

Of the fines levied, 99.7 percent remain uncollected, and the government has not initiated a single forced collection against delinquent companies, prompting calls for a comprehensive review of the enforcement system.

According to data obtained from the Ministry of Climate, Environment and Energy by the office of People Power Party lawmaker Park Su-min, a member of the National Assembly's Climate, Energy, Environment and Labor Committee, only 27.57 million won of the 9.16 billion won ($6.64 million) in greenhouse gas emission penalty fines levied last year was collected — a collection rate of just 0.3 percent.

Under the Act on the Allocation and Trading of Greenhouse Gas Emission Permits, companies that emit greenhouse gases beyond their allocated limits must either purchase additional permits or pay a penalty fine. The fine is set at three times the average market price of emission permits.

The collection rate for surcharges on unpaid fines was also found to be low.

When a company subject to a penalty fine fails to pay by the deadline, a surcharge of 1.2 percent of the outstanding amount is added for each month of non-payment.

Of the 2.43 billion won in surcharges assessed last year, only 799,500 won was collected.

Under the law, the Ministry of Climate, Environment and Energy may initiate delinquency proceedings against companies that fail to pay their fines, but it has not done so in a single case. The ministry cited ongoing business closures and bankruptcy proceedings at the delinquent companies as the reason.

Woongjin Energy, a solar panel components manufacturer and the largest single delinquent, was handed a 5.4 billion won penalty in 2022 but has paid neither the fine nor any surcharges.

Woongjin Energy was declared bankrupt in 2022 following a deterioration in its finances, and proceedings have since stalled as the company has been unable to secure funds for repayment.

Another delinquent company, Altron Jeonju, had its operations shut down in December 2024, yet was still assessed a fine of 927.43 million won the following November. The entire amount remains uncollected.

The ministry said it would consider writing off uncollectable debt as bad debt depending on the outcome of bankruptcy proceedings.

"It is inevitable that questions will be raised about whether imposing fines on companies whose operations had already been shut down reflects a lack of any real intention to collect in the first place," Park said. "There is an urgent need for a comprehensive review of the greenhouse gas emission penalty system — including whether excessive fines have led to massive non-collection and whether the collection process itself needs to be reformed."


thlee@heraldcorp.com