Korea’s emission rights trading system will launch next week at the Busan headquarters of the Korea Exchange, the state-run bourse said Tuesday.

The carbon derivative market will open Jan. 12, with the trading and payment service operated by the KRX. The trading hours will be from 10 a.m. to noon.

Only the 525 companies approved by the Ministry of Environment are entitled to engage in trading.

During the initial stage from 2015 to 2017, companies under the emission target will receive carbon allowances for free.

The emission rights trading is a state policy to combat climate change by allocating the emission permits to companies. Firms whose carbon emissions exceed or come under the permitted amount can trade the emission rights.

The market-based environment policy is currently being executed in 34 countries around the world, including members of the European Union, New Zealand and Switzerland, according to KRX’s data.

With the trading’s launch just around the corner, the main bourse emphasized that, although the trading system takes a market-based approach, its environmental objective must not be undervalued.

“The trading’s key objective is not to create a boon in the financial market, but to reduce the country’s emission of air pollutants,” KRX vice president Yoon Suk-yoon said in a press conference Monday.

For the policy to launch successfully, the Korea Exchange plans to encourage the trading market by diversifying the tradable products. In addition to greenhouse gas emission rights, the main bourse plans to list similar environment rights, such as air pollutant emission rights.

By Chung Joo-won (joowonc@heraldcorp.com)